Foreign Trusts: A Legal Way to Pay Zero Tax

Monday 8 April 2013, 1:31PM

By Andersen Accountants Limited


Having a New Zealand foreign trust can lead to huge tax savings and wealth generation.

A foreign trust must have a non New Zealand resident settlor (the person who sets the trust up and transfers property into the trust). It can have either New Zealand or overseas resident trustees. As long as the settlor is a non New Zealand tax resident all foreign income of the trust is exempt from all income tax in New Zealand.

New Zealand law considers the residency of the settlor to be crucial in determining the tax position of the foreign trust. Because the trustees are the legal owners of the trust property (which they hold on behalf of the beneficiaries – who may be secret and undisclosed) to overseas tax authorities these will usually be the relevant people to consider in determining if any overseas tax is payable. If those trustees are resident in New Zealand this is likely to mean that no overseas tax is payable. The end result is that a New Zealand foreign trust can lead to no tax being paid anywhere in the world.

The trust is able to carry on business or hold assets producing capital gains or passive income streams. The assets owned by the foreign trust can he held in a tax haven or elsewhere. A New Zealand foreign trust provides a high degree of privacy and secrecy.

A New Zealand foreign trust is a useful tool that can benefit many people including New Zealanders living overseas, people considering migrating to New Zealand in the future, people resident in countries with an unstable political or economic environment, and anyone who will save tax by transferring assets and income streams out of their current country into a New Zealand foreign trust structure.

Andersen Accountants Limited is able to advise and assist with all aspects relating to the creation and ongoing management of New Zealand foreign trusts. We also provide a trustee service. To discuss your situation please contact us in confidence.

Kristina Andersen
Andersen Accountants Limited
Telephone: 09 3695198