Withholdings Tax for Offshore Investors

From 1 July 2016, a new withholding tax will apply to residential property sales by offshore persons within 2 years of purchase.  As such, this tax just gives the 2 year brightline test more strength in relation to overseas investors.

The new withholding tax will apply to residential land in NZ that is purchased from 1 Oct 2015 and sold within 2 years by an offshore person.  If you remain in NZ or hold your rental properties for at least 2 years, then this new withholding tax will not affect you.

Offshore persons includes:

- NZ Citizens that have been overseas for 3 or more years
- No an NZ Citizen and don't have a NZ residence visa
- Company if 25% of shareholders or directors are offshore persons
- Look through companies if 25% of shareholders are offshore persons
- Trusts were 25% of settlors or trustees are offshore persons
- Trusts will all beneficiaries are offshore persons


Disclaimer: The above article is general in nature and we recommend you seek professional advice tailored to your specific situation.