IR3 Question 16 Estate or trust income

If you received estate or trust income that relates to the year 1 April 2018 to 31 March 2019, show it at Question 16.

There are three types of estates or trusts:

• complying

• foreign

• non-complying.

Complying trusts are trusts that have been taxed in New Zealand on all their income since the day they started.

Allocations of beneficiary income which the minor beneficiary rule applies to are taxed as trustee income. This means the trust is subject to tax on this income at 33 cents in the dollar, and it’s included in the trustee tax calculation in the trust’s IR6 return.

These distributions shouldn’t be included in the minor’s individual tax return.

All other trusts are non-complying or foreign. Read the guide Trusts’ and estates’ income tax rules (IR288) for more details.

What to show on your return

Add up the tax paid by the trustee/s and print the total in Box 16A. Print your share of the estate or complying trust income in Box 16B.

But, if your estate or trust income includes:

• interest with RWT deducted, show this at Question 13 and tick 13C.

• dividends with imputation credits attached, show this at Question 14 and tick 14C.

• overseas income and overseas tax paid, show this at Question 17.

• taxable Maori authority distributions, show this at Question 15.

Income from foreign and non-complying trusts

If you’re a beneficiary of a foreign or non-complying trust please complete a Schedule of beneficiary’s estate or trust income (IR307) form.

Taxable distributions from non-complying trusts

Copy the amount of taxable distributions from the non-complying trust to Box 16C, and attach the IR307 to your income tax return.

Inland Revenue separate taxable distributions from non-complying trusts because they’re taxed at a different rate.

If you have this type of income, your tax calculation at Question 32 may not be correct. Inland Revenue will do this calculation for you and send you a notice of assessment.