Title to Land
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
- 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
- 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
- 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.
- 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;
- Family; and
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.
- 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.
- 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 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.