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Reside in NZ – but what does that mean?
In my past 20 years working as an accountant, I have encountered legislation and regulations numerous times, mentioning the following terms that come with significant implications for my clients business, and personal life matters.
List No 1:
- Live in New Zealand
- Ordinarily reside in New Zealand
- Domiciled in New Zealand
- Have a permanent place of abode in New Zealand
- Is a tax resident of New Zealand
- Not an overseas person
- Holding a resident visa
- Is a citizen of New Zealand
My clients and their advisors are often confused when it comes to deciding what they can or cannot do in New Zealand.
List No 2:
- Can they act as a resident director in a New Zealand company?
- If they own a large company, does the company need to get their financial reports audited?
- Invest in assets that are regarded as sensitive land?
- How to fill a form at the bank to declare their tax residency status?
- Should they deduct 10% or 2% on interest earned from New Zealand financial assets?
- Are they subject to the thin cap rule when plan financing structure of their business?
We then go to the following legislation to try and find answers.
List No 3:
- Companies Act 1993
- Overseas Investment Act 2005 and Overseas Investment Amendment Act 2018
- Income Tax Act 2007
- Immigration Act 2009
And the Acts then refer to the terms in List No 1. Some do not define these terms at all. Some define the terms but then need further explanation and clarification as to the definition. Some refer to definitions in other Acts. Different Acts refer to the same term with different meanings. And the agency that has jurisdiction over these acts also likes to publish guidance in relation to the definitions. And of course sometimes the guidance will be overruled by court decisions. Then it’s not just whether the individual has residency or what type, there are ownership structures such as trusts, companies, limited partnerships, etc, which can be subject to the same problems.
The advice is always: if in doubt, consult your advisor – lawyers, accountants and other relevant professionals.
My question is, why don’t we make one ring to rule them all?