WWW.WYNNWILLIAMS.CO.NZ

INVESTING IN NEW ZEALANDWYNN WILLIAMS

Wynn Williams Christchurch

Homebase, Unit B, 195 Marshland Road, Shirley, Christchurch 8083PO Box 4341, DX WP21518, Christchurch 8140, New Zealand

P 64 3 379 7622F 64 3 379 2467E email@wynnwilliams.co.nz

www.wynnwilliams.co.nz

Wynn Williams Auckland

Level 7, Forsyth Barr Tower, 55 Shortland Street, Auckland 1010PO Box 2401, Shortland Street, Auckland 1140, New Zealand

P 64 9 300 2600F 64 9 300 2609E email@wynnwilliams.co.nz

www.wynnwilliams.co.nz

CONTENTS

Introduction 2

General Information About New Zealand 2

Migrating to New Zealand 3

Investing in New Zealand 6

Government 8

Legal System 9

Currency and Finance 9

Economy 9

Business Structures 10

Land 12

Tax 12

Transitional Resident Rules 14

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GENERAL INFORMATION ABOUT NEW ZEALANDNew Zealand is in the South Pacific approximately 1500 kilometres east of Australia. New Zealand consists of two main islands called the North Island and the South Island and a number of smaller outlying islands. The area of New Zealand is 270,000 square kilometres which is similar in size to the British Isles or Colorado and about two-thirds the size of Malaysia.

The population of New Zealand is four million. Three million live in the North Island and one million live in the South Island. Our population is ethnically diverse and well-travelled. One in every four people working in New Zealand was born elsewhere and one New Zealander in four is currently living and working overseas.

75% of the population is of European ancestry, 15% is of Maori ancestry, 10% is of Asian ancestry and 7% of Pacific Islands ancestry. (These percentages add up to more than 100% because some people identify with more than one ethnic group). Maori are the indigenous people of New Zealand. The official languages are English and Maori. English is spoken throughout the country.

The population is well educated and New Zealanders enjoy a high standard of living with excellent housing, health, transport, and communication systems. New Zealand culture values fairness, integrity, ingenuity, practicality, informality and a strong work ethic.

INTRODUCTIONWynn Williams has produced this guide for overseas persons investing in New Zealand or migrating to New Zealand under Immigration New Zealand’s Migrant Investment Policy.

This guide is accurate at September 2011 but is necessarily general in nature. As legislation, business conditions, and government policy can change, advice should be obtained on any proposal for investing or applying for residence in New Zealand. Wynn Williams will be happy to assist.

We can help you with any of the following:

• Your application for residence under the Migrant Investment Policy

• Investing in New Zealand and Overseas Investment Office consent applications

• Purchase of property or a business in New Zealand

• Structuring of your personal and business assets in New Zealand

• Establishment of trusts

• Wills and powers of attorney

• Putting you in touch with other professional advisers as required (eg banker, accountant, international tax adviser)

We offer a comprehensive range of high quality legal services and provide direct, practical advice and analysis with a focus on the best outcome for you.

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MIGRATING TO NEW ZEALANDAnyone (other than an Australian citizen) who wants to migrate to New Zealand needs to apply for permanent residence. Many applicants obtain residence in New Zealand under Immigration New Zealand’s Migrant Investment Policy through the Business Migrant Scheme.

MIGRANT INVESTMENT POLICY This Policy is designed to attract investor migrants with business experience, international connections and financial capital to New Zealand.

The Policy is divided into two categories:

• Investor Plus (Investor 1 Category)

• Investor (Investor 2 Category)

A successful applicant for residency under either the Investor 1 Category or the Investor 2 Category receives a conditional residence visa. If the conditions are met it is later converted to a permanent residence visa.

A summary of the key requirements for each Category of the Migrant Investment Policy is set out below:

KEY REQUIREMENTS INVESTOR PLUS (INVESTOR 1 CATEGORY) INVESTOR (INVESTOR 2 CATEGORY)

Age No age limit Applicant must be 65 years or younger

Business Experience No business experience required Minimum of 3 years relevant “business experience”

Investment Funds NZ$10million NZ$1.5million

Investment Period 3 years 4 years

Settlement Funds No additional funds NZ$1million (transfer not required)

English Language No requirement An English speaking background; or An International English Language Testing System (IELTS) test report with a score of 3 or more; or A competent user of English

Number of Applicants Unlimited 300 approved applications per year

Health and Character Applicant (and family) must meet health and character requirements

Applicant (and family) must meet health and character requirements

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To be eligible for residency applicants must meet the following criteria:

INVESTOR 1 CATEGORY Applicants under the Investor 1 Category must have “investment funds” of at least NZ$10million to be invested in an “acceptable investment” for at least 3 years.

The Applicant does not need to have previous business experience but must spend at least 12% of the year (44 days) in each of the last 2 years of the 3 year investment period in New Zealand. There are no age, English language or additional settlement fund criteria to be met.

INVESTOR 2 CATEGORYApplicants under the Investor 2 Category must have “investment funds” of at least NZ$1.5million to be invested in an “acceptable investment” for at least 4 years.

Applicants must have minimum “business experience” of 3 years and spend at least 40% of the year (146 days) in each of the last 3 years of the 4 year investment period in New Zealand. Applicants must be aged 65 or under, meet English language speaking requirements and have additional “settlement funds” of NZ$1million.

DEFINITIONS “ACCEPTABLE INVESTMENT” means an investment which:

• is capable of a commercial return under normal circumstances; and

• is not for the personal use of the applicant(s); and

• is invested in New Zealand in New Zealand currency; and

• is invested in lawful enterprises or managed funds that comply with all relevant laws in force in New Zealand; and

• has the potential to contribute to New Zealand’s economy; and

• is invested in one or more of the following:

- bonds issued by the New Zealand government or local authorities; or

- bonds issued by New Zealand firms traded on the New Zealand Debt Securities Market (NZDX); or

- bonds issued by New Zealand firms with at least a BBB- or equivalent rating from internationally recognised credit rating agencies (eg Standard and Poor’s); or

- equity in New Zealand firms (public or private, including managed funds); or

- bonds issued by New Zealand registered banks; or

- equities in New Zealand registered banks; or

- defined residential property development(s); or

- bonds in certain finance companies.

For the purposes of this policy an investment in the applicant’s New Zealand business (eg farm, manufacturing business) and/or convertible notes are considered to be an equity investment.

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“BUSINESS EXPERIENCE” under the Investor 2 Category means:

• experience in planning, organisation, control, senior change-management, direction-setting and mentoring acquired through ownership of, or management level experience in, a lawful business enterprise that has at least 5 full-time employees or an annual turnover of NZ$1million.

An applicant is considered to own a business if they own at least 25% of a business.

A lawful business enterprise is an organisation that:

• operates lawfully in a commercial environment with the goal of returning a profit; and

• is not set up primarily for passive or speculative purposes.

“INVESTMENT FUNDS” means:

• nominated funds and/or assets which are owned:

- solely by the applicant; or

- jointly by the applicant and the applicant’s partner (who is included in the residence application) provided the applicant and partner have been living together for 12 months or more in a partnership that is genuine and stable; or

- jointly by the applicant and dependent children who are included in the residence application;

in which case, the applicant may claim the full value of the jointly owned funds or assets for assessment purposes; or

- jointly by the applicant and a person other than their partner or dependent child, in which case the applicant may only claim the value of that portion of funds and/or assets for which they provide evidence of ownership.

Nominated funds and/or assets must have been earned or acquired legally or have been gifted to the applicant unconditionally and in accordance with local law. Where nominated funds and/or assets have been gifted to the applicant funds and/or assets being gifted must have been earned lawfully by the person/s gifting the funds and/or assets.

Nominated funds and/or assets must not be subject to a mortgage or other charge.

Nominated funds and/or assets must not be borrowed.

“SETTLEMENT FUNDS” under the Investor 2 Category means funds which the applicant and the applicant’s family will use to support themselves during the 4 year investment period. The applicant is required to produce evidence of the availability of settlement funds, which may include:

• funds held in New Zealand bank accounts;

• funds held in offshore bank accounts, together with evidence that the funds can be accessed from New Zealand; or

• acceptable evidence of net assets (either in New Zealand or offshore).

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INVESTING IN NEW ZEALANDSince the United Kingdom joined the European Union, New Zealand has actively strengthened its ties with North and South America, Asia and the Pacific Rim countries. New Zealand has a deregulated economy directly exposed to international competition with few import controls or subsidies.

Although New Zealand welcomes foreign investment, the consent of the Overseas Investment Office (“OIO”) is required for some transactions where an “overseas person” wants to acquire land or invest in New Zealand. The Overseas Investment Act 2005 (the “Act”) governs overseas investment by overseas persons.

Consent is required if:

• An overseas person wishes to acquire “sensitive land”; or

• An overseas person wishes to invest more than NZ$100million in business assets.

The Act requires that consent be obtained before a transaction takes place. It is possible for agreements relating to the acquisition of sensitive land or relating to investment in significant business assets to be entered into provided the agreement is expressed to be conditional upon OIO consent being obtained.

An individual investor who does not apply for consent (or attempts to avoid the provisions of the Act) where consent is required will be liable to prosecution under the Act.

OIO APPLICATION PROCESSThere is no standard application form for an application for consent under the Act as the information and documentation required for every application varies quite significantly.

An overseas person wanting to invest in sensitive land or significant business assets must:

• have business experience and acumen relevant to the investment; and

• must demonstrate financial commitment to the investment; and

• must be of good character.

If an overseas person wishes to invest in sensitive land but does not intend to permanently reside in New Zealand they must also show that the investment is likely to benefit New Zealand. If the investment is in sensitive land over 5 hectares in area, the overseas person must also show that the benefit to New Zealand is likely to be substantial and identifiable.

The factors the OIO consider in assessing the benefit of an investment in sensitive land to New Zealand include:

• creation or retention of jobs;

• introduction of new technology or business skills;

• an increase in export receipts for New Zealand exporters;

• introduction of additional investment for development purposes;

• added market competition, greater efficiency or productivity, or enhanced domestic services in New Zealand;

• protection of the environment;

• an increase in processing in New Zealand of New Zealand’s primary products;

• provision for protection or enhancement of existing areas of native vegetation and wildlife;

• provision, protection or improvement of walking access to areas of native vegetation and wildlife;

• provision for protection or enhancement of historic heritage within the land; and

• provision for general walking access over the land (or part of it) by the public.

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Where the overseas person does not intend to reside in New Zealand then, for certain types of sensitive land, there are further requirements which must be met before OIO consent can be obtained. If the sensitive land includes any special land (eg foreshore, seabed, riverbed or a bed of a lake) those parts of the property must be offered for sale to the Crown.

PROCESSING TIMEThere is no statutory timeframe within which an application for OIO consent must be decided. However, the OIO aims to make a decision on high quality, straightforward applications where no third party consultation is required or special land is involved within 50 working days (about two and a half months). For processing to take place within the 50 working day period, it is necessary that the application is a high quality one which provides full detailed information addressing the specific criteria against which the application is assessed by the OIO (the criteria are set out under “OIO Application Process” above). For complex applications or applications involving sensitive land where the overseas person is not intending to become permanently resident in New Zealand, a longer period is not uncommon. For this reason, it is important that advice is sought regarding OIO issues at a very early point in the process when an overseas person is considering investing in land or business assets in New Zealand. Wynn Williams can advise you in relation to all aspects of the OIO application process.

CONSENTThe OIO advises whether or not consent is given to the acquisition by an overseas person in a decision letter. The letter will set out whether or not consent has been granted and list any conditions which have been imposed by the OIO on that consent.

The majority of applications can be decided by the OIO under delegated authority. However, some consent applications are referred to the relevant Government Ministers for a decision.

If consent is granted to the investment by the OIO, it will usually be subject to various conditions that the overseas person must comply with.

The OIO will check to make sure that the conditions continue to be met until such time as they have been revoked or until the benefits of the investment to New Zealand have been realised.

OIO FEESThe current fees charged by the OIO for processing applications relating to sensitive land or significant business assets are as follows:

• application for consent to a land transaction which can be decided by the OIO under delegated authority – NZ$19,524.44;

• application for consent to a land transaction which needs to be provided by Government Ministers – NZ$22,488.89; and

• application relating to investment in significant business assets which can be decided by the OIO under delegated authority – NZ$13,186.67

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DEFINITIONS“OVERSEAS PERSON” means a person who is:

• not a New Zealand citizen; or

• not a person who is ordinarily resident in New Zealand.

An overseas person may be an individual or other entity such as a company.

A person is treated as being ordinarily resident in New Zealand if they have a permanent residence visa and:

• they are domiciled in New Zealand; or

• they are residing in New Zealand with the intention of remaining permanently and have done so for the last 12 months.

A New Zealand company is treated as an overseas person if it is 25% or more owned or controlled by another overseas person.

“ORDINARILY RESIDENT” means:

• domiciled in New Zealand; or

• resident in New Zealand for the previous 12 months and intending to reside in New Zealand indefinitely.

“SENSITIVE LAND” means:

• non-urban land exceeding 5 hectares;

• land exceeding 0.4 hectares on certain specified islands;

• land comprising foreshore or seabed;

• land exceeding 0.2 hectares adjoining a foreshore;

• land exceeding 0.4 hectares comprising a bed of a lake;

• land exceeding 0.4 hectares adjoining a bed of a lake;

• certain conservation, recreation, or historic land exceeding 0.4 hectares; or

• land exceeding 0.4 hectares adjoining certain conservation, recreation, or historic land.

NEW ZEALAND: GOVERNMENTNew Zealand is a stable democracy. It is a member of the British Commonwealth of Nations and has strong links with the United Kingdom. New Zealand is a constitutional monarchy. Queen Elizabeth the Second is the head of state.

There is a democratically elected parliament based on the British (Westminster) system. There is only one legislative body which is called the House of Representatives (Parliament). The executive consists of the Governor General (the Queen’s representative), the Prime Minister, and a cabinet of ministers selected by the Prime Minister.

Members of Parliament are elected every three years.

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NEW ZEALAND: LEGAL SYSTEM New Zealand has a common law legal system which is based on the British system. This system is similar to that found in other members of the British commonwealth. The court system consists of a hierarchy of courts. The district court deals with civil claims of less than NZ$200,000 and with less serious criminal offences. The high court deals with civil claims of NZ$200,000 or more and with serious criminal offences. There are rights of appeal from the District Court to the High Court, from the High Court to the Court of Appeal, and from the Court of Appeal to the Supreme Court.

There are other specialist courts such as the Family Court and the Environment Court. Judges have a strong tradition of independence and the legal system has various mechanisms designed to protect that independence.

The New Zealand legal profession consists of barristers and solicitors who must hold a practising certificate issued by the New Zealand Law Society. Most members of the legal profession hold a practising certificate as both a barrister and a solicitor.

NEW ZEALAND: CURRENCY AND FINANCEThe New Zealand currency is decimal. The base unit is the New Zealand dollar. There are 100 cents per dollar. The New Zealand dollar is currently trading at around US$0.80.

New Zealand has a sophisticated and stable banking system. There are a number of major banks and non-bank financial institutions. Together they offer a wide range of banking services and financial products in a competitive market.

These include corporate finance, project finance, retail banking, equipment and stock and trade finance, electronic banking, factoring and receivables financing, leasing, property and construction finance, and trade finance.

There are no restrictions on the amount of money (whether in cash or by funds transfer) that may be brought into or taken out of New Zealand. However there are reporting obligations for certain transactions under the Financial Transactions Reporting Act 1996. This Act requires financial institutions to report suspicious transactions to the police and also requires persons coming into or leaving New Zealand with more than NZ$10,000 in cash to report that transfer.

NEW ZEALAND: ECONOMYThe New Zealand economy is a market driven economy and is mainly controlled by the private sector. It is highly geared towards overseas trade. In the past, the New Zealand economy was dominated by farming. Farming is still a significant part of the New Zealand economy but in recent years tourism, manufacturing, and service industries have become the largest contributors to the economy. New Zealand has one of the most open and competitive economies in the OECD.

The New Zealand economy generally enjoys sustainable growth, low inflation, low unemployment, and controlled public debt levels. New Zealand’s major trading partners are Australia, USA, Japan, Britain, Korea, and China.

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NEW ZEALAND: BUSINESS STRUCTURESA person may carry on business in New Zealand as a sole trader, a partnership, a limited partnership, a joint venture, a trust, a company, a look-through company or an overseas company.

SOLE TRADER An individual person may carry on business on their own account as a sole trader. A sole trader is personally liable for all liabilities incurred in carrying on the business.

PARTNERSHIPTwo or more individual persons or companies may carry on business as a partnership. A partnership is not a separate legal entity. A partnership is a flow-through structure for tax purposes so the partners share profits and are personally liable for the liabilities of the partnership.

LIMITED PARTNERSHIP Limited partnerships are a form of partnership involving at least one general partner (who is liable for all the debts and liabilities of the partnership) and at least one limited partner (who is liable to the extent of their capital contribution to the partnership). A limited partnership is also a flow-through structure for tax purposes but is a separate legal entity from its partners.

A partner in a limited partnership can be a natural person, a company, a partnership or another unincorporated body.

General partners manage the business while limited partners are usually passive investors in the business. Loss-limitation rules apply to limit losses claimed by limited partners to the level of their economic loss.

Limited partnerships were introduced to New Zealand to facilitate sustainable growth in New Zealand’s venture capital and private equity industries. The regime removes barriers to foreign capital investment which provides a valuable source of funding for new companies and early stage expansion capital.

Features of limited partnerships include:

• separate legal personality;

• an indefinite lifespan if desired;

• a list of activities that the limited partners can be involved in while not participating in the management of the limited partnership (safe harbour activities); and

• the tax treatment of limited partnerships.

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JOINT VENTURE Two or more individual persons or companies may carry on business as a joint venture. Joint ventures are usually formed to carry out a particular project. The rights and liabilities of the parties depend on the terms of the joint venture agreement.

TRUSTThe trustee of a trust may carry on business. Under a business trust, the trustee owns the trust property and carries on the business on behalf of the beneficiaries of the trust. The trustee is liable for the liabilities arising from the trust business. The trustee has rights of recourse against the trust property to meet those liabilities. The entitlements of the beneficiaries depend on the terms of the trust. Those entitlements may be in a fixed proportion or may be variable.

NEW ZEALAND COMPANY A New Zealand company may be formed under the Companies Act 1993 to carry on business. A New Zealand company must have at least one shareholder and one director. Non-resident shareholders and directors are allowed.

In broad terms any entity may be a shareholder. However only individual persons may be directors.

New Zealand companies do not have a par value attached to their shares. Instead shares are issued to shareholders at an agreed price. The value of the shares is then dependent on the value of the company’s assets and undertaking.

New Zealand companies must file an annual return with the New Zealand Companies Office. If a New Zealand company is owned by overseas persons or ultimately owned by an overseas company then there are extra reporting requirements that must be met. In broad terms this means that the foreign owned New Zealand company must file audited financial statements relating to its New Zealand business.

LOOK-THROUGH COMPANYA Look-Through Company is a New Zealand tax resident company, the shareholders of which have elected that the company be a Look-Through Company. It is a flow-through structure with profits and losses allocated to shareholders in proportion to their shareholding on an annual basis. A loss-limitation rule applies to limit losses claimed by shareholders.

A Look-Through Company is treated like a partnership for tax purposes.

OVERSEAS COMPANY An overseas company may carry on business in New Zealand by registering as a branch. An overseas company must register as a branch within 10 working days after it begins to carry on business in New Zealand. If an overseas person registers as a branch rather than forming a New Zealand company as a subsidiary, there are different consequences.

The reporting and filing requirements are different (eg an overseas company registering a branch must report on its worldwide operations rather than just its New Zealand business), liabilities for damages are different (an overseas person registering as a branch will be directly liable to its contracting parties), and the tax consequences may be different (an overseas company registering as a branch may be treated as a non-resident for tax purposes whereas if an overseas person forms a New Zealand company as a subsidiary, the subsidiary will be a New Zealand tax resident).

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NEW ZEALAND: LAND Most privately owned land in New Zealand is held under a central land registration system. Under this system each piece of land has its own title which records who owns it. This means that when land is purchased the ownership details set out on the title can be relied on and it is not necessary to research the previous ownership of the land.

ENVIRONMENTAL LAWSThe use of land, water, and other resources in New Zealand is governed by the Resource Management Act 1991. This Act is designed to promote sustainable management of the physical and natural resources in New Zealand. The Resource Management Act is administered by Local Government Authorities. These authorities issue regional and district plans which set out rules for activities in their administration areas. Any person wishing to use land, water, or other resources must abide by these rules. In some cases the person must seek a resource consent authorising particular activities.

BUYING AND SELLING LAND IN NEW ZEALANDAll contracts for the sale and purchase of land in New Zealand must be in writing and signed in order to be enforceable. It is common for these agreements to be conditional on various conditions being met. These conditions usually include:

• the purchaser’s solicitor being satisfied with the title to the land;

• the purchaser raising sufficient finance;

• the purchaser carrying out due diligence on the land and being satisfied with the result; and

• where the purchaser is an overseas person, the purchaser obtaining consent from the OIO to allow the purchaser to buy the land.

NEW ZEALAND: TAX INCOME TAX The New Zealand tax system comprises income tax, goods and services tax (“GST”), gift duty, import tariffs and excise duties. These taxes are levied by the Crown. Local Government also levies taxes by way of rates against owners of land.

New Zealand income tax is imposed on New Zealand residents (including individual persons and companies) on their worldwide income unless they qualify for the exemption from tax on overseas income under the Transitional Resident Rules. New Zealand income tax is also imposed on non-residents on the income they derive from New Zealand.

The marginal tax rate for individuals varies between 10.5% and 33%. The tax rate for companies is a flat 28%. The tax rate for trust income varies depending on whether the trustee or a beneficiary is taxed, the tax status of the trust, and the residence of the beneficiary. Where the trustee rate applies the tax rate is a flat 33% if the trust was established by a New Zealand resident and has New Zealand resident trustees.

Income earned by a trust from a New Zealand source is always taxed in New Zealand either to the trustee or to the beneficiary of the trust. Income earned by a trust from an overseas source is taxed in New Zealand if it is distributed to a beneficiary who is resident in New Zealand unless the beneficiary qualifies as a Transitional Resident under the Transitional Resident Rules. It is not taxed in New Zealand if the beneficiary is not resident in New Zealand.

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Income earned by a trust from an overseas source is also taxed in New Zealand if a settlor of the trust is resident in New Zealand or died whilst resident in New Zealand. A settlor is a person who directly or indirectly transfers property to a trust at less than market value. Income from an overseas source is also taxed in New Zealand if the trust is a testamentary trust (created under a will) and the trustee is resident in New Zealand. Therefore, in broad terms, trusts with New Zealand resident trustees are not subject to New Zealand income tax if they have solely overseas income, settlors, and beneficiaries.

NO CAPITAL GAINS TAX, ESTATE OR DEATH DUTIES There is no capital gains tax in New Zealand. However in certain circumstances, gains derived on the resale of assets (such as land or shares), or distributions from trusts or companies may be treated as income and can therefore be subject to income tax.

There are no estate or death duties in New Zealand.

GSTGST is a value added tax imposed on supplies of goods (including land) and services in New Zealand by a GST registered person. The GST rate is currently 15% on the value of the supply. GST is charged by a GST registered person on the goods and services they supply. GST registered tax payers obtain a credit for the GST charged on goods and services they acquire. At the end of each GST period, the registered person pays the difference to or claims a refund from the Inland Revenue Department. Where certain supplies are made to overseas persons, the GST rate is reduced to 0% or may be exempt from GST.

GIFT DUTY Gift duty has been abolished in New Zealand for gifts made after 1 October 2011.

INTERNATIONAL TAX New Zealand has entered into double tax agreements with a number of other countries to reduce the instances of double taxation. These agreements are intended to provide that only one country will tax a person’s affairs or if taxes are levied in both countries, the person will obtain a credit so they recover tax paid twice.

Payments of dividends, interest, and royalties to individual persons or companies who are not resident in New Zealand are generally subject to non-resident withholding tax. The rate of non-resident withholding tax depends on the type of payment and whether a double tax agreement applies. It can vary between 10.5% and 33%.

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TRANSITIONAL RESIDENT RULESThe New Zealand Transitional Resident Rules operate as a broad income tax exemption for new migrants and certain returning New Zealanders. The general criteria for qualification as a “transitional resident” are as follows:

• the tax payer is a natural person (ie not a company);

• the tax payer has become tax resident in New Zealand;

• the tax payer has not previously been a tax resident of New Zealand within the last 10 years; and

• the tax payer has not previously been a transitional resident.

The transitional resident exemption does not extend to foreign companies and foreign trusts which are administered/established by new migrants and returning New Zealanders.

Generally speaking, provided new migrants satisfy the criteria to be met to qualify as a transitional resident, they are entitled to a New Zealand tax exemption on their foreign income (subject to some exclusions) for a period of 48 months. The income will still be subject to the taxation regime in the country in which the income is derived. There is an opportunity for transitional residents to take advantage of a lower taxation rate in the country in which the income is derived compared to the rate at which it would be taxed in New Zealand. Investments can be structured in a way that investments are made in countries with attractive taxation rates to maximise the benefit received by the new migrant under the Transitional Resident Rules. It needs to be noted however, that the Transitional Resident Rules would also mean that the new migrant could not claim New Zealand tax deductions in respect of any foreign-sourced losses.

The income categories covered by the exemption include employment income relating to prior overseas service, employee share-based remuneration relating to prior overseas service, interest and dividend income, rental income, pension income, royalty income, gains from the sale of certain offshore property held on revenue account, income attributed under the Controlled Foreign Company Rules, income attributed under the Foreign Investment Fund Rules, financial arrangement income and income distributions from foreign trusts. The exemption does not extend to income for employment duties performed while a transitional resident, or income from the supply of services performed while a transitional resident.

For the transitional resident exemption not to apply, the individual must elect out of the regime. Careful consideration must be given to electing out of the regime as an election out of the regime is irrevocable. Situations in which an individual may benefit from electing out of the regime may include:

• where they are in an overall foreign loss position over the exemption period (this may be difficult to assess if the individual may have exposure to the Financial Arrangement Rules or the Foreign Investment Fund Regime); or

• where they are eligible for family assistance and the tax rebates they would obtain exceed the tax payable on their foreign income.

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THE OVERSEAS INVESTMENT TEAMIf you need legal advice and expertise, please get in touch with any of our team below. For full team member CVs visit www.wynnwilliams.co.nz

INVESTING IN NEW ZEALAND

JONATHAN GILLARD PARTNER, LLB

P 64 3 379 7622M 64 21 226 6100 F 64 3 379 2467E jonathan.gillard@wynnwilliams.co.nz

OLLY MATSON PARTNER, LLB

P 64 3 379 7622M 64 27 226 5555F 64 3 379 2467E olly.matson@wynnwilliams.co.nz

DAVID HAIGH PARTNER, LLB BCom

P 64 3 379 7622M 64 27 573 7775F 64 3 379 2467E david.haigh@wynnwilliams.co.nz

AREAS OF PRACTICEInvesting in New Zealand and ImmigrationCommercial Property Acquisitions and DisposalsCommercial LeasingPropertyTrusts

AREAS OF PRACTICECommercialPropertyPrivate ClientTrustsInvesting in New Zealand and ImmigrationExporting Legal Services

AREAS OF PRACTICERuralInvesting in New Zealand and ImmigrationCommercialPropertyPrivate ClientTrusts

GUIDING YOU EVERY STEP OF THE WAYWYNN WILLIAMS

COMMERCIAL LAWWynn Williams provides commercially-astute, proactive legal solutions for any business issue or opportunity.

We have a team of commercial lawyers with experience across a wide range of business sectors and sizes. Our commercial clients include large national and multinational companies, as well as owner-operators.

We have a strong focus on export and international trade, primary industry, agribusiness, transport, construction, and technology/biotechnology.

Our services cover all aspects of business structuring – including mergers, acquisitions and disposals; joint ventures, governance advice, shareholders’ rights, and insolvency. We also advise on the full range of operational requirements – including banking and finance, securities law, international trade, insurance, and employment.

Our goal is simple – to work with you to find the best solution, and maximise your opportunities, whatever your situation.

WWW.WYNNWILLIAMS.CO.NZ

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We WillDo our utmost for you, applying the best legal knowledge, judgement, innovation and commercial insights to all tasks.Honour the highest ethical and professional standards – always.Deliver results, on time and with value.Be here. Over 150 years of experience counts.

Member firms of the State Capital Group practice independently and not in a relationship for the joint practice of law.

Homebase, Unit B195 Marshland Road, Shirley Christchurch 8083PO Box 4341, DX WP21518Christchurch 8140, New Zealand

Level 7, Forsyth Barr Tower55 Shortland Street, Auckland 1010PO Box 2401 Shortland StreetAuckland 1140, New Zealand