Recently, you may have noticed something of a backlash in the NZ media against Chinese immigrants and investors in New Zealand.
The current spate of xenophobia has been sparked by the perception that wealthy Chinese are buying too many Auckland properties, forcing the price up for Kiwis. Chinese investors make up less than 50% of the buyers and inward migration traditionally boosts prices. However, no-one appears to be correlating the price increase with the record numbers of cashed-up Kiwis returning home from Australia (that story seems to have been buried). The rampant house price inflation is further fuelled by lack of stamp duty or capital gains taxes.
New Zealand has become the wild west of property investment. People in New Zealand are either making a killing, or getting locked out of the property market completely and resigned to renting for the rest of their lives.
From today’s Stuff.co.nz report we learn that the Inland Revenue Department has created a “high wealth unit” to “keep a close eye on rich immigrants”. And we’re not just talking surveillance of Kim Dotcoms either…
A paper released by the Treasury outlines Inland Revenue’s priorities for spending new funding for the department to seek out tax dodgers…
Wealthy new immigrants who do not seem to have been getting the same level of scrutiny that our home-grown rich have enjoyed in recent years are also a target.
“Additional funding allocated in Budget 2015 would be used for work in relation to … high-income individuals, in particular new immigrants,” the paper says.
It describes this as “a world-wide risk not currently addressed in the department’s high-wealth individual programme.”
The Inland Revenue set up the high wealth individuals unit to scrutinise the wealthy who often have multiple companies and trusts as part of their complicated financial lives.
Asked why wealthy immigrants had not been covered by the highwealth individuals unit, an Inland Revenue spokesman said its investigation activity inevitably involved “choices about where we prioritise our efforts”.
“This bid sought further funding to increase activities in a number of areas, including high income earners. The expansion to include new immigrants follows preliminary work which identified that the volume of persons in this category justified this investment, and is in line with trends in other OECD countries.”
The problem is that the IRD doesn’t define what it considers to be wealthy. Given that the median wage is $44,876 anyone earning over that figure could be subject to closer scrutiny by the IRD, this includes most skilled migrants in New Zealand (except for those that Dean Hall wants to employ on $35,000 a year).
Stuff’s article finishes with
Another target for the taxman’s investigators is property speculation around new subdivisions, particularly in the growing Auckland and Christchurch property markets.
The Treasury opposed the proposals for extra funding, but its reasons have not been disclosed.
On same day the NZ Herald’s lead story is about Chinese migrants buying up Auckland land sections (building plots in subdivisions)
The more cynical among us could forgiven for thinking the reason why the New Zealand government is allowing rich migrants to buy up most of its major cities is because its going to tax the bejesus out of them very soon. Chinese investors are New Zealand’s new cash cows.
If you’re considering migrating to New Zealand beware the IRD. Our advice is to consider other countries that aren’t so keen to part you from your wealth.
You may also be interested in
New Zealand’s rock star economy has crashed and burned within 18 months. The hotel room has been trashed, the limo is in the pool and hangovers have taken the place of Champaign breakfasts.
The writing has been on the wall for some time. The downward spiral of dairy prices, a NZ dollar in free fall, dwindling interest rates, falling business confidence and a turn-down in building activity in Christchurch are all signs that the country has had the requisite 15 minutes of fame to qualify as a rock star. New Zealand is now relegated to the ‘one hit wonder’ section of the Golden Oldies charts.
Just when it looked like a session in rehab would save it, one of the country’s leading economists is now warning of a recession risk. If you’re on the verge of buying tickets for a NZ concert tour this may be an excellent time to see what else is available… read on
News that Fonterra will axe 523 jobs shows that the human effects of the tumbling global dairy price are being felt throughout New Zealand, the Green Party said today.
“These job cuts are a tragedy for the 523 staff and their families, who will now be joining rural workers and indebted farmers in financial insecurity,” Green Party primary industries spokesperson Eugenie Sage said.
“Ultimately, these workers are bearing the cost of the National Government putting all its bottles in the Fonterra basket.
“The Government’s single-minded support for the dairy industry above all else has created huge risks for farming families and those employed in the wider primary industries.
“The Government should be supporting rural economies to become more resilient and grow value not volume, through innovation and R&D, so that global dairy price downturns are less likely to lead to mass job losses…read on