How should I re-structure if I relocate overseas?

Question from Tuang updated on 25th February 2010:

I have 4 investment properties (I am the guarantor for these investment loans) in the name of a LAQC, and my own home (no loan) in the name of my family trust.
I am the sole shareholder of the LAQC and one of the shareholder (the other is my solicitor) of a trustee company which is the sole trustee of the family trust.
How should I re-structure my assets if I move to and work in Australia. Sell LAQC to Family Trust? No change? Tax minimisation and asset protection will be important.

Our expert Mark Withers responded:

One of the elibility criteria for an LAQC is that it's management base must be located in NZ. This potentially means that your company loses its LAQC status if you leave the country. Australia also has quite a strict tax regime as it relates to trusts and your NZ trust may not be suitable in Australia, especially given Australias capital gains tax.

Compounding all this is the fact that Australis has repealed it's foriegn loss quaranting rules which had previously prevented an Australian tax resident off setting a NZ property loss against their Australian income. I believe that taking advantage of this change in Australia will not be possible if the properties remain in a NZ company as the LAQC status of your company is only recognised in NZ.

You would probably be better off with the rental properties in your own personal name. Restructuring this may be costly and would trigger depreciation recovery so should be investegated fully first by seeking tax advice from both NZ and Australian based advisors.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.


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