IRD Reporting Requirements for Trusts

The Inland Revenue released two consultation Documents late last year on new disclosures and financial reporting requirements for domestic trusts which will apply from the 2021/22 Income year.

The first consultation document (Reporting requirements for domestic trusts: where disclosure is required under the Tax Administration Act 1994) relates to the proposed minimum reporting requirements for Trusts to follow.

The second consultation document (Reporting requirements for domestic trusts) is a draft operation statement outlining the Commissioners approach to applying the new trust information gathering powers.

Who is affected?
All domestic Trusts that are required to file an income tax return will be affected by the requirements outlined in the consultation documents.

Trusts that are required to file income tax returns but are not currently preparing annual financial statements will now be required to prepare financial statements to the minimum required standards. This will also apply to Trusts who are in a partnership where a partnership set of accounts only is produced.

Foreign Trusts, Charitable Trusts, Maori Authorities and Bare Trusts are not caught under these new rules. Estates that retain assets for beneficiaries e.g. life interest trusts are also caught by the rules.

Domestic Trusts who currently have inactive status at the IRD and any other trust that applies for this status and gain approval will also not be required to comply with these rules.

Minimum Reporting requirements
The new reporting requirements are summarised below:

  • A statement of financial position and statement of profit and loss are to be prepared.
  • Double entry accrual accounting must be used to prepare the financial statements.
  • Appropriate valuations used when preparing the financial statements such as tax values, historical cost and market values.
  • Statement of Accounting Policies disclosing the accounting policies applied when preparing the financial statements.
  • Disclosing comparable figures for the previous income year (where applicable).
  • Additional required information discussed in detail further below.

The Inland Revenue however has recognised the increased level of compliance this may impose on “small” trusts and have proposed a de-minimis exception to provide partial relief for these trusts. A trust is deemed to be “small” for an income year if the trust has derived annual income less than $30,000, incurred less than $30,000 in expenses and whose assets did not exceed $2 Million in value within the year. The de-minimis exemption removes some of the above requirements such as the requirement to apply accrual accounting, preparing a statement of accounting policies and disclosing comparative year information.

The financial statements are not required to be submitted with the trusts income tax return, they are merely required to be prepared using the minimum reporting standards and provided to the Inland Revenue if requested.

Additional Financial Information
The consultation document provides details in regards to what additional information will be required to be disclosed in the financial statements.


  • Of the financial statements and taxable income for the year.
  • Movements from opening to closing balances on a line by line basis of all beneficiary current accounts, including loans.
  • Schedule of Fixed Assets.

Trusts with specific business types

  • Forester – information about the cost of timber as at the end of the income year and a reconciliation of movements in the cost of timber during the income year.
  • Specified Livestock Owner – Details of livestock valuation methods, valuations, and calculations for tax purposes.

Associated persons transactions

  • Detailed information on transactions with associated persons.

Additional Disclosures requiring to be made to IRD
The Commissioner of Inland Revenue was granted new powers in December 2020 to collect information from Trusts. The powers were granted in response to the re-introduction of the 39% personal income tax rate and to provide the Commissioner with information to help assess whether trusts were being used to avoid this higher tax rate. The second consultation document is a draft operational statement which effectively outlines the Commissioners approach to gathering the information. The disclosure requirements are in addition to the minimum financial reporting standards. The expectation is that this information will be collected when filing the income tax return.

In Summary, the following information is required to be submitted:

  • Statement of profit or loss and a statement of financial position. This information is expected to be submitted using an IR10. The IR10 is expected to be prepared and filed showing all Trust movements rather then only the business transactions that are currently required to be filed.
  • The nature and amount of each settlement are required to be disclosed. Settlements will be classified in to categories and where a settlement has occurred during the financial year, the value of the settlement will be required to be disclosed under the appropriate category.
  • Settlor details. Including, name, date of birth, IRD number are required to be disclosed and this extends to all settlors over the lifetime of the trust that can reasonably be obtained by the trustees. The term Settlor is defined in the Income Tax Act and is extended from the Trusts Act definition to include settlors that provide low interest loans to the Trust. (For further information on this, please refer to the linked article).
  • Beneficiary & distribution details for all distributions made within the income year including taxable and capital distributions. This information is expected to be provided with the IR6B form that currently is used to record taxable distributions.
  • Details for persons with powers of appointment including name, date of birth and IRD number. This includes people who can appoint both Trustees and Beneficiaries.

Some of these disclosures are expected to be made using existing forms or upgraded versions of these forms such as the IR10 and IR6B, but it is not yet clear what format other disclosures such as settlement details are expected to be disclosed in.


A lot of the information required to be disclosed to the Inland Revenue is expected to be reasonably available as the requirement for trustees to hold these personal details are effectively already enforced by the Trusts Act 2019 which came in to effect January 2021. (See link to an earlier article)

We are close to the end of the 2021/22 income year where these rules begin to apply. It is therefore very important that Trustees are aware of these new requirements and how they are affected by them. We expect the compliance costs for trusts to increase. We are currently reviewing our client base and will be in touch if we believe your trust(s) are heavily affected by these changes.