New Zealand tax, a number of statements (independent of each other) are presente

Question

New Zealand tax,

a number of statements (independent of each other) are presented which relate to a particular scenario. For each of the statements, specify whether it is TRUE or FALSE , and justify your answer with an appropriate explanation (in no more than 150 words). All persons mentioned below are New Zealand tax residents unless specifically stated otherwise. All taxpayers have a 31 March balance date.

The Meetpie Trust is a discretionary, complying trust that was settled by James Meetpie. The beneficiaries of the trusts are: Lynne (his wife) and his children, Mike (25 years old), Nike (17 years old) and Olive (15 years old). Mike has been a non-resident for the past three years and lives permanently in the United Kingdom. Income derived by the Meetpie Trust for the year ended 31 March 2017 is as follows:
- Dividends from a New Zealand resident company of $30,000 (gross)
- Rental income from a house located in Australia of $40,000
- Rental income from a house in New Zealand of $26,000

a) If all the dividend income is distributed to Olive on 5 May 2017, the income will be taxed at her marginal tax rate for the year 2016-17.
TRUE/FALSE?

b) If the rental income from Australia is distributed to Mike on 5 May 2017, the income will be taxed at his marginal tax rate for the year 2016-17.
TRUE/FALSE? (3 marks)

c) If the rental income from New Zealand is distributed to Nike on 30 November 2017, the income will be taxed at her marginal tax rate for the year 2016-17.
TRUE/FALSE? (3 marks)

d) Hak is the sole shareholder, director and employee of Icey Ltd, a company which provides consultancy services to a number of clients. In the year ended 31 March 2017, Icey Ltd’s income from services performed by Hak is $70,000, and Hak was paid a salary of $33,000 and dividends of $30,000. Hak has no other source of income. Hak’s taxable income is $70,000.
TRUE/FALSE?

Explanation / Answer

A. True : if dividend income is distributed to olive (minor) then it is taxable as per newzealand tax laws. the exception to this is if it's less than $1000 then it's not taxable.

B. False : as per rules, if a non resident receives the income which is not from newzealand, then it is not taxable.

C. False : The normal tax rate is applicable for Nike when he receieves bebefits from trust

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