Does your Trust need an IRD number?

Trusts and Estates

Recent tax changes in relation to property transactions could have an impact on your Trust - find out here whether you will have to apply for an IRD number for your Trust and why.

The short answer

A recent change to the law means that if your trust owns land or income generating assets it must provide an IRD number when transferring the ownership of certain property.

The reason why your trust needs an IRD number

The Taxation (Land Information and Offshore Persons Information) Bill is aimed at gathering information on local and foreign property buyers, including family trusts to assist the Inland Revenue Department with its enforcement of taxation rules and investigations of property compliance.

Trustees of trusts and their lawyers will therefore now have more red tape to deal with when buying or selling property.

The new law now provides that from 1 October 2015 all trusts buying or selling property must have an Inland Revenue Department (IRD) number.  This includes non-income generating family trusts that they own the main family home as their only asset.  It is important to note that the family trust’s IRD number will be required, and not the IRD numbers of the individual trustees of the trust.

When should the trustees of a trust apply for an IRD number?

We recommend that all property owning trusts obtain an IRD number without delay.  If you are thinking of buying or selling a property in your trust in the near future then obtaining IRD registration is now urgent.

During any property transaction, trustees of trusts will be required to complete a tax statement, which will require entry of the trust’s IRD number.  The information contained in the tax statement will be provided to Land Information New Zealand as part of the transfer documentation, and then forwarded to the IRD upon settlement. 

If an IRD number for the trust is not available at the time of settlement of the transaction, interest and penalties could be enforced under the agreement for sale and purchase. 

How to obtain an IRD number

An IRD number for a family trust can be obtained relatively easily by applying to the IRD.  This can take several weeks to be processed.  The application form can be found on the IRD website.

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Copyright © Cavell Leitch. All rights reserved. Redistribution is only permitted with express written permission. For enquiries please contact us. This article by its nature cannot be comprehensive and cannot be relied on by clients as advice. It is provided to assist clients to identify legal issues on which they should seek legal advice. Please consult the professional staff of Cavell Leitch for advice specific to your situation.