Big congratulations, Immigration New Zealand, on the success of the new Active Investor Plus (AIP) programme! We’re just as excited — we’ve already signed up four investor clients, and one of them got their application approved just two weeks ago. It’s a great start, and we’re looking forward to more good news ahead!
From our interactions with our clients and prospective clients, we found that our clients are particularly concerned about their tax liabilities, investment options, how to provide evidence of source of funds, the immigration processes, and a whole host of issues that need to be resolved and answered before they embark on this immigration journey. This could be quite a daunting process, especially given the amounts of money and time involved.
Quick Guide to AIP
Tax
Most AIP clients have concerns about their tax liabilities in New Zealand. They are concerned about whether they will be taxed on their worldwide income in New Zealand.
Under the current AIP program, investors are required to stay in New Zealand for a certain number of days. Under the Growth Category, investors are required to stay in New Zealand for 21 days over the 3-year investment period or 105 days over a 5-year investment period under the Balance Category.
If the investors choose to stay the minimum in New Zealand, they are not likely to cross the threshold of becoming New Zealand tax residents – thus their income outside New Zealand would not be subject to New Zealand tax.
However, if other family members who are included in the application choose to come to live in New Zealand, the principal applicant could potentially meet the threshold of becoming a New Zealand tax resident. The investor needs to consult professional tax consultants who can advise on the intricacies and implications of becoming a New Zealand tax resident.
Even in the event of they decide to move to New Zealand and live permanently in New Zealand, it should be noted that they may be eligible for the transitional tax exemption for the first 4 years of becoming New Zealand tax residents. There are also ways to protect their overseas assets from being subject to New Zealand tax jurisdiction.
Investment options
The new AIP policy has more investment options. AIP investors are required to invest in Acceptable Investments. What are the acceptable investments?
Growth category
Under the Growth category, investors are required to invest a minimum of $5 million into either Direct Investments or Managed Funds, which are approved by New Zealand Trade & Enterprise, or NZTE – a government agency. The investors need to invest in these acceptable investments for a minimum of 3 3-year periods.
NZTE has a list of all approved Direct Investments in their Live Deals platform. Prospective investors are required to register with the platform to access the list of approved Direct Investments. Direct Investments are companies and businesses that are currently raising funds, and their businesses are deemed to align with the government’s economic strategy.
NZTE also maintains a list of approved Managed Funds that are deemed acceptable investments. There are 3 types of funds available – Private equity / Venture capital funds, Private debt funds, and Funds of funds. Investors need to understand their risk profile, liquidity, and exit options for these investments. As we work closely with some of the fund providers, we can always arrange for the providers to have a private session with the investors, so the investors would have a better understanding of their investment products and options.
Balance category
AIP investors would have even more options if they decide to invest in the Balance category. Under this Balance category, investors need to invest at least $10 million for 5 years. Investors can invest in, besides the Direct Investment and Managed Funds, listed shares, bonds, new residential developments, new or existing commercial/industrial property developments, and philanthropy.
Safe Haven
Being far away and tucked in the corner of the South Pacific, New Zealand is considered a haven by many investors. Being a neutral and proudly independent nation, New Zealand has a reputation for being a responsible and peaceful nation. New Zealand is also a self-sufficient country in terms of food and energy.
From 2020 to 2022, we have seen the dire situation of how the COVID-19 pandemic ravaged across the globe. New Zealand came out relatively unscathed. Despite the challenges, our health system and supply chain survived and coped well under such challenging circumstances. This is one reason many investors choose New Zealand, especially given the current geopolitical tensions in Europe and the Middle East.
Source of funds
Immigration New Zealand (INZ) has very strict requirements for the evidence of funds. All AIP applicants need to provide evidence of funds, and INZ needs to verify that investors’ funds are legally acquired. In fact, from our discussions with many aspiring applicants who have had some experience applying for Residence in other jurisdictions, they found the INZ source of funds requirements are one of the strictest.
This is a necessary safeguard to protect the integrity of the New Zealand immigration system, and this is exactly the reason why investors choose to come to New Zealand, following the highest standards of financial due diligence. We have a team of advisers who are experienced in helping clients to unravel the complexity of the source of funds and present it to the satisfaction of INZ.
The applicants
Some applicants have tricky family situations, and it’s important to be open and thoughtful about them. Questions like who should be included in the application, who can’t be, or who should be the main applicant can get complicated, especially when family members have different goals. Our team understands these challenges and has plenty of experience helping people navigate them the right way.
Health and Character
We are not all perfect.
All aspiring AIP applicants need to meet INZ Health and Character requirements. Sometimes, some of our clients cannot meet the stringent Health and Character requirements, which does not necessarily mean the application will be futile or fatal. INZ has a very robust process to deal with applicants who could not exactly meet the Health and Character requirements. With proper advocacy and representation, these issues can be addressed.
Confidentiality
Confidentiality is of utmost importance to Investors. Most investors prefer to deal directly with the professionals who manage their cases rather than having to go through layers of paper handlers.
At Āhia, we don’t use administrative staff or relationship managers to talk to you or handle your documents. Our professional immigration advisers will manage your application and deal with you personally and directly. We understand and respect the need for confidentiality and privacy.
Buying a house
Currently, New Zealand has a regime that bans foreigners from buying residential property in New Zealand.
However, there are options for a new resident to buy a house. For example, suppose the main applicant is unable to stay the required number of days in New Zealand to become eligible to buy a house. In that case, the secondary applicants may be eligible if they stay long enough. But this may have implications for the tax residency of the principal applicant. We can assist clients in exploring the options of buying a house in New Zealand.
Secure Your NZ Investment Journey with Ahia Invest
In short, the AIP programme is a great opportunity, but it’s not without its complexities. With strict policies in place to protect the integrity of New Zealand’s immigration system, it’s essential to get things right from the start. For most applicants, tax planning and investment security are top priorities, and that’s where we come in. Our team provides tailored support every step of the way, backed by a trusted network of experts who are thoroughly familiar with the AIP process. With the right guidance, your path to investing and settling in New Zealand can be smooth, secure, and successful.
