If you are contemplating resigning as a trustee of a Trust, it’s really important to inform IRD.
Typically the trust’s lawyer will take responsibility for any paperwork to formalise the resignation. This may involve some minutes or a resolution. However, they may not inform the Inland Revenue Department and this can be problematic down the track.
If there is any delay in informing IRD, the department will still recognise you as a valid trustee until such time as they receive notification of your resignation. The fact that you have legally resigned as a trustee is of no consequence to them.
For both income tax and GST purposes this could mean that you are personally responsible for any outstanding tax for the period the department views you as a valid trustee of the trust. This would include any time that elapsed between you formally resigning and the department receiving notification.
The liability continues until such time as any debt is repaid.
If a fellow trustee was declared bankrupt you could be held liable for any tax debt that exists if the department had not been informed of your resignation.
If you would like assistance in informing the department, don’t hesitate to get in touch. It takes no time at all and can save an awful lot of problems down the track.
