LINDA LINGLESTANLEY SHIRAKIGOVERNOR

ACTING DIRECTOR OF TAXATIONJAMES R. AIONA, JR.

RONALD B. RANDALL

LT. GOVERNOR

ACTING DEPUTY DIRECTOR

STATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809

PHONE NO: (808) 587-1510
FAX NO: (808) 587-1540

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2010-11
August 5, 2010
Re:Act 182, Session Laws of Hawaii 2010, Relating to the Permitted Transfers in
Trust ActOn June 28, 2010, Governor Linda Lingle signed into law Senate Bill 2842 SD 2, HD 1,CD 1, as Act 182, Session Laws of Hawaii 2010.
Act 182, the Permitted Transfers in Trust Act, creates a new chapter in the Hawaii Revised
Statutes (HRS) that authorizes the transfer of certain property into trust arrangements, whereby theproperty transferred receives statutory creditor protection. This announcement is limited to the tax
implications of the Permitted Transfers in Trust Act.
TAX PROVISIONS OF THE PERMITTED TRANSFERS IN TRUST ACT
The Permitted Transfers in Trust Act provides for the assessment of a 1% excise tax on thefair market value of each permitted transfer made pursuant to the Act. To be a permitted transfer
under the Act, the transfer of property must be made pursuant to a trust instrument.
The tax is to be paid by the transferor of the permitted property. The Act specifies that theonly property transferable under the Act is cash, marketable securities, life insurance contracts, andnon-private annuities.
The Department of Taxation (Department) is authorized to administer this tax with all of its
authorities of Title 14, HRS, including the Department’s implementation authorities relating to theassessment, collection, and enforcement of the tax laws.
A non-grantor trust established under the Act is subject to Hawaii income tax law. However,to the extent that the beneficial interest in the non-grantor trust is held by a beneficiary residing
outside Hawaii, the income or capital gains accumulated for that nonresident beneficiary is exempt
from Hawaii income tax.
Hawaii residents that receive actual or constructive distributions of income or principal froma trust established under the Act are subject to all taxes on that income.

Department of Taxation Announcement No. 2010-11
Page 2 of 2
TAX FORMS AND GUIDANCEThe Department is presently developing new tax forms, Form P-70, Permitted Transfers in
Trust Tax Return, for the assessment and collection of the Permitted Transfers in Trust Act tax. The
Department will be providing preliminary guidance to taxpayers in the instructions that accompany
the form.
Also, the Department will be developing administrative rules providing additional guidance,
which the Department initially intends to issue as temporary rules. Persons interested in submittingcomments or suggestions on the administration of this tax may send comments to the following
contact:
Rules Office
Department of Taxation
PO Box 259
Honolulu, Hawaii 96809
Phone: (808) 587-1530
Fax: (808) 587-1584
Email: Tax.Rules.Office@hawaii.gov
EFFECTIVE DATE
Act 182 is effective on July 1, 2010 and applies to permitted transfers made after that date.
For more information, contact the Technical Section at 587-1577.

STANLEY SHIRAKI
Acting Director of Taxation