Overview of New Zealand's position on the taxation of trusts.

If a New Zealand Trust, operated by a New Zealand resident trustee, receives income from any place other than New Zealand that income is tax free in New Zealand.

If the funds are invested outside of New Zealand no tax is payable on that income in New Zealand.

The Inland Revenue Department says in its Trusts and Estates Guide:

Beneficiaries who are not New Zealand residents for tax purpose only have to pay New Zealand income tax on trust income derived from New Zealand

It follows that Beneficiaries who have no New Zealand income pay no tax in New Zealand.

An example is given in the New Zealand Inland Revenue Department ruling PU 2869 (November 1998):

B Trustee New Zealand Ltd is a member of a B Bank Group worldwide. It is ultimately controlled in the United Kingdom. B Trustee New Zealand Ltd provides international trustee services to trusts that do not have:
  • A New Zealand resident settlor,
  • New Zealand resident beneficiaries,
  • New Zealand sources trust income.
A taxable distribution is made by B Trustee New Zealand Ltd to Mr Zee. Mr Zee is not resident in New Zealand. The distribution is from a trust that has no New Zealand sourced income.

Mr. Zee is not subject to New Zealand income tax. The trustee who is resident in New Zealand is not liable as agent to New Zealand income tax on the distribution.


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