What is a Pre-Migration Trust?

A person who intends to migrate to New Zealand (including a returning expatriate of New Zealand) should settle assets on an offshore trust (Pre-Migration Trust) prior to arrival in New Zealand. If no further settlements are made upon the trust after the person takes up residency in New Zealand, a tax deferral opportunity is available.

New Zealand Tax Benefits

	Provided the Pre-Migration Trust is settled before the migrant or returning expatriate gains New Zealand residency, foreign sourced income of the trust will not be liable to New Zealand tax.
	The corpus of the trust can be distributed tax free at any time, subject to ordering rules which deem income and capital gains to be distributed first. There are strategies for minimising the effect of these rules if distributions are essential.
	With careful structuring, the Pre-Migration Trust may make capital investments into New Zealand which will not be deemed distributions, and at the same time minimise New Zealand tax on those investments by using a high level of offshore financing.

Overall Strategy

The overall strategy is to set up a nest egg structure in which a migrant or returning expatriate places a portion of his wealth that he will not need to draw on in the foreseeable future in the trust, where it can accumulate in a tax advantaged environment. The structure is ideal for a person who is in a position to leave funds in income-producing investments offshore, untouched, for a significant period of time.

Reporting Obligations

There is no obligation to disclose the existence of the trust to the New Zealand Inland Revenue, unless a distribution is made to a New Zealand resident beneficiary.

How Can NZTIC Assist?

NZTIC provides expert assistance in establishing a Pre-migration Trust in an offshore jurisdiction through an associated trustee company. The associated trustee company provides an offshore trustee and trust administration services to the trust. NZTIC also provides assistance in structuring investments and distributions both into and outside of New Zealand.