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Site Archives Trusts

Penny and Hooper

The appeal in Penny and Hooper has been decided in favour of the Commissioner in a 2:1 majority decision of the Court of Appeal released on 4 June 2010.

In the first instance the decision could be considered to have been rendered largely nugatory for the time being given the recent reduction of the top marginal rate to that of the trustee rate. However, with the new company rate now significantly below these rates, the matter of below market salaries will likely be a live issue for some time.

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Budget Podcast – John Peterson, Vicki Ammundsen and Sybrand van Schalkwyk

John Peterson and Vicki Ammundsen join me on this first TalkTax podcast.  Hope you enjoy our thoughts on the Budget released today.  Please leave a comment below.

Click on this link to listen: Thoughts on the Budget

The transcript of the podcast is copied below:

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Corporate trustee up-date

The recent decision in Newmarket Trustees Limited v CIR is a timely reminder of the risks inherent in the appointment of an assetless corporate trustee.  Newmarket Trustees Limited is the trustee for a number of trusts, one of which (the Southern Lights Trust) has substantial unsatisfied tax obligations.  Newmarket Trustees Limited acknowledged its liability for the tax obligations (about which it had been unaware when it accepted the appointment as trustee) but sought to have a statutory demand set aside on grounds that included the disruption to other trusts if the trustee was liquidated and the trustee’s lack of involvement in the day to day management of the debtor trust.  Declining the application the Court was critical of the trustee’s failure to meet its obligations as a trustee and the absence of any information regarding the Southern Lights Trust’s financial position. 

Although it could be hoped that this case can be limited to its facts, it would be interesting to hear readers’ views on whether the practice of using a single corporate trustee company for multiple trustee appointments is still common .

A simpler alternative to income splitting?

In a speech to the Tax Agents Institute conference in Greymouth last Wednesday, Revenue Minister Peter Dunne confirmed that he would push ahead with legislation on income splitting.

His prospects of success look bleak.  With marginal rate tax cuts for the wealthy already on the table for this year’s budget there is unlikely to be any money or political appetite for another middle class tax break.

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Residential Care Subsidy – Means Assessment and Gifted Assets

Advisors may be under the impression gifting assets to a family trust will provide some degree of protection from a means assessment for the residential care subsidy under the Social Security Act 1964.  However the level of protection is not as significant as you may initially have thought.

It is widely known that the means assessment “adds back” gifts made within 5 years of the date of assessment if the gift is in excess of 5,500 p.a.  It is perhaps less widely known that this claw back also extends to gifts made by the person’s spouse or partner.

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Trust and intention

Intention in the context of trusts is more usually seen in the context of the three certainties. However, the recent decision in Ward v Ward [2009] NZSC 125 regarding an application under s. 182 of the Family Proceedings Act, may require looking at intention in the trust context in a whole new light.

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What happens to the trust when the love is gone–subtitle another way to pay tax

Trusts can provide excellent inter-generational asset protection. However, when relationships break up assets in trust solution (rightly or wrongly – I’ll leave that analysis for another day) are often taken into account. The equal sharing principle of the Property (Relationship) Act 1976 is pretty much standard modus operandi now and accordingly, or despite, many parties fail to appreciate or understand the advantages and limitations imposed when trusts are involved.

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‘In Vicki you can Trust’…

Congratulations to Vicki Ammundsen one of TalkTax’s respected authors. Her new book ‘Taxation of Trusts’, published by CCH, is out now…

Taxation of Trusts

Can extending the trust period bring the existing trust to an end?

Following on from the post on 23 October 2009 regarding tax consequences that can follow on from a variation of trust it is perhaps timely to consider whether something as commonplace as a variation in trust period could effect a fundamental variation.

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Sporting charities

Recent publicity surrounding funding of local sports clubs following the decision in Travis Trust , highlights the difficulties that exist for sporting bodies that seek registration as a charity.

While many sporting bodies are registered as tax charities, the charitable status of many sports is as best unclear.

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Recent comments

  • Peter: When you have more than one job all your income is added up and you pay tax on the total income amount. For...
  • Joanne Martin: Hi Would you be able to email me to discuss a small company that is an LTC which I need some advice on...
  • Rizwana Saheed: You are on the right track that there is an exemption when employees work overtime but whether or not...
  • bryan: as a group of employees we get paid meal money if we exceed 11hrs on any day. Employer says he wants to tax...
  • linda: My mother is 94 and has dementia. With govt assisted carers she is still living in a home gifted within the...
  • Sharon: Hi Daniel, Can you please advise how owners of a profit-making LTC pay themselves? The owners used to pay...
  • Another Anne: My Dad is in care on full subsidy. I am EPOA. Are we able to gift some money to my brother in UK so...
  • Twagilayesu Isaya: I agree with the author of this article that Inland Revenue Department need to provide clear...
  • Quinn: Hi. I would like some clarification regarding the valuation of the investments component of the owners basis...
  • QROPS Pensions: Interesting piece of writing, you always write the most useful content & TalkTax is no exception...

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