Forums / Getting Technical / Legal & Accounting / Tax & NZ investment (getting the $ out)

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  • Profile photo of itchyfeetitchyfeet
    Member
    @itchyfeet
    Join Date: 2004
    Post Count: 12

    Hi All,

    I would appreciate some guidance relating to NZ/Aus tax issues, as outlined below.

    I have just contracted to purchase 2 properties in NZ via a trust and company structure (NZ company is the trustee, myself and my wife are beneficiaries). The properties make a loss, once depreciation is taken into account but still make money on a cash basis. Consequently, any money left over each year is treated as capital (I assume), not income. If I withdraw this money from the NZ trust and pay myself here, do I have to pay any sort of tax – either in NZ or Australia?

    Is the outcome in the above example the same if the property (and trust/company structure) are located in Australia? In other words, the properties make a book loss, but the excess cash is available to withdraw as tax free capital?

    Is it best for me to gift any money required by the NZ trust (for deposits etc) or lend the money to the trust (either personally or via our Australian trust)? If I do lend the money do I have to charge interest? If so, how much?

    If I borrow the deposit money for the NZ properties using equity here in Aus, can I claim my interest bill as a tax deduction? Can I still claim the deduction if I dont charge interest to the NZ trust?

    Sorry about all of the questions – there’s just so much to know!!

    Cheers,

    ItchyFeet

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,729

    Hi,

    I’m sorry, but this sort of investing needs a stern rebuke.

    Rule: Every sensible investing plan needs an entry AND and exit plan.

    If you have purchased these investments without a plan for how you will repatriate your investment then you have been ignorant in your approach.

    Investing in a foreign country is complicated enough, but once you have a structure formalised there is even less flexibility.

    I suggest you seek immediate paid professional advice (in Aus and NZ) to clarify your position so that you can regain control of your cashflow as soon as possible.

    Rule: Control over the cash is paramount in any investment.

    You are right to ask these questions, but they were questions that should have been thought of and answered prior to investing.

    Learn the lesson for next time.

    Cheers,

    Steve McKnight

    **********
    Remember that success comes from doing things differently.
    **********

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of itchyfeetitchyfeet
    Member
    @itchyfeet
    Join Date: 2004
    Post Count: 12

    Hi Steve,

    I take your point but I am still in the ‘due diligence’ phase of the contracts (another 10 days to go) and settlement is not for another 2 months. I have already sought NZ legal advice and have a way to get my money out – I was simply exploring other (more direct) options. The deals were good ones and I didnt want to lose the opportunity due to lack of understanding of the finer implications of the Aust/NZ tax system. That was the idea of buying time with the ‘due diligence’ period.

    Rgds,

    ItchyFeet

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