New Zealand law provides for no special tax consequences on the formation of trusts. Transfers to trusts are taxable or non-taxable pursuant to the same rules that apply in respect of transfers to other people or entities. However, because there is more likely to be an element of gift in...

Under the New Zealand Income Tax Act 1994, taxpayers aggregate their gross income and subtract allowable deductions and losses carried forward from earlier years. The result is taxable income. The statutory rules for the taxation of trusts are set out in subpart HH of the Act. There are four...

There are several varieties of legislative or executive action that are on occasion labelled tax simplification. The article develops an analytical framework, the purpose of which is to examine to what extent certain varieties of simplification can be expected to succeed. The analysis involves...

In the mid 1990s, New Zealand began a project to rewrite the country’s income tax legislation. The first step of the rewrite was to reorder and reenact the 1976 Income Tax Act as the Income Tax Act 1994. Although the rewrite attempted clarify and simplify the legislation to make it more...

International aspects of New Zealand’s trust regime are driven by three things. First, operating independently of the trust regime is New Zealand’s policy to tax all income that has a New Zealand source. Secondly, there is the structural factor of the trust regime that trusts themselves are...

Historically, courts have been unwilling to adopt a purposive approach to the interpretation of tax statutes. In 1996, as part of a process of rewriting the Income Tax Act 1994, Parliament inserted a number of provisions into the Act that appeared to be calculated to require the courts to...

In Farmers’ Trading Co Ltd v. Commissioner of Inland Revenue (1986) 8 NZTC 5,062 (HC), Farmers, a well known department store chain, sought to pay tax on only part of its revenue from goods sold on credit. It sought to defer recognition of the gross profit element of the sale until the money...

Section 156 of the Income Tax Act 1976 permits exporters to make certain deductions when calculating their assessable income. In order to qualify for an export incentive deduction the court in Preece v Commissioner of Inland Revenue (1981) 4 TRNZ 379 held that the applicant must be the owner of...

Trusts fit uneasily into any tax system. The beneficiary should be taxed on any trust income received; yet the trustee also receives income that is amenable to taxation. It would not be fair for the income to be taxed to both the beneficiary and the trustee, yet neither should the trustee escape...

The general charging provisions of the Income Tax Act 1976 purport to tax all assessable income. Sections 226 to 233 of the Act lay down a code for the taxation of the income of trustees and beneficiaries. Is this code an exhaustive statement of the assessability of trust income over-riding pro...