I have a question about buying investment property in New Zealand and the entity that should own it to maximise the tax benefits. I have 3 choices as I see it. I can buy in my personal name, my Aussie family trust or a NZ family trust. I am an Aussie resident for tax purposes and have no additional NZ income so a LAQC is not relevant. Please feel free to correct me on any of this as I have only just started investigating it all.
Title in Personal Name: Any income I earn from a NZ investment will be taxed in NZ and I will get a credit against my tax paid here in Oz. If the reverse happens and my investment makes a loss, this loss is quarantined in NZ and offset against future earnings. Simple.
Title in Aussie Family Trust: Same. Any losses are quanrenteeined on behalf of the trust in NZ to be offset against any future NZ earnings by the trust. Any profits are taxed in NZ and are then distributed to me as a beneficiary. My personal Aussie tax would then be adjusted with the appropriate credits. Pretty simple.
Title in NZ Family Trust: Same. Any losses are quarantined in the trust to be offset against any future NZ earnings by the trust. Any profits are taxed in NZ and are then distributed to me as a beneficiary. My personal Aussie tax would then be adjusted with the appropriate credits. Not sure if I can distribute profits to Aussie trust as I haven’t asked before? Seems pretty simple but additional accounting costs.
These are all fine and manageable however the story changes when I get to capitals gains issues. Even though NZ has no capital gains tax, as all income is eventually passed through to my Aussie tax return, if I sell a property in NZ I will hit for capital gains tax here in Oz.
How can I buy and sell property in NZ without this happening? What structure can I use to achieve this? The only way I heard of so far is to create a family trust without my name anywhere in it. So create a corporate trustee (which I would do anyway) and a have NZ-based relative or very good friend as the beneficiary. I would then do all the work undercover and get gifted any profits over time. Sounds a bit dodgy to me though. What about having my Aussie trust as a beneficiary or my Aussie corporate trustee as one? Would this get around the capital gains tax issue?
Everyone talks about NZ being great with no stamp duties, no land tax and no capital gains tax but it’s not really the case for this last point if you are an Australian resident for tax purposes. Anyone with experience in this out there?
Cheers,
Title in Personal Name: Any income I earn from a NZ investment will be taxed in NZ and I will get a credit against my tax paid here in Oz. If the reverse happens and my investment makes a loss, this loss is quarantined in NZ and offset against future earnings. Simple.
Title in Aussie Family Trust: Same. Any losses are quanrenteeined on behalf of the trust in NZ to be offset against any future NZ earnings by the trust. Any profits are taxed in NZ and are then distributed to me as a beneficiary. My personal Aussie tax would then be adjusted with the appropriate credits. Pretty simple.
Title in NZ Family Trust: Same. Any losses are quarantined in the trust to be offset against any future NZ earnings by the trust. Any profits are taxed in NZ and are then distributed to me as a beneficiary. My personal Aussie tax would then be adjusted with the appropriate credits. Not sure if I can distribute profits to Aussie trust as I haven’t asked before? Seems pretty simple but additional accounting costs.
These are all fine and manageable however the story changes when I get to capitals gains issues. Even though NZ has no capital gains tax, as all income is eventually passed through to my Aussie tax return, if I sell a property in NZ I will hit for capital gains tax here in Oz.
How can I buy and sell property in NZ without this happening? What structure can I use to achieve this? The only way I heard of so far is to create a family trust without my name anywhere in it. So create a corporate trustee (which I would do anyway) and a have NZ-based relative or very good friend as the beneficiary. I would then do all the work undercover and get gifted any profits over time. Sounds a bit dodgy to me though. What about having my Aussie trust as a beneficiary or my Aussie corporate trustee as one? Would this get around the capital gains tax issue?
Everyone talks about NZ being great with no stamp duties, no land tax and no capital gains tax but it’s not really the case for this last point if you are an Australian resident for tax purposes. Anyone with experience in this out there?
Cheers,