Option 1 Some increase in information required to be disclosed by foreign trusts (details of settlor and beneficiaries as listed in trust deed).
Option 2 Significant increase in information required to be disclosed (details of settlor, persons with effective control, non-resident trustees, beneficiaries, trustees, trust deed) coupled with an annual return, expanded application of the AML laws and a register of foreign trusts, searchable (but not by the public).
Option 3 As for 2, but foreign trust register is publicly available.
Option 4 Amend the foreign trust tax regime to repeal the exemption from tax on foreign source income.
Shewan recommends Option 2. His conclusions are:
The Inquiry concludes that the existing foreign trust disclosure rules are inadequate. The rules are not fit for purpose in the context of preserving New Zealand’s reputation as a country that cooperates with other jurisdictions to counter money laundering and aggressive tax practices.
The Inquiry considers that a significant increase in information disclosed when a foreign trust sets up, annual reporting and increased enforcement, will satisfactorily address the issues identified. Banning foreign trusts or removing the current tax exemption is not considered to be necessary or justified.
The full report is 136 pages long.
No doubt Andrew Little will still insist that all foreign trusts should be banned, as part of his party’s efforts to make up policy on the hoof.