Inland Revenue has launched consultation on policy proposals to address an aspect of New Zealand’s foreign investment fund rules. By imposing tax on unrealised income the current rules could be deterring some people from choosing to settle in New Zealand. The proposal suggests allowing some migrants to pay tax on dividends and realised gains.

CA ANZ supports the efforts of officials to attract highly skilled and entrepreneurial migrants, as well as to encourage those working with them to invest and settle in New Zealand. While CA ANZ acknowledges the reasons for the narrow focus of the issues paper, it believes that broader and more significant reforms are necessary to achieve the intended objectives fully. In CA ANZ’s view, a comprehensive, effective, and practical solution is required. The current proposals are unlikely to achieve their intended outcomes for the target group unless they are significantly simplified and the associated restrictions relaxed.

CA ANZ suggests a multi-pronged approach as follows:

• Stage one: progressing the proposals in the issues paper.
• Stage two: extending the scope of the proposals in the issues paper to non-migrants and considering other changes to the FIF rules as part of a review.
• Stage three: other tax issues that may be a barrier to or discouraging skilled talent and foreign direct investment in New Zealand