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31 March 2024

Do you have a Trust? New trust rate changes come into effect

The top Trust tax rate is expected to increase from 33% to 39% on 1 April 2024 to bring it in line with the top personal tax rate.

This adjustment aims to address a discrepancy that became prominent after the top personal tax rate increased in 2021, prompting some high earners to shift income to trusts to enjoy a lower tax rate.

Tax laws include exceptions that could mitigate the new rule’s impact.

Exceptions include:
  • Low Income Trusts: Trusts with an income of up to$10,000 per year are expected to continue to be taxed at 33 per cent rather than the top rate of 39 per cent.
  • PIE Investments: Trusts investing in Portfolio Investment Entities (PIEs) can benefit from a flat PIE tax rate of 28%, depending on the trust’s expense accounting and distribution practices. For trusts currently investing in our First Mortgage Trust Group Investment Fund, assessing the potential benefits of switching to our First Mortgage PIE Trust could be advantageous. We recommend discussing this with your accountant or tax adviser.
  • Beneficiaries: If a trust distributes all its income to adult beneficiaries, the tax is calculated at the individual beneficiaries’ personal tax rates, which, depending on their income, could be a lower rate than the 39%. For trusts already doing this, the new tax rate change will not alter their tax obligations.
Will it affect me?


If you have a trust, it’s important to understand whether these changes impact you. We advise consulting with your lawyer, accountant, or financial adviser.

Please note that at the time of writing, the necessary legislation hadn’t been passed, and there is always the possibility of change until that happens.


First Mortgage Trust is not a financial or tax adviser, and the benefits of investing in a PIE will depend

on each investor’s personal circumstances. This information is of a general nature, and we strongly recommend that you talk to your financial or tax adviser to determine what type of fund is right for you. Tax laws are subject to change.

Why invest with us?

We know risk is a major consideration when deciding where to invest. With FMT our investments are backed by first mortgages over land and buildings. Property-based securities traditionally provide some of the least volatile investments. In addition, the funds always hold cash investments (liquidity) with New Zealand banks to help ensure cash is available to repay investors when needed.

Learn more about investing with FMT

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              Which type of fund is right for me?

              Complete this questionnaire to see what type of fund might be the most tax effective for your circumstances. Please note, this is just a guide and we recommend you seek professional tax advice.

              Are you investing as an individual or trust?
              Other investor types should seek professional tax advice.


              Is your tax return completed by a tax adviser or accountant?

              Can you reasonably estimate your own annual income?

              What is your total income from all sources (including PIE income)?

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              Do you distribute all annual income to beneficiaries?

              Do all Trusts beneficiaries earn more than $48K from all sources (including PIE income)?

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              Disclaimer – This tool is intended to provide general guidance only. This tool does not take into account your particular financial situation, objectives or goals.

              There are alternative strategies which may provide better outcomes, we recommend you seek independent advice before making any investment decision. If you have completed this guide and wish to discuss this, we recommend you seek professional tax advice.