Two recent legislative changes potentially assist trustees of trusts with early (or short) vesting dates. Occasionally we see trusts with vesting dates of less than 80 years, and with no power to vary the trust deed. There can be many valid reasons to want to keep a trust about to vest ongoing. One solution has…
The Covid 19 pandemic has led to many highly skilled expat Kiwis relocating back to New Zealand, and technology advances have enabled them to continue to be employed by non-resident employers. New Zealand (NZ) and foreign tax obligations need to be considered in cross-border employment situations. Foreign Tax It may be that the non-resident employer…
It has been common practice in NZ for trustees distributing income to beneficiaries (typically those on a lower marginal tax rate) not to distribute the cash, but to leave the amount outstanding, thereby creating a beneficiary credit current account. Two issues arise with that practice. First, if the current account has been in place for…
Interacting with the Inland Revenue can be an interesting experience at times, and it is advisable to maintain a respectful demeanour when representing clients and their tax affairs. Contact with IR is often initiated by a risk review letter, and a considered response at that stage is recommended as it can deal with the matter…
The most common scenario where a company might issue shares and declare the issue to be a taxable bonus issue, is before a sale and purchase of shares of that company. Usually this will be undertaken at the behest of the continuing shareholders. Pre-sale, advisers will have identified that the sale and purchase of shares…
In this update on land transactions, we report on recent legislation that has clarified two issues regarding associated persons and section CB 15 of the Income Tax Act 2007 (the Act). Also, the Inland Revenue (IR) have recently confirmed their position on whether a deceased is associated with their estate. It is also worth reminding…
One of the very first things to look at when considering an Inland Revenue risk review, investigation or a taxpayer’s voluntary disclosure, is the applicability of the statute time bar. If available, it could mean the Commissioner is unable to reassess an income tax return or GST return to increase the amount of tax payable….
A corporate structure is recommended for trading internationally, for creditor and asset protection reasons. Often a special purpose company is used to isolate the foreign operation from the NZ business. Practitioners who advise NZ businesses on structuring overseas operations will be well aware of the issue of double taxation. Briefly, double taxation arises in a…
It may surprise some, but tax issues should be considered when preparing wills for clients. Effectively this means understanding the tax status of assets that will pass by will on death. Consider for example a couple who own a commercial property in partnership, where depreciation has been claimed on the building and fit-out. The couple…
Many New Zealanders own their family home or bach in a trust, for a variety of reasons. A tax problem can arise where the family home property is developed or subdivided, and that property is owned by the trustees of a trust. Where work is undertaken developing or subdividing land within ten years of its…
