If you’re a U.S. citizen with a foreign trust, take heed of the U.S. tax implications of having your trust. It is nigh on impossible for the trust to be treated as a separate entity for U.S. tax purposes – or that portion of the trust’s assets that you are deemed to own.
Whilst New Zealand is underway with revamping its tax rules around employee share schemes, the United States has a well-defined framework for the tax treatment of such schemes, including stock options.
It is interesting to observe the Inland Revenue Department’s policy programme, which is currently focussing on three key areas:
Business transformation; BEPS and international tax reform; and further improvements and enhancements to tax and social policy within the broad-base, low rate (BBLR) policy framework.
If you are contemplating a move to New Zealand you need to understand the tax traps in advance. Many expatriates find themselves in a bind only after they have arrived down under, often inadvertently learning the hard way that the New Zealand tax system has teeth… or even fangs, through its taxing mechanisms.