Foreign Trusts: Not All That Exotic or Complex–Respondent Geoffrey Cone

A non-domestic trust is not as lavish as some persons envision. The media, inside of New Zealand, many times, depicts the Foreign Trust as quite exotic, in order to appeal to the viewing and listening audiences. Reality check: The Foreign Trust is very basic.

 

New Zealand is not a tax haven. This is to say, that New Zealand has never been put on the list of tax havens provided by the OECD. It is probably not at all likely that New Zealand will ever make the list. The primary characteristics of a tax haven is that it imposes no taxes, or very limited taxation, there is no true transparency offered, and there is non-disclosure, relative to exchanges with other national governments. New Zealand, it is correct to state, does not fit the profile of a tax haven. New Zealand does not have a private banking industry—either.

 

The 2002 OECD Agreement is the model with regard to exchange of information. The exchange of information, conducted on an international basis, makes it possible for officials to enforce and carry out the tax law. New Zealand was one of the first nations placed on the White List of the OECD. New Zealand has sufficiently initiated the agreed-upon standard, on an international level. New Zealand, additionally, has shown its leadership, in way of tax transparency, by the way it handles foreign trusts. Countries, requiring tax information are provided with non-complex details.

 

Back in 2006, Michael Cullen implemented new laws with regard to taxes. The regulations did not come without complication. He worked diligently at it—and provided the regulations after a great deal of review. The citizen of New Zealand, acting as a trustee of a foreign trust is required, by IRD, to provide an IR607. The IR607 is also known as a Foreign Trust Disclosure. The IR607 is necessary in order that the person responsible for the trust may maintain associative financial records, necessary for purposes of tax, within New Zealand. The essential records include: Details of the Settlement and Distribution of the Trust—including the recipient’s name and his or her address; The Deed of Trust, details relative to Assets and Liabilities of the Trust; funds received by the Trustee and Expenditures. When the trust is made part of a business arrangement, the individual responsible for it must maintain information relative to the accounting system, and the chart of accounts.

 

The records are kept inside of New Zealand. Any individual failing to maintain records and follow the laws will be penalized, accordingly. The measures of enforcement became more significant upon the enactment of the World Standard Money-Laundering Legislation, which occurred in 2011.

 

Notes Regarding Geoffrey Cone:

 

Geoffrey Cone graduated from the University of Otago in New Zealand. He holds a post-graduate diploma in Tax and Trust Law. He began his practise of the law in the 80s inside of Auckland. He moved to Christchurch and held the position of Partner and the Chairman of Partners.

 

When he returned to Aukland in the 90s he eventually set up his own firm. The name of his firm is Cone Marshall Limited. It is the only legal establishment, in New Zealand that specialises in international trust and tax planning services.