NZ tax UK annuity
NZ resident family received UK annuity and queried entitlement to NZ social welfare assistance. After research and analysis we were able to confirm annuity was exempt in NZ and entitlements to NZ social welfare assistance were significantly greater than had been previously considered possible.
GST on matrimonial property split
A couple owned a lifestyle block in a GST partnership, subsequently separated and the block transferred to just one party then later sold. We determined GST implications of the partnership dissolution and subsequent sale of the lifestyle property by one party. Utilised valuation and apportionment rules to mitigate GST output tax liability and confirm party(ies) responsible for payment.
Tax residence and student loan
NZ resident transferred to Asia for NZ Government work and relocated with spouse. We confirmed tax residency position for both parties, and the application of the applicable Double Tax Agreement. We provided practical and straightforward conclusions as to the implications of forecast potential travel and the couple mitigated NZ tax on foreign income, and received interest free concessions in respect of NZ student loans.
A small company purchased a residential property to use within their Airbnb short term rental activity and received incorrect guidance from solicitors and real estate agents about the GST implications. We reviewed the unconditional contract for purchase and considered the relevant GST legislation. As a result we were able to provide clear and concise practical implications of either continuing or discontinuing with the acquisition, and associated future GST implications and opportunities.
Restructure and sale of shares
A large family owned business and property owning group was facing tension between owners . They wanted to separate business and its associated risk to one group of family members from the property owning activity to a different group of family members. We reviewed the proposed course of action and considered the likely tax implications. We were able to confirm that the tax implications would have been significant and adverse, and that commercial objectives would have been only partially met. We provided 3 clear alternatives that each better met the commercial objectives of the family group, and did so without any adverse tax implications.
Family owned group faced a $2 million tax bill as a result of an IRD audit. We were able to demonstrate flaws in IRD’s interpretation of tax policy and reduced the bill by nearly 90%.
VD NZ rental returns
A non resident couple had inherited and owned a NZ rental property but never returned the income for NZ income tax purposes. A significant compensation payment following a natural disaster had also been ignored. We advised on the implications of the compensation received and calculated the tax shortfall. OTA was able to successfully negotiate with IRD to limit exposure to a small number of years and without imposition of otherwise material shortfall penalties.
NZ resident, investments Caymans etc
A NZ resident on secondment for the NZ Government in the Pacific Island was provided with housing accommodation and other benefits, and earned foreign income from a third jurisdiction. We advised on the NZ tax implications of these receipts and successfully assisted with subsequent NZ tax return compliance, and seeking recovery of the additional NZ tax payable from the employer.
Tax on death of partner
A partner in a GST registered partnership passed away and bequeathed her share in real property of the partnership to remaining partners. We considered the GST and income tax implications arising for each partner and the partnership upon death, earning of income prior to the estate being distributed, and upon distribution. We utilised valuation and various GST supply rules to recommend estate distribution methodology that did not trigger the application of adverse GST supply rules.
German investment income
IRD had threatened legal action and prosecution of a European national NZ tax resident who had failed to file NZ income tax returns for a number of years. OTA determined the NZ tax implications arising from holding of foreign rental property, foreign limited partnership interests and other Foreign investment Fund investments. We utilised best available methodologies to mitigate income tax liabilities and negotiated with IRD to avoid both penalties and prosecution.
A local business owner going through an acrimonious separation and divorce neglected to file income tax and GST returns for a number of years, for both himself personally and a trust holding various commercial and residential property. IRD had commenced collection action via court proceedings prior to OTA’s appointment. OTA was able to revise GST and income tax calculations, and successfully negotiated with IRD to then reduce core tax owing, mitigate penalty and interest costs and avoid prosecution and potentially bankruptcy – and securing an extended time-frame for settlement.
GST zero rating
Following difficulties with a tenant and termination of the lease a taxpayer re-evaluated his investments and sold a commercial property. Despite being GST registered, IRD sought to retrospectively de-register the taxpayer for GST immediately prior to the sale, and sought the GST fraction of that value. OTA established clear facts and determined the correct application of GST law to an activity and its cessation such that GST registration was continued and no GST amount was payable.
A NZ resident departed temporarily to reside in a low tax Asian jurisdiction, whilst retaining NZ real property. We considered income tax residency and advised on the NZ tax implications should the individual remain a NZ tax resident. We were able to provide practical steps to follow to mitigate the likelihood of IRD successfully asserting NZ residency had been retained.
Canada vs NZ tax residence
A NZ citizen who had lived in Canada for many years and accumulated significant investments was contemplating returning to live in NZ. We considered the application of NZ income tax residency and transitional residency rules. As a result we were able to provide practical advice and certainty regarding NZ tax implications and the availability of a temporary income tax exemption on foreign income.
Duty on diamonds
A NZ company selling small items to NZ residents exclusive of GST was notified of a GST Risk Review to be undertaken by IRD. We analysed the underlying supporting documentation and considered the GST implications accordingly. We provided a clear and comprehensive response for IRD such that no further action was taken.
IRD audit and settlement
A couple operating a cash economy business had failed to return all income received and their accountant was unaware of the shortfall. IRD had calculated shortfalls and was proposing significant penalties and prosecution for evasion. After analysing the facts and context, we were able to secure an acceptable settlement with IRD that enabled the couple to avoid criminal prosecution and continue operating their business.
Tax residence and implications part 2
An Australian couple operating a business in Australia moved to NZ and set up a NZ company here. We considered the application of NZ residency rules, transitional residency rules, NZ CFC and FIF rules, and the NZ/Australia Double Tax Agreement. As a result we were able to provide definitive recommendations as the tax implications and a recommended structure for ownership and income distribution from the new NZ company and the continuing Australian company.
GST and income tax on legal expenses
Successful defense of a civil action brought by a disgruntled previous business partner necessitated incurring significant legal fees. We carried out significant analysis considering the GST and income tax implications of these fees being incurred by a new entity and the receipt of settlement proceeds. We were able to ultimately provide support for claiming input tax credits and an income tax deduction in respect of the legal fees, and the non accessibility of the settlement proceeds ultimately received.
NZ resident UK investments
A UK government employee transferred to NZ and become an employee of the NZ government. We considered his residency position and implications for his UK income, UK pension, various global investments and his NZ income. As a result, we were able to provide specific practical advice to ensure concessional and transitional FIF and residency provisions were utilised and the basis for ongoing compliance clearly outlined.
Lending to brother in law
A UK resident immigrated to NZ retaining their UK home as an investment property. We assisted by determining the basis for ongoing UK and NZ compliance and liaised with UK advisors to ensure these were completed appropriately.
Tax residence and implications
An Australian executive and his wife were looking to relocate to New Zealand and visited multiple times and purchased a home in NZ for family members before eventually relocating to NZ. We considered the residency and transitional residency implications and were able to provide definitive advice in relation to the transfer of his residency, the application of transitional residency provisions, protection offered by the AUS/NZ Double Tax Agreement, and the ongoing implications for his NZ income and Australian investments.
NZ resident departing New Zealand was retaining her NZ home as a rental investment. We considered her residency position, the implications of retaining her NZ home on her residency position, and the timing for any changes in residency. We confirmed the dates she was able to exclude her NZ personal services income from her overseas income tax returns and confirmed the ongoing implications arising from her secondment and in light of possible extensions or terminations of that secondment.
Update May 2018
A large family owned business was facing operational issues and material tax risk and leakage arising from poor legacy trans-Tasman structuring. We reviewed the structure, operational drivers and financing to determine the best structure. As a result the business, entities and financing arrangements were restructured to result in much stronger alignment of commercial operations to key business KPIs, considerably less risk, and less tax leakage. Direct cash savings alone were in excess of $1.5M per year.
Australian resident NZ property
NZ resident departed on a two year secondment to Australia was retaining her NZ home as a rental investment, then ultimately settled in Australia permanently. We considered her residency position, the implications on her residency position of retaining her NZ home , and the timing for any changes in residency. We confirmed the dates she was able to exclude her NZ personal services income from her overseas income tax returns and confirmed the ongoing implications arising from her secondment and in light of possible extensions or terminations of that secondment.