Did you know?

If you are a trustee of a trust you are personally liable for the tax obligations of the trust.

Inland Revenue have just advised that If you resign as a trustee, they must receive this in writing, as soon as possible following the resignation, so they can update their records.

If you resign as trustee of a trust and don't send IRD written confirmation, they'll still recognise you as a trustee, which makes you liable for any tax obligations of that trust.

If you resigns as a trustee of a trust and delay sending Inland Revenue written confirmation, they'll recognise you as a trustee up until they receive your written resignation.

For income tax and GST purposes, you may be liable for any outstanding tax for the periods you were a trustee. This includes the period of time between your resignation as a trustee and Inland Revenue receiving written confirmation of the resignation. This liability continues until any debt is paid.

So you better make sure the trust's tax returns are correct and that if you resign you make 100% sure that the IRD are advised in writing immediately.

This is particularly important if the trust is buying and selling or renting out property. There could be large sums involved.

If you are a trustee of a friend or family member's trust you may want to reconsider.

You are personally liable for the tax obligations of a trust. Is it worth the risk?