16 October 2023

Update: 12 March 2024

Additional draft legislation was released yesterday, 11 March to propose a de minimis threshold for trusts.  The de minimis threshold means that trusts with no more than $10,000 of trustee income per year will continue to be taxed at 33% rather than the increased rate of 39%.  Trusts who have more than $10,000 of trustee income will be taxed at 39% from the first dollar of trustee income derived.

Other changes to the proposed trust tax rate change include keeping the trustee tax rate at 33% for:

  1. Estates, but only in the year of death and the following three income years;
  2. Disabled beneficiary trusts; and
  3. Energy consumer trusts and legacy superannuation funds

The Government has estimated that introduction of the $10,000 de minimis threshold will mean that only around 49,000 of the 400,000 trusts in New Zealand will be impacted by the proposed increase in trust tax rate.


As you will no doubt be aware, the trustee tax rate is proposed to increase to 39% for the 2024–25 and later income years (beginning 1 April 2024 for most trusts), from the current 33% rate. This will bring the trustee tax rate in line with the top marginal tax rate that kicks in on an individual’s income over $180,000.

The proposal was in a tax bill that was before Parliament until Parliament dissolved on 8th September 2023 for the general election. In order for the proposal to become law, Prime Minister-elect Christopher Luxon’s new Government will need to reintroduce the bill.

Luxon confirmed in the weeks leading up to the election that, while he does not support the trustee rate moving to 39%, the reality is that the Government can’t afford to leave the trustee rate at 33% given the Government’s current fiscal position. Therefore, the new Government will reintroduce the bill and the trustee rate moving to 39% on 1 April 2024 is pretty much a done deal.

Luxon did say that when the fiscal position improves, they will look to reduce both the trustee rate and the top marginal tax rate, however this would not be in the Government’s first term. The intention is for the trustee rate and the top marginal tax rate to be the same to discourage tax avoidance and protect the integrity of New Zealand’s tax system.

Given the certainty on the trustee rate increase, this is likely to have a significant impact on our clients with family trusts. Over the coming weeks, we will therefore be contacting our clients with trusts to discuss how they will be impacted.

Talk to our experts

If you would like to discuss your situation and how this may impact you, please get in touch with your trusted Nexia Advisor. 

If you are not already a Nexia client and you are looking for specialist tax advice or strategies for effective tax planning, contact us to explore how we can help.

Nexia is one of New Zealand’s best accounting and business advisory firms with offices in ChristchurchAuckland and Hawke’s Bay.

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