Controlled foreign company regime may tax New Zealand residents who have shares in a foreign company. Similarly, the foreign investment fund regime may also tax New Zealand residents with foreign shareholdings, interests in foreign superannuation schemes and life insurance policies. If there is an overlap between the controlled foreign company and foreign investment fund regimes in respect of foreign shares, only one regime will apply depending on the level of ownership and other factors.
To find out whether there are any income tax implications for offshore investments or for income from overseas, the following criteria should be considered:
- Residence of the investor;
- Residence of the investment entity;
- Application of the “international tax rules” of controlled foreign company and foreign investment fund;
- Availability of foreign tax credits; and
- Effect of double tax treaty.