Geoffrey Cone’s Two Cents on New Zealand’s Foreign Trusts

New Zealand’s foreign trusts may not be what it appears to be from the media coverage. Following what is shown in the media, one might suggest that New Zealand is a tax haven but this is far from the truth. The Organization for Economic Co-operation and Development (OECD) maintains a list of tax havens and New Zealand unfortunately does not feature in it. Usually, there are criteria which are set for a country to be labeled a tax haven. For a nation to be named a tax haven, usually this suggests that it should impose minimal or no tax, lack transparency, and have laws or procedures that inhibit the exchange of information with other governments. With this in mind, New Zealand does qualify to be on this list.

 

Nonetheless, it is crucial to note that New Zealand was the first country to be whitelisted by the OECD for having substantially implemented the internationally agreed standard of transparency set in 2002. This Model Agreement which was set by the OECD officially supports the international exchange of information as a means of enforcing domestic tax laws. In so doing, New Zealand demonstrates true leadership in tax transparency. More so, in how it handles trusts and the requirements placed on the trustees.

 

New Zealand was introduced to new rules that were set by Michael Cullen in 2006. This was done, of course, after in-depth consultation. Following this regime, a New Zealand resident trustee of a foreign trust has to issue a Foreign Trust Disclosure Form and keep financial and other records for New Zealand tax purposes. Other records in this case include; details of settlement and distribution, trust deed, details of the trust’s assets and liabilities and money that the trustee receives and spends. In cases where a business is included within the trust, the trustee has to also keep information on the accounting system and charts and codes of account. Under the new regulations set, all records are required to be kept in New Zealand and must be recorded in English, failure to which a trustee will suffer heavy penalties.

 

Most countries require that for an individual settling a trust, he/she must report the settlement to their own revenue authorities and central banks. In doing so, revenue authorities will have the relevant information and details of a particular trust or transaction.

 

About Geoffrey Cone

Born and raised in New Zealand, Geoffrey Cone attained an LLB honors and post graduate diploma in tax and trust laws from the University of Otago in New Zealand.

Mr. Cone established his own practice in 1999 which he called Cone Marshall Limited. His law firm is the only one in New Zealand that specializes exclusively in international trust and tax planning. The firm also issues trustee and trust management services through its affiliate companies.

 

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1 Comment

  1. Quelch Kingston

    Mr. Cone began practice in 1980 in Auckland, New Zealand then later on he moved to Christchurch whereby he became partner and chairman of partners in a major law firm. It is absolutely what superiorpapers review would have written off in the first instance.

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