Moving to New Zealand

New migrants to New Zealand and New Zealanders returning after an absence of 10 years or more may be able to benefit from the transitional resident tax exemption, which applies to foreign sourced income derived by new migrants for a period of up to four years after you first become resident in New Zealand. 

 

To maximise the effect of the transitional resident exemption, care should be taken to ensure that the start date of your residence in New Zealand is not unintentionally triggered earlier than expected. A person becomes tax resident in New Zealand if they have a permanent place of abode in New Zealand or if they are personally present for an aggregate of 183 days in any 12 month period.

Whether you hear about them through your accountant, your banker or your new neighbour, you are going to quickly realise that the use of trusts is prolific in New Zealand. A trust involves a disposition of property by a person, called the settlor, to a person or persons, the trustees, who are instructed to hold that property for the benefit of others, the beneficiaries. There must be an express intention to establish the trust, it must be clear who the beneficiaries are and the trust property should be clearly identifiable. A trust will normally be set up by the execution of a trust deed, which records the terms of the trust and directs the trustees as to how they should administer the trust property. 

 

There are three main reasons for the use of trusts in New Zealand: asset protection, estate planning and taxation benefits. By ceding legal title to the assets, a settlor of a trust may put his assets beyond the reach of his or her future creditors. A trust gives the settlor power to control distributions to the beneficiaries and is therefore useful as an estate planning tool. The generous features of New Zealand’s relationship property laws may operate to allow even an unmarried partner to walk away with half of the family assets after a relatively short period of time. It is important that you understand the scope of these laws and protect your and your family’s wealth from unexpected threats.

 

New Zealand does not have a generally applicable capital gains tax, but the tax laws contain many provisions which recharacterise capital gains as income and tax them accordingly. 

 

Simply having money in the bank can expose you to tax on foreign exchange movements on an unrealised basis, if you exceed the relevant thresholds. 

 

Gains from land transactions will generally remain outside the tax net, unless one of the myriad of exceptions apply to your situation, such as development or improvement activities, gains from a change in the resource rules applying the land, acquiring the land as part of a business or for the purpose of disposal or simply being associated to someone in the building business.