New announcement. Learn more

Blog Articles

NvidiaMillieAIRPAAgingJewelleryScam investmentInvestment fraudInvestment fraudsScamsCyclonesFloodingInsurance premiumsInvestment managerArtesianOrgans on a chipManaging household moneyCouplesTravel insuranceTravel cardTravelPlastic WasteStewartCollaborative engagementBest Ethical Financial AdviserAwardHuman skinCrash test dummyAkzo NobelBieresdorfUnileverThe 3 R'sAnimal crueltyAnimal testingSyndicated propertyWholesale investorBreast cancer, mammogramGender diversityDiversity40:40 vision30% clubFemale leadersOutlookIndicatorsRecessionFossil FuelsWomenChildrenCyberVisaMagellanDEIDiversity, equality and inclusionGHG emissionsNet ZeroNorway Oil FundEngagementActive EngagementWealth protectionPasswordsBank of mum and dadBank loansBull marketReparationsVolunteeringB-corpGarden festivalCompensationClimate changeBuilding portfolioPortfolioBusiness as a force for goodB corpFinologyNanukPlasticPackagingEsg investingFear of missing outConfirmation biasBehavioural financeRetirement villageEsg ratingsSustainableWalking the talkProxy votingVotingAwardsBear marketEthical preferencesIndependent informationGreenwashingNastiesGMODonationsMindful MoneyRIAAWarEthicsAuctionImpact InvestingCyber securitySustainable InvestingResponsible InvestingMarketTimingCoronavirusCovidAiaCignaEthical investingEsgEnvironmentActivePassiveEPAProperty Relationship ActTax returnWearable DeviceArtificial IntelligenceUnderwritingDNA TestingGenetic TestDe Minimis ExemptionFair Dividend TaxForeign Investment FundTax ratesKiwiSaver feesChinaBrightline TestEQCAdvice FeesInvestment feesJunk InsuranceWarrantiesConsumer Guarantees ActRetirement IncomeNew Zealand SuperannuationBridgesFitness CoachingWellnessSally MellorInvestment PropertyTenantLandlordRental PropertyCar RentalCar InsuranceRelationship BreakupProvisional TaxBeanyAccountingTrust DeedBeneficiaryTrust ActTrustSkin cancerProstate cancerMelanomaLung cancerCervical cancerCancer mythsFirst home buyerOpinionFactsSwindlerScamTreasuryVolatilityDollar cost averagingFamily trustsResearchMilfordInvestor confidenceFMAInvestment assumptionsTerm depositsKiwisaver monitoringKiwisaver comparisonStress freeHolidaySecurityBanksTax refundRiskReturnInvestingGreedFinance companiesContents insuranceOwing moneyCredit cardCredit cardsPropertyExpertsBubblesBorrowingLendingFloatFixMortgageLoansInterest ratesFinanceBrokingLegislationForeign superWordingOmbudsmanHouseCoverContentsBalanced fundSchooling costsEducationCredit ratingsTradingSecondary marketTerminologyFixed interest investmentFixed InterestLegalGuarantorUk pensionPension transferSpendingChristmasConsumer behaviourUK Pension TransfersQROPsInvesmtentWays to dieInsurance claimsWinz#residential care#assetsTrustsResidential care subsidy#residentialcaresubsidy#gifting#familytrustsSavingsLottery#bonusbondsSpecific injuryCase stuffyTrust expensesEstate planningAsset protection#trust#family Trust#incomeprotectioninsurance#incomeAdriennes storyQuizLife expectancyLVR ratioHouse depositBorrowing to buy a house#firsthomebuyerKiwisaver returns#kiwisaver feesReitrement savingsFirst home buyersUncategorized#financialplanningPersonal financesFinancial management#personalfinances#mortgages#finances#fidelity#kiwisaverperformance#redundancy insurance#incomeinsuranceRetirement ageJohn KeyFirst home buyer withdrawalKiwisaver rulesFirst home buyer grantUnclaimed moneyMoney refundsPortability superBringing home KiwiSaver#australia KiwiSaverInsurance #insurance#homeinsurance#liability#insurance claim. Insurance claim#income insurance protectionFirst home grantDumb ways to dieUnder 18 years oldTax creditTrans-tasmanPortabilityAustraliaAsteronRisk profilesMoving funds#changing kiwisaver managersInvestment returnsTibTerminal illness benefit#claim#sil#kiwisaver analysis#shares#mighty river power#electricity#partners lifeTrusteeSafety of KiwiSaverFunBeerCredit ratingBad debtTax rebateInvestment advice#retirement planningLapseExpensesFighting fundEmergency cashRipping off elderlyFinancial planingPass backUnit pricingGareth morgan#Medical Assurance Society#MAS#investment analysis#travel insurance#insurance claimFinancial planningBudgettingReporting#insurance commissionInsurance commissions#commissions#career in insuranceSouthern crossClaimingInsurance excessesRussiaJohn clarkeHumourGfcCyprusHome insuranceEarthquakesCrisisStand down periodPolicy wordingChurningContributions holidayTaxesPayrollEmployer contributionsEsctEmployee contributionContribution holidaySil kiwisaver. westpacKwiisaverBitAsset allocationAsbAnzAwarenessReturnsPerformanceProstate canerWillsRelationship PropertyPlanningLegal AgreementsLawyersDivorcePremiumsTowerFund ManagersFisherKiwibankDefault schemesBnzAMPPetsPet insuranceMoney managementBudgetsHouse insuranceFire and general insuranceAccChilds trauma insuranceChilds traumaProtectionFund managerClaim trauma insuranceTotal and Permanent Disablement InsuranceOnePath LifeClaimsSmokingSmokers ratesInsurance researchInsurance analysisImageFree quotesSavingMoneyInfographicInflationVideoTpd insuranceTPDSovereignDisabilityCase StudyAxaHeart attackLoveIncome protectionCancer insuranceBreast cancerTerranovaMinimum wageEmployer contributionTraumaIncome protection insuranceCancerSortedRisk profileRetirementOnepathInvestmentsWestpacBTWho can joinRetirement savingsFuneral plannerFuneralDyingDeathTrauma insuranceLife InsuranceInsurance News & ViewsInsuranceIncome insuranceHealth insuranceDisability insuranceUS citizenRetiring to live in new zealandInvestmentFATCAReturning to new zealandRetiring in new zealandMember tax creditKickstartTransitional residentTaxationRetiring to new zealandNew migratnFifFdrDe minimisSuperannuationRetiringNZ superannuationNew zealandEligibility for NZ SuperMorningstarInvestment ReturnInvestment performanceFund sizeFeesTaxPIRPIEMoney News & ViewsIrdMinimum contributionKiwiSaver News & ViewsKiwiSaverContributions1 April 2013

Residential Withholding Tax on offshore persons - could it affect you?

From 1st July 2016 - a new tax relating to residential property will be in force.  This tax (the Residential Land Withholding Tax RLWT) applies to 'overseas investors'.  BUT it is important to note the definition of 'overseas in this legislation - IT COULD APPLY TO YOUR ENTITY.

From 1st July - any entity that has an overseas connection will be subject to this RLWT if they sell residential property within two years of acquisition.  This tax has been designed and developed to try and slow down the accelerating property prices in New Zealand.  But because of the definitions, if your entity has an 'overseas connection' it could be caught and be liable for tax.  This tax is payable at the marginal tax rate of the entity.

Chapman Tripp have outlined their understanding of what an overseas person is on their Brief Counsel.  We have copied it below for you (for more information - please check out their website).

The definition of “offshore RLWT person” is wider than the definition of “offshore person” in the Overseas Investment Act and under the recently enacted property tax statements regime.  Even where the owner of a property appears to be in New Zealand, it will be necessary for conveyancing agents to ask their clients detailed questions about their factual circumstances to determine whether RLWT applies.

An individual will be an “offshore RLWT person” if he or she:

  • is a New Zealand citizen who has not been in New Zealand within the last three years
  • holds a residence class visa and has not been in New Zealand within the last 12 months, or
  • is not a New Zealand citizen and does not hold a residence class visa.

A company or partnership will be an “offshore RLWT person” if:

  • it is incorporated or registered outside New Zealand or constituted under foreign law
  • it is controlled (directly or indirectly) by more than 25% offshore RLWT persons, or
  • more than 25% of its directors or general partners are offshore RLWT persons.

Many New Zealand companies will be caught by these rules.  For example, a New Zealand company with three directors, one of whom is Australian, could mean the company is subject to the RLWT rules.  New Zealand subsidiaries of multinationals will almost certainly be “offshore RLWT persons”.

The rules applying to trusts are even broader.  In addition to looking at the offshore status of each of the trustees, settlors and beneficiaries ­­­– any of whom could result in “offshore RLWT person” status for the trust ­­­– the RLWT rules will apply to a trust where:

  • a beneficiary who is an individual and an offshore RLWT person who has received a distribution from the trust in one of the last four years of more than $5,000, or
  • the trust has disposed of any other residential land within the last four years and the trust has any beneficiary that is an offshore RLWT person (even if no distributions have been made from the trust).

These are the RLWT rules (thanks to Chapman Tripp for the summary):

Broadly speaking the RLWT regime will require a conveyancing agent for an offshore RLWT person selling residential property to withhold RLWT from the purchase price and pay it to Inland Revenue before releasing funds where:
  • the property is residential property (which includes bare land zoned residential) located in New Zealand, and
  • the property is disposed of within two years of acquisition (provided the property was acquired on or after 1 October 2015).
Where RLWT applies, the vendor’s conveyancing agent is required to withhold the lesser of:
  • 33% (or 28% in the case of companies) of the vendor’s gain, or
  • 10% of the vendor’s gross sales price.
The vendor’s gain is calculated solely based on the current sales price less the original purchase price.  Improvements and other deductible expenses are not included in calculating the gain subject to RLWT.

For more information, here is the Special Report from Policy and Strategy, Inland Review: 2016-sr-residential-land-withholding-tax.

If you have any thoughts or opinions that you would like to share, visit us at our Twitter, Facebook or Linked In pages, and comment.


This product has been added to your cart