Can someone advise me the best way to go in regards to tax & accounting for NZ property.
We are resident aussies (SA) with house and vacant land in Invercargill.Hi John,
I am also from SA and own commercial property in Invercargill. We use David Mc Cone from Staples Rodway in Christchurch for accounting. phone 0011 64 3 343 0599. Web is http://www.staplesrodway.com. We have not tried any other accountants but are happy with these ones.
Cheers
Xenia
We buy properties in all conditions. Can offer Immediate Cash Settlements, No Real Estate Agents Required
[email protected]
phone 0412 437 582Can anyone advise on the Aussie end of things? My username has been a misnomer for the last three months, which means I don’t have to lodge my first NZ tax return for another nine months, but I’ve caught the last three months of the Aussie tax year.
Can anyone suggest a Sydney accountant who is cluey about NZ property investing and taxes?
thanks!Can anyone advise on the Aussie end of things? My username has been a misnomer for the last three months, which means I don’t have to lodge my first NZ tax return for another nine months, but I’ve caught the last three months of the Aussie tax year.
Can anyone suggest a Sydney accountant who is cluey about NZ property investing and taxes?
thanks!Find a reputable Kiwi Accontant(i.e.one that has wealthy property owner clients)from internet and give him your specific details.Everybody’s situation is different.
Andrew.Dane
you should try Stephen for your taxation. he’s in Sydney and knows how to include a NZ property into your tax return
Stephen A Cassrels
Suite 2, Level 3
35 Spring St
Bondi Junction NSW 2022
Tel/Fax 02 9389 2869cheers
Mark
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 lodged in New Zealand. If tax is paid, it is firstly paid in NZ, then you claim the tax paid as a foreign tax credit when you lodge your tax return in Australia.
Do it the wrong way around, and you pay the tax in Australia, then pay it in New Zealand, and only get to claim the tax credit in Australia in the second year.
Next point, the tax year in New Zealand is 1st April to 31st March. There is a protocol between the two countries where tax returns lodged in NZ up to 31st March can be accepted in Australia as being to 30th June.
This means your Australian accountant can use the information in the NZ tax returns as if it is to 30th June, just convert to $AUD and adjust the depreciation to comply with the Australian tax rules on capital allowances. So you do not pay for two lots of accounting fees.
By now, you should be seeing that you do not need to lodge an Australian tax return for 30th June 2005 showing the NZ income until next year – then show the income to 31st March 2006 as if it is to 30th June 2006.
Don’t you just love double tax agreements – meant to avoid just that!
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.nzOriginally posted by masteraccountants:Hi landlordtobe,
Don’t you just love double tax agreements – meant to avoid just that!
Christopher Raynal
I will call when we lob in Christchurch in 2006, do you know of any South Australian accountants that are up to speed with NZ investment properties?
Well I certainly stuffed that up!
My previous post was directed to Christopher at Master Accountants.
Sorry about that.zed
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 Australia and put in the keywords NZ property investment, and see what comes up.
I know accountants in Melbourne that are up to speed on NZ property investment.
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.nzThanks guys, really appreciate the tips – doing my taxes this year won’t be as complicated as I first thought!!
Originally posted by masteraccountants: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 lodged in New Zealand. If tax is paid, it is firstly paid in NZ, then you claim the tax paid as a foreign tax credit when you lodge your tax return in Australia.
Do it the wrong way around, and you pay the tax in Australia, then pay it in New Zealand, and only get to claim the tax credit in Australia in the second year.
Next point, the tax year in New Zealand is 1st April to 31st March. There is a protocol between the two countries where tax returns lodged in NZ up to 31st March can be accepted in Australia as being to 30th June.
This means your Australian accountant can use the information in the NZ tax returns as if it is to 30th June, just convert to $AUD and adjust the depreciation to comply with the Australian tax rules on capital allowances. So you do not pay for two lots of accounting fees.
By now, you should be seeing that you do not need to lodge an Australian tax return for 30th June 2005 showing the NZ income until next year – then show the income to 31st March 2006 as if it is to 30th June 2006.
Don’t you just love double tax agreements – meant to avoid just that!
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.nzHi Masteraccountants,
What does “adjust the depreciation to comply with the Australian tax rules on capital allowances” mean? This is certainly my quandry. NZ as we know has great depereciation rules, what I can’t understand is how this is meant to translate back to Australia.
Cheers
Scally.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 accountant will have to adjust for the NZ depreciation. Where it is allowed, it is at lower rates than in New Zealand, so an adjustment is required.
If the building costs were before 1987, then no capital allowance is allowed for residential property.
There was a capital allowance for hotels and commercials buildings from 1985. Residential properties were added later in 1987.
Regards
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.nzThanks Christopher,
I guess that this is the essence of the problem, the Australian and NZ tax systems seem very similiar except for depreciation. In my case it seems that all this wonderful depreciation I’ve just claimed in NZ will have to be handed back when I lodge my return in Australia.
This leads to my next question. Is it not better to have never claimed this depreciation in NZ (as I understand you can do). I’m wondering this because I realize that it will eventually be handed back in time through their “claw-back” provisions anyway. Is their any point in having it considering that it seems of no use in the Australian system anyway? Indeed it might be beneficial to have never claimed it in the first place.
Cheers
Scally.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 $100 000 depreciation over five years. The tax benefit on that claim has been $33 000 at 33%.
Let’s say you have another chattels valuation prepared when you sell the property. What will it show? It will show what all property investors know, that the increase in value of the property has come mainly from the land value increasing, not from the building increasing in value – although it may have from inflation in building costs.
In practical terms, what does this mean?
It usually means that half of the depreciation is paid back as depreciation recovered. The Australian term is ‘balancing charge’. There was no balancing charge in the pre 1997 Tax Act rewrite – nice little loophole, since closed.
So, in our example, $33 000 has been received as a tax benefit and $16 000 is paid back. Do you need to be a Rhodes Scholar to work out whether or not to claim depreciation?
You would certainly claim it in your NZ tax returns. And if the rules apply in Australia, that you can claim depreciation even at the lower rate, then you claim it and you repay half of it (based on my clients’ experience) when you sell the property.
Regards
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.nzHi Chris ,
have a completly different question if you dont mind answering it?
As you may know i have acquired a positive cashflow property. With the spare cash i receive i would like to purchase shares in new zealand as i was told that their is no capital gains tax in NZ.
Is this true? And if it is, is it complicated or can you do it online?
Thanks.
DomHi 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 share investing through most NZ Banks. I am adding below a number of links for you to check on –
http://www.bankdirect.co.nz/section59.asp
http://www.nationalbank.co.nz/online/onlinesharetrading/
http://www.directbroking.co.nz/
http://www.crestsystems.co.nz/crest_shareprice.html
http://www.asbsecurities.co.nz/section691.asp
http://www.canopus.co.nz/
http://www.broking.hsbc.com.au/public/asx_share_trading.htmlKind regards
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.nzThanks Chris,
I set up a new zealand trust with your company a while ago.
Is my trust a suitable trust for share trading?
P.S Great links.
Dom[biggrin]
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