Doing business in New Zealand - A GUIDE FOR INVESTORS March 2022 - Chapman Tripp
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Doing business in New Zealand A G U I D E FO R I N V E S TO RS March 2022
Contents
1 About Chapman Tripp
19 Taxation within New Zealand
37 Financial services
in New Zealand
2 New Zealand at a glance
22 New Zealand’s cross-
border tax regime
42 Investing in New Zealand’s
capital markets
4 Overseas investment
in New Zealand
25 Contract law in New Zealand
44 Fundraising in New Zealand
7 Establishing a business
26 Consumer protections
in New Zealand in New Zealand
46 Insolvency in New Zealand
9 Buying and developing real
estate in New Zealand 29 Employment and health and
safety law in New Zealand 48 Resolving disputes
in New Zealand
14 Environment and
resource management 32 Anti-trust, competition
law in New Zealand 50 Emigrating to New Zealand
law in New Zealand
34 Intellectual property
17 New Zealand Māori and
the Treaty of Waitangi
in New Zealand
We make every effort to ensure the accuracy of the information provided but it should not be relied upon as a basis for making
business decisions as circumstances, business conditions, government policy and interpretation of the law may change.
About Chapman Tripp
Chapman Tripp, New Zealand's leading law firm, can offer you a national, full service team. New Zealand Law Awards 2021:
Established in 1876, we have a reputation for excellence and a long track record of delivering Large Law Firm of the Year
innovative, commercial solutions which respond to the individual needs of our clients. KangaNews Awards 2021:
Our advice is clear and commercial. Chapman Tripp has an international We recommend you speak to us about New Zealand Law Firm of the
We help you mitigate risk and maximise client base and has been involved in your investment requirements before Year (sixth consecutive year)
your investment through all phases of some of the most high profile Overseas making any decisions so that we can
your business venture – from evaluating Investment Office applications of recent provide you with advice that is specific
Australasian Law Awards 2021:
potential investment opportunities times. We play a key role in mergers to your needs.
and acting on acquisitions through to and acquisitions, banking, financing, New Zealand Deal Firm of
advising on the most efficient way to insolvency, restructuring, procurement You can read more about Chapman Tripp
at chapmantripp.com
the Year
structure your business, the day-to-day processes, large scale infrastructure
operational issues you need to be aware projects and dispute resolution.
Chambers Asia Pacific Awards 2021:
of and, should it eventuate, how to
achieve a successful exit strategy. We have more than 60 partners and New Zealand Law Firm
around 200 legal staff with offices
of the Year
“
We also help you to make sense of the in Auckland (the economic centre of
New Zealand regulatory and cultural New Zealand and home to more than a
environment. We will represent your third of the population), Wellington (the NZ Lawyer 2020:
business interests to relevant regulatory seat of government) and Christchurch Our advice is clear and Most Innovative Firm List
bodies, including the Overseas
Investment Office, and will guide you
(the South Island’s commercial hub).
commercial. We help
NZ Lawyer 2020:
through the resource management This guide is designed to provide the you mitigate risk and Employer of Choice List 2020
prospective investor with an introduction
consent process and the best approach
for dealing with Māori law. to New Zealand’s legal framework. The maximise your investment
information is accurate at the time of through all phases of your
publication but is necessarily high level
business venture.
”
and generic so should not be relied upon
as a basis for decision-making.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 1
New Zealand Geography
New Zealand is situated in the South
Culture
New Zealand culture values fairness,
Economy
New Zealand is a safe place to invest
at a glance Pacific Ocean, with a land area
equivalent to Japan or Britain. We have
ingenuity, practicality, modesty, restraint
and informality. English is the everyday
and is currently ranked first of 190
economies by the World Bank for ease
one of the largest exclusive economic language but Māori and sign language of doing business.
zones in the world at 4.1 million are also recognised as official languages.
square kilometres. Major exports include dairy products,
We aspire to be a multi-cultural society meat, timber and minerals. We also
New Zealand consists of two main but accord a special significance to have developing industries in export
islands – the North Island and the South Māori culture, reflecting that Māori are education, boat building, IT, horticulture,
Island. It has a temperate climate and the indigenous people of this land. wine and film.
offers a high quality of life with clean air
and easy access to nature. Our stock exchange is the first in the
Political and legal system world to open trading each day – two
hours ahead of Sydney, three hours
Population New Zealand is consistently rated in the
top four by Transparency International
ahead of Tokyo, four hours ahead of
The resident population is just over Beijing, 12 hours ahead of London and
for freedom from corruption. We
5 million, one third of whom live in 17 hours ahead of New York.
have a common law legal system
Auckland. based on the British model, with an The currency is based on the
independent judiciary. New Zealand dollar, which is freely
New Zealand is a nation of migrants,
with one of the most ethnically diverse floated against all major currencies.
New Zealand has a stable parliamentary
populations in the world and a large “ex- democracy with a proportional voting
pat” community that provides important system which usually (but not always)
international linkages. produces coalition governments. The
two major parties, which would generally
lead a coalition government, are National
at the conservative end of the spectrum
and Labour at the liberal end.
Currently, we have a Labour Government
that includes two Ministers outside
Cabinet from the Green Party.
The British sovereign is the titular
Head of State and is represented in
New Zealand by a Governor-General.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 2
Free trade agreements ALERT
Want to know more?
New Zealand supports trade
liberalisation and is party to a large
Go to:
number of free trade agreements,
newzealand.com or
including with Australia, China, Hong
Kong, Chinese Taipei, South Korea, newzealandnow.govt.nz/investing-
ASEAN, Singapore, Thailand, Malaysia, in-nz or nzte.govt.nz/page/invest-
Brunei and Chile. We are also signatories or-raise-capital-with-nzte
to the Comprehensive and Progressive
Trans-Pacific Partnership and to the
Regional Comprehensive Economic
Partnership (RCEP).
Information on New Zealand’s
international trading agreements can be
found on the Ministry of Foreign Affairs
and Trade website: mfat.govt.nz
“
New Zealand currently rates number two
by Transparency International for freedom
from corruption.
”
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 3
Overseas Key points
• New Zealand recognises the positive
When is consent
required?
Residential land
The sale of residential property,
investment in economic and social contribution
foreign investment brings to
Overseas Investment Office (OIO)
consent may be required if the target
including lifestyle blocks and unit titles,
is restricted to:
New Zealanders.
New Zealand • New Zealand consistently ranks
highly as an attractive investment
business possesses any of the following:
• significant business assets - where
• New Zealand citizens and persons
“ordinarily resident in New Zealand”
(which, in this context, means holding
destination, with various studies the cost of an acquisition, or the
a permanent resident visa, having
identifying the ease of doing value of the applicable New Zealand
resided in New Zealand for at least
business, low level of corruption, high assets, exceeds NZ$100 million.
a year and having been present in
quality of regulations, adherence to Non-government investors from all
New Zealand for at least 183 days in
the rule of law, significant investor Comprehensive and Progressive
the past year)
protections, and protection of Agreement for Trans-Pacific
personal freedoms accorded to Partnership (CPTPP) countries have
• individuals who obtain consent on
investors in New Zealand. a higher threshold and Australia has
the basis that they are acquiring
a special arrangement under the CER
• Not all overseas investments into a home to live in and have made
Investment Protocol)
New Zealand require consent a commitment to reside in
or notification. Like most other • an interest in sensitive land, or New Zealand, and
countries, however, New Zealand • fishing quota.
does require overseas persons • investors who can demonstrate
to obtain consent for, or to notify through obtaining OIO consent that
certain types of investments. they will be developing the land and
ALERT
adding to New Zealand's housing
• Even if consent is not required, The definition of sensitive land is supply, or using the land for a non-
an investment into critical or residential use or for a residential
very detailed and requires careful
strategically important business can use that is incidental to the investor’s
require notification for consideration checking and analysis from qualified
advisers. In particular, land may core business.
under the national security and
public order regime. be “sensitive” if it adjoins certain
Exemptions are available for Australians
types of land, or is “associated” with
and Singaporeans under New Zealand’s
other land already controlled by an treaty obligations with these
overseas person. jurisdictions.
Tessa Baker – Partner
T: +64 9 357 9502
M: +64 27 622 3161
E: tessa.baker@chapmantripp.com
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 4
Consent criteria
Sensitive land To obtain consent, the overseas investor will need to demonstrate that the purchase will bring benefits additional to the
In general, all applicants (including persons status quo. These benefits are assessed against a variety of economic, social and conservation factors. Benefits need
with control of the applicant if the applicant to be proportionate to the nature of the investment being made (so more minor transactions do not require such a high
is an entity) are required to meet a bright threshold) All residential land, including “lifestyle,” is included in the sensitive land category.
line investor test comprising a closed list of
character and capability factors. Farm land Farm land must be offered on the open market before a sale to an overseas person can be entered into. Exemptions
The character factors include: from this requirement can be obtained, but only in special circumstances and at the discretion of the relevant Minister.
The overseas investor will need to show that the benefits to New Zealand arising from the investment are substantial,
• convictions resulting in imprisonment including economic benefits (such as employment, new technology and business skills, increased productivity,
increased exports, processing of primary products), a reduced risk of illiquid assets, and local oversight and
• corporate fines, in New Zealand or participation. The type and level of benefits required mean it is difficult for an overseas investor to obtain consent to
overseas, and buy farm land without substantial enhancements proposed.
• being ineligible to come to
Fresh or These include marine or coastal areas, riverbeds or lakebeds that form part of sensitive land. The fresh or
New Zealand. seawater seawater areas of the sensitive land must be offered to the New Zealand Government as a part of the OIO consent
areas application process.
The capability factors include:
• prohibitions on being a director, Residential For transactions involving residential land (which is not otherwise sensitive), the overseas investor will need either to
promotor, or manager of a company land satisfy the benefit to New Zealand criteria or one of four alternative tests: a commitment to reside in New Zealand,
increased housing supply, non-residential use or incidental residential use.
• penalties for tax avoidance or
evasion, and Leases Leasehold interests in sensitive residential land for a remaining term of more than three years, including renewals, and
more than 10 years, including renewals, for otherwise sensitive land will require consent. Prior leased interests may
• unpaid tax of $5 million or more. need to be included in this calculation.
A national interest assessment may Forest land Overseas investors wanting to buy forest land – being land over five hectares devoted principally to forestry – will need
be applied to transactions involving to satisfy either the benefit to New Zealand criteria or one of two alternative streamlined tests: the special forestry
strategically important businesses, an test or the modified benefits test, both of which involve replanting after harvest. The OIA also covers the acquisition of
overseas government investor, or an area of forestry rights over 1000 hectares per annum. Announcements have been made that land to be converted into forestry
specific national interest. This assessment, will shortly need to meet the benefit to New Zealand test (rather than the special forestry test).
which is applied infrequently, is designed
to ensure that overseas investments in
Strategically Transactions involving a strategically important business (such as military or dual-use technology, ports or airports,
sensitive and high-risk assets are not
important electricity, water, telecommunications, and financial market infrastructure) are subject to a national interest assessment
contrary to New Zealand’s national interests. infrastructure taking into account a range of factors, the importance of which can vary depending on the investment.
Certain investments have additional criteria
that must be met for consent to be granted
(see the following table). We recommend
you check with a qualified adviser on
these requirements.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 5
Off-shore transactions We recommend that potential investors Consent conditions
engage New Zealand legal counsel early
Transactions occurring outside Consent will be granted subject to
in the investment process to assess
New Zealand may still require OIO various conditions with which the
whether consent is needed and to
consent if the target business has applicant must comply and against
ensure that there are no unnecessary
interests in land or other assets in which applicants must report. Often
delays. An application for consent can
New Zealand. OIO implications for off- the conditions will reflect the nature
require preparing a large amount of
shore transactions should be assessed of the benefits claimed to support the
information on the investor and the plans
early in the transaction process to transaction in the consent application.
for the investment.
ensure that OIO timeframes do not Standard conditions include a
cause unnecessary delays. Assessment times can be found at requirement to dispose of the interest if
https://www.linz.govt.nz/overseas- consent conditions are not met.
Consent application investment/discover/our-assessment-
process/assessment-timeframes
Class exemptions
process The requirements for consent do not
The consent application process is apply to certain situations covered by
administered by the OIO and governed class exemptions including:
by the Overseas Investment Act 2005 ALERT • transfers within 75% wholly
(the Act) and accompanying regulations. owned groups
The formal assessment timeframes
The overall consent decision rests with were introduced in November 2021
the relevant Ministers. The OIO assesses and are being phased in. The OIO • where there is no increase in ultimate
the consent applications, and makes overseas ownership and control
can pause an application timeframe
recommendations to the Ministers. and also extend the timeframe.
For certain applications the OIO • acquisition of redeemable
We can advise you on timeframe preference shares
itself makes consent decisions under risks when advising on specific
delegated authority from theMinisters.
transactions. • security arrangements in the ordinary
National interest assessments are made
by the Minister of Finance and are course of business that secure
not delegated. payment or performance of an
obligation, and
• underwriting of an issue of securities
in the ordinary course of business,
provided that the position is held for
less than six months and voting rights
are not exercised.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 6
Establishing Key points
• Overseas persons can directly own
Types of business
entities in New Zealand
Establishing a
New Zealand
a business in assets and operate businesses in
New Zealand, or establish subsidiary
Overseas investors can undertake
business in New Zealand through
subsidiary company
entities to own assets and operate A New Zealand company is a separate
New Zealand •
businesses in New Zealand.
Overseas companies and limited
various structures:
• branches
legal entity responsible for its own assets
and liabilities. There is no restriction on
partnerships which intend to carry the size of a company’s share capital.
• subsidiaries There are no residency restrictions
on business in New Zealand need
to register with the New Zealand • limited partnerships on shareholders.
Companies Office within 10 days of • joint ventures/general partnerships. Key points to note
starting business in New Zealand.
• Every New Zealand company
• Overseas entities will need to Establishing a requires at least one New Zealand
obtain a New Zealand tax number
and, depending on the volume of New Zealand branch resident director or one Australian
resident director who is also a
business, may be required to register An overseas company that carries director of an Australian company. As
for the Goods and Services Tax. on business in New Zealand must be long as this requirement is fulfilled, a
registered on the Companies Office New Zealand company may have any
ALERT Overseas Register within 10 working number of overseas directors.
days of business commencing. Business
Unlike other countries, the • Directors must comply with their duties
is carried out in New Zealand if an
Companies Register maintained under the Companies Act 1993. There
overseas company:
by the New Zealand Companies is no requirement for a company to
Office is publicly available, • establishes or uses a share transfer have a company secretary.
including information regarding office or a share registration office in • The Companies Office may require
directors and shareholders, such New Zealand, or a certified proof of identity (e.g.
as their residential address and full • administers, manages, or deals with passport) and a certified proof of
legal name. property in New Zealand as an agent, residential address (e.g. utilities
personal representative or trustee, bill) for overseas directors when
whether through its employees or an registering a company.
agent or in any other manner. • Every New Zealand company
requires a New Zealand registered
The New Zealand component of office address/address for service.
business operations is governed by
New Zealand law. The New Zealand
Branch remains the same legal entity as ALERT
Tim Tubman – Partner
T: +64 9 357 9076
the overseas company, and there is no We can assist and put you in touch
M: +64 27 344 2178 sheltering of liability. with providers of professional
E: tim.tubman@chapmantripp.com
director and registered office
services in New Zealand.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 7
Entering a joint venture/
Establishing a limited general partnership
Branch Subsidiary Limited partnership
partnership Joint ventures for a particular project Liability Because the branch A special purpose The general partner
The rules governing limited partnerships can be carried out by a company, a is legally the overseas subsidiary may help (which may be a
in New Zealand are similar to those limited partnership or an unincorporated company, there is no ring-fence liability. company) manages
applying in other jurisdictions, including contractual joint venture. sheltering of liability. But in practice, unless the business and
the subsidiary is can be liable for any
Delaware, Australia and the Channel
A general partnership is not a separate substantial in its own debts and obligations
Islands. The distinctive feature of the
legal person and each partner is jointly right, any significant which the limited
limited partnership model is that it acts
and severally liable for the debts of commercial dealings partnership itself is
as a look-through vehicle for income tax may need to be unable to meet. The
purposes while affording the protections the partnership. Responsibilities and
liabilities can be allocated according guaranteed by the limited partners are
of limited liability to its members. A overseas parent. passive investors and
limited partnership must have at least to a partnership deed, but partners
their liability is limited
one general partner and one limited do not enjoy the protection of limited
to the amount of
partner, who cannot be the same person. liability. For this reason, some investors
capital they agree to
A general partner is jointly and severally prefer to pursue joint ventures through contribute.
liable with the limited partnership and a special purpose vehicle company or
any other general partners for the limited partnership. Tax The branch will The subsidiary is Limited partners are
unpaid debts and liabilities of the limited generally be a New Zealand treated as holding
partnership. A general partner can be considered to tax resident and the assets of the
an overseas company provided it is Branch, subsidiary or be non-resident will be subject to limited partnership
registered in New Zealand with at least for tax purposes, New Zealand tax and personally
one director who lives in New Zealand or
limited partnership? with the effect on the subsidiary’s derive the income
who lives in Australia and is a director of There are advantages to each of that the overseas worldwide income. and deductions.
company will have Losses cannot This enables them
an Australian company. the three options, depending on
to pay any tax be offset against to distribute capital
the circumstances.
A limited partner has the protection of obligations incurred any income of gains among
limited liability, but must not take any in New Zealand but the overseas themselves tax free
may also be able to parent and cannot and to pass through
part in the management of the limited
include the branch usually be claimed tax losses (although
partnership. A limited partner can be an
activities in the tax in the parent’s only to the extent of
overseas person. return filed in the home jurisdiction. that limited partner’s
home jurisdiction of exposure to the loss).
the head office.
Overseas Investment Act Consent
Establishing a new business may be subject to the Overseas Investment Act (see the
Investing in New Zealand section for more detail).
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 8Buying and Key points
• All titles in New Zealand are
Registered title system
New Zealand uses the Torrens land
Forms of title
In New Zealand there are three main
developing registered at Land Information
New Zealand. “Freehold” title is
registration system under which most
parcels of land have their own titles
forms of title.
Freehold – this is the most common
the most common. Particular care showing dimensions and location,
real estate in needs to be taken when dealing with
“leasehold” or “unit title” properties.
ownership and other interests affecting
the land. The government guarantees
(and best) form of title available in
New Zealand.
New Zealand
the accuracy of titles, which can be
• When purchasing property in Leasehold – the purchaser of a
searched by the public for a nominal fee.
New Zealand, it is usual to sign a leasehold property acquires the
sale and purchase agreement that Chapman Tripp provides a full title benefit of a lease of the property (as
is conditional upon the purchaser searching service. opposed to the freehold). Leasehold
carrying out a due diligence title is particularly prevalent within the
investigation and being satisfied with The primary attraction of the Torrens Auckland waterfront area. The term and
the results of that investigation. system is that dealings can be rental structure of these leases can
conducted in reliance on a single title, vary significantly. Particular care needs
• Overseas investors need government
rather than on a succession of title to be taken when acquiring leasehold
consent under the Overseas
deeds. New Zealand has converted property, especially when the lease
Investment Act to buy “sensitive”
almost all titles, plans and instruments reserves an annual rent that is subject to
land (which includes farm land
into an electronic format, allowing review under the terms of the lease.
and residential land) or any other
real-time searching and electronic
property where the consideration is
registration of all land title and
over $100 million. See the Investing in
surveying transactions.
New Zealand section for more detail.
Under New Zealand law, buildings
and other improvements permanently
attached to the land form part of the
land itself and pass with ownership of
the land, unless the seller and buyer
agree otherwise.
Dealings with land are registered
electronically against the title.
Mark Nicholson – Partner
T: +64 9 357 9297
M: +64 27 305 9120
E: mark.nicholson@chapmantripp.com
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 9Unit Title – unit titles are similar to uncommon to find leasehold unit titles on the management and maintenance contract disclosure statement which other forms of title save that they are within the Auckland waterfront area. of common property (such as lobbies contains information on the unit title limited to a defined part of a building or A purchaser of a unit title property and lifts) and the structural elements being purchased (including the amount property. They are the most common automatically becomes a member of the building as well as common of the “levies” payable to the body form of title for apartment buildings of the “body corporate”. The body building services. Before entering corporate to cover the cost of the (with each individual apartment corporate effectively governs the into an agreement to purchase a unit insurance of the building as well as its comprising a single unit title). Most building under the terms of the Unit title property, the vendor is obliged management and maintenance). unit titles are freehold but it is not Titles Act 2010, with a particular focus to provide the purchaser with a pre- Doing business in New Zealand A GUIDE FOR INVESTORS March 2022 HOME 10
Contracts for sale and Due diligence In addition, you will need: Seismic rating of
purchase of land Due diligence is a fundamental • a registered valuer to undertake a commercial buildings
component of the process of acquiring valuation of the property, and
To be enforceable under New Zealand As a result of the Christchurch
property in New Zealand. Depending
law, a contract for the sale and purchase • a building inspector/engineer earthquakes of 2010 and 2011,
on the nature of the property being
of land must be in writing and signed by to review the condition of the purchasers of commercial buildings will
acquired, due diligence commonly
the parties involved or their authorised building and identify any defects or now usually include the seismic rating
entails engaging a lawyer to review:
agents. Once signed, an agreement maintenance issues (see also the of those buildings as part of their due
for sale and purchase becomes legally • the title to the property and (in the comments below about the “seismic diligence investigation.
binding on all parties. case of commercial property) the rating” of commercial buildings).
All new buildings in New Zealand are
terms of any leases
Sale and purchase agreements can be required to be constructed to 100%
made subject to conditions which are • council records for the property in of the current building code (often
designed to protect either the seller the form of a “LIM” report to identify referred to as “New Building Standards”
or the buyer. Common conditions are the following types of issues or “NBS”). However, older buildings
the buyer raising finance and the buyer are unlikely to have been constructed
• any enforcement action being
being satisfied with the results of the due to 100% of NBS, either because of the
taken by the council for non-
diligence investigation (see below). lower building standards applying at the
compliance with statutory or
time the building was constructed or
You should always obtain legal advice regulatory requirements
because of poor design or workmanship.
before entering into a sale and purchase • any outstanding code compliance
agreement. However, particular care certificates in respect of any
needs to be taken before entering into building work undertaken at the
an agreement to purchase: property (see section below on
building works) ALERT
• a commercial property (which, An older building with a seismic
• the existence of a building warrant
depending on size and value, may rating of less than 34% of NBS
of fitness which is required for
be subject to fairly significant legal is classified as “earthquake
most buildings other than stand-
negotiation), or prone” and will be subject to
alone houses (see section below
• a residential property that is to be on building works) statutory requirements for seismic
developed by the vendor (commonly • any relevant records held by the strengthening works. Particular care
referred to as buying property “off council regarding the property needs to be taken with heritage
the plans”). (for example the existence of any buildings and buildings constructed
contamination or geotechnical before 1976, which are more likely to
Where a real estate agent is engaged issues or whether the building be earthquake prone.
by a seller to effect a sale, commission has been identified
is payable by the seller. There is no as “earthquake prone”)
stamp duty. • any rates arrears.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 11Typically, most investors in commercial
property in New Zealand look for a
Residential property Gain from sale of a property held for
longer than the relevant bright-line
Resource
seismic rating of at least 67% of NBS. – tax considerations period (five years or 10 years) may still be Management Act
A rating of less than 67% can have an taxed if the Inland Revenue Department
Generally, gains from the sale of The Resource Management Act 1991 is
impact on the value of the property (IRD) considers that the seller acquired
residential properties purchased: New Zealand’s principal statute relating
and also the ability to attract or retain the property for a purpose or intention
to the use of land, water, minerals,
tenants. Most major corporates in • on or after 27 March 2021 and held of resale, or if one or more of the
the coast, air and physical resources.
New Zealand will refuse to lease for less than 10 years, or specific land taxation provisions applies
The Act has major implications for
property in New Zealand if it has a (for example, if the seller carried on,
• between 29 March 2018 and 26 all property developments, be they
seismic rating of less than 67%. or was associated with someone who
March 2021 and held for less than commercial, industrial or residential
carried on, a business of land dealing,
There are two main types of report five years in nature, and for infrastructure and
land development or building at the time
issued by engineers to assess the utilities. A new development may require
are taxed at the owner’s standard of acquiring the property and sells that
seismic rating of a building: a number of consents under the Act
income tax rate under the property within 10 years).
before it can go ahead.
“bright-line test”.
• an “ISA” (or “Initial Seismic Residential Land Withholding Tax
Assessment”), a very high level Controls on property development
“New build” residential properties (RLWT) applies where the seller is an
desktop study that is not always are administered by local government
acquired on or after 27 March 2021 offshore person and the residential land
accurate and should be treated with authorities and are expressed through a
are subject to a shorter five year is sold within the relevant “bright-line”
caution, and range of publicly notified plans. These
“bright-line” period. The legislation to period. RLWT also applies to sales by
include regional plans, district plans,
• a “DSA” (or “Detailed Seismic achieve this is to be enacted before New Zealand entities that are ultimately
and some national level plans. Plans
Assessment”) which is usually more 31 March 2022 and is drafted to more than 25% owned or controlled by
set out rules for activities depending
accurate but will generally cost more apply retrospectively. offshore persons. (For more detail, refer
on the nature, scale and location – for
than an ISA. However, care still needs to the section on New Zealand’s cross-
Exemptions (and in some cases, most developments above a certain
to be taken to review the report to border tax regime.)
apportionment) may apply if the size this includes the requirement to
identify any limitations on the scope property is: obtain resource consent. At the district
Residents must provide an IRD number
of the investigations undertaken by level, these rules are largely based
as part of the usual Land Information
the engineer. • the seller’s main home on the zoning of the relevant land.
New Zealand transfer process.
• inherited from a deceased estate Non-residents must also provide a Parties seeking consent to proceed
If the engineer’s report was obtained with a development must follow the
• sold as part of a relationship New Zealand IRD number as well as a
by the vendor, the purchaser should procedures set out in the relevant plan.
break down. home jurisdiction tax number together
consider requiring either that the This may involve public participation in
with another form of identification –
engineer confirm in writing that the the resource consent process, through
such as a passport. In order to obtain
purchaser may rely on the report or notification of the consent application.
an IRD number, a non-resident will
that the report be re-addressed to
need a fully functional New Zealand
the purchaser.
bank account or confirmation from
a New Zealand reporting entity that
customer due diligence has been
completed in accordance with
New Zealand anti-money laundering
(AML) legislation.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 12Privately owned land may also be
designated in the applicable district plan
Most types of property (other than
stand-alone houses) are also required
Māori land claims
as being required by the government or to hold a building warrant of fitness Land claims by Māori, the indigenous
other competent designating authority (or “BWOF”) that is issued annually people of New Zealand, are governed by
for a public work (including compulsory confirming that certain building systems the Treaty of Waitangi Act 1975. Under
acquisition if necessary). The current and services (mostly related to life the Act, grievances are heard by the
market value of the land would be paid safety, such as sprinklers, lifts and fire Waitangi Tribunal which can then make
as compensation. alarms) comply with certain Building Act recommendations to the government
criteria. The existence of a BWOF should regarding the resolution of those
For more detail on the Resource be checked during the due diligence grievances.
Management Act 1991, refer to the investigation by reviewing an up to date
Environment and resource management “LIM” report for the property. Recommendations for the return of
law section. land to Māori are generally applicable
Allied to the Building Act is the Building only in respect to land owned by
Code. This sets criteria to ensure the government or State-Owned
Building works buildings are safe, sanitary, have Enterprises. Privately owned land is not
The Building Act 2004 is designed adequate means of escape and, in the subject to return to Māori ownership
to regulate and control building work case of public buildings, have access unless the title to the land has been
and the use of buildings. Every new and facilities for disabled persons. specifically endorsed to that effect
building and most substantial alterations Existing buildings, which are being (and, even then, current policy is not to
or additions to existing buildings will altered, may require upgrading in the exercise that right). If it was exercised,
require a building consent. Multiple-use course of the alterations in order to the current market value would be paid.
approvals are available for group home comply with these criteria as nearly
as is reasonably practicable. Buildings For more information on Māori
builders who build homes throughout
considered earthquake prone may also rights under the Treaty, refer to our
New Zealand using the same or
be required to be upgraded. New Zealand Māori and the Treaty of
similar plans.
Waitangi section.
Following completion of any work The Act imposes restrictions upon
pursuant to a building consent, a code occupation of a building where public
compliance certificate (or “CCC”) areas of that building are subject
should be obtained. When purchasing to building works for which a code
a building in New Zealand, a key item compliance certificate has not yet
that should be checked during the due been issued.
diligence investigation is whether there
are any outstanding code compliance
certificates for building work carried
out at the property. This can be verified
by engaging a lawyer to review an up to
date “LIM” report for the property.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 13Environment Key points The Resource Applications for resource consent are
generally made to the relevant local
• The Resource Management Act 1991 Management Act authority. Depending on the type of
and resource (RMA) is the primary instrument
of environmental regulation in
The RMA regulates all uses of land,
water and air, out to the edge of the 12
activity, the application may be heard
without public notification, on a publicly
New Zealand. It is however currently notified basis, or with limited notification
management subject to extensive reform and
is expected to be replaced in the
nautical mile coastal limit. It is largely
administered by local government
through resource consents granted, or
to affected parties only.
Applicants must provide a
law in
near future.
withheld, under statutory and publicly comprehensive assessment of the
• The Exclusive Economic Zone and notified district and regional plans, and environmental impact of the proposal
Continental Shelf (Environmental some national level documents.
New Zealand Effects) Act extends a variant of the
RMA into the sea and seabed 12 to District plans control the use of land.
or use. Rights of appeal can generally
be exercised by the applicant, or by
anyone who has made a submission
200 nautical miles offshore from Regional plans control the use of water,
on the application to the Environment
New Zealand. coastal matters and the discharge
Court. (Special processes apply in some
of contaminants.
• New Zealand’s climate change cases, such as for nationally significant
response is delivered through an These plans classify activities as: projects).
Emissions Trading Scheme.
• permitted (not requiring The RMA has a range of penalty and
resource consent) enforcement provisions. Directors and
senior managers can be found personally
• controlled, discretionary or non- liable for any acts or omissions by
complying (a resource consent the company.
is required and, where granted,
will often be subject to specific Central government can also provide
conditions designed to mitigate any national direction through National
adverse environmental effects), or Policy Statements, National Planning
Standards and National Environmental
• prohibited (will not be consented).
Standards.
Under the RMA, polluters who
contaminate land can be liable. But
owners or occupiers of contaminated
land can also face enforcement action
for that contamination (even if it is
historic contamination caused by a
previous polluter).
Catherine Somerville-Frost – Partner
T: +64 9 358 9813
M: +64 27 486 3309
E: catherine.somerville-frost@chapmantripp.com
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 14When the RMA was enacted in
1991, it placed a very high value on
The Exclusive The Emissions The ETS currently covers forestry,
electricity production, industrial
local decision-making and public Economic Zone and Trading Scheme processes, liquid fossil fuels, synthetic
consultation. It still reflects those gases and waste. Although it was
founding values but has been much
Continental Shelf The Emissions Trading Scheme (ETS)
designed as an “all gases, all sectors”
is the key delivery mechanism for New
amended over its history and most of The Exclusive Economic Zone and scheme, agriculture will not come fully
Zealand’s commitments to emission
those amendments have been designed Continental Shelf (Environmental into the scheme until 2025.
reduction, legislated for through the
to streamline RMA processes and Effects) Act (EEZ Act) extends a variant
Climate Change Response (Zero Carbon) A recent series of amendments will:
to permit more central government of the RMA to the EEZ and applies to
Amendment Act 2020.
intervention with a view to speeding up activities such as seismic surveying
• phase out free allocations to high-
development. and cable laying, seabed mining and The Zero Carbon Act: emitting trade-exposed industries,
the construction and installation of
A comprehensive review of the RMA beginning in 2021 and gathering
oil and gas rigs. It also anticipates • establishes a net zero emissions
is currently underway, with changes speed from 2030
possible future uses, including deep target (allowing for forestry offsets)
expected to be legislated for within the sea aquaculture, carbon capture and by 2050 for all greenhouse gases,
current Parliamentary term. • create a cost containment reserve
storage, and marine energy generation. except biogenic methane which is to
which establishes a price floor of $20
be brought within a range of 24% to
The permitting authority is the per unit and an effective price ceiling
47% below 2017 levels by 2050, and
Environmental Protection Authority of $50 (each to be increased by 2% a
(EPA), which must issue a decision on • creates an independent Climate year to provide for inflation)
publicly notified applications within six Change Commission which will be
months of receiving the application, responsible for preparing five year • improve the auctioning system
or within 60 days of receiving a non- emissions budgets and advising the for units.
notified application. Minister on the quantity of emissions
which will be permitted within each For more information, go to:
The EEZ Act identifies various factors budget period. climatechange.govt.nz/emissions-
which should drive the EPA’s decision- trading-scheme
making. Several of these reflect
environmental or biodiversity values but
they also include the economic benefit
to New Zealand and the efficient use
and development of New Zealand’s
mineral resource.
Appeal rights are to the High Court
and are limited to points of law. The
maximum penalty for breach of a marine
consent is $10 million.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 15Minerals regime All petroleum, gold, silver and uranium
deposits (including under the sea) are
Return to the government is through
a royalty regime, although there is
Access and rights to prospect, explore the property of the Crown (Government). provision in the Act for the government
and mine New Zealand’s extensive No person may prospect, explore for, also to participate in any given permit
petroleum and mineral estate are or mine, government-owned minerals and thus derive a fair financial return
governed by the Crown Minerals Act without an appropriate permit. through that avenue. The current policy
1991 and by the Minerals Programme and is not to exercise this right.
the Minerals Programme for Petroleum Evaluation criteria for oil and gas
issued under it. exploration under the allocation All transfers of, or other dealings with,
system must meet health, safety and a permit interest require the consent of
Acquisition of permits is through an environmental requirements and the New Zealand Petroleum & Minerals.
annual Block Offer process, although applicants must engage with indigenous
this is currently tightly restricted. communities. Permits can be granted For more information, go to:
for up to 15 years and give the holder nzpam.govt.nz
The Government is allowing existing exclusive rights to explore in the
permits for oil and gas exploration to designated area. An exploration permit
run their course but will not issue any does not automatically confer mining
new offshore permits and can issue new rights. These must be applied for
onshore permits only in the Taranaki separately.
region. The National Party has promised
that it will reverse this ban when next
in office.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 16Te Iwi Māori Key points
• Māori are the indigenous people of
• Iwi corporations often look to
maximise returns from settlement
assets through joint venture
Some of the significant differences
are that Te Tiriti ceded to the British
Crown kāwanatanga (governorship) while
and Te Tiriti Aotearoa New Zealand (referred to as
Aotearoa throughout this section).
arrangements with overseas
investors.
retaining tino rangatiritanga – absolute
sovereignty of Māori over their whenua
(land and water), kāinga (homes), and
o Waitangi • Aotearoa has no written constitution,
but Te Tiriti o Waitangi 1840 (Te Tiriti)
and the English version, the Treaty of
• Māori have a relationship of
kaitiakitanga (stewardship) with land,
water and other phenomena which
taonga (valued items or phenomena).
The Treaty, by contrast, expressed a
cession of sovereignty to the Crown while
Waitangi (the Treaty), are a part of the should be considered when doing
guaranteeing to Māori “exclusive and
foundational law of the country, as business in Aotearoa.
undisturbed possession of their lands,
recognised in a number of statutes,
forests, fisheries and other properties”.
court decisions and common law
principles in Aotearoa.
Te Tiriti o Waitangi
Due to the inconsistences between the
Before discussing Te Tiriti, it is important two versions, the courts of Aotearoa do
• Te Tiriti is, in essence, an agreement
to acknowledge He Whakaputanga not seek to enforce the actual wording of
between the British Crown and
(Declaration of Independence) 1835. Te Tiriti or the Treaty. Instead, they seek
Māori. While the meaning of Te
He Whakaputanga is a precursor to Te to recognise the principles of the Treaty
Tiriti and the Treaty is the subject
Tiriti and was a formal assertion by Te as first laid out by the Court of Appeal in a
of much debate, due to significant
Whakaminenga, a confederation of iwi landmark judgment in 1987 (New Zealand
differences between them, they are
Māori, of their authority globally. Māori Council v Attorney-General). The
the foundation for a partnership
based on mutual duties to act Te Tiriti was signed on 6 February 1840 Court found that the Treaty imposes a
reasonably, honestly and in the by representatives of the British Crown duty on both the Crown and Māori to
utmost good faith. and many, but not all, Māori iwi and hapū. act in the spirit of partnership envisaged
Waitangi Day, observed on 6 February by the original signatories, and that both
• The British Crown did not honour Treaty partners must act reasonably,
the Treaty, with the result that Māori each year, is a public holiday to honour
the signing of Te Tiriti. honestly and in the utmost good faith.
collectives (called iwi or hapū) have
suffered significant grievances. A While neither Te Tiriti or the Treaty
Most rangitira Māori (leaders) signed Te
political process was developed in are enforceable as an international
Tiriti, the version written in Māori, which
the 1990s to negotiate and settle treaty or statute law, their principles
differs in many important respects from
these grievances. The settlement have become much more relevant
the English text.
packages include cultural and through developments in case law and
commercial redress. because the Government legislated in
1985 to enable the Waitangi Tribunal to
• These settlements have helped
investigate historical breaches of Te Tiriti
to finance the creation of iwi
dating back to 1840.
corporations and contributed to the
“Māori economy”, which was valued Many other pieces of legislation have
Te Aopare Dewes – Partner at $68.7 billion as at 2018. also created a statutory requirement to
T: +64 9 358 9839
M: +64 27 209 0810 consult Māori on the basis of Te Tiriti,
E: teaopare.dewes@chapmantripp.com including the Local Government Act 2002
and the Resource Management Act 1991.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 17Treaty settlement process Historical claims are negotiated and
finalised with the government of
Te Ōhanga Māori –
Since 1840, the Crown has repeatedly the day. Some iwi and hapū choose the Māori economy
breached Te Tiriti, creating to go straight into negotiation with
Te Ōhanga Māori is broadly defined
significant grievances for iwi and the Crown. Others prefer to go first
as those privately or collectively
hapū with devastating economic through a Waitangi Tribunal hearing
owned businesses that have links to
and cultural repercussions across process and to use the ensuing report
Māori ancestors. Its financial value
multiple generations. as the basis for direct negotiations with
has been assessed at $68.7b as at
the Crown.
The Waitangi Tribunal, created by 2018, comprising: $47.7b Māori-owned
and governed through the Treaty Iwi and hapū receive settlement of their businesses and $21b in Māori trusts,
of Waitangi Act 1975, conducts historic grievances with the Crown in incorporations and other entities.
comprehensive inquiries into Māori the form of cultural and commercial
A large proportion of the asset base
Tiriti-based claims, both historical and redress. Commercial redress is usually
in Te Ōhanga Māori has been created
contemporary, and is usually limited to determined by the negotiation of a
outside the Treaty settlement context
making non-binding recommendations quantum amount, followed by iwi or
through independent and private Māori
to the government regarding the hapū purchasing Crown lands with
businesses, entities, whānau (families)
resolution of those grievances. that money.
and households.
These claims often relate to land. It may also include valuable rights of
Māori control 50% of the fishing quota,
Generally, the Tribunal cannot first refusal for between 50 to 170
and own around 40% of forestry in
recommend the return of privately years (in some cases, longer) over
Aotearoa. Some of these holdings were
owned land to Māori, and cannot surplus Crown lands, usually within the
established through the ‘Sealords Deal’
recommend the Crown to acquire traditional area of the iwi or hapū.
in 1992 (the Treaty settlement relating to
privately-owned land. The Tribunal
Some iwi and hapū have used Māori fishing rights) and the ‘Treelords
can make a binding recommendation
settlement monies to create large, Deal’ in 2007 (the Treaty settlement
relating to Crown-owned forest land
asset-rich Māori corporates, the under which the Kaingaroa Forest was
and lands previously owned by a
three largest of which are now transferred from the Crown to central
State Owned Enterprise which have
valued at over $1 billion each. These North Island iwi). Māori also own 30% of
a “section 27B” memorial noted on
are now significant players in the lamb, sheep and beef production and
the title.
Aotearoa economy. 10% of dairy and kiwifruit production.
If the Waitangi Tribunal did make such
Iwi and hapū corporations have sought
a recommendation, the owner would
to maximise the returns from their asset
be compensated by the government of
base through joint ventures and other
the day. To date, the Waitangi Tribunal
partnerships with investors who can
has only ever made one binding
bring capital, value-added processing,
recommendation for resumption
employment opportunities, and market
of land and in that case, the Māori
access. China has been a particular
claimants and the Crown negotiated
focus for these activities..
a settlement.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 18Taxation Key points Individuals are regarded as resident For individuals, assessable income
for income tax purposes if they includes (among other items) salary
• New Zealand has a broad-based have a permanent place of abode and wages, bonuses, other employment
within income and consumption tax system.
This includes withholding taxes on
in New Zealand or are present in
New Zealand for more than 183 days
benefits or remuneration, partnership
income and investment income. For
many cross border payments and a within any 12-month period. New salary and wage earners, tax is deducted
New Zealand robust general anti-avoidance rule. migrants and, in certain cases, returning
New Zealanders who have not been
at source by the employer through the
Pay As You Earn (PAYE) system. The
• The primary revenue sources are: resident for tax purposes in New Zealand amount of tax deducted will depend
income/company tax, a consumption for at least ten years, can qualify for on the gross salary or wage paid to the
tax on goods and services (GST) and temporary transitional residence status. employee. Non-cash benefits provided
local authority rates. A transitional resident is exempt from to employees are subject to fringe
New Zealand income tax on their benefit tax (FBT) which is payable by the
• Capital gains tax, stamp duty, gift foreign-sourced income other than employer.
duty and death duties are not income from employment or the supply
payable in New Zealand. of services for a period of four years For companies, net taxable income
after they meet the test for New Zealand generally corresponds with accounting
tax residency. profit or loss. However, adjustments are
Income tax commonly required in relation to:
A company is regarded as resident in
For individuals and companies defined New Zealand if it: • the timing of income and expenditure
as “resident” in New Zealand, income recognition
tax is generally imposed on worldwide • is incorporated in New Zealand
income. Non-resident individuals • bad debts
and companies are taxed only on • has its head office in New Zealand
• capital receipts and depreciation
New Zealand-sourced income, and • has its “centre of management” in rates, and
their tax liability may be reduced by New Zealand, or
the provisions of an applicable Double • various provisions and reserves.
Tax Agreement. • is controlled by its directors in
New Zealand. New Zealand does not currently
have a broad based capital gains tax.
Income tax is imposed at 28% on In certain circumstances, however,
companies and unit trusts (which capital gains are taxed. In particular,
are treated as companies under the proceeds from the sale of real or
New Zealand tax law). Individuals (both personal property (including shares) may
resident and non-resident) are taxed be subject to income tax (for example,
progressively at between 10.5% and 39%, where the dominant purpose of the
with the 39% rate cutting in at taxable initial purchase was to resell the asset at
income over $180,000. As noted above, a profit).
Bevan Miles – Partner non-residents are taxed only on their
T: +64 9 357 8986
New Zealand-sourced income. Special provisions apply to residential
M: +64 21 240 7387
E: bevan.miles@chapmantripp.com
properties other than the person’s
main home.
Doing business in New Zealand
A GUIDE FOR INVESTORS
March 2022 HOME 19You can also read
