[PaulJ]

Hi Group,

I was planning to wind up my limited company next year for my move back to New Zealand; I am currently in UK on a returning residents visa after activating my NZ residency visa last year.

Does anyone know if if any dividends paid to myself from my limited company come under the new residents four year tax exemption arrangements?

I would be living in New Zealand at the time of the dividend, and living in New Zealand resident for tax purposes. I had a look on the inland revenue web site and it list the following as being included in the arrangements:

- foreign dividends
- offshore business income (that is not related to the performance of services).

Not sure if the foreign dividend are talking about public companies only, or include a limited company that you own.

I used to provide IT consultancy services with this company, although there has been no new business for past couple of years as I have been in full-time permanent employment. I not sure if this will conflict with the statement 'related to the performance of services'. I will be basically winding the company down, all current revenue will be from bank interest. revenue three years ago would have been from me providing IT consultancy services, the company has paid corporation tax for this in previous tax years.

I was planning to sort this out next but, I need to get this information quickly, as if it is not coverred, I would be best to wind it down now in UK to take advantage of the taper releif on CGT which is phased out next April.

Regards,
Paul.

[incredible hulse]

Hi Paul
Was your original entry into NZ to active your PR before April 2006 ? If it was my understanding is that the 4 year exemption isn't valid

[PaulJ]

Hi Paul
Was your original entry into NZ to active your PR before April 2006 ?

Thanks for the reply, my original entry was Nov 2006.

Regards,
Paul

[Super_BQ]

Last that I recall (but don't quote me on this) that you would have to be away from NZ (Non-resident) for more than 10 years before claiming the 4 year tax exemption. If you've made residency in NZ recently - then going back soon wouldn't make you eligeable.

[PaulJ]

Last that I recall (but don't quote me on this) that you would have to be away from NZ (Non-resident) for more than 10 years before claiming the 4 year tax exemption. If you've made residency in NZ recently - then going back soon wouldn't make you eligeable.

Thanks very much for the reply, I think I would be ok, as I am on a returning residents visa at the moment, which expires November 2008. So long as I return before that expires, and become resident for tax purposes, I should be ok as the original entry would be classed a the date when I activated my residents visa.

I need to check this further and apreciate it is very complex. I am very keen to know if the UK limited company dividends are coverred under the scheme, putting aside wether I would qualify for the scheme, and any other visa technicalities.

If the dividends are not coverred in this scheme, it would take a lot of pressure off me for deciding how/when to wind the company down.

Regards,
Paul.

[jryorkshire]

Ummmm... my understanding is as follows.....

I assume that the UK company was a Managed Service Company (you would have received a basic salary via wages to utilise your personal allowance for tax and the remaining income paid via dividends - but following change of UK rules these types of companies do not "work" to avoid PAYE therefore are no longer used), anyway even if it is not then assuming you no longer provide services to the company any income derived from it should be covered by the transitional residents exemption (income from services - basically employment- are not covered). On winding up the company you may need to consider UK CGT assuming you will be still a resident of UK. If not you'll only need to consider any "deferred gains" or "rolled over gains" (if any) invested in the company when set up when you permanently leave the UK. These would "crystallise" upon ceasing to be a UK tax resident. There is generally no tax on gains in NZ, save for any Foreign Investment Funds, but even these are covered by the transitional residents exemption.

Basically, (or as basic as I can get it and it's the only and last time I'm going to post this!) the transitional resident exemption commences from when you become a tax resident of NZ and expires at the earlier of:-

- the date a person ceases to be a tax resident of NZ,or
- the end of the 48th month after the end of the month in which you either:
--acquire a permanent place of abode in NZ, or
--the month in which the 184th day you were personally present in NZ during a 12 month period occurred.

You should qualify for the exemption if
- you have not been a tax resident during the prior 10 year, and
- you obtained a permanent place of abode in NZ after 1 April 2006, and
- your 184th day of being personally present in NZ (for the first time or after more than 10 years of absents) is also after 1 April 2006.

Hopefully this will helps !

JR