IRD Reporting for Trusts: What You Really Need to Know
From the 2021–22 income year, Inland Revenue has required more detail from Trusts with over $200 of income. That sounds daunting—but in practice, it’s simpler than many people think.
What IRD Wants
Trusts now need to provide:
- Details of settlors (those who have put money or assets into the Trust)
- Distributions made to beneficiaries
- Basic financial information
For most family Trusts, this is information you already hold.
The First Year Is the Hardest
- **Year One:** You provide full details when you file.
- **Every year after:** Filing is simpler. You can even do it online with **myIR**.
Once the template is set up, the reporting becomes routine.
When No Return Is Needed
Not every Trust has to file a return:
- **Mum-and-Dad Trusts** that own only the family home can be made **non-active** with IRD by completing a non-active Trust declaration. No return is then required.
- **Trusts with small investments** can restructure. Sell the investments to yourself, and then we prepare a **Deed of Loan** that records the loan from the Trust to you. That way, the Trust holds no income-producing assets—and has no tax return to file.
Why Winding Up Isn’t the Answer
Some clients are told: “The reporting is too hard—close the Trust.” But in reality:
- Filing is simpler after the first year. You can even do it online with myIR.
- Many Trusts can avoid returns entirely with common-sense structuring.
- The protection a Trust provides often far outweighs a few minutes of admin.
Real-Life Stories
**✅ Success – Peter & Ana**
Peter and Ana had a small Trust investment portfolio. They took our advice and restructured by the Trust selling the assets to them, with a Deed of Loan from the Trust to them, so the Trust had no taxable income. Their Trust tax returns vanished, and their protection stayed.
**⚠️ Failure – Joan**
Joan wound up her Trust because her accountant said IRD reporting was “too complicated.” Two years later, she was bankrupted after guaranteeing her son’s loan, and her home—no longer in the Trust—was sold to meet debts.
The Bottom Line
IRD reporting is not a reason to give up your Trust. With the right set-up, your compliance can be minimal, while your protection stays strong.
📖 **Next step:** Contact us to book a **Trust Check**at our offices or via Zoom with Kirsty Hourigan +64 9 4155704. We’ll show you exactly how to simplify your Trust and keep it compliant.
Disclaimer: This blog is general information only, not legal advice. The decision to wind up a trust has serious implications, including potential loss of asset protection and tax consequences. Please seek professional advice for your situation before taking any action.
