By Michael Woodward, Mackay Bailey, Accountants, Christchurch NZ
New Zealand has very open rules regarding foreign investment. in fact, you don’t need to be a citizen or have residency to own property.
However, there are certain transactions that require consent to invest in New Zealand from the Overseas Investment Office (OIO).
When Is Consent required?
Consent is required in the following circumstances:
- The purchasing entity is an overseas person (this includes overseas Company’s) and
- The land is ‘sensitive’
- The area being purchased is greater than 5 hectares or
- The area being purchased is greater than 0.4 hectares and adjoins a lake, park or river or
- The area being purchased is greater than 0.2 hectares and adjoins the beach or
- Land of any size that includes ownership of the foreshore or seabed or
- The land asset is significant (whereby the value is greater than NZD$100 Million) or
- The transaction includes fishing quota
What are the Criteria for Consent to be Granted?
When consent is applied for, all applicants must satisfy the ‘investor test’. The investor test looks at the character of the applicant, the level of relevant business experience and the level of financial commitment to the project. If the applicant intends to reside in NZ (i.e their immigration status has been provisionally accepted) the applicant only needs to satisfy the investor test.
If the applicant intends to continue to live overseas, the transaction must also pass the ‘benefit to New Zealand‘ test. This test is stringent and a total of 21 factors are considered. In essence it must be demonstrated that the proposed transaction will produce clear and identifiable benefits to NZ. (i.e increased employment, export earnings etc…)
What Do I need to be Aware of?
- OIO approval is required for some (but certainly not all) overseas investments in NZ assets.
- Where OIO approval could be required, make sure that OIO consent is added as a condition to any proposed sale contract.
- OIO consent will take time. The quality of your application will influence the time required for a decision to be made
Who Can Help Me?
Your local MSI firms are experienced in this area. They can help you identify when consent might be required, and aid in the preparation of a high quality application to maximise your chance of consent being granted.