Ariadne in the South : New Zealand International Taxation of Passive Trust Income

This article examines the international taxation of dividend, interest and royalty income derived through a trust. It concludes that New Zealand's general principles of international trust taxation and its international withholding rules can be reconciled by applying and re-applying the trust attribution rules at each relevant withholding or taxing point. Applying purposive statutory interpretation, non-resident beneficiaries and non-resident trustees can benefit from the foreign investor tax credit or zero-rated interest withholding under the approved issuer levy regime. There is one significant inconsistency: if the income is attributed to the trustees on behalf of the trust, the nature of the claim to tax does not depend on the settlor's residence (as the trust rules usually require) but the trustees' own residence