Stevemw

Hi all,
My sister in law just got back from a holiday in NZ and brought us a copy of "Arrival" magazine, which is aimed at newly arrived immigrants.
In one article it said that if you are bringing over a significant chunk of money (e.g. the proceeds from the sale of your UK house) you should put it, or the house you buy with it, into a trust to avoid tax. Apparently the tax problem wouldn't arise if the funds came from a UK trust.
This is the first I've heard of this and a quick google didn't reveal any details. Has anybody else come across this issue?
Cheers,
Steve

Joshlin

Hi Steve
I've had a very quick look on the inland revenue website www.ird.govt.nz and can see no reference - they only seem interested in taxing income wherever it's earned and would only tax on profit from house sale if it had been purchased initially with a view to selling on (ie property development)
I'm sure others much more knowledgeable in this area will add further
Vicki

Radio Ham

Hi Steve


I asked this same question in August/September... but I am still not clear on the answer unfortunately! My questions were:

Has anyone looked at buying a house using a family trust before they arrive in NZ? - and so avoid UK inheritance tax and NZ gift tax?

Does anyone know what a qualifying foreign private annuity is under NZ inland revenue rules - so pension funds can be moved to NZ and then claimed 100% cash on retirement?

Anyone got any ideas?

Colin

Stevemw

Hi Colin,
I'm not clear on what your issues are, but maybe the article I read was a sideways reference to what you are asking. What is the issue with UK inheritance tax (assuming that you don't expect to die for a few years yet!) and NZ gift tax? Or are you looking to buy a house for a relative rather than for yourself?
As for the pension funds, I think I'll be leaving mine in the UK - keep my currencies diversified.
Cheers,
Steve

Radio Ham

Hi Steve

I'm looking to buy a house for me and my family this year after we burn our bridges here in the UK and move to NZ in search of a job and points to become resident. The idea of the trust as I understand it is to protect the assets of the kids when I pop off, but the house needs to be bought/set up in a trust from the start I think.

I now have a contact in the NZ prperty market so I'll ask them and report back if I get a good answer.

On the pension front, all the cash upfront sounds attractive to me... but only because I can't see me making my telegram from Liz.

Stevemw

Hi Colin,
Please do let us know what you find out. From what little I so far know there is no Inheritance Tax in NZ, so I'm not sure what the trust would be protecting the assets from.
I guess the real research can wait until we arrive in NZ - we certainly won't be buying a house right away.
Cheers,
Steve

JAJ

There is also no such thing as capital transfer tax.



Jeremy

isv

Even after you move to NZ you will still be subject to UK inheritance tax - unless you make it quite clear that you are more than just a resident in NZ. You have to demonstrate that your domilcility is no longer in the UK - ie. you have to be absolutely clear that your home/life/family etc. are no longer attached to the UK and you have no intention of coming back.

Doing something seemingly innocuous like keeping a house in the UK may signal to the Inland Revenue that you never really changed domicile and could have come back. They will pursue your family for inheritance tax if they believe this to be the case.

There is a huge difference between residency for tax purposes and domicility. Tax residency is changed easily/quickly - domicility is something else entirely.

Alan.

JAJ

Realistically though - if your assets are in New Zealand, and the will is given probate in New Zealand, how on earth can the Inland Revenue collect Inheritance Tax?

The other point is that there may be very good non-tax reasons to keep a UK house, at least for a while. You can always sell it later on.

Jeremy

foolsgold

but only on any Uk assests, not on the value of the estate, demontrating tax domilcility is very easy, if you have a job in NZ and pay tax, you're home and hosed

Nice Guy

I recall when we came to NZ, we had to give proof where our money came from.

A couple of faxes to our UK solicitor was enough to convince the receiving bank that the dosh was not obtained by nepherious and dubious methods……..as if I look like a drug dealer……….really!

Still, it’s all to do with money laundering.

Inspector Clouseau

A friend of mine (going to oz) explained tonight that in oz they start timing you from the day you land. After 6 years if you sell your UK property they are allowed to charge you capital gains tax against the increased value of capital accumalated over the 6 years. So basically forcing you to move your capital into oz before this punitive effect takes place.

Does NZ have any such rule?

JAJ

Australia has a capital gains tax - most countries in the West do. I'm not sure what's particularly 'punitive' about the scenario you suggest above. There is an exemption for capital gains tax for your 'main residence', and the 6 year rule you refer to is what happens when you rent out your former home in the UK and don't acquire a new home in Australia. The ATO website has the detailed rule.

As for New Zealand, I'm not sure if NZ has a capital gains tax? - check with http://www.ird.govt.nz


Jeremy

Kiwipaul

No it dosn't.

It dosn't have any CGT (one of the few countries in the world that don't), or rules about when you can move you pension across, it's up to you and their is no tax if you do or don't. Worldwide income IS taxed but whats new.

Inspector Clouseau

Ah! Worldwide income you say? Er, how would they find out about an income from a rented house in the UK, where all the income went towards paying off a mortgage? Surely that would just show up as a capital gain when we actually sell it?

If they do find out then why cant I offset my rent ,that I'll be paying in Auckland, as a tax loss / legitimate expense?

Where's that international accountant when you need him?