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…

We have attached a summary of tax issues to consider for New Zealand inbound migrants. New Zealand inbound migrants tax treatment

Tax legislation was passed on 30 March 2017 amending the company associated person capital gains rules, which will be much less of a problem when restructuring companies and moving assets around a corporate structure.  Also, the related party debt remission rules have been amended and are much more taxpayer friendly than first proposed. For the associated…

The Building (Earthquake-Prone Buildings) Amendment Act 2016 requires city and district councils to actively identify and require owners to act on earthquake-prone buildings. Inland Revenue confirmed in late 2016 that in most cases, costs incurred in obtaining a detailed seismic assessment of a building are revenue in nature, and fully deductible. An exception will be where…

  Be aware of the changes set to apply from 1 April 2017 for GST zero rating of services to non-residents for land transactions   Background The forthcoming GST changes will affect services provided to non–residents by New Zealand resident lawyers, estate agents, architects, engineers and any other service provider in relation to land. In general…

It’s surprising how often GST and non GST assets are thrown together in the one entity. Whilst certainly permissible, it can add some GST complexity, which is why most advisers suggest keeping GST and non GST assets in separate entities. To illustrate, suppose the trustees of a GST registered trust that owns a commercial rental…

Certainly, do not liquidate or elect out of the LTC regime, as remission income arises which flows back to the shareholders personally. Do not do a debt capitalisation as IRD consider it tax avoidance. If all the LTC’s debt is shareholder debt, wait for the May Tax bill to be passed. The draft bill seems…

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