Finance Minister Grant Robertson delivered his sixth budget on 18 May which included the announcement that the trustee tax rate will increase from 33% to 39% effective from April 2024. While the change was a surprising addition, it had been recommended by Inland Revenue and Treasury back in 2021 when the top personal income tax rate was raised to 39%.

The decision to increase the trust tax rate is a response to the Inland Revenue's research aimed at enhancing the fairness of the country's tax system and is comparable to the tax regimes and trust laws in other countries such as Australia, Canada and the UK where trustee tax rates all align with top personal tax rates.

Of note is the exemption of deceased estates and trusts for disabled people where the income of the eligible trust will be taxed as income of the deceased or the disabled beneficiary. Additionally, it is also anticipated that trusts with lower tax-rate beneficiaries can continue to distribute trustee income to utilise beneficiaries’ lower marginal tax rates.

Despite this upcoming change there are still many reasons why a trust continues to be a useful tool for estate and asset planning strategies, reducing exposure to risk and protecting assets for future generations. If you want to know more about why a trust can continue to be a relevant structure for wealth preservation you can read our article, Trusts for Modern Families. 

We’re here to help

With changes expected to come in from April 2024 we are currently working through what these changes mean for our clients. In the meantime, if you have any questions about your Trust or the trustee tax rate changes please don’t hesitate to contact your Trust Manager or call and email us on 0800 878 783, [email protected].