Trusts and Estates Tax
Updated for 2026 IRD rates
Overview of Trust Taxation
Trusts are a common structure for holding and managing assets in New Zealand. For tax purposes, trusts are treated as separate taxpayers with their own IRD number. The taxation of trusts depends on whether income is retained by the trust (trustee income) or distributed to beneficiaries (beneficiary income).
Trustee Income
Trustee income is income that the trust earns but does not distribute to beneficiaries in that income year. It is taxed to the trustee at the following rates for the 2026 tax year:
| Income Type | Tax Rate |
|---|---|
| Trustee income (standard) | 33% |
| Trustee income (no beneficiary currently entitled) | 33% |
| Foreign sourced trustee income (certain situations) | 28% |
Note: If the trust is a complying trust with a corporate trustee or certain other characteristics, different rates may apply. Always check with a tax professional.
Beneficiary Income
When a trust distributes income to a beneficiary, that income is taxed at the beneficiary's marginal tax rate, not the trust rate. The beneficiary includes the distributions in their personal tax return and pays tax at their own rate. If the trust has already paid tax on the income, the beneficiary receives a tax credit (through a beneficiary allocation or memorandum account).
Key points about beneficiary income:
- Income distributed to beneficiaries is included in the beneficiary's taxable income
- The trust can claim a deduction for the amount distributed
- Beneficiaries who are minors (under 16) may be subject to different rules — income up to $1,000 is tax-free, and anything above is taxed at 33%
- Trust distributions to Māori authorities may be subject to different rates
Trust Tax Returns
Trusts must file an annual tax return (IR6) with IRD. The return includes:
- Trustee income and expenses
- Beneficiary income allocations
- Distributions to beneficiaries
- Tax credits, including RWT and foreign tax credits
The trust tax return is due by 7 July following the end of the tax year (or 31 March if using a tax agent).
Estate Taxation
When a person dies, their estate becomes a separate taxpayer for the period of administration. For the first 3 years, estate income is taxed at the beneficiary's marginal rate (subject to certain conditions). After 3 years, or if the income is accumulated, it is taxed at the trustee rate of 33%.
Key considerations for estates:
- Income earned during the administration period is taxable
- Expenses of administration (legal fees, executor's fees) are generally deductible
- Distributions to beneficiaries are treated as beneficiary income
- New Zealand does not have an inheritance or estate tax
Trust Disclosure Rules
New Zealand has introduced new trust disclosure requirements. Trustees must provide detailed information about the trust's structure, settlers, beneficiaries, and other parties. This information is submitted with the trust's annual tax return. The rules apply to all trusts, including foreign trusts (with some modifications).