Fresh tax concerns for New Zealand have arisen in accordance with the proposal of a potential wealth tax and more-extensive capital gains tax.

Plans are currently in consideration as part of a green paper by a tax working group established by the New Zealand Government December last year as announced by chairman of the group, Michael Cullen. Speaking at an international fiscal conference, Cullen attributed proposals to New Zealand’s limited range of tax rulings in comparison to international standards.

“A wealth tax, a tax on financial transactions, a broader capital gains tax, a land tax and new environmental taxes will all be options considered by the Tax Working Group”, its chairman Sir Michael Cullen said.

“The most obvious area of narrowness is the very limited scope of our current capital gains tax regime. That reflects a long New Zealand tradition, the basis of which is hard to discern,” Cullen stated.

The New Zealand government has since called upon the New Zealand people to submit their views on what tax changes they would like to see with it a keenly debated subject since the call went out for submissions on 1st March 2018. As a result, a Submissions Background Paper, which aims to provide more context to these issues and the many more that are up for discussion over the next six weeks, was released by the Tax Working Group on 14th March which can be further explored via the group's website.

New Zealand’s capital gains tax is expected to apply to investors in real estate. The New Zealand Government is concurrently reviewing the introduction of a bill to exempt ‘foreigners’ from buying homes in the country. The argument by New Zealand’s Government attests that the country’s housing crisis has been largely contributed to by an increase in wealthy foreign buyers dominating markets resulting in inflated prices and a short supply in affordable housing,

Forming an undoubted concern for those considering a permanent move to New Zealand, one must question how the Government will define a ‘foreigner’ and particularly so for those looking to immediately secure property purchases ahead of arrival to New Zealand.

“We’re receiving mixed messages from the New Zealand Government. One minute, they are keen to promote New Zealand as an opportune destination for skilled, affluent emigrants all the while creating a blockade for this exact demographic and the property investments they are likely to make which falls exactly in line with where they propose to build revenue for this new capital gains tax”, comments Montfort’s managing director Geraint Davies.

“A wealth tax is very concerning, especially for someone who may be considerably wealthy while intends to become a New Zealand resident. This will also mark the first time that a wealth tax has been considered outside of the European Union”, Geraint continues.

Throwing further tax implications and complexities for any ex-U.K. emigrant relocating to New Zealand into the mix, this announcement supports the importance of expert global financial planning and specifically cross-border tax solutions.

“Where New Zealand was once considered one of the more ‘painless’ countries to emigrate to in terms of wealth, do pension transfers and the establishment of trusts and special-purpose vehicles for non-New Zealand residents allow for investments without tax implications?" asks Geraint Davies.

"Jacinta Ardern’s government has undoubtedly thrown a huge metaphorical spanner in the works.”

Montfort’s first recommendation is to not fall victim to likely speculation such proposals can bring and may also lead to assumptive decisions on your global financial plans. Regardless of speculation, an expert tax advisor regulated to impart advice should always be sought and in as much time as possible ahead of emigration plans.

“Where the global transfer of your financial portfolio may seem simple, often-unknown pitfalls are incredibly likely to emerge”, says Geraint Davies

“We remain one of the few firms who are able to effectively advise on this area of financial planning and implement such recommendations", comments Geraint Davies. "Montfort has also developed an inimitable global network of key affiliate firms including leading IFAs and tax advisors in New Zealand who our advisors work with to ensure your finances, pensions and investments continue to perform in the U.K. and your new country of residence.”


Please get in touch with a member of the Montfort team should this recent announcement by the New Zealand Government concern you. Call +44 (0)1483 202072; email info@montfort-intl.com or visit montfort-intl.com

 

Photograph courtesy of Wall Street Journal

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