Income tax – Whether money or property received by New Zealand tax residents from overseas is income from a foreign trust

Closes 18 Jun 2026

Opened 1 Jun 2025

Results expected 28 Jun 2026

Feedback expected 1 Jul 2026

Contact

public.consultation@ird.govt.nz

Overview

This draft interpretation statement updates and will replace IS 19/04 Distributions from foreign trusts. Please refer to the reading guide in the shaded box before the contents for a description of changes.

This interpretation statement considers the income tax treatment of amounts of money or property that New Zealand tax residents receive from a person overseas, including through inheritance. It addresses how to determine whether the person who transfers the money or property is a trustee of a trust and when the resident taxpayer has derived beneficiary income or a taxable distribution from a foreign trust. All legislative references are to the Income Tax Act 2007 unless otherwise stated.

Reading guide

  1. The accompanying draft interpretation statement is an update of IS 19/04 Distributions from foreign trusts.
  2. There is no material change to the Commissioner’s interpretation. However, we considered it was appropriate to refresh the statement for several reasons.
  3. Most notably, in 2024 IS 24/01 Taxation of trusts was published. This updated IS 18/01 for numerous changes in the trust rules over the preceding 6 years. IS 19/04 frequently referred to IS 18/01. These references are outdated and could cause confusion.
  4. Several other references in IS 19/04, legislative and otherwise, were also found to be outdated and have been refreshed.
  5. In response to queries, we have clarified that taxable distributions must be calculated according to New Zealand law when the ordering rules apply.
  6. We have also emphasised that if an amount received is not a distribution from a foreign trust, a person still needs to turn their mind to whether they have income from foreign sources bearing in mind that New Zealand tax residents are taxable on worldwide income.
  7. IS 19/04 preceded the use of fact sheets. To make the item more accessible, we have extracted the section labelled Introduction from IS 19/04 and turned it into a fact sheet. This will allow people to assess whether they may need to read the technical discussion in the interpretation statement or consult a professional advisor. References have been added of other publications issued by Inland Revenue on topics which provide additional assistance.
  8. The name of the interpretation statement has been changed so the topic is clearer and does not require any technical understanding of what a foreign trust is.
  9. The examples have been reformatted, so they are easier to read. Some facts have been updated due to the passage of time or the lack of relevance. For example, the reference to the doctrine of relation back in Example 4 has been deleted as it is not relevant to the main point that the ordering rules do not apply to testamentary trusts.
  10. The new format of interpretation statements has been adopted to make it easier to read. The legislation in the appendix has been deleted as it is available at legislation.govt.nz.

 

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