Geof Nightingale: Independent tax expert on the new migrant tax rules

A view that new migrant tax rules will put us on par with other countries. 

The Government's proposing a bill to stop migrants being taxed on estimated overseas income and instead, only what they actually earn. 

Independent tax expert Geof Nightingale told Mike Hosking the current settings are a problem for high-value migrants, particularly now we have the Active Investor Plus scheme.  

He says these people usually have a portfolio of shares of other things around the world but we tax them on an annual basis, no matter if they sell. 

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Episode Transcript

Speaker 1 (00:00):
A couple of tax changes to tell you about new

(00:02):
bill to stop migrants being taxed on estimated overseas income
and instead only on what they actually earn. Also, people
and I hadn't thought about this. People using solar and
feeding it back to the grid won't be charged income tax.
Did you think about that when you stuck a few
panels on your roof? Anyway, Jeff Nightingale's an independent tax
expert in this back. Well, it's Jeff Morning.

Speaker 2 (00:19):
Good morning, Mike.

Speaker 1 (00:20):
This migrant business estimated v received. Is this complex?

Speaker 2 (00:24):
Yeah, well it is a little complex, but it's a
good measure. At the moment. New Zealanders pay a deemed
tax on foreign shares and that's a deemed income of
five percent, and the net gets taxed at the marginal rate.
So that's a cash cost for owning shares, whether or
not you get a dividend or whether or not you

(00:45):
sell them. And that's been a real problem for high
value migrants, and particularly now I've got the active investor
plus scheme. We want these people to come here and
invest five to ten million, and they usually have a
portfolio of shares. Of other things I've done around the
world and we're needed, we start taxing them on an
annual basis whether or not they sell. So it's designed
to address that and make it more attractive to come

(01:06):
to New Zealand and it's a good measure.

Speaker 1 (01:08):
Does that put us on a level playing field for
migrants with other countries and the tax treatment.

Speaker 2 (01:14):
Yes, because generally they are subject to terrible words, but
generally they subject to capital gains tax on those offshore
share portfolios in their home country, but only when they
sell them. And you know, some of this venture capital
investment may never be worth anything. And so what we're
doing is giving them the option to elect into essentially
a sort of a capital gains tax regime in New

(01:36):
Zealand and say, if you sell those shares, will tax
seventy percent of the profit, pay tax in New Zealand,
get a credit in your home country so it aligns
with their offshore jurisdiction better.

Speaker 1 (01:47):
What would your assessment of that being a handbreak if
we hadn't changed it. Is it a major? Yeah?

Speaker 2 (01:53):
It was a major because I particularly with this Golden
visa active investor thing, because that's the people we're trying
to attray five to ten million dollars to invest in
New Zealand. So I think it's a it's a good
move to fix it there. The only disappointing thing is
it would have been good to give that elective option
to all New Zealand.

Speaker 1 (02:09):
Is not just well, I was going to say, so,
what's a migrant? What's not a migrant? And a you're
giving different treatment to different people.

Speaker 2 (02:15):
Yeah, you are. So a migrant is someone that's not
been resident of New Zealand for five years, So it
does apply to returning New Zealanders. You have to have
been non resident for five years. And there was a
lot of lobbying to try and get the Because it's
an electival, you're elect into it, so there's a lot
of lobbying to try and get it extended more broadly.
But but at the moment, the government's just focused on

(02:36):
this one problem.

Speaker 1 (02:36):
Okay, the good thing, As I said, I hadn't thought
about it. I mean, you're six and panels on the roof.
You think you're doing the right thing saving on a
power bill. But I mean the concept of paying tax,
I mean that would be that would come as a
surprise for many people, wouldn't it.

Speaker 2 (02:47):
It would Yeah, you sell the electricity from your your
your run off solar and its income, and so then
you've got to declare that and come you've got to
claim costs for putting the panels on the roof. And
it's just a nightmare. And so this is a really
sense of pragmatic thing. The government's saying, a little bit
of income from solar panels on your roof, we're just
going to call it exempt. Not trouble you with a
tax system. It's a really sensible thing to do.

Speaker 1 (03:09):
From tax point of view. Is the government doing pretty
much all they can about getting people into the country
and making it easy.

Speaker 2 (03:16):
Now, yeah, they are, because the other thing in this
bill is a big bill. It's one hundred page tax bill.
But the other thing and there is a provision to
allow digital nomads, so people to come to New Zealand
and work here. So we already change the visas so
that you can do some digital work on a visitor's
visa and work back into your offshore employer. And now

(03:36):
we've changed the tax rules to say that you can
do that for two hundred and seventy five days in
an eighteen month period without being subject to New Zealand tax.
But it's got to be an offshore employer and you've
got to be paying tax on that income in the
offshore country. But that's another sensible move to get more
people into New Zealand.

Speaker 1 (03:53):
Good inside has alway, Jeff ppreciate your expertise. Jeff Nightingale,
independent tax expert, with us this morning.

Speaker 2 (03:58):
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