IRD trust disclosure: post-implementation review

On 7 April 2025 the IRD released its post-implementation review of the increased disclosure requirements for trustees that were introduced in December 2020.

The IRD has recommended maintaining the disclosure regime, while making changes to improve future disclosures and reduce compliance costs.

A reminder of the rules

The rules were introduced to support the Commissioner of Inland Revenue’s ability to assess compliance with tax rules and develop tax policy and to assist the Commissioner in understanding and monitoring the use of structures and entities by trustees.

Under the rules, where a trust derives assessable income for a tax year the trustees must prepare financial statements and disclose details to the IRD of settlements onto the trust, settlors, distributions, beneficiaries, appointers and any other information required by the Commissioner.

Compliance concerns

The IRD consulted with various stakeholders in carrying out its post-implementation review and the overall feedback was that the disclosure rules have resulted in unnecessary compliance costs, particularly in the first year. Some concerns raised by stakeholders were that it is not necessarily clear what the information being provided is used for and that the requirements should be restricted to what is needed for compliance and policy purposes.

Maintaining the rules with small changes on the horizon

In response, the IRD maintained the benefits to the regime justify the retention of the reporting requirements and expressed concerns that significant changes to the requirements could have a negative impact on New Zealand’s anti-money laundering/countering financing terrorism rating with the OECD Financial Action Task Force.

The IRD did recommend minor changes to the regime duringthe 2025-2026 tax year such as:

• Ensuring compliance costs are considered when making future changes to the rules.
• Simplifying compliance by removing unnecessary breakdowns of disclosures (for example, trustees not having to distinguish between different types of distribution and not being required to disclose non-cash distributions reasonably expected to be no more than $100,000 in an income year).
• Introducing a statutory provision to require beneficiaries, settlors and appointors to provide relevant personal information to trustees that the trustees need to comply with these requirements.

One aspect not introduced was stakeholders’ submissions that “small trusts” should be exempt from the reporting requirements. The IRD did, however, not rule this out, instead noting that more consideration was needed on this, particularly on what should constitute a small trust, before implementing this.