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 prices rise – and the rents are not rising as fastly as the house prices.
There are opportunities in different towns, so doing research is important.
NZ Bird Dogs are property finders in New Zealand. They find properties, negotiate a price below valuation and then offer the properties to their members for a fee. The fees are the lowest I have seen for comparable property finders.
If you cannot find NZ Bird Dogs contact details, just drop me an email and I will send you their promo material.
Yep. Still looking for clients. I’ve put on more graduate accountants so I can handle the work. We are all providing opportunities for each other.[biggrin]
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
Ok folks…Im trying to make heads an tails of all this as I’m a newbie but this is my situation.I’m from NZ but moved to Oz (Melbourne) a month ago. Before I left NZ my mother and my niece set up an LAQC of which I was meant to be a part of but the lawyer advised against my being a director or shareholder because he felt that as an Australian Resident being a director could make the NZ companys holdings liable to Australian CGT.
My mum, niece and myself joined forces as my niece is a high income earner, my mother owns a property near the beach (which she has sold to the LAQC) and I do all the property investing research.
Both my mother and niece are NZ residents, my niece is sole director but both are shareholders owning equals shares in the LAQC.I moved to Melbourne for personal reasons and wish to start investing in property here.
Can someone suggest some structural ways for me to enter into the family LAQC as a shareholder and director?
Are the holdings of a NZ company liable for Australian CGT if a director and shareholder of the NZ company resides in Australia?Dr X says:
Trustee company with us as directors
NZ-based trust.… could you explain this abit more please … I do agree with Dr X that you dont have to set it up one way just because thats the advice you are given
APPRECIATE ANY PROMPT REPLYS FOLKS – thanks
To Chris Raynal,
Just a quick reply, due to the time.
Thank you very much for the info. You have been very helpful. I most certainly have your details written down. It won’t be for a couple of months before I decide what to do. I have a couple of things, or three, to tidy up before I can take any action one way or the other.
Regards,Forklift.
hi guys
came across this article on the ATO websitehttp://law.ato.gov.au/atolaw/view.htm?docid=TPA/TA20044/NAT/ATO/00001
any association with what your setting up?????
hb
Hi
don’t you hate it when the ATO uses words like……“The arrangement is a sham. “
or
“The Australian Taxation Office is examining these arrangements“
that usually means penalties………lots of penalties……
thank god, nobody got involved
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 concerned with promoters using NZ Foreign Trusts illegally to evade tax. They were used by these promoters to evade tax. It was a scheme, so would be determined be a conspiracy to defraud the Australian Government.
The claims by the promoters were false and would not stand up to an audit inspection.
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 masteraccountants for clarifying the trusts structures that you set up
has there been any tax related issue with australian residents using this structure and the ATO??hb
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 questioned in the future. An auditor can always request details to review the tax affairs of an Australian resident taxpayer.
We have done our research into all of the issues, such as the transferor trust rules and control/administration by Australian tax residents, and have developed a structure and administration process that we believe will pass an audit test with the ATO to ensure it is not also deemed to be an Australian resident trust.
There is CER (closer economic relations) between Australia and New Zealand since the 1980s (at least). This means that there is information sharing between the ATO and IRD. So we believe that the ATO is aware of what arrangements their tax residents are entering into.
They certainly know when an Australian tax resident purchases a NZ property in their own name. They don’t have to wait until you inform them!
So it is highly likely that they know their tax residents are being named in NZ Trusts when we apply for IRD Numbers for them and their Trusts. And IRD are sent copies of our Trust Deeds. They could share this information with the ATO should the ATO request it.
There is no attempt to hide information from either IRD or the ATO.
It is interesting that Australian tax residents have to answer a question in their income tax returns about any interests in foreign companies and foreign unit trusts. They do not have to disclose any ‘interest’ in a discretionary trust.
This is probably so as in discretionary trusts no-one has a ‘present or legal entitlement’ to the assets or income of the Trust. So there is no ‘interest’ as defined. It does provide a nice arrangement for overseas investors, nevertheless, while still being honest with the tax authorities.
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 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 would be similar to that in NZ. That is to say, you would not have to declare your income interest in your Australian tax returns. You could check this with an Australian tax accountant. But that is the situation if a New Zealander owns part of a company in Australia. The reverse should apply.
The LAQC is presumably making a loss. LAQCs are not recognized in Australia as being anything different from a normal company, so they would regard the losses as belonging to the company – to be offset against future profits. So there would be no tax claim in Australia for your share of the losses in the LAQC.
Eventually, if the property were to be sold, and a capital gain were made, then you would have to pay CGT on your share of the capital gain. As the property was owned by a company, you would not receive the 50% CGT exemption. Your other shareholders would have no CGT to pay in Australia.
That begs the question, why would you want to do it?
If you want to jointly own some other property with your relatives, preferably a cash-flow positive rental property, other structures would be more tax effective.
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
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