LIVESTREAM – Everything you need to know about the New Zealand Trust – 9th March 2022

VOICEOVER:

This podcast channel is about you - successful international entrepreneurs- successful expats - successful investor, sponsored by HTJ.tax.

DERREN JOSEPH:

All right. So for everyone, anyone and everyone joining us, good morning, good day, good evening. Wherever you are, welcome to another live stream from HTJ.tax. We do this every week, have a look at our website HTJ.tax to see what's coming up and it's all free. You feel free to jump on and jump off as you like. So we always have a little disclaimer at the beginning. What we talk about here today is not advice. If you're looking for advice, you need to engage a professional who will know your situation and said, I would just have a general conversation about general tax principles, and you can consider it entertainment so you can consider it educational, but it is not meant to be all right. So, without further ado, we'll welcome Arran Boote, who is joining us all the way down from Auckland in New Zealand. Arran, would you like to introduce yourself please?

ARRAN BOOTE:

Cool. Thanks Derren. So, I'm the deputy managing director of William Buck in New Zealand, I've been a chartered accountant for 30 years. Have worked and lived in Hong-Kong, China, USA, Thailand, the Philippines, and New Zealand. So, good around the world. I was the regional chair for preps city for 11 years. And I've been the New Zealand advisor on trust since I was working at the lids in 1992. So it's been a long time. So that's a very broad background of where I've been and what I've done.

DERREN JOSEPH:

Fantastic. Thanks. And it's rare that we get someone with your pedigree and your experience. So we're looking to extract as much as possible for you today. So today we're going to talk about New Zealand trust. So I thought I'd start with a pretty basic question, especially since, you know, the media creates all this mystique and a bit of hysteria about trust. So what exactly is trust?

ARRAN BOOTE:

Yeah, I think there's no need for the mistake though. I mean, I trusted somebody in an arrangement between three parties here. The people that want to establish the, you have the people put in charge of operating, running, and governing the trust. And you have the beneficiaries are the people that are entitled to receive something from the trust. The origin of trust goes back. Many, many centuries. It's an English tradition. And if you go back many centuries, all the landed Gentry were in scripted into the King's armies and asked to go and start foreign wars, whether it be a wine from their land and their wives and their family and their peasants and the operation or their farms for many, many years.

And often some of them didn't come back. I mean, the English were at war with the French or Spanish, almost incessantly from 1,203 to 1800. So that's where the concept of trust arises and the mandate chain tree lists the country to go and follow the rules. They put someone in charge of operating and looking after their assets and their family. And they had peasants in the land while there are wine equally and trusting those people to look after those assets when they were unable to do so themselves. So that's the concept of a trust and the same concept still applies today. It's just that we don't have the landed Gentry conscription and to Kings armies of but the concept still applies today in terms of people that want to establish a trust, maybe for their families, maybe for a charity or for many other different patients.

And I want to put someone in charge of operating those as looking after those assets, governing those assets on behalf of the people. Now, then stakeholder can be a trustee and a beneficiary, but that's what called a may trust. That's where that trust is almost always state of summer, but the state goal will considered to be a trustee with others. And the beneficiaries are normally what's called discretionary beneficiaries. So you get back like a description of the class of beneficiaries. So it might be the children out as one-on-one, or it might be their grandchildren that might be a charity and might be a whole list of people that have the right to benefit, but don't have a fixed interest in the assets.

So normally what happens almost in every trust in the world is that the trustee is given quite rude pals about the operation of the trust and who they can be in a fit and who they can not benefit. It's at their discretion as trustee to make that decision. This is why that means that the state board can help influence them. We'll come onto that either wrong, but the trustees are given the entire authority and responsibility of owning those assets because the assets are registered in the S in the name of the, and they have to operate and manage that press. And then the beneficiaries would ultimately receive the benefit of those assets when other income strains or by divestment of the asset, to the beneficiaries, whenever they would talk to now trust, they use for many, many reasons.

There's a lot of charitable trusts around in the world for tax exemptions, but trusted generally used as a method of estate planning, give QT planning and protection of assets from other risks to almost like insurance. The simple operation of a trust do Zeeland has far too many trusts. In my opinion, we have more than a million reportedly, more than 1 million domestic pressings for a population of 5.5 million people. Now, I think that numbers , but even if you stayed with overstated by 20%, it means that there was one New Zealand transfer.

Every seven people in New Zealand. I don't believe we need quite that many trusts or worry about I have three I one for my business. I won for my family hiring this one. Now I have one for my personal and basements. So I'll use the the trust raking works very well in New Zealand and I use it to its full.

DERREN JOSEPH:

Okay. So, so that's great. That's a great introduction. Thanks for that was pretty comprehensive and as well, as well as a great segue into New Zealand. So that is quite a high number of trust. So I've two questions kind of coming out from that. So first of all, all of those domestic trust, or are you adding up domestic plus the foreign trust. And then secondly, tied into that. What makes the New Zealand trust unique from other jurisdictions, if at all?

ARRAN BOOTE:

So the 800,000-word press it all into our old domestic press is another hundred and 50,000 foreign trusts on the New Zealand register. Why I trust that popular here? Look, we were an English. We are still a member of the Commonwealth. So until recently, the highest court in New Zealand was the privy council in London. So all the laws that you would expect to apply all the rules and traditions around trust or the old industry, addition to anything you expect to apply in England applies in New Zealand.

We had a lot of farming sites in New Zealand. So that was where the trust really got guiding between how you pass lane from generation to generation in the ag family doctor was the start of the press back at the end of the 18 hundreds. When land was after the Mary Walls then was passed off to the English, the standards that arrived in New Zealand and how you pass that down from generation to generation, it was really the start of the press. You know, the 18 hundreds trust us became a common mechanism in New Zealand. Over the years, there are relatively cheap to put in place costing three or three and a half thousand dollars on average for a good, decent trust state.

And given that, you know, if it's used as like an insurance policy to, to keep risk and buckets, it's no different to paying an insurance policy, but this has other benefits in terms of estate planning and give to them. Now, frost became very popular in the 1970s, the 1980s, because we had quite high levels of estate duty and gifts. Beauty. We have that in the 1990s, and I don't think we'll ever see estate video give 50 back on the New Zealand plate. In fact, we don't even have a capital gains tax in New Zealand, sorry, out of Texas is very efficient.

We just have income tax and GST, which is why I do international texts because there's not much you can do. What does income tax and teams pay because it's not, does that mean, but the trust me were very, very popular as a consequence of the estate duty and give to the books. And then since then people just keep them guy. One thing I said to him, trust you can pass that through generation to generation. The new law is no 80 year period. So you can have them for as long as you want. You can roll them over. You can name them. You can change the jurisdiction. They're extremely flexible, particularly in New Zealand, as a drafted, in order to be extremely flexible, changes, circumstances, Sydney, I've got, sorry.

I'll use them to keep the risk of age operations, separate to the other. And if something goes wrong and one of the trusts, they're not that they put it versus the assets that are held by the other entities from the administration and governance has done for victim. Now, nothing has either gone wrong, but you don't know what might happen in a changing circumstances. And even if you've done prudent business, no, some, sometimes things just go wrong and you don't want to be putting your family home at risk. For example, if something in your business tends to customer. So now why is that foreign trust?

Talk about foreign stocks because those are extremely popular in New Zealand. One of the reasons using on the side popular is not tainted with the tax Haven, qualified tax havens becoming extremely difficult to work with new restrictions terms of which countries will accept money transfers in and out of those tax items with sustainable business operation tastes that to start out of man, that I'm telling you Caymans, even the Panama free zone is now putting in place, substantial business case in order to access the zero tax rate, then use it on texts.

Across system is entirely different in that donkey, who is the premise of a museum for a long period of time. It was ex-chair of the things you kept with fans in New York, knew some people to talk to at the OECD. Any OECD, what would it take for us to have a foreign trust regime in New Zealand? It has zero texts, right? That you would approve. So they infect the LEC. The official was came down to New Zealand and advise the New Zealand government of what had to be in the legislation to have the RECD tick of approval for our zero texts, right, for and trusts.

And it was all about disclosure. So underlying beneficial ownership effectively, and we passed the rule in accordance with the RECD requirements can use Zealanders. Now, the only, the single only LBCT approved from trust regime that has a zero tax rate is nowhere else in the world. You can have that tick of approval. He's in an, is also a modern stable democracy. Nothing's happened here, just the political upheavals. Since we had the vote, the 1,996, we have a very modern banking system. And because we have so many domestic press, everyone is used to the operation of a truck.

Everyone knows you have the trustworthy, the banks that have a trust with banks. Our failure with foreign trusts. So in New Zealand is very popular because it's always good to get pro and bottom democracy, stable banking system worked for you officially, and it's a zero tax rate on foreign income of a New Zealand. Foreign trust is zero. So that's really what foreign trusts I think have become so popular here in terms of, you know, and the, and the rate of growth even town, we would do a couple of weeks.

DERREN JOSEPH:

Oh, that is, that is pretty aggressive growth. And especially when, as you mentioned, certain other offshore jurisdictions have been hit reputationally by certain leaks and whatever, I can see that New Zealand is a lot more attractive in terms of a jurisdiction. Now, you mentioned the UBO ultimate beneficial owner. I know in some of the there's talk or there's progress to what some sort of registered trial register a public register. Is there an equivalent in New Zealand? Is there public register of UBS?

ARRAN BOOTE:

Nope, not a part of it, but, but when you complete and register the foreign trust with the New Zealand inland revenue department, you have to include the name of the SIBO and the name of any beneficiary, but only if they're received an entitlement from the trust. So until I've actually received something, then I was not even disclosed, but the Safeco is disclosed at the beginning and the accountant or lawyer is establishing. The trust has to do anti-money laundering and counter financing of terrorism checks.

So I think we had to do a KYC to confirm the client is who they say they are. And the funds are not from bribes drugs with people's wander. Often we get referred clients from other Chad's accountants, who they will films and that then they take, or very obviously before they took them on as clients. So we can rely on, they check if there are 20 or, or chartered accountants in a foreign for a man. But if they come to us directly, we will, we will do the normal KYC, how your client checks and just confirm the source of the accounts.

We also don't want to be as a firm connected reputationally, where they put the trust had been used for drugs, ambulance people, smart, doing old products. It's just not a good business site to, to do that, but we've never had any problems and continue to operate a very large number of them.

DERREN JOSEPH:

Okay. And in the offshore world, in general, there's been a lot of discussion around economic substance as does that play a role in, in trust structures as well, or just comparing?

ARRAN BOOTE:

The New Zealand I'm aware of the substantial business case. I've had clients who've moved from Cyprus to New Zealand as a consequence of this substantial business case where they simply can't get the registration to Xero tax friends anymore. Zealand does not have a substantial business case in respect of press. So, so often the trustee will provide for an initial settlement of $10 or a hundred dollars. And if you want, that can be the exchange or the, of New Zealand assets and the traps. We don't have to have anything more than an initial settlement. And often that's not tied up and told the business give down the way. So there's no substantial business case you can have as little or as much as you want them to the trust as far.

DERREN JOSEPH:

Hmm. Okay. That's, that's obviously quite attractive. Now. I understand just from doing some reading.

ARRAN BOOTE:

He's on his channel often, you didn't even hear the richest to the base. You don't have to have anything. You can just have the cost data itself. It's not a substantial business operations requirements was away, but let's be clear about that.

DERREN JOSEPH:

Okay. Understood. Thanks for clarifying that. Now in doing research for this conversation, I saw that there's been some legislative changes. Recently, New Zealand is a, some sort of new trustee act. Can you talk a bit about that? How has that changed things in, in, in any way, you know, has it, how has it meaningfully impacted, especially the international trust-based as opposed to domestic trust space?

ARRAN BOOTE:

Okay. So, so the trust act 2019 is the fifth piece of legislation in 60 years. So they all trust their decision with a, a . So the impact of the 2,900 discussions was to change some of the rules and some of the governance and some of the operations. So the new act requires for the first big advantage under the old act, you had to have a trust that could only last ideas that's called. You can have a trust now for as long as you like, there's no limit on the number of years. You can have a trust impact that has the name, and that's quite helpful. There are a number of family trusts.

They're up to their third generation in service of science. Should I have to get rid of the stress? Do I have to go based on the assets because my term was up, that's gone. So that's all, that's quite helpful. There are new rules in terms of governance. So the, and I think this is a good thing because trusts are only as good as the vehicle keeping that, that it could is. And the governance that is recorded and the trustee trust had been set aside with somebody, nothing happened, the trustees didn't meet, but didn't discuss anything. It didn't do many things. It just operated as if it was them who set up the trust without any actual vehicle, keeping governance and maintenance that's been being enforced.

And the legislation you need to have good, very good vehicle. Keeping trustees need to meet at least twice a year, rather than never. And they have to maintain good financial records, nothing wrong with that. That, that that's actually helpful because past need to have those things in India, there are disclosure requirements and the disclosure requirements require you to provide the financial balance sheet of the trust, to the fisheries that has caused some concern. Of course, now you can obtain a waiver of that from the beneficiary. So the beneficiaries and Kinnari families had obtained waivers from the children because they often don't want to start that.

They told them that there's all this money sitting in this trust that there are beneficiaries and they might not decide they would, because I know that they're going to have to save millions of dollars on the death of their mother or their father. So you don't, you do have to disclose if you don't want a, if you don't get a waiver from the beneficiaries, you know, a number of freestyle want to do that, maybe they don't want to share the charity Watson on the trust because they're going to get all these requests and bits and pieces until the ability to actually make those sorts of decisions. You can think of the contract for foreign trusts. You can contract out of that traffic. You can do that by simply changing the jurisdiction in the trustee that applies to that trust to it, a number of the number, but one, three or four weeks ago.

So Singapore is one, Africa is the jurisdiction that applied to the New Zealand. A foreign trust is still in New Zealand for trust is still registered here as a New Zealand foreign trust. But the jurisdiction that applied to the operation of the law that trust is all the Singapore will South Africa. Therefore the trust set of New Zealand does not apply at all to that foreign trust. Now, I think there's what you're going to see. More and more people are going to be signing. Don't really want to have to disclose the beneficiaries or the funds that are sitting in this trust every year. I don't really want the hassle of explaining why I need a waiver from that or this Chinese introspection, the trust date for the New Zealand foreign trust.

If you got a New Zealand domestic trust, they just start with an easy trust jurisdiction out for domestic trust. That way you've got to easy on wisdom rule, but their means and ways of getting around there taught the gambit of this discussion. If you really want to get into this with data on terms of how you might be able to achieve that, we get domestic trust is paid to get in contact with me directly. And I'll type these realize steps. It's a bit of work to get there, but if you really want to not have the beneficiaries entitled to that disclosure, and you don't want to go and get white lists because they, you might be getting that question, like, why do I have to sign your waiver? And what's on the trustee, then come see me or talk to me and I'll take you through how we mark and achieve that for you. But I don't think that's really a subject for discussion here.

DERREN JOSEPH:

Okay. That is quite interesting. The idea that the New Zealand trust could be governed by the trust trust legislation in another jurisdiction, aside from the mandatory disclosure rules, is there any other scenario in the ordinary course of business that you, that you've seen people, are you exercising that option of using another laws? What, what other nationality?

ARRAN BOOTE:

Cool. I've got a couple of Portuguese accessible. Those are typically with south African staples. The other issue with the Northern trust state is the requirement for the trust agent. We have an investment plan and the, this mint of assets amongst different asset classes, as you would do with a prudent investment plan. Obviously that's not what the foreign trust often wants to do. Often an easier on foreign trust to use dry and cheese and foreign company to come in to make the profit that evidence come and to use it on farm trust. And that is obviously tax-free on the state and the trust here, there's a capital distribution and the following year back to them, and it's not taxable in their country on a capital distribution.

And it wasn't taxable in New Zealand. So in fact that whole dividend flow is retarded tax free, and that's entirely legitimate. There's no quiz of tax planning. That's just standard normal tax planning, but the debasement of assets in the, in the process you can put in place like clothes and your trustee to prevent them from a Carroll. Now I was thinking, one of my press are in the family hub. Clearly there's not a divestment of assets amongst periods as a concept that is a single asset trust. So I simply put in place, I closed that allowed for that to occur.

So if you've got a New Zealand domestic press and you're in New Zealand and you haven't get down there, it is imperative that you go down to your press lawyer and get that change. Otherwise, the ID conceived that trust aside because it does not comply. And noncompliant trust is texted 45%. You don't want that. It's deliberately there as a punitive measure. So just go and get the clothes and Susan, the trust act two, the other 19 only came into effect in March, 2020 righty, just into the new rules about how it actually works in practice to the number of press that haven't yet been updated. Go down to your first lawyer. Doesn't cost very much. Get the calls on CD in your phone. Doesn't apply to the foreign festival, which is simply going to change the drug structure.

DERREN JOSEPH:

Okay. Understood. Now, you know, what'd you just said somehow triggered in my mind thoughts about information exchange, because you mentioned Portugal had mentioned South Africa, how does it Zeeland trust work with regards to like CRS the common reporting standard and factor the financial account tax compliance act.

ARRAN BOOTE:

Obviously attacker applies to New Zealand strategy everywhere in the world. So you've got us say bowls or us beneficiaries. The fed cattle would apply banks. Don't like it when here, because banks have to do a whole lot more compliance. Luckily I have a reasonable relationship with the largest bank in New Zealand. So I started, I've got and other trust, neither bank account. This one, that's a FATCA, here's the forms. And, and that will generally do it like it, that they will do it. They won't do it. If you can't do one transaction a year, they'll do it. If you can't do a few transactions, see some prices for in the account, but to a factor applies.

Even the tech side and snap have tax, information, sharing agreements, timeless has it. Panama just has had a automatic alter or have information sharing agreements. So there's no place in the world. Now you can have a trust or an operation. It is not subject to the international text information sharing agreements that I will want. I think there's a couple of countries in Africa, which does it comply North Korea, which you wouldn't want to set up a business and it doesn't comply. So, yeah, we also get to information sharing agreements, but this be clear about those.

The only information the ID has at the beginning is the name of the sizzle and the residents of the schedule until a beneficiary, as a safety, but they don't even get on the register. There's nothing to share, but there's nothing there to share with. And it's not, you don't have to have, the CFO can be anyone. It doesn't have to be the person that will be the beneficiary. So people are often using parents or sisters or friends as the sale. And I might be the beneficiary, but that doesn't show up anywhere until they receive something out of the trust. So there's nothing to share. That's just the name of the frame. And then the New Zealand government will comply with requests that they want, but there's not no registered to share fact there's no public.

So if a government sends a request to say, we believe AIX has received their beneficial receipt from XYZ trust in the ID, we'll share that information at that point in time. But until they receive that until they get a request that won't occur in the last 50 years, I've seen a request to one from South Korea and we compliant as we're required to do, but we act for a good number of processes. And 100 years, I don't think the rules are there to catch the people that are deliberately during the wrong, if you comply. And because New Zealand got the OACD took over approval, I don't think you can see much issued out of the information sharing agreements and the common reporting standards requirements

DERREN JOSEPH:

Understood. Understood. Now you mentioned sensitive jurisdiction. So for those who are watching this opt has been recorded. So this has been recorded on March the 10th. So right now there is some discussion around people who let's say maybe exposed to Russia, like Russian passport holders, certain restaurant nationals, are there certain jurisdictions that are not encouraged or perhaps not able to access a New Zealand trust structure?

ARRAN BOOTE:

No, this says, no, there's no prohibition list. If you are registered all a gag or Russia. So if you and we have a couple of those, then basically basements the New Zealand, the New Zealand parliament passed last night, 108 and see the ability to see sea acid. But only of all, the gods is a list of all the docs. So if you are sitting on $6 billion of Russian assets, you might well be considered to be an oligarchy is a person in New Zealand that has very lad estate for it's $7,000 a night commendation.

I think he's going to find that, that the state has been seized the consequences of the government board last night, but we have a number of Russian individuals who are not all the guards who are the step is far on. Trust them don't have any problems with this. I haven't had a request yet on those Korea. I'm not expecting one, but taking it, but there's nothing stopping us as long as we can prove the source of the funds and who they are. And there's some be a certified passport and proof of address. It comes from another child's. Canada has done that for us privates. I previously there's no prohibited nations.

DERREN JOSEPH:

Okay. That's that's good to know. Now what about, so I'm going back to the, the, the point about factor. So if someone is U S explosive, they are beneficiaries that are us exposed. I know from as a trustee, there are no issues, but if the structure requires a New Zealand bank account, the banks are they open to it, or are they a bit nervous about us expose?

ARRAN BOOTE:

Now the banks are open to it, but I mean, they can't prohibit acting for, we're still the largest economy in the world. So you kind of isolate yourself from bed. So the banks are familiar, but they have processes in place where you have to go through a few more hoops. When you open the bank account in New Zealand, foreign trust, doesn't have to have a bank account. It doesn't have to have a New Zealand bank account. We have a number with any accounts that are under the museum in just opening one in Portugal at the moment. And one of the reasons I'm going up to Madeira shortly is to complete their process. Cause I'm obviously the trustee with the Portuguese national, but if you want a bank account and you've got answered on the only issue for the US staples is the US grant or press regime.

And I send them to you there and for advice about that, because I know enough to be dangerous. And I use that in the gradual trust strategy and better than I do. So I was getting my thoughts up to you to get advice about the humans, gradual frustration to them getting through the years gradual transformation, the banks were open accounts under FATCA, and we'll deal with that. You just have to, you might have to pay a slightly bit of a fee on the transaction for the processing time.

DERREN JOSEPH:

Okay. That's, that's good to know, because as everyone's aware, if you are us exposed, sometimes banking can be challenging. Okay. So another another point I wanted to explore, could you talk about the letter of wishes that that can be attached to a trust

ARRAN BOOTE:

On-court Fonda days? I believe these are very helpful and very useful. So a letter of wishes, and sometimes it's called a memorandum of wishes is the same thing. It is not binding, but it's highly persuasive on the trustees is effectively a seed of wishes from the seed pools to the trustees in terms of what they intended, what they want them to have happened with respect to the assets that the trustees and our government was managing on behalf of the beneficiaries is that it's not binding, but it's highly persuasive. In fact, I've never seen a trustee not take into account the wishes of the state rule who has set out on watching.

It's quite helpful. The trustees need to know what the CFO had in mind when they establish trust to operate it. And the way that the state intended them to operate. Obviously the trustees have Ty independence on the same one. I can do almost what they want with it, but it would be highly usual for them not to take into account the desires of the staples. When they establish the trust. It might be for the education of their grandchildren I could pay for. I've got one trust that I, I'm a huge number of very ancient violence. He wants to stay with the museum. It's helpful with the trustees to know what was the purpose of the trust.

So they can actually make sure it happens in the way that they wanted it to a later wishes or memoranda of wishes can be live. You can update them regularly. You can change them if you want. The trustees are kept informed along the way. God forbid that if the state does get hit by a bus tomorrow, then the trustees are left without any point to come back and forth. Little for them to decide that this is what was in the mind or the people that set up the trust when I turn it up and I've got that instruction from them, I would take that into account when I operate the trust going forward. I think it's a very helpful thing to have.

DERREN JOSEPH:

Okay. Wonderful. As you mentioned that one of the first clients that I had with, with trust issues, from a tax perspective in Singapore, the trust was actually created for violin. So it's just that you mentioned it.

ARRAN BOOTE:

And, it's a huge collection, anything violin.

DERREN JOSEPH:

Wow. Okay. Another question. What exactly is an advisory trustee in the New Zealand context?

ARRAN BOOTE:

So advisory first angel custodian trustees, almost every trustee, but very often used to be paid. So the concept of an advisory trustee, excuse me, is where the trustees are undertaking a project normally, and they don't have the expertise amongst themselves in that specific area. They have the right to appoint an advisory trustee to advise them on that matter. And then the trustees are entitled to rely upon the advice of the advisory trustee, and they are relieved from any personal liability as a consequence.

They don't have to follow the advice of the advisory trustee, but they're entitled to rely on the advice of the advisory trustee and they're released to any liability that arises because they've relied on that advisory trustee. Now I've only seen it used twice to give you an example. We, I would, I think advise your trustee is valid. This was a trusted, a reasonable piece of land, right on the town boundary, which they wanted to have it edit into the town boundary in order to subdivide it and just visit into sections for the building of houses. So they appointed an advisory trustee that had connections and Edward for the council town planning department as an advisory council, firstly, and they also appointed a town planning firm as an advisor, but not as an advisory trustee and together, they worked in order to bring that band inside the town band, right, and got approval for visit into a subdivision.

So it's a very specific project where they didn't hear the expertise amongst themselves. Didn't want to have any driver, should something go wrong, an appointed advisor trustee. And yeah, that's the only time I was going to use them 10 years, Darren custodian and trustees are a little different custodian. Trustees often get appointed under a testamentary trust. So on the death of a person, you can appoint a custodian trustee and they are challenged with an investment of the assets of the estate on behalf of the beneficiaries and operation operational. The trust on behalf of the beneficiaries, is it say on the teeth also Sable again, not often used in New Zealand.

We, do have easier than guardian trusts, which would act for smaller states, but all the other custodian trusts require quite substantial assets to justify the costs in their phase. The buy charge being a custodian, trustee, custody and trustees are used in New Zealand. When a company goes into liquidation and the assets are placed under the custody and trustees mandate until the liquidation is complete. But then the trust concept more often than not now, the trustees are appointed from the, from the estate and they send me a point and basement themes and manage the investments on their behalf rather than appointing a custard and trusting the first states to provide for. I just don't see it very often here.

DERREN JOSEPH:

Okay. Does it have any, it sounds similar to the idea of a protector in other jurisdictions. Is it, is it similar or is it completely different?

ARRAN BOOTE:

So total, I mean, you can never predict it for New Zealand trustful and he's in the front of, it's not common, but it certainly isn't entirely outside the VOD tablet. Yeah. I don't think it protects the texts, the liability on board themselves and advisory trustee wouldn't fit type, the viability onboard themselves. So it's a little different to a predictor is not too dissimilar and that the trustees can look to a protector to assist them in the decision of same night. But as I said, it's not quite the same. I understand where you're coming from.

DERREN JOSEPH:

Okay. And what about a managing trustee? So that's regular, I've seen the term when I was doing some reading, but that's the regular trustee, right? The managing trustee.

ARRAN BOOTE:

Yeah. So talk about trustees and who they should be in New Zealand. We often use a corporate trustee, a company as the prostate is the reason for that. If individuals are the trustees, then all of the assets of the trust are registered in the names of the individuals. And if one dies or one decides they don't want to act anymore, or you don't like that person, and you want to have a pipe system, we have to go and rebates the older, the assets ownership in the name of the new trustee. So even if you kept doing it replaced one, you still have to reregister all the assets again or whatever. Again, not in this phase and costs some times with that process.

If you have a company as a trustee, then if it do the directors of that company, the, the equivalent of the trustees, they are operating and managing the trust underneath, underneath that, the company is the name, the trustee, and you can change the reg pills without changing the ownership of the assets. Corporate trustee is store the owner. It's just that the people operating that company are different. So it's very quick, easy, and cheap to change like first date for the corporate trustee for a foreign trust, you must have, what's called a contact trustee, a contact trustee. It must be a New Zealand tech visitor. It should be someone who is an expert in the operation of press.

It is not a general practitioner is not the lawyer down the street. It is not some accountant you used on the corner. It is someone who has expertise in operation or that trust. I am personally the contact trustee for all of William bags for interests. And that's who the P the ID will come in contact with. There's an issue or registration or something that needs to be compliant with. You must have a contact three. How do I do do not have a foreign trust? You haven't done compliant trust. And as I said before, you'll be texted forty-five percent on income and capital gains, not what you had intended, I think.

DERREN JOSEPH:

Okay, understood. And that contact trustee, does he, or she need to be licensed. Is there like an exam? And they get a certain sort of credential?

ARRAN BOOTE:

No, I'm not licensed, but I have not seen most people won't take it. And this by our an expertise have expertise in the area because it has some personal liability that arises on the context trusted. So you either take it on for as a freewill. You take it on because you know, you can comply with the requirements and what the requirements will be, and regularly do make those disclosures as required, but there's no registered. They used to be a rule that it had to be a chartered accountant or lawyer that will is, is being relaxed a little bit. But I haven't seen anyone pegging on there that isn't a chartered accountant or an attorney expertise in the operational front trust. And I wouldn't recommend anyone use someone that's not big. They cannot the expertise or the expertise in that area, but it ended up costing a lot more in the long run.

DERREN JOSEPH:

Okay. And the corporate trustee, are they licensed trust companies or no?

ARRAN BOOTE:

Just an ordinary company. We adopt a specific prestige constitution that goes with the coming. We don't have articles or memorandums and you don't wear constitution. So I come here to the constitution. That's the rules that govern the operation of the company. We actually put in place a specific constitution that provides for that company is acting in its capacity as I trust a and only as a trustee. So that it's clear, but you don't have to have a license. You didn't have to have it. They just did list. The seeking funds from the public was recommending investments to the public. And then you kind of have the pivot placements and go through quite a lot of regulations, January the foreign trust as a society and New Zealand. And she is, or assets are off shore and operating in New Zealand. So there's no need, and I'd seek funds from the public in New Zealand. Nothing I've ever seen in any authorities is a foreign trust concept.

DERREN JOSEPH:

Okay. Understood. And in terms of the fee structure, I know you mentioned at the beginning, it costs like a few thousand New Zealand dollars to set up. What about the annual running costs? Any additional costs that people get to get a sense for what they're looking at?

ARRAN BOOTE:

Yeah, so, so, so typically a good foreign trustee will cost you around three to three and a half thousand dollars, New Zealand dollars. That includes the setup of the corporate trustee and the appointment of the directors know that no up costs, you will be paying a contact trustee in the order of four to 7,000, depending on what's required of them to operate and govern the trust will transactions more operations going to be towards the higher end of that, a passive traps, because a few transactions a, you might be at the Larry into that branch really does the pain. There are some trustees around New Zealand that challenge, or are considered to be unreasonable things, 12 and a half to 15,000.

If you're paying that much, come and talk to us, we can probably have that. The, the ongoing costs, you're the government fee for the trust 10 each year, you have to do a set of financial statements each year that you, if you want to have got lots of transactions, we can recommend that accounting software package called zebra take it cost $50 a month. So $600 a year, you got the accounting software covered. It's going to cost you a couple of grand a year to do the financial statements, tax returns and filings. It's gonna cost you about $500 a year to do the resolutions trusting minutes that go with it. It's not as a site. It's not super expensive to operate in New Zealand. It's a lot cheaper. Maybe you got to Gainesville or somewhere out there where you're going to be paying like 20 or 30,000 a year for the site of,

DERREN JOSEPH:

Yeah. It's actually cheaper than Singapore as well. Now, how would someone reach you? What's the best way to reach you and your team?

ARRAN BOOTE:

Look, I'm on LinkedIn, but if you don't, if you can't find me on LinkedIn, if you just look at William back, New Zealand, number 10, you you'll see my name there. Contact Darren. And he has my contact details. I'm on WhatsApp on anything among we chat. So people can find me if they really want me. There's not many Aaron routes in the world. So pretty much if you search Aaron boots, you'll find me the very so, and there's not too many of us around in the world. How many?

DERREN JOSEPH:

Wonderful and thank you for your time. Thanks for sharing so much of your insights into the New Zealand foreign trust. Thank you very much.

ARRAN BOOTE:

You're welcome. Have a good day.

DERREN JOSEPH:

All right. Thank you.

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