NEW ZEALAND Law and Practice Contributed by: Brent Wicks, Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
Cone Marshall Limited Floor 3/32 Mahuhu Crescent Auckland Central Auckland 1010 New Zealand Tel: +64 9307 3950 Email: info@conemarshall.com Web: www.conemarshall.com
1. Tax 1.1 Tax Regimes
value since its original acquisition (but prior to trans - ferring that property into a trust). Following the transfer into the trust, if the property needed to be sold within the bright-line period, for whatever reason, the base value established via the market valuation could be used, rather than the origi - nal, historical purchase price, when determining the capital gain and any tax payable under the bright-line rules. This circumstance can arise where a property is required to be sold sooner than anticipated – eg, on the breakdown of a marriage/relationship, or busi - ness failure. 1.4 Taxation of Real Estate Owned by Non- Residents Residential Land Withholding Tax (RLWT) applies to non-residents (or New Zealand citizens absent for sig - nificant periods) selling residential property within the bright-line period. The tax is deducted at settlement, typically at 5% of the sale price or 10.5% for proper - ties sold within two years (post-1 July 2024). RLWT acts as a prepayment and can be credited against the final tax liability when filing a tax return. A NZ company with a mix of NZ resident and non-NZ resident shareholders could potentially avoid offshore RLWT status and would attract the 28% company tax rate (lower than the trustee tax rate and top personal rate of 39%). 1.5 Stability of Tax Laws Recent and potential developments include the fol - lowing.
New Zealand has a range of tax regimes that can apply, including income tax, trust taxes and property- related taxes. • Personal income tax based on a progressive tax system, with rates ranging from 10.5% for income up to NZD15,600 to the highest rate of 39% for income earned above NZD180,000. • The trustee tax rate is set at 39%, effective from 1 April 2024 (although trust income distributed to beneficiaries will be taxed at the income tax rate applicable to that individual, rather than 39%). • The “bright-line” test is a capital gains tax, which applies to residential properties sold within two years of purchase (for properties bought on or after 1 July 2024). The capital gain will be taxed at the relevant income tax rate. There are some excep - tions, including an exemption for the “main home”. • Presently no inheritance tax or gift duty applies. • Goods and Services Tax (GST) 15% – applicable to most goods and services. 1.2 Exemptions There are currently no estate, inheritance or gift taxes in New Zealand. There are no exemptions applicable. 1.3 Income Tax Planning It is common for independent and up-to-date market valuation to be carried out before transferring residen - tial property into a trust. This is done for the purposes of establishing an up-to-date “base-line” value, and is particularly relevant if the property has appreciated in
417 CHAMBERS.COM
Powered by FlippingBook