Income Tax Act 2007

HC 25 Foreign-sourced amounts: non-resident trustees
When this section applies

(1)

This section applies when a non-resident trustee derives, as trustee income, in an income year a foreign-sourced amount that would be assessable income if derived by a person resident in New Zealand.

Trustee income

(2)

Despite section BD 1(4)(a), (b), and (5)(c) (Income, exempt income, excluded income, non-residents’ foreign-sourced income, and assessable income), the amount is assessable income of the trustee if, at any time in the income year,—

(a)

a settlor of the trust is a New Zealand resident who is not a transitional resident; or

(b)

the trust is a superannuation fund; or

(c)

the trust is a testamentary trust or an inter vivos trust, of which—

(i)

a trustee is resident in New Zealand; and

(ii)

a settlor died resident in New Zealand (whether or not they died in the income year) or the last surviving settlor was resident in New Zealand when that settlor ceased to exist.

First exception

(3)

Subsection (2) does not apply if—

(a)

the trustee is resident outside New Zealand at all times in the income year; and

(b)

no settlement has been made on the trust after 17 December 1987 and, if an election has been made under section HZ 2 (Trusts that may become complying trusts), the election has not been made by the trustee.

Second exception

(4)

Subsection (2) does not apply if—

(a)

the trustee is resident outside New Zealand at all times in the income year; and

(b)

when a settlement has been made on the trust after 17 December 1987, it was made only by a settlor who is not resident in New Zealand—

(i)

at the date of the settlement; and

(ii)

at any time between 17 December 1987 and the date of settlement.

Extent to which subsections (3) and (4) apply

(5)

Subsections (3) and (4) do not—

(a)

affect a settlor’s income tax liability under the trust rules:

(b)

apply to determine whether the tax obligations in relation to the trustee’s income tax liability are met for the purposes of section HC 10(1)(a)(ii) and meeting the requirements for a complying trust.

Treatment of non-resident trustee in other provisions

(6)

For the purpose only of calculating the taxable income of a trustee referred to in subsection (2), and not otherwise, the trustee is treated as resident in New Zealand for the purposes of—

(a)

sections EW 9 and EW 11 (which relate to financial arrangements):

(b)

section LJ 2 (Tax credits for foreign income tax):

(c)

section OE 1 (General rules for persons with branch equivalent tax accounts):

(d)

the international tax rules.

Defined in this Act: amount, assessable income, complying trust, foreign-sourced amount, income, income tax liability, income year, international tax rules, New Zealand, New Zealand resident, non-resident, resident in New Zealand, settlement, settlor, superannuation fund, taxable income, transitional resident, trust rules, trustee

Compare: 2004 No 35 s HH 4(3), (3A), (6) provisos

Section HC 25(1): amended (with effect on 1 April 2008), on 2 November 2012 (applying for the 2008–09 and later income years), by section 84(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section HC 25(2)(c)(ii): amended, on 23 March 2020, by section 139 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).

Section HC 25(6)(c): replaced, on 1 July 2012 (applying for income years beginning on or after that date), by section 75(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).