When does a Director “live in New Zealand”?

Tuesday 16 August 2016

I have mentioned in previous articles that since 1 April 2015, New Zealand companies must have at least one Director who lives in New Zealand. The exception is where you have at least one Director who lives in Australia and is also the Director of an Australian company.

A recent New Zealand case shows what is required for a Director to be considered “living in New Zealand”.

In Re Carr [2016] NZHC1536, the High Court specified 4 relevant considerations in determining the residency requirement:

1. The amount of time the Director spends in New Zealand;
2. The Director’s connection to New Zealand;
3. The other ties the Director has to New Zealand;
4. How the Director lives when in New Zealand.

In that case, the key factors which influenced the Court’s decision in deciding that Mr Carr was living in New Zealand were:

1. He spends on average one third of the year in New Zealand;
2. He has a partner who lives in New Zealand most of the year;
3. He has a home and other land in New Zealand;
4. He is a member of various clubs and organisations in New Zealand;
5. His primary doctor is a New Zealand GP;
6. He has strong business relationships in New Zealand and employs a significant number of people;
7. He has New Zealand bank accounts;
8. He generally presents as a New Zealand business person would.

The case shows that a Director does not have to be present in New Zealand for at least 50% of a year to be considered as living here. However, the person must have significant ties to New Zealand, which in all likelihood would also deem that person to be a tax resident of New Zealand.

The case also shows that the Registrar of Companies is actively monitoring compliance in this area.

If you have any specific questions about residency for tax or company law requirements, please consult Teresa Chan at Teresa Chan Law Limited, Level 3, Westpac Building, 106 George Street, Dunedin 9016, ph. 477 1069, or email teresa@tchanlaw.co.nz If you are a Mandarin speaker, please ring Xiaoyan Mu at (022) 694 9917.

Apart from property sales and purchases, our areas of practice also include: immigration, sale and purchase of businesses, wills, enduring powers of attorney, trusts and relationship property.

Note: The information in this article is general only. You should seek advice for specific situations.