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Land Purchases and Property Development

Set out below are details of some of the most significant legislation affecting businesses in New Zealand.
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Title to Land

New Zealand has a land ownership scheme based on a central register. This system is similar to the “Torrens” system in Australia and means that almost every parcel of land has its own separate unique identifier (“title”).

Once the purchaser’s name is noted on a title as the registered proprietor the rights to ownership of that land are guaranteed by the New Zealand Government. This therefore means that if there are any errors in the chain of ownership, this will not affect the validity of the title and there is no need to trace the history in order to prove ownership. The only exception to this guarantee is if the registered owner has obtained title by way of fraud.

In New Zealand it is possible to purchase property personally or as a company or as a trust. There are different tax implications and processes in place for companies and trusts and further advice should be sought regarding the appropriate structure of, and vehicles for, such purchases.

LINZ is responsible for providing New Zealand’s land information and registration system. LINZ has automated its land titles and survey business functions in a computer system called Landonline. Landonline provides remote access facilities to subscribing customers such as lawyers, surveyors, real estate agents and local authorities. Landonline operates a system called “e-Dealing” which is a mechanism that transfers property immediately using internet protocols. The result of this e-Dealing is that once the electronic instruments are certified, signed and released by a lawyer or conveyancing professional for registration the computer land register will be instantaneously and automatically altered so as to record the purchaser of a piece of land as the registered owner of the title. There are currently changes by implementers to Landonline that will hopefully provide further enhanced access and functionality for those involved in land transactions.

The Building Act 2004

In New Zealand the construction of buildings is controlled by the Building Act 2004 which applies not only to the construction of new buildings, but also to the alteration, demolition and maintenance of existing buildings. The main reason for having building controls is to ensure buildings are safe and healthy to live or work in. There is a three-part framework for setting out these controls:

  • The Building Act 2004 sets out the law on building work.
  • The Building Regulations contain the mandatory New Zealand Building Code and also the rules about building consents and building inspections.
  • The New Zealand Building Code sets out performance standards that all building work must meet, and covers aspects such as fire safety, access, moisture control, durability, services and facilities.

Agreements for Sale and Purchase

In order to have a legally binding contract for sale and purchase of land, the contract or agreement must be signed by the parties in writing. A contract can however be subject to conditions. Common conditions could be that it is subject to the purchaser being able to raise finance or the purchaser being satisfied with the Land Information Memorandum (“LIM”) relating to the property. The LIM is provided by the local territorial authority. If the conditions of the contract are not satisfied by the due date, then either party may elect to cancel the contract at any time thereafter. The parties however, have a duty to take all reasonable steps to satisfy the conditions, and if the conditions are not satisfied and the contract comes to an end any deposit paid is generally refundable in full unless the parties have agreed otherwise.

Entrepreneur Category

To be approved residence under the Entrepreneur Category, an applicant generally needs to:

  • Have established or purchased, or made a substantial investment in, a business operating in New Zealand;
  • Have been self-employed in the business for at least two years;
  • Demonstrate how the business is benefitting New Zealand by promoting economic growth;
  • The business must also comply with New Zealand Employment and Immigration Law;
  • The requirements as to health, good character and English language must also be met.

As the rules and requirements relating to immigration change from time to time, it is impossible to set out the full details at length. We suggest that you check out details on the Immigration New Zealand website (www.immigration.govt.nz) so that you can obtain the most up-to-date information and criteria:

Business Investor Category

There are two Business Investor Categories at present. They are:

  • Investor 1 Category NZ$10 million of investment funds. No maximum age, no business experience or minimum English language requirement needed.
  • Investor 2 Category NZ$1.5 million of investment funds plus settlement funds of NZ$1 million. Applicant must be under 65 and meet the English language requirement.


The migration of people into New Zealand is controlled by the Government through the New Zealand Immigration Service. The majority of tourists and visitors are generally permitted to enter New Zealand for brief stays with a minimum of immigration formality. Temporary entry is normally granted through a visitor’s visa which can be approved for a period of up to nine months. Other types of visas are available. They are:

  • a residence visa which is for those people who wish to permanently live in New Zealand;
  • a work visa which is for those people who want to work in New Zealand for a temporary period of up to three years; and
  • a long term business visa which is for those people who wish to establish their own business in New Zealand for an initial period of time but that can be established for up to three years.
  • There are a number of categories under which prospective immigrants may qualify for permanent residence in New Zealand. Under the present policy, the categories are as follows:
  • General Skills;
  • Skilled Workers
  • Business Investor;
  • Entrepreneur;
  • Family; and
  • Humanitarian.

We look at a few categories as follows;

Applicants are assessed against a points system. The basis upon which points are awarded changes from time to time, however, it is generally reassessed annually and details publicised shortly after the reassessment.

Points may be awarded on various criteria, such as the applicant’s educational and vocational background as well as age and financial standing.

In addition, points may be awarded for a family sponsor and if the applicant has a genuine employment offer.

An adequate knowledge of the English language, good health and character are also required.

Accounting Practices

With the exception of certain exempt companies, all companies are required to comply with the Financial Reporting Act 1993. Companies are required to produce “financial statements” which include a balance sheet, profit and loss statement and a statement of cashflows as at the end of each financial year. The financial statements must give a “true and fair view” of:

  • The state of affairs of the company;
  • The profit and loss or income and expenditure of the company; and
  • The cashflows of the company.

The Financial Reporting Act 1993 distinguishes between “exempt companies” and “reporting entities”. Exempt companies are those which are not overseas persons and which do not have assets of more than $NZ450,000, or turnover which exceeds $NZ1,000,000 and do not form a group of companies. These companies are required to comply with the accounting standards prescribed from time to time by the Minister of Justice. A “reporting entity” includes all other companies. Reporting entities must prepare their financial statements in accordance with generally accepted accounting practice.

The Companies Act 1993 and the Financial Reporting Act 1993 also require that companies with overseas shareholdings carrying 25% or more voting power must be audited and their accounts filed in the Companies Office. Financial statements must be completed within five months of the end of each financial year.

The New Zealand Society of Chartered Accountants controls the profession in New Zealand, and is a member of the International Accounting Standards Committee. Generally, international standards are incorporated within New Zealand and most accounts are prepared using historic costs, recognising income on an accruals basis.

Companies are required to retain most of their business records, i.e. books of account recording receipts, payments, income or expenditure and vouchers, bank statements, invoices, receipts and all other financial accounts relating to the business for a period of seven years after the end of the income year to which they relate. These records must be in the English language so as to enable the Commissioner of Inland Revenue in New Zealand to readily ascertain the assessable income derived by the taxpayer and allowable deductions.

All taxpayers, individuals and companies are required to furnish a return of income on the prescribed date for the income year ending on the preceding 31 March. If the Commissioner of Inland Revenue consents, a taxpayer may adopt an income year which ends on the date of the annual balance date of the taxpayer’s accounts. In addition, companies are required to report certain payments made to residents and non-residents at the time the company return is furnished.


In New Zealand the Government collects and administers tax through the IRD. The IRD collects tax under two primary pieces of legislation. They are:

  • the Income Tax Act 2007; and
  • the Goods and Services Tax Act 1985.

The latter is a consumption tax commonly called “GST”. In addition import tariffs and miscellaneous excise duties, rates and gift duty as direct and indirect taxes are collected. However, a bill is currently before the House of Representatives that will repeal all gift duty in New Zealand. Some of the important features of the New Zealand tax system and policy environment are that there is no capital gains tax in respect of certain transactions, no employee payroll tax and no social security tax.

At present, a New Zealand resident company is taxable on its worldwide income at a rate of 28%. All companies, whether resident or non-resident are taxed at the same rate. However it should be noted that an overseas company is taxed at the same rate but only in respect of its income that has a New Zealand source.

Taxation rates for individuals change from time to time and the latest rates are available on the IRD website.

Individuals are regarded as resident in New Zealand for income taxation purposes if they have a permanent residence in New Zealand (regardless if they also have one elsewhere) or if they are personally present in New Zealand for more than 183 days within a 12 month period.

Companies are considered to be resident in New Zealand if they:

  • are incorporated in New Zealand; or
  • have their head office in New Zealand; or
  • have their centre of management in New Zealand; or
  • control of the company by its directors is exercised in New Zealand whether or not decision making by directors is confined to New Zealand.

Goods and Services Tax (GST)

GST is currently charged at a fixed rate of 15% (subject to change) on the supply of most goods and services (with the sale and purchase of shares and financial transactions being the notable exception). Also on certain types of transactions between registered parties GST is charged at 0%. Typically these are business sales and purchases where the transaction is considered a “going concern” and some land transactions where they meet the requirements of the GST Act for 0 rating.

GST is intended to be borne by the final consumer of goods and services.

Residential property sales are exempt from GST in New Zealand although a residential property developer will usually be liable to pay GST on the sale of the property. Businesses are able to register for GST and claim a credit for any GST they incur in conducting their business while charging GST on their sales.

A person can register for GST provided that they are, or are going to be, conducting a taxable activity. A taxable activity is any activity carried on continuously and involves the supply of goods or services to another person for money.

Being GST registered is compulsory when supplies made in New Zealand have exceeded, or are likely to exceed NZ$60,000 in any 12 month period. All GST registered entities are required to file regular returns on GST collected by them and to account to the IRD for such GST.

Commercial Legislation and Regulations Affecting Business