$511 billion in trust assets is now an open book for IRD

A nation built on trusts

New Zealand runs on trusts. The country holds an estimated 300,000 to 500,000 of them, roughly one per 10 to 15 people, more per capita than any other nation. In the 2024 income tax year, 233,000 trusts and estates filed IR6 returns, and the total assets of trusts subject to disclosure hit $511 billion in 2023, up $16 billion in a year.

These are not just household finance structures. They sit behind farms, SMEs, rental portfolios and succession plans across the country. For decades the trust was the Swiss Army knife of New Zealand financial life, delivering asset protection, tax efficiency, succession planning and relationship-property shielding all at once. Having one was a status symbol.

That era is over. Three changes have quietly rewired the rules, and the owners most exposed are the ones who set up a trust a decade ago and never touched it again.

The tax arbitrage is dead

The engine of trust formation was always tax. When the top personal rate sat above the trustee rate, moving income into a trust saved money, and IRD data shows trust IR6 filings grew 42% between 2002 and 2010, exactly the years when the arbitrage paid off.

That gap has closed. The trustee tax rate rose from 33% to 39% on 1 April 2024, affecting roughly 400,000 trusts. The structure is punishing: income up to $10,000 is taxed at 33%, but any income above that triggers 39% on the full amount, with no marginal banding. For a trust earning $50,000 in net rental income, the annual tax bill jumped from $16,500 to $19,500, a $3,000 difference that compounds to $30,000 over a decade.

The trusts holding the real money, rental property, business interests and investment portfolios, are the ones most exposed. IRD figures show the scale of what sits inside them: in the 2024 year, income from IR6 returns totalled $47.3 billion, with trustee income up 167.5% to $40.6 billion. With the rates now aligned, the primary reason many trusts existed has evaporated.

New law, higher governance bar

The Trusts Act 2019, in force from 30 January 2021, replaced 60-year-old law and introduced mandatory trustee duties, codified governance standards and stronger transparency toward beneficiaries. A deed drafted under the old regime may no longer meet the current standard.

Worse, the protection itself has weakened. Polina Kozlova, a lawyer at PK Law, wrote in March 2026 that courts can look through structures that appear to be “alter ego” arrangements or were set up to defeat partner rights under the Property (Relationships) Act. A trust that gave genuine protection 20 years ago may not do so today. Her verdict is blunt: “The old ‘set and forget’ mentality now represents significant risk.”

IRD now has a map

The third change is the one that should worry complacent trustees most. The disclosure regime introduced from the 2021-22 year turned an annual paperwork exercise into a data set that gives IRD visibility into trust operations, beneficiaries and connections between entities.

Helen Willis, a chartered accountant at The Accounting Hub, wrote in January 2026 that the key question IRD now asks is “not ‘is there a trust?’ but ‘who is really benefiting, and how?'” The regime lets IRD map relationships between trusts, entities and individuals with unprecedented ease.

The red flags are exactly the habits that built up over years of neglect: paperwork that does not match operations, paper-only distributions, trusts run as informal bank accounts, and loans with vague terms. The 2023 disclosure data shows $69 billion in loans from trusts to associated parties and $16.6 billion in total withdrawals against just $6.4 billion in beneficiary income, the precise ratios the regime was designed to surface. Willis identifies DIY trusts as most exposed, often set up with good intentions but deteriorating administratively as rules change.

What owners should do now

A properly maintained trust with gifted loans remains a legitimate tool. Henry Stokes, general counsel at Perpetual Guardian, noted in February 2025 that ensuring an estate holds minimal assets by the time of death remains the best defence against claims. But that only works if the trust has been kept in order.

Kozlova recommends regular “fitness tests” of deeds and resolutions. For trusts that now hold only a family home and earn no income, the case for winding up may be stronger than the cost of ongoing compliance. Either way, the choice can no longer be avoided. IRD has the data to see inside every trust in the country, and $511 billion in trust assets tells you the stakes are not trivial. The owners who reviewed their structure will be fine. The ones who set and forgot are the ones IRD is now equipped to find.

Sources

• Are NZ Family Trusts Still Worth It? Tax, Law & What to Do in 2026 (2026-08-30)
• New Zealand Trust Law: A Framework for Modern Asset Protection (2026-03-31)
• Are your trust disclosures keeping up with IRD expectations? (2026-01-29)
• Number of trusts and estates (2025-10-08)
• Trust disclosures – 2023 data (2025-04-07)
• Family trusts and wills: The case that confirms families must have open conversations about inheritances (2025-02-23)