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…

Tax concessions are available for property transferred under a Relationship Property Agreement (RPA). Subpart FB of the Income Tax Act takes the approach that the recipient steps into the shoes of the transferor, so that no tax implications arise with the transfer. However, the parties and their advisers should take into account any deferred tax…

The Inland Revenue (IR) has confirmed NZ trusts can have a dual classification for tax purposes, as both a complying trust and a foreign trust. This comes as IR have finalised their updated Interpretation Statement on the Taxation of Trusts. It’s not an unusual situation to have a dual trust. For example, NZ’ers who are…

Without much fanfare, the Government has changed its policy on allowing trading entities of charities to be afforded exempt taxation status without having to register as a charity themselves. This is what the Commentary to the June 2018 tax bill says about the proposed change: Registration under the Charities Act 2005 carries with it a…

  Care needs to be taken when structuring borrowing from Banks to ensure deductions for interest payments are claimable in the right entity. Not uncommonly, and for various reasons, a director of a company will borrow monies from the Bank on behalf of their trading company to use in the business. The company will make…

Inland Revenue recently issued a draft interpretation statement, PUB0061, on NZ tax law as it applies to trusts. The draft statement seeks to update the 1989 statement, and we attach a copy of our submission on certain of the tax issues that we thought deserved comment. Once the statement is finalised, it will become Inland…

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