HWI Chartered Accountants Auckland

You would all have seen the booths in malls and the advertisements on television for companies such as NZ Tax Refunds and My Tax Refund where they offer a ‘risk free no refund - no charge’ service for filing tax returns for PAYE earners. We have noticed a growing number of instances where children who are beneficiaries of trusts have visited these agencies before we have completed the trusts’ financial statements. This makes it more difficult to allocate income to beneficiaries without incurring additional costs in relation to requesting re-assessments for the beneficiaries. Not allocating income to beneficiaries results in the trust facing a larger than necessary tax cost.

As well as the additional administration issues created and cost involved (when NZ Tax Refunds prepare their tax returns, HWI are delinked as tax agents for the individual) distributing income to beneficiaries can save the trust significant amounts of tax due to much lower personal tax rates (trusts still pay a flat rate of 33% whereas individuals pay a maximum of 21% for income up to $48,000). Please make your children and any other beneficiaries of your trusts aware of the consequences of visiting these agencies.

By HWI preparing and filing the beneficiaries Personal Income Tax returns they will more than likely get a larger refund than if they had gone through an alternative agency and your trust will benefit from a lower tax cost.

If you have any queries please contact your HWI accountant on (09) 307 8500.