Meeting compliance obligations
Managing financial obligations
Trustees must know and understand the financial position of the trust and ensure accounts are properly managed.
General financial requirements
You'll need to make sure that the trust's finances are always in order. This includes:
- having a separate bank account for trust funds
- knowing the trust's financial situation and reporting on it to owners
- keeping accurate financial records
- organising and keeping insurance up to date.
If you hire an accountant or specialist to manage your finances, you still need to be able to understand the information they give you, and to communicate it to owners in a way they can understand.
Registering as a Māori authority
Some trusts can be registered as a Māori authority — this reduces the amount of income tax you may need to pay, though it comes with other obligations.
Tax requirements for Māori land trusts are complicated. Many trusts choose to outsource their tax obligations to experts.
Tax requirements include:
- registering the trust with Inland Revenue and apply for an IRD number
- keeping all financial records for 7 years
- registering for and paying GST, if the trust's turnover will be more than $60,000 in a 12 month period.
It's important trustees get tax obligations right — if you don't, you can be held personally accountable if things go wrong.
If you're not sure, start by talking to IRD's Kaitakawaenga Māori — they offer a free advisory service about:
- the taxes you need to know about
- what records you need to keep
- how to complete your tax returns
- when to file returns and make payments.
Investment Policy Statements
It's good practice for all trusts to develop an investment policy statement — a detailed plan of how trust money will be distributed, spent or invested.