New Zealand Trust
New Zealand Trust
A trust structure is the financial market tool known for its convenience and functionality. It allows the asset security with concurrent creation of effective and efficient schemes for asset distribution and tax planning activities. This is why investors pay such a high interest to it who are attracted by this place to do business. Although New Zealand never referred to this category of places earlier, it has a fairly interesting and attractive trust mechanism for investments that requires greater attention today.
This state is mainly known for the model of the Australian legal system to apply, although it opens wide enough opportunities for those businesses that optimize their expenditure part as per tax schemes. The state is attractive since founders have the unique opportunity to fully withdraw their assets from the area of taxation remaining in the comfortable legal field with the good will at the international level.
As the real alternative to classical offshore option, trusts in New Zealand may transform to become non-resident trusts provided that all the requirements are met. Under such situation, though accounting to local legislative regulations, they are referred to the category of “foreign” and are eligible for withdrawal from the jurisdiction of fiscal rules.
In accordance with local legislation, a structure earlier formed on the territory of the country, cannot be taxed in such cases:
- The overseas origin of trusts – they arrive from abroad and stored abroad;
- Profit from the property is also generated outside the country – the value is 100%;
- The beneficiaries and the founder are not new Zealand residents.
Though the requirement is not relevant in relation to trustees or owners. Depending on preferences of founders, they may be both foreign citizens and residents. If a company acts as above that is controlled by non-residents for quarter or more, the regular audit on financial and accounting activities is compulsory.
It is important to remember that an individual who was able to accumulate “income of the trustee” (a similar definition is used by local finance law) is subject to taxation to the maximum extent. The rate is 33%. The above-mentioned law applies not only to the profit specified; it also applies to revenues gained by beneficiaries – both items cannot be taxed at the same time. The beneficiary may act as the taxpayer where his own profit will be only subject to taxation but not the trust profit. With careful separation of all the available sources existing at the territory of New Zealand, the financial mechanism may be reasonably considered to be comfortable and productive to high extent.
PURPOSE OF TRUSTS IN NEW ZEALAND AND THEIR BENEFITS
The main difference between local trusts is that they are not referred to legal entities, being a contract in fact. Trust founders are given the option to transfer the property to be managed by the structure with self-alienation and rights are lost along with responsibilities. Assets become inaccessible for claims coming from creditors of the trust founder, his heirs who claim for the certain amount and authorities of foreign countries. At that, the state is not in the “black list”, it has a high status and clear legal system with the high degree of reliability.
Important is the fact that the beneficiary and the structure founder/owner may be a single person. Some offshore companies allow this, although this is strictly prohibited in others. With specific regard to New Zealand, there is no limitation to such features observed. Among other benefits available to local trusts the following may be accentuated:
- Possibility to do business fully purposes of beneficiaries and owners, investing assets and opening accounts. The profit, whether of foreign origin, is subject to taxes, though it is private and is not related to the trust;
- The property is fully secured against external attacks;
- Tax planning opens a wide range of opportunities in terms of proper management and asset flow arrangement;
- Option to include different types of assets in the trust. This may include the real estate, bank accounts for insurance policies, property of intellectual nature and so on;
- Total anonymity of both deposits and deposit-based operations;
- Favorable international position, stability of the financial system, and much more.
Most often, trusts are chosen by those who aim at the following:
- Effective financial management and administration;
- Safety of the property to achieve high standard of living not only for themselves but for their families as well as those beneficiaries chosen;
- Formation of the payroll system for employees – bonuses, pension payment and other.
TYPES AND STRUCTURE OF ORGANIZATION
The local legal field allows the possibility of classic trust formation that is entirely relevant to those that exist in other countries under fundamental Anglo-Saxon norms.
In addition to founders, beneficiaries and trustees, that may be a company, one person or more taking independent decisions, a guarantor is required for the structure charged to monitor the adequacy of compliance:
- Local legislative framework;
- The Principles of integrity of the functioning of the trust;
- Goals assigned in the deed;
- Beneficiaries and their interests.
Activities performed by the administrator on behalf of the trust. If it is the company of foreign jurisdiction, the profit derived by it is not subject to taxation. The most popular are the variation of trusts:
- Qualified – they have trustees who are local residents and are subject to state taxation;
- Foreign – they include founders who are non-residents, only those revenues are taxed that are gained within the state;
- Charitable – fully exempt from payment of taxes;
- Non-qualified – unlike the trustee, the founder is a resident.
It is proved practically, that the structure formation is not particularly complicated. First, a deed is filed that is a confidential document. The information regarding only managers is entered with the public Register of Companies where there is no information of the trust and of its owners. The authorities required only that at least one of Directors of the managing company is a resident of the country.