The vast majority of trusts are designed to help people get away with illegal, immoral, or deceptive activities.  They are most often used by those wanting to avoid or evade tax and by those wanting to get Government benefits and handouts that they would otherwise not be entitled to. Many wealthy people and their student children are able to get the benefits which were designed to help poor people.

Others use trusts to nullify personal guarantees they have given on loans, leases and other transactions. Some use trusts to hide assets from creditors or receivers. If you are trying to make a lot of money, things could go wrong so if you have a trust you can let others bear the  losses and you can start afresh the next day.

Others use trusts to circumvent legislation. If you discover how to make money and you become rich, you do not want your partner to take off with half your fortune so a trust would be a good idea.      

Political parties use trusts to hide how donations are used to buy policies and buy decisions so party bosses do not want anything done about trusts. Trusts are also used by some organisations to deceive the public about their activities.

New Zealand is estimated to have a higher number of trusts per head of population than any other country but the exact number is not known. The secrecy surrounding trusts in New Zealand means that criminals and other overseas residents find that they are a good way to hide assets and launder money. 

The majority of politicians have set up trusts for some of the reasons outlined above. They benefit from trusts so are not willing to make changes which would tightly control the purposes for which a trust can be set up and would require trusts to be registered. If these changes were made, the country could be billions of dollars better off and the tax paid by working people could be reduced.  This would stimulate economic activity and help those producing goods to increase their incomes.         

 Most highly paid people in Wellington have trusts so the Law Commission has not recommended any controls on how they can be used, despite the huge amount of evidence that trusts are predominantly involved in what some regard as unacceptable activities.  It therefore seems certain that trusts will continue to be a great way to make money and be a vehicle for wealth creation.   

Overseas residents were allowed to set up secret trusts for tax evasion, money laundering and criminal activities. The justification was that a small number of lawyers and accountants, including the lawyer employed by John Key, were able to make money from this. However, the IRD did have high supervision costs.  The reputation of New Zealand was harmed by the Panama Papers but the Government denied that there was any problem. After a report was produced by a tax accountant, some changes were made.     

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