Register an Australian Company in New Zealand

The Consequences of the Australia – New Zealand Double Tax Agreement  for Small Business

We recognize the historical context in which New Zealand’s GST and income tax laws, along with the Double Tax Agreement with Australia, were formulated. They were crafted during a period when international trade was predominantly conducted by large corporations. However, these regulations are better tailored to the operations of big businesses, potentially placing undue burdens on small enterprises.

The inadvertent consequences of tax policies and legislation on the practices of Australian-owned businesses in New Zealand can be considerable.

You need to speak with one of our Specialist Advisors if you are thinking about opening up an office in New Zealand.

Talk to us about the tax implications for:

• Structures
• Trusts
• Partnerships
• Shareholder Agreements

At Investment Plus Accounting Group we ensure that  you are not double taxed or faced with unexpected penalties down the track from the ATO will require special registrations and applications to both Inland Revenue and, in some cases, the ATO. We handle all negotiations, applications and the entire process for one fixed fee.

Our Services Include:

Many Australian residents are unaware of their non-compliance until the Australian Taxation Office intervenes several years down the line, resulting in substantial penalties and accrued interest.

Allow us to assist you in navigating this process correctly.  We will include the following key services to assist you to avoid the ‘Double Tax Trap’.

1. Establish the correct structure – Setting it up properly will depend on the structure and if Australian companies or Trusts are involved. We can assist with any type of shareholder however the type of shareholder will determine the options best suited to you

2. Ensure that Double Taxation does not apply –Ensuring you are not double taxed or faced with unexpected penalties down the track from the ATO will require special registrations and applications to both Inland Revenue and, in some cases, the ATO. We handle all negotiations, applications and the entire process for one fixed fee

3. Gain Access to the New Zealand Tax Portal. 

4. Apply for New Zealand tax file (IRD) numbers for non-residents. 

5. Arrange for the establishment of a New Zealand based bank account. Obtaining a New Zealand bank account for a small business controlled by Australians poses challenges due to New Zealand’s stringent anti-money laundering laws, which impose significant obligations on local banks.

Fortunately, we can facilitate the process for you seamlessly. With our assistance, you can open an account online without the need to visit your Australian bank or make a trip to New Zealand.

Cost effective services.

We can establish your New Zealand company promptly and accurately, ensuring it operates seamlessly across both sides of the Tasman. This service can be completed within a day, costing just $1600+GST. These fees cover expenses paid to the New Zealand Companies Office and GST, including the registration of your company for all applicable New Zealand tax types, such as income tax and GST if necessary.

Additionally, it’s essential to factor in unforeseen circumstances that may arise when selecting your registered office. This fee includes:

• • Preparation and lodgement of all registration documents
  • Legitimate protection from double taxation
  • All documentation required for opening a New Zealand bank account (and assistance so you don’t have to fly there)
  • Registration for all relevant New Zealand tax types (no one gets New Zealand tax registrations completed for Australian residents faster than us)
  • Discussion with your Australian tax agent on what we have done, why we have done it and how it will impact on you in Australia
  • All fees paid to the New Zealand Companies Office

What are the Tax Implications of the Double Tax Agreement?

Before incorporating your New Zealand company, it’s crucial to carefully assess how the tax regulations of both New Zealand and Australia will affect your endeavors.

Here’s a breakdown of how your tax situation might be affected if your current Australian income exceeds $30,000 per annum, even if the strategy involves ownership of the NZ company by an Australian company under your ownership.

Example: Assuming a NZ profit of $100,000 with allowable management fees.

If your marginal tax rate stands at 45%, the situation becomes even more dire. We can illustrate how the impact remains consistent, even if you opt for the Foreign Tax Credit, and how this holds true even if profits are routed through an Australian company. Regrettably, from our experience, this is where most Australian advisors falter, often resulting in substantial penalties imposed by the ATO several years later.

Depending on your specific business model, we may encounter limitations in making this structure viable due to the language of the Australia New Zealand double tax agreement. Nonetheless, even in our worst-case scenario, you’ll find yourself considerably better off year after year throughout the lifespan of your New Zealand business.

The tax savings realised by many small businesses, akin to yours, can cover our entire fee within a matter of days!

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