Wealthy Immigrants (read “Chinese”) to be Watched Closely by Inland Revenue

 

Chinese currency

New Zealand is wants its cut of Chinese wealth

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)

chinese buying up land

Chinese locals snap up 23 sections within minutes

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.

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6 thoughts on “Wealthy Immigrants (read “Chinese”) to be Watched Closely by Inland Revenue

  1. The quality of housing or building standards are fairly well known [in other parts of the world], so this has me baffled as to why the standards are so low.
    Auckland is considered to be the most cosmopolitan [largest] city, Wellington the more “cultured” city. Yet neither really measures up on any type of global scale to either claim. There are suburbs that have more population and large towns that have more culture. So really nothing to crow about.
    The high taxes in Auckland are a result of not being used to or able to manage anything of scale.

  2. I fail to understand why on earth anyone in their right state of mind would want to buy Auckland property at 10 to 12 times average earnings for a sub-standard, poorly built, poorly insulated, shack. Only then to be hammered by the council with 9.9% council tax rise plus levy on top of that. Take into consideration the horrendous social factor of living in New Zealand too. Why??? I have to be missing something here?

  3. I find the blame on to only Chinese in acceptable, migrants from UK play a big part also in the housing market, so does from rest of the world. People on average wage could not afford $800k house and also have $160K deposit.
    Only people that gave money and will pay much higher price arête ones. Who has either lot of money from what ever source, and people from high value house countries selling their house in their country bringing large sums and are willing to pay same amount here. People from Melbourne selling their $1m dollar property can pay $800k leaving $200k balance.
    You need to look at the total picture and then compare rather then just one off figures picking on a single race.
    Rock star economy, is used just to please the population, no where near rock star like China and India , where growth was sustainable double figures.
    Wake up those who wants to come to New Zealand, huge huge risk.

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