Hi Bevan,

Okay, let’s start with the easy tax issue. You are buying an income-producing asset in another country. So you are involved in international tax issues, namely the double tax agreement between Australia and New Zealand.

This means that tax returns shpuld be lodged firstly in the source country, namely New Zealand – where the…[Read more]

Hi Alex,

A lawyer that we recommend is Jeffrey Ng in Auckland. His rates are very reasonable and he does a great job on checking mortgage documentation to make sure it has been done correctly. He has corrected some banks and they had to admit that they had got it wrong.

So if you want someone on your side who specializes in property…[Read more]

Hi,

I have made several postings to similar forums asking the same questions.

We are a firm of property specialist accountants and tax advisers in New Zealand, and provide low cost setup and low cost administration structures for overseas investors to buy New Zealand and US properties.

If you are interested, send me a private mail so I can…[Read more]

Hi GP,

Thanks for those links. It is nice to have the guides at the ready to quote them.

I have noted that most of the legislative references to definitions etc refer back to the 1936 Act.

It has mystified me as to why this part was not included in the progressive rewrite of the Tax Act since 1997.

But who are we to question the…[Read more]

Hi GP,

The research that you have done is much appreciated.

This is more along the lines that I had found and was able to develop options for clients.

Just reading the guide from the ATO makes one give up hope and think that there are no options. It takes reading in between the lines and the sort of questions and answers that you put to the ATO…[Read more]

Hi,

You might like to read the legal article in this link for an example of who a transferor is http://www.findlaw.com/12international/countries/nz/articles/2224.html

Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New Zealand
Ph +64 9 360 3259
Fax +64 9 360 2180
http://www.masteraccountants.co.nz

Hi GP,

I am no longer operating in Australia as a tax agent, so I do not have standing with the ATO.

When I have these kinds of questions, I relay them through associated accountants in Australia, and they obtain the information or opinions requested.

That is so in this case. Private rulings have not been applied for. The ATO record on private…[Read more]

Hi Andrew,

I advise that the NZ Trust also has an independent NZ resident trustee, whether as a company or not. In this way, there are two resident NZ trustee companies.

The Accounts and tax returns are prepared and lodged in New Zealand. The minutes are maintained and recorded in New Zealand. Buying trips are obviously conducted in NZ, and…[Read more]

Hi GP,

I know that we have had this debate or discussion going on for awhile.

Can I ask you if you have contacted the ATO about what is a transfer and what is a purchase? Have you put different scenarios to them for clarification?

When a Trust purchases property, it is not a transfer. When an already owned property is sold to a Trust, there is…[Read more]

Hi Shar,

Currently, as you own the rental properties in your own names, you will have to lodge tax returns in New Zealand and in Australia.

It would make more sense to prepare the NZ tax returns, and then use those Financial Accounts for the Australian tax returns – with adjustments just for the different depreciation bases and rates.

When the…[Read more]

Hi GP,

The solution is to liquidate the company and pay out the capital gains to the shareholders as the proceeds of liquidation.

It does mean closing down the company, and it does mean that all of the properties should be sold, so all of the capital gains have been crystallized.

In NZ, this would preserve the tax-free status of the capital…[Read more]

Hi,

In answer to GP, there are some differences in NZ trust law compared to other jursidictions, the main difference being that the tax residence of NZ Trusts depends on that of the settlor, whereas other trust jurisdictions depend on that of the trustees.

Where the trustee does not distribute all of the net income of the Trust, the trustee pays…[Read more]

Hi GP,

Yes, I am sure about what I have said about the Trust Transferor Rules.

If you remember, the Rules go as follows –

Under transferor trust measures, tax is imposed on a taxpayer where they have transferred property or services to a non-resident discretionary trust or, after 12 April 1989, to a non-resident non-discretionary trust for…[Read more]

Thanks for that GP,

I know that you have posted that information earlier, and probably more times than you care to remember. As new members join, they may come up with the same questions as others. It is too hard to look back on all the question on the forums.

This still leaves the question unresolved of whether the loan taken out in the…[Read more]

Hi,

We set up NZ Trusts in a way to avoid CGT in Australia. Our cost for the structure is $NZ600.

If you send me a private mail with your email address, I can send the info and attachments.

The structure involves an NZ Trust with 2 NZ resident company trustees. This avoids the ATO deeming the Trust to be an Australian Trust.

As long as any…[Read more]

Hi Ralph,

You have not actually said what advice you received from the other accountant or what the conflict is.

In the absence of that, there is nothing preventing you from buying the family home in a Trust and renting it to yourselves.

There just won’t be a tax claim available where the rent received is less than the expenses. In any event,…[Read more]

Hi,

Yes, New Zealand does have a more benign tax regime for foreign property investors.

However, the ATO introduced ATO ID 2002/764 with effect from 1st July 2001. This interpretive decision effectively allows for the claiming of foreign rental property losses where the interest deduction gives rise to the bulk of the foreign property loss.

It…[Read more]

Hi,

The way that tax law works, you can effectively claim for the other NZ property expenses.

Tax law says that an expense can only be claimed once against the relevant income. Once you claim the property interest in your personal tax return, the ‘balance’ of the property Accounts will be likely to show a profit – if it is the interest…[Read more]

Hi,

The last comment was correct to the extent that there is not a 100% CGT exemption when the family home is owned in a Trust. However, the Trust would still be able to claim the 50% CGT exemption where the beneficiaries of the Trust are the same family members living in the house.

It looks like the ATO doesn’t want families to own the family…[Read more]

Hi Anzion,

Any way that you try to cut it, any attempt by whatever structure to purchase a family residence and claim the expenses (or excess of expenses over income), is doomed to failure. The ATO would rightly regard the dominant reason for the arrangement to be tax avoidance, and strike it out.

Christopher Raynal
Master Accountants Group…[Read more]