The minimum requirements for the preparation of financial statements for foreign trusts for a return year for the purpose of section 21B of the Act are as follows:
Form of financial statements
(a)
the financial statements must consist of—
(i)
a balance sheet setting out the assets, liabilities, and net assets of the trust as at the end of the return year; and
(ii)
a profit and loss statement showing income derived, and expenditure incurred, by the trust during the return year; and
Principles with which statements must comply
(b)
the financial statements must be prepared applying the principles of accrual accounting; and
Valuations
(c)
the financial statements may, however, disclose amounts using the following valuation principles:
(i)
tax values, when those values are consistent with double-entry and accrual accounting; and
(ii)
historical cost with impairment or depreciation as appropriate; and
(iii)
market values, when, in the preparer’s opinion, market values provide a better basis of valuation than those in subparagraphs (i) and (ii); and
Statement of accounting policies
(d)
the financial statements must contain a statement of accounting policies setting out, in sufficient detail so that a user can understand the material policies that have been applied or changed,—
(i)
the policies and assumptions that have been used in the preparation of the financial statements; and
(ii)
a description of the effect of any material changes in the accounting policies used since the previous year for which financial statements were prepared; and
Matters that statements must show
(e)
the financial statements must—
(i)
disclose comparable figures for the previous return year (if financial statements were prepared for that previous year); and
(ii)
include a statement of the foreign trust’s New Zealand taxable income (if any) in New Zealand dollars for the return year; and
(iii)
include a reconciliation of movements, on a line by line basis, from opening to closing balance, of—
(A)
all settlor and beneficiary accounts, including loans; and
Currency
(f)
the financial statements may be prepared in any currency that is appropriate, having regard to the circumstances of the trust and its settlors and beneficiaries.