How much tax will I pay on a family trust in NZ?

The tax payable on a New Zealand family trust depends on whether income is retained in the trust (trustee income) or distributed to beneficiaries (beneficiary income), and on each beneficiary’s own marginal rate. The 2024 Budget materially changed the rules.

The trustee rate is now 39%

From the 2024-25 income year onwards, the trustee tax rate is 39%, aligned with the top personal rate. This was the change introduced by the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Act 2024. Before that change, the trustee rate had been 33% since 1989. The full Inland Revenue guidance is published at ird.govt.nz/roles/trusts-and-estates.

A narrow exception applies to small trusts with trustee income of $10,000 or less per year — they continue to be taxed at 33% on the de minimis amount.

Beneficiary income is taxed differently

If trust income is allocated to a beneficiary as beneficiary income (under the rules in subpart HC of the Income Tax Act 2007), the beneficiary pays tax at their own marginal rate rather than the trustee rate. The relevant marginal rates for 2026 are:

• $0 to $15,600 — 10.5%
• $15,601 to $53,500 — 17.5%
• $53,501 to $78,100 — 30%
• $78,101 to $180,000 — 33%
• Over $180,000 — 39%

This means trustees with an adult beneficiary on a low marginal rate can sometimes reduce the family group’s overall tax bill by distributing rather than retaining income. The arithmetic depends on whether the beneficiary will actually use the money and on the family’s broader circumstances.

Beneficiary income for minors

Income allocated to a beneficiary under 16 is taxed at 33% under section HC 35 (the minor beneficiary rule), preventing the obvious income-splitting strategy.

No inheritance tax, gift duty, or stamp duty

New Zealand has no inheritance tax, no estate duty, no gift duty (abolished 1 October 2011), and no stamp duty on transfers to a trust. Asset transfers in and out of a trust attract no capital gains tax, with one important exception: the bright-line rules under section CB 6A apply when residential property is transferred to or from a trust within the relevant 2-year, 5-year or 10-year bright-line period.

GST

A trust pays no GST unless it carries on a taxable activity (for example, owning a commercial rental property or trading). Family trusts holding the family home are usually not registered for GST.

What this means in practice

For most family trusts holding the family home and modest investments, the practical impact of the 39% trustee rate is:

• Distribute income to lower-rate adult beneficiaries where the trust deed permits
• Use the de minimis $10,000 threshold for trusts with very small income
• Keep records of beneficiary decisions and resolutions before 31 March each year

For the full mechanics of tax-efficient distribution under the post-2024 regime, see our family trust tax implications guide.

Want help?

If you would like to model the tax outcome for your specific trust, book a free consultation and we will work through it together with your accountant where needed.