Hi Vivy,

Technically, if you become a shareholder in the LAQC, you would be subject to the CFC (controlled foreign companies) Regime. This would normally mean that you would return (declare) in Australia your income interest in the company.

As there is a double tax agreement between Australia and New Zealand, I believe that the arrangements…[Read more]

Hi HB,

No, there have not been any tax-related issues or queries from the ATO in regards to any of the Trusts that we have set up. We have been setting them up over the last two years, so there has been opportunity for the ATO to query them with the Australian resident taxpayers who are using them.

That does not mean that they could not be…[Read more]

Hi,

The Trusts that we set up are NZ qualifying trusts, not NZ Foreign Trusts.

NZ Foreign Trusts are not illegal. There are situations where NZ Foreign Trusts are suitable for certain overseas (to NZ) investors and their foreign-sourced income.

The ATO is not concerned with NZ Foreign Trusts that are used legitimately. They were correctly…[Read more]

Hi Forklift,

In New Zealand, everyone has been speculating about when the market is going to top out. Most of us thought that after two years, the market would slow down. Well, we’ve seen four years of growth and the market still is growing. So, none of us are predicting its early slowdown.

To be true, many of the yields are falling as the…[Read more]

Hi,

Well, there are a number of advantagesm compared to Australia –

* no stamp duty
* no capital gains tax
* higher rental yields (rent/investment)
* can structure for cash-flow positive investment – self-funding
* good capital growth

Do you need any more reasons?

Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne…[Read more]

Hi MaiA,

In case it was not clear, not CGT would be paid in either country on these deals. Income tax would be payable. To qualify for the 50% CGT exemption in Oz, you would have to own the property for twelve months and one day – from the date of purchase as per the Sale & Purchase Agreemens to the the date of sale.

Your money partners would be…[Read more]

Hi MaiA,

Even though both Australia and NZ tax property trading or development income in a similar way, there is still the opportunity to reduce your overall tax bill if the marginal rates that you pay in Australia are above 33% – quite likely as the top rate is 49.5%.

With the extra information that you have supplied, it does look like a NZ…[Read more]

Hi Redwing,

GVs are Government Valuations (used for council ratings purposes and apportionment of purchase costs by accountants) and RVs are Registered Valuations (used by banks for lending purposes).

PS. Funny that about my name coming up. Must be Karma!

Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New…[Read more]

Hi MaiA,

It may already be too late to set up a structure for the project.

You have bought a section of land and are building on it. When you purchased the section of land, it would have been in your own names (presumably), and you have expended money on building the development.

Are you going to sell to a new structure to carry out the…[Read more]

Hi Dr X,

In our trustee companies, the investors are also the directors – the only directors. And the Trust Deed ensures that only they are the persons authorized to appoint and remove trustees. There are many protections included in the Trust Deed.

Our trustee company acts as a co-trustee to ensure that the Trust is regarded as being…[Read more]

Hi Redwing,

An LAQC is a Loss Attributing Qualifying Company. It is a NZ invention, and only assists NZ tax residents. The normal situation is that the losses of a company have to stay in the company to be offset against future (hopefully) profits.

In an LAQC, the losses are attributed to the shareholders in proportion to their shareholdings in…[Read more]

Hi MaiA,

Yes, the proposed structure quarantines the capital gain in NZ, where there is no CGT.

The style of the corporate trustees and Trust ensures that the Trust is only a resident NZ Trust and is not considered an Australian resident Trust.

As it is not an Australian resident Trust, it does not need to lodge a tax return in…[Read more]

Hi Carlyle,

The ATO Ruling is IT 2360. If you have problems accessing it from the ATO website http://www.ato.gov.au I can send you a pdf version, if you send me a private mail.

The rules in the double tax agreement are that between the two contracting states, the country that has the income-producing asset is the ‘source’ country. And the tax return…[Read more]

Hi Dom,

I was wondering if it was you. The username made me guess.

Yes, the NZ qualifying trust that I set up for you will suit the purpose of either share trading or share investment.

Kind regards

Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New Zealand
Ph +64 9 360 3259
Fax +64 9 360…[Read more]

Hi Dom,

That is correct. There is no capital gains tax in New Zealand. So, where you make capital gains in New Zealand, you will not have to pay CGT to IRD.

However, if you own the shares in your own name, you will have to pay CGT to the ATO.

The solution would be to own the shares in a suitably structured New Zealand Trust.

You can do on-line…[Read more]

Hi Scally,

That is a very good question. I am asked the same question by NZ taxpayers that own rental properties, and my answer is always the same.

Let’s say that you have a chattels valuation (statement of estimated building construction costs as per TR 97/25 for our Australian taxpayers) prepared when you purchase the property, and you claim…[Read more]

Hi Scally,

Australia had the special building write-off, now called a capital allowance, that allows writing off the building cost at 2.5% straightline per annum.

The only problem is that the allowance only started from 19th July 1987, so any construction before that date cannot be claimed for depreciation.

That is why your Australian tax…[Read more]

Hi,

The issue with ‘tainting’ is that the tax-free status of capital gains is compromised. They are taxable, in other words.

Where there is an association between the persons owning each of your Trusts, any rental properties purchased after the property trading commenced will have the capital gains tainted for up to ten years.

If the properties…[Read more]

Hi,

I would have thought that all tax agents would know about double tax agreements, but I have come up against one Australian tax accountant that showed complete ignorance of DTAs.

I qualified and practised in Australia, so I think that he must be the exception to the rule.

You might have to do an internet search of Yellowpages in South…[Read more]

Hi landlordtobe,

You might be worrying needlessly.

Your investment in New Zealand comes under the double tax agreement between the two countries.

The country where the income-producing asset is located is the source country so is entitled to tax in the first instance.

Even if the property is making a loss, the tax return should firstly be…[Read more]