NZ foreign trusts & Look Through Companies

I just came across these two terms when doing a bit of reading up. Seems they have become popular a few years ago and got a mention in the Panama Papers. Does anyone know if they are still beneficial & if anything has changed since then? Is it a good strategy looking at NZ trusts & Look Through Companies? Anyone looked into them in detail or are using them? Double tax agreements between Oz & NZ would mean that we all basically could reduce our income tax rate to 0% here, right?

It seems with a NZ foreign trust the tax rate is set at 0% and then you have the double tax agreements with other countries (Oz for example) so then you don't have to pay any tax. Basically if their settlors are overseas, their beneficiaries are overseas, the assets that are in the trust are overseas. Because all the income is earned by non-residents, and it is earned outside New Zealand, they're not interested in taxing them. That’s why foreign trusts don’t pay any tax in NZ.

"A New Zealand entity can have a tax rate set at zero, so technically tax is charged even though the tax charged is zero. Another country with a reciprocal tax arrangement with NZ recognises that tax has been paid in the foreign jurisdiction, even though it was zero. There for the other country to avoid double taxation, also charges zero tax."

Look through companies:
New Zealand resident shareholders will pay tax on the company’s profits and use losses at their marginal tax rate. The look through treatment applies for income tax purposes only - there is no general capital gains tax in New Zealand nor are there any inheritance or estate taxes or stamp duty land taxes. A foreign shareholder of an LTC that only receives foreign-sourced income will not have any New Zealand tax liability. If the shareholder is a New Zealand foreign trust (i.e a trust with a foreign settlor and New Zealand trustee), the trustee will not be taxed on its share

 

Yes know a lot about them. You dont escape tax in australia. It is a useful vehicle for reducing double tax purpose. Look up limited partnerships.

Not taking on new clients so call @Paul@PFI to discuss

 

A overseas NZ company has an audit issue many people dont understand and it may be a PITA and costly issue to address. NZ companies laws are not unlike the UK. They can have some complex and messy issues too.

One thing I like is a NZ company registered in Australia with ASIC. But they must usually file financials with ASIC.

TIP - Dont have an Australian company that also operates in NZ with a permanent establishment. eg a NZ office, A NZ resident manager etc.