In New Zealand there can be a fair degree of cross over between the services that lawyers and accountants offer.

That’s why when picking a professional, it makes sense to choose someone who for the large part possesses skills of both a lawyer and an accountant.

That’s what we at Gilligan Rowe & Associates (GRA) do and why we have staff solicitors and accountants working together under one roof.

What does this mean to you?

It means faster service, higher quality advice, better value and the peace-of-mind knowing that your affairs are being handled in the best way possible.

Here’s an example of why we provide both of these services…

An offshore investor or a potential migrant to New Zealand will want three things from a professional:

1. Advice on the tax implications of moving to New Zealand or investing in New Zealand
2. Advice on the best ownership options  available to them
3. Advice on the asset protection merits of ’structures’ to help minimise tax.

Typically tax advice is provided by an accountant, whereas asset protection and relationship property advice is provided by a lawyer.

There are however a select group of professionals based in New Zealand such as GRA, who can straddle both disciplines.

Following this, when choosing a professional you want a New Zealand company who specialises in helping people with financial interests outside of NZ. They could be migrants, Kiwi expats returning home, property buyers or investors, or business owners.

As recognised property accounting and investment experts, we at GRA are familiar with all the ins and outs to do with tax minimisation and compliance.

There are certain areas where the two disciplines do not intersect. Conveyancing is an example of this and generally should be handled by a lawyer. Conveyancing occurs when property is purchased or sold and involves transferring the funds from the purchaser or receiving them on behalf of the vendor as the case may be and dealing with the banks and the correct registration of the new ownership on the title.

You will also find that lawyers generally have limited knowledge when it comes to tax and accounting issues.

As a result, of this, offshore investors or new or returning migrants will choose GRA because we provide the core tax and accounting services PLUS broader asset protection and structure advice which you would typically get from a solicitor.

We’re ready to help.  If you have a technical question, go ahead and use our free Ask the Experts service or for a free initial consultation by email, phone or Skype, please Contact Us now.

Transitional Resident Rules

On 1 April 2006 new legislation was enacted with the intention of making New Zealand a more attractive destination for skilled migrants or ex-pats looking to return.

Up until this date when you moved to New Zealand and assumed tax residency you were liable in New Zealand for all income irrespective of source. This means if you moved to New Zealand but retained offshore investments you were required to bring to account in New Zealand any gains on these offshore investments.

In some instances this will prove to be particularly onerous as in certain instances unrealised foreign exchange gains were brought within the tax net.

From 1 April 2006 a new migrant or a returning ex-pat who has not been tax resident inNew Zealand for 10 years has a 48 month window where they are exempt from having to account for tax in New Zealand on offshore income.

Note that there are exceptions to this such as income from employment, but it does cover a wide range of offshore income including rent from offshore property, interest on offshore accounts, dividends from offshore companies and exchange movements on offshore financial assets.

Some other points to note about these rules is that you are only eligible for them once. That is, you cannot take advantage of them for 48 months, leave New Zealand for 10 years and return and apply them again.

And needless to say it is a temporary exemption so that once the 48 month window has closed offshore income needs to be bought to account under the ordinary tax rules.

Asspecialist New Zealand Accountants, we are involved every day with helping people who live in the US, AUS, UK, Canada (or anywhere) do business with New Zealand.

As New Zealand Accountants, we can help you to navigate through these issues so you can avoid the stress and cost of paying tax where not required.

To learn more you can use our free Ask The Experts service or we would be happy to arrange a Free Interview by phone, email or Skype.

While it is fair to say that most countries will recognise tax paid in other countries so you do not double pay tax there can be technical exceptions to this rule particularly when corporate structures are involved.

Take an example of a New Zealand investor who sets up a company to invest in Australia (it could also be UK or USA). The company is involved in property related activity and produces taxable profit that is subject to tax in Australia because it has a source there…

At the same time the company is regarded as being a tax resident of New Zealand so has to return the same income in New Zealand. Assuming the company tax rates in both Australia and New Zealand are 30% there would be no further tax to pay in New Zealand as the company would be able to utilise the Australian tax paid as a credit to prevent tax payable in NZ.

Whilst this on the face of it seems to prevent double taxation it is not the end of the story. Why? Because there will be a point in time when the

New Zealand investor wants to extract the profit from the company. When this happens the distribution would be regarded as a dividend and taxable to the New Zealand investor.

Typically dividends from a New Zealand company carry ‘imputation credits’ (which are a form of tax credits) but that is not the case in this example.

Imputation credits only accrue when New Zealand tax is paid, and as the company in this instance will have paid no New Zealand tax, there would be no imputation credits attached. This means the shareholder will be liable for full tax on the dividend…or double taxation!

Gilligan Rowe & Associates can set up low cost structures that are legal, which can prevent this double taxation situation from occurring.

To learn more you can use our free Ask The Experts service or Request a Free Interview by Skype, email or phone by clicking on the button below.

The default NRWT rate on interest is 15% but this can be reduced to 10% if the double tax agreement between New Zealand and the country of the lender says so.

NRWT is therefore a significant issue for people as in most cases it is the borrower that has to bear the cost. Whilst the tax is designed to be a New Zealand tax levied on the lender, there are not many lenders who will accept interest payments 15% below what is required. Why? Because part of it is being withheld and remitted to the New Zealand IRD here.

Following this, exceptions to NRWT are important and there are a number of exceptions that you should be aware of.

First, it is possible to apply for what is known as ‘approved issuer status’ which means that the interest payments are not subject to NRWT but are subject to a 2% approved issuer levy.

Further, if you qualify for the transitional migrant rules then during the 48 month period in which you have the exemption from accounting for offshore income you also have an exemption from having to account for NRWT.

Finally, interest payments to certain Australian based banks are not subject to NRWT if the bank is operating through New Zealand in a branch. The logic behind this rule is if you have a bank such as Westpac and you are making payment to Westpac Australia you are effectively making payments to the same company that operates in New Zealand (as Westpac New Zealand is a branch of Westpac Australia).

If all of this sounds confusing or involved, we understand. As New Zealand Accountants We specialise in helping clients all around the world to minimise their tax (legally) when dealing with their affairs in New Zealand.

New Zealand that administer the Trust and in that instance there are disclosure requirements for that resident Trustee. They have to disclose to the Inland Revenue Department the name of the Trust, the name and contact details of any resident, foreign Trustees and disclose whether the settlor is resident in Australia.

Outside of these disclosure requirements there are no other tax obligations in New Zealand whilst the Trust remains a foreign Trust and its only source of income is offshore. If the settlor subsequently moves to New Zealand then the Trust needs to be converted to being a complying Trust by filing an election within 12 months of arrival. Note that this time frame is extended if you are a transitional resident to 12 months after the end of the 48 month period where you are exempt from tax on foreign income.