Ready for new tax disclosures under the revised overseas investment regime? NZ International Tax & Property Advisors

Effective from 5 July 2021, overseas investors looking to purchase significant New Zealand business assets must make new tax disclosures as part of their application under the Overseas Investment Act 2005. These requirements are intended to provide Inland Revenue with the information to enforce the Income Tax Act 2007.

Further to the recent enactment of the Overseas Investment Amendment Act 2021 and accompanying Regulations, Inland Revenue has published a form IR 1245 as a separate section of the investor’s application to the Overseas Investment Office (OIO), which must be supplied at the time of the application. The IR1245 form adds to the existing OIO tax disclosure requirements. 

The OIO has indicated that an applicant’s completed IR 1245 form will not be taken into account in its decision making. Instead, Inland Revenue will need to review the form and confirm it is complete before the OIO will begin assessing an application.

While the IR 1245 form appears short, the nature of the questions included is relatively technical, requiring applicants to:

• describe their plan for the significant business assets, such as details of any substantial capital expenditure likely to be made over three years;
• detail their tax residence, and that of any holding companies;
• provide information about the capital structure for the investment, including debt and equity funding and the possible involvement of any hybrid arrangements;
• indicate the likely nature and extent of any transfer pricing arrangements;
• state whether any double tax agreements are relevant; and
• indicate whether the applicant is likely to apply to Inland Revenue for a ruling or advance pricing agreement with respect to any aspect of the investment.

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