‍

Both trusts and estates are taxed on the income they generate, the amount of tax depending on the individual circumstances.

Trusts – 33% or 39%

Trustees of a trust hold money or property for the benefit of its beneficiaries. From 1 April 2024, trusts will pay tax at a 39% tax rate on any income that is not distributed to beneficiaries, if trustee net income exceeds $10,000. For earlier years, trusts and estates were taxed at a flat 33% rate.

‍

Note that the tax rate for trustee net income that exceeds $10,000, the total income is taxed at 39% (not just the income over and above $10,000). Also, any settlement on a trust does not count as income for tax purposes.

Deceased Estates – 33%

Estates are a person’s assets after they have died. If an estate continues to earn income while it’s being wound up, that income will be taxed at the lower rate of 33%. This will apply for all the estate’s income during the tax year the person dies, and for the next 3 years. After this period, any income will be taxed as though the estate were a trust.

Disabled beneficiary trusts – 33%

A trust set up to care for disabled beneficiaries will continue to pay tax at the 33% rate, no matter how much income it earns.

A ‘Disabled beneficiary’ means a beneficiary of the trust who receives 1 or more of the following support payments in a tax year:

• the disability allowance
• the child disability allowance
• the supported living payment (because of restricted work capacity), or
• the JobSeeker Support Health and Disability (if this has been paid for at least 6 months).

This also includes anybody over the age of 65 who would have met the ‘disabled beneficiary’ definition in the year they turned 65, or the tax year before that year.

If you have any questions about the trust tax rate increase and how it may affect you, please contact your CT advisor.

Phone: 09 238 9219 | Email: team@ct.co.nz | Helpdesk: 0800 883 718

_

This video contains general information only. You should obtain advice for your personal circumstances.