The New Zealand Inland Revenue Department (Inland Revenue) has recently issued a proposal regarding minimum requirements for the financial statements that trustees of domestic trusts will have to prepare starting in the 2021/22 tax year.
The new requirements apply to all trusts that have assessable income and do not fall within certain exempt categories.
The statements that the trusts will have to issue will be based on double-entry book-keeping and accruals accounting, with a reconciliation between the profit or loss (in the statement of profit and loss to taxable income) and a reconciliation of movements from opening to closing balances of all beneficiary accounts.
Exceptions will apply for small trusts if:
Trustees of domestic trusts will also be required to make disclosures in their annual returns about information on settlements and distributions.
The closing date for submissions on the proposed minimum requirements is 15 November 2021.