Shewan review gets it right, says academic
massey-university
Mon Jun 27 2016 12:00:00 GMT+1200 (New Zealand Standard Time)
Shewan review gets it right, says academic
Monday, 27 June 2016, 5:41 pm
Press Release: Massey University
Monday, June 27, 2016
Shewan review gets it right, says academic
John Shewan’s report on the use of New Zealand foreign trusts for illicit purposes has many excellent recommendations, says Massey University tax expert Dr Deborah Russell.
Mr Shewan, who was appointed to investigate foreign trust disclosure rules following the Panama Papers saga, has recommended that trustees of foreign trusts should report much more information to Inland Revenue.
“Although New Zealand’s tax system is highly robust, it turns out that our foreign trusts could be used to shelter illegal activity, including tax avoidance,” Dr Russell says.
“Mr Shewan says trustees should be required to register foreign trusts when they are set up, and they should file annual returns with details of settlors, beneficiaries, and full financial statements.”
Dr Russell has been vocal in urging government to take action with respect to foreign trusts, including much greater disclosure to IRD. She argued this would enable legitimate use of foreign trusts and, at the same time, stop them from being used for tax avoidance and other illegal purposes.
“Mr Shewan has delivered a very strong recommendation for action. Just knowing that information is being collected should be enough to deter foreigners who want to use trusts in New Zealand for tax avoidance and other illicit purposes,” she says.
“The foreign trusts problem never created any risk to the amount of tax collected in New Zealand – but it created a risk to our reputation. The actions recommended by Mr Shewan will eliminate that risk.
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“The onus now rests with the government. It will be up to them to decide whether or not to implement Mr Shewan’s recommendations.”
Dr Russell describes the proposal that trustees pay a fee of $500 for registering trusts, and an annual filing fee of $500 as “very unusual”.
“No other taxpayers are required to pay fees for the privilege of giving information to IRD, but it might be justified because government does not expect to collect any tax from foreign trusts.”
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