Doing Business in Aotearoa New Zealand Guide

Business Structures

Doing business through Aotearoa New Zealand entities

New Zealand is widely regarded as one of the easiest places in the world to start a business. New Zealand law allows overseas investors to set up businesses in a relatively short space of time, which allows such parties to own assets, operate businesses, employ local employees and enter into contracts with third parties in New Zealand.

New Zealand corporate entities are simple to form, globally recognised, and comparable to their international equivalents.

If an overseas company is “carrying on business” in New Zealand, it is required to register with the New Zealand Companies Office as a branch. There are a number of different types of corporate entities that are used in New Zealand and the most common are limited liability companies, overseas branches, and limited partnerships.

Other less common types of corporate entities include unlimited liability companies, incorporated societies, general partnerships and charitable trust boards.

Capital Markets

Private capital markets

New Zealand has always been a net importer of capital to fund growth and is generally considered to be an attractive investment destination for capital. Domestic and offshore private equity and venture capital funding continue to play a significant role in the New Zealand capital markets.

The past few years have seen significant transactional activity, fueled by more relaxed monetary and fiscal policy, which has also led to the increased predominance of investment funds securing capital to acquire assets. While initial public offerings have also been attractive to asset owners, significant transactions have occurred in private markets with trade and fund investors acquiring assets.

In recent quarters, investors have been more selective, but investment appetite is holding up and there is no shortage of private capital to be invested in quality opportunities. Investors are endeavouring to meet and bridge realistic vendor expectations and transaction activity in 2023 was surprisingly consistent despite challenging economic factors.⁴

Securities law regime

An offer of financial products (e.g. debt and equity securities, managed investment products and derivatives) in New Zealand is regulated by the Financial Markets Conduct Act 2013 (FMCA) and overseen by the Financial Markets Authority (FMA).

An offer of financial products is made in New Zealand if it is received by a person in New Zealand, unless the offeror takes reasonable steps to ensure that persons in New Zealand cannot accept the offer. This applies regardless of whether the offer is made by a New Zealand or offshore entity. 

An offer of financial products will require the preparation and registration of a product disclosure statement, unless an exemption or exclusion applies. The product disclosure statement is heavily regulated under the FMCA and related regulations. 

There are a number of exclusions and exemptions under the FMCA, where no disclosure document is required, or a reduced level of disclosure applies. Common exclusions and exemptions relate to offers to ‘wholesale investors’, ‘close business associates’ and ‘employee share schemes’ that fit within specific criteria. If the investor is unable to rely on any of the exclusions or exemptions, then it is possible to apply for a bespoke exemption from the FMA. 

Australia and New Zealand have a Trans-Tasman mutual recognition scheme under which a New Zealand issuer may make an offer of financial products to investors in Australia without needing to prepare a separate offer document under Australian laws. The mutual recognition scheme also applies to Australian issuers in respect of offers to New Zealand investors.

After a significant reform of New Zealand financial markets legislation in 2013, New Zealand benefits from more simplified capital raising processes, and greater investor protections.

Mergers & Acquisitions

The New Zealand IPO market remains complex. Like many global exchanges, the New Zealand Stock Exchange (NZX) faces a declining number of issuers, with private markets being an increasingly competitive transactional alternative for vendors. While the NZX has significantly improved its issuance processes, the time, cost and residual risks associated with a public market IPO are greater compared to private market transactions. The ongoing reporting obligations continue to present challenges for issuers and the traditional benefit of being listed, namely access to capital, is increasingly well accommodated for by private equity and other fund investors. The Minister of Commerce and Consumer Affairs has signalled that the Government will be exploring changes to capital market settings as a priority.

Overseas Investment Regulations

Overseas Investment 

While not all overseas investments require regulatory consent, investments by overseas persons in either “sensitive land” or “significant business assets” are heavily regulated under New Zealand’s overseas investment regime. 

The overseas investment regime seeks to achieve a balance between realising the benefits of overseas investment and the need to manage ownership and control of New Zealand’s sensitive land and assets. The regime is governed by the Overseas Investment Act 2005 (OIA) and associated regulations. 

The Overseas Investment Office (OIO) monitors compliance with the overseas investment regime and takes enforcement action for breach. Although the OIO forms part of Land Information New Zealand, the ambit of the overseas investment regime covers much more than land, so overseas investors will need specialised advice early in the transaction to consider whether a proposed investment will require the consent of the OIO.

It is an offence under the OIA to give effect to an investment without obtaining the required OIO consent or to take steps to evade or circumvent the operation of the OIA. A person who breaches the OIA may be liable to a range of civil penalties and criminal fines (for instance, penalties of up to NZ$500,000 for individuals and up to NZ$10 million or three times quantifiable gain for businesses). The OIO has a range of enforcement powers available in the case of breach or non-compliance with any condition attached to a consented transaction, including applying for court orders to require the investor to dispose of assets and property.

An investment in significant business assets includes:

• The acquisition of more than 25% interest in a business (or the increase of an existing stake over certain control thresholds) where the consideration paid for the New Zealand part of the investment exceeds NZ$100 million

• The acquisition of more than a 25% interest in a business (or the increase of an existing stake over certain control thresholds) where the value of the New Zealand assets exceed NZ$100 million

• The establishment of a business in New Zealand where the total expenditure expected to be incurred in establishing the business exceeds NZ$100 million

• The acquisition of property (including goodwill and other intangible assets) where the consideration paid exceeds NZ$100 million

Investors from certain countries with trading arrangements with New Zealand will benefit from elevated monetary thresholds, rather than the default NZ$100 million threshold listed above. For instance, the NZ$100 million threshold increases to:

• NZ$200 million for certain non-government investors from member countries to significant trade agreements (including China, the Republic of Korea, Hong Kong and Taiwan, and parties to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (which includes, as of July 2023, the UK)) 

• NZ$618 million for certain Australian non-Government investors (subject to annual adjustment)

• NZ$129 million for Australian Government investors (subject to annual adjustment)  

Sensitive land comprises certain types of land prescribed in regulations and includes:

• Non-urban land areas greater than five hectares (e.g. farm land)

• Residential land, being land that has a property category of ‘residential’ or ‘lifestyle’ on the District Valuation Roll. There is an exemption for investors from Australia or Singapore to acquire residential land (that is not otherwise sensitive land)

• Land of certain sizes either comprising or adjoining land of particular significance (e.g. marine and coastal areas, lakebed, or land listed as a reserve, of historical significance, held for conservation purposes, or set apart as Māori reservation)

• Land located on certain specified islands greater than 0.4 hectares

An investment in sensitive land includes the purchase of freehold land as well as the acquisition of any leasehold interest in residential land of three years or more, or any leasehold interest in non-residential land of ten years or more. 

Where an overseas person acquires a more than 25% interest (or the increase of an existing stake over certain control thresholds) in an entity that owns or controls sensitive land, that acquisition by the overseas person will be considered to be an investment in sensitive land and will require consent.

Treasury

Floating exchange rate

New Zealand has a free floating exchange rate, the New Zealand dollar (NZD), which was floated in 1985. Given New Zealand's dependency on external capital, relative interest rates play an outsized role in driving the value of the NZD. Commodity prices also impact the NZD, as New Zealand is a major exporter of agricultural products. 

The NZD's floating exchange rate regime allows it to adjust to economic shocks by absorbing the impact of external events. During times of global uncertainty or economic downturns, the NZD can depreciate sharply (e.g. during the GFC and early part of the COVID-19 pandemic), providing a cushion for the economy by making exports more competitive and stimulating tourism and investment. Conversely, during periods of economic strength, the NZD can appreciate, helping to control inflation and maintain economic stability. Overall, the free floating exchange rate regime has been successful and the NZD is one of the top 15 most traded currencies in the world, despite New Zealand being only the 52nd largest economy.

Foreign exchange market – availability of hedging instruments

The full suite of hedging instruments is available to the NZD or businesses operating in New Zealand. Due to the level of volatility regularly seen in the NZD, it is very common for domestic companies to proactively manage or hedge foreign exchange (FX) risks. 

The most common instrument is the forward exchange contract (FEC), with the ability to hedge out multiple years across most of the main trading currency pairs (USD, GBP, EUR, AUD, JPY, CNH, SGD, THB). The large New Zealand banks all have local dealing desks, with larger volumes deals, or more complex transactions, occasionally priced or executed through the Australian parent banks (where applicable). Larger global banks have some presence in New Zealand but most will leverage their trading desks offshore (e.g. in Asia or Australia) as required. 

Interest rate markets 

New Zealand has a fully functioning domestic interest rate market with traded overnight index swaps (OIS) traded out several years and a traditional ‘swap’ curve traded out to 15 years. There is some capacity to fix longer than this, but most traded liquidity sits within 10 years. 

The tenor and liquidity of the swap market broadly aligns with the domestic bond market, where there are very few bonds issued greater than 10 years outside of the Government or Local Government Funding Agency (LGFA). 

As mentioned in Section 3, Capital Markets, the overwhelming majority of lending to businesses in New Zealand comes through the registered banks (~90%). Within this, there is a general reluctance on the part of banks to extend committed lending for more than 5 years (and in many cases 3 years). As a result, it is very common for businesses to independently manage interest rate risks and they usually do this through the swap market.

Taxation

Overview 

New Zealand has a broad-base tax system with few exemptions and concessions (with the notable exception that there is no comprehensive capital gains tax).

New Zealand’s key taxes are income tax, goods and services tax (GST) and payroll taxes. There is no inheritance tax, no stamp duty and no local or state income taxes.

New Zealand is generally considered to have a favourable tax environment for an investor’s earnings and assets.

Residency

A New Zealand tax resident’s worldwide income is subject to tax in New Zealand. A non-New Zealand tax resident is also subject to tax in New Zealand to the extent the income has a source in New Zealand. 

Tax residency for an individual is generally based on whether the individual has a ‘permanent place of abode’ in New Zealand or is present in New Zealand for more than 183 days in a 12-month period. Tax residency for a company is generally based on whether the company is incorporated in New Zealand, has its head office or centre of management in New Zealand, or control of the company by its directors is exercised in New Zealand.

Income Tax  

Currently, individual tax rates are on a graduating scale, with marginal tax rates from 10.5% (on annual income up to NZ$14,000) to 39% (on annual income over NZ$180,000). New Zealand’s recently-elected coalition government has proposed tax cuts to these individual tax rates but changes are yet to be introduced.

Companies are taxed at a flat rate of 28%. Dividends are subject to income tax in New Zealand, and potentially withholding tax if paid to a non-resident. New Zealand operates an imputation regime that enables New Zealand shareholders to obtain a credit for tax paid at the company level, and provides that fully imputed dividends are not subject to withholding tax.

A business is subject to income tax in New Zealand if it is a business of a New Zealand tax resident, has a sufficient physical presence here, or has New Zealand sourced income. Relief may be available from New Zealand income tax under New Zealand’s double tax treaty network. Taxpayers must register with Inland Revenue (IR) and file an annual income tax return. Taxpayers will generally be required to pay provisional tax in three instalments over a year (calculated by a method prescribed by IR). Underpayments and late payments of tax may result in IR charging interest or late payment penalties.

Losses

Tax losses incurred by a taxpayer may be carried forward and offset against future income. In the case of a company, this is subject to maintaining a 49% continuity of shareholding from the income year in which the loss was incurred to the year in which it is used to offset income. There is no ability to carry back tax losses to prior income years.

A tax loss of a company may be made available to another company in certain circumstances where both companies are in the same group of companies and other conditions are also met.

For a company, if there is a breach of the 49% shareholder continuity requirement for carrying forward tax losses, it may still be possible for the company to carry forward tax losses if it satisfies the business continuity test (BCT). The BCT will generally allow tax losses to be carried forward if there is no “major change” in the nature of the company’s business activities within five years of the continuity breach, and other criteria are met. Whether or not a major change has occurred will be assessed based on factors such as:

- assets used;
- business processes;
- use of suppliers;
- markets supplied to; and
- type of product or service supplied.

Employment tax

Businesses intending to employ people in New Zealand must register with IR.

Filing requirements depend on the number of people being employed. Employer tax obligations include KiwiSaver contributions, PAYE, and employer superannuation contribution tax (ESCT). If a business provides a benefit to an employee outside of normal salary and wages, the employer may be subject to fringe benefit tax (FBT).

Tax obligations in respect of contractors are different to those that apply in respect of employees. New Zealand taxpayers need to ensure that staff and contractors are classified appropriately. (See Employment at Section 9).

Withholding tax

New Zealand imposes resident withholding tax (RWT) on passive income paid to residents (e.g. interest and dividends) and non-resident withholding tax (NRWT) on passive income paid to non-residents (e.g. interest, dividends and royalties), subject to any applicable double tax agreement. New Zealand borrowers may be able to apply New Zealand’s approved issuer levy regime to reduce the withholding tax cost on interest paid to a third party non-resident lender.

Withholding tax is also imposed on other types of payments, including payments to non-resident contractors, entertainers and sportspeople, and New Zealand contractors within specified industries. Exemption certificates can be obtained in specified circumstances.

Goods and Services Tax

New Zealand imposes a goods and services tax (GST) at a rate of 15% of the value of supplies of goods and services in New Zealand (subject to certain exclusions). GST is also charged on imported goods and certain imported services.

Taxpayers are required to register for GST and file regular returns if they make (or expect to make) supplies worth more than NZ$60,000 a year.

Importers

The majority of goods imported into New Zealand are subject to GST at 15% of their declared customs value, being the total of the value of goods, any amount of tariff duty (if any), and international transportation and insurance costs (special rules apply to low value imported goods under NZ$1,000). The import GST can be recoverable via the importer’s GST return if the importer of record is GST registered and uses (or makes available to use) the goods for its taxable supplies in New Zealand. Tariff duty may apply based on the value of the item imported, at a rate that depends on the tariff classification of the item and its country of origin.

Transfer pricing

New Zealand’s transfer pricing rules require cross- border transactions between related parties to be priced on arm’s length terms. The transfer pricing regime is focused on economic substance over legal form, making it critical that cross border arrangements (and ultimately, the taxable profits of a New Zealand entity) align with the level of economic activity undertaken in New Zealand.

New Zealand typically follows OECD guidance as to how an arm’s length price should be determined. However, there are unique rules which apply to the deductibility of interest where total cross-border related-party debt exceeds NZ$10 million. Simplification measures are also available to support taxpayers with managing their local compliance burden provided certain criteria are met.

Obtaining contemporaneous New Zealand-specific transfer pricing documentation places taxpayers in the strongest position to defend the transfer pricing position taken during a given financial year and to mitigate the risk of penalties being imposed.

Pillar Two – Global minimum effective tax rate

Following the OECD led initiative, New Zealand has introduced draft legislation which could see the global minimum effective tax rate rules (referred

to as Pillar Two) coming into effect from 1 January 2024. The effective date is yet to be confirmed and could be deferred to 1 January 2025.

At a high level, large multinational groups that fall within the scope of the rules (with annual global revenues over €750m) would pay a minimum 15% effective tax rate on “mobile” income in every jurisdiction in which they operate. Groups with a New Zealand presence and within the scope of the rules will be required to register with Inland Revenue, complete a GloBE Information Return and file an annual NZ “Multinational Top Up Tax” Return in New Zealand stating the amount of top up tax payable (if any). Failure to meet the registration or filing requirements could result in penalties of up to NZ$100,000.

Although there is no set date for its implementation in New Zealand at this stage, New Zealand taxpayers will likely still face increased compliance obligations in order to meet other jurisdictions’ Pillar Two compliance obligations for financial years starting on 1 January 2024.

Thin capitalisation

New Zealand also has a thin capitalisation regime that limits the deductibility of interest in New Zealand for foreign owned entities depending on the debt to asset ratio in New Zealand, and of the owner’s worldwide group.

Double Tax Agreements

New Zealand has a network of 40 double tax agreements with its main trading partners and is a party to the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS. New Zealand also has an intergovernmental agreement with the USA in relation to its FATCA regime and is a party to the OECD’s Automatic Exchange of Information initiative.

Property

Title to land

All title to land in New Zealand is held in a searchable, online registry, and the Government guarantees its completeness. As a result, there is certainty in purchasing and holding title to land. The land acquisition and transfer process can be made reasonably straightforward if undertaken with the guidance of experienced property law practitioners.

New Zealand law recognises a variety of interests in property, including freehold, leasehold (both residential and commercial), cross-lease, unit titles and personal rights to use land granted by licences. 

New Zealand also recognises special land rights including rights to take resources from land and certain Māori land rights.

With the exception of the Overseas Investment at Section 5, there is no other distinction between domestic and overseas purchasers of land. 

Purchasing land

The usual process for acquiring property in New Zealand, whether residential or commercial, is to sign an agreement for sale and purchase. 

Agreements are generally subject to conditions that, for example, allow for purchasers to conduct due diligence on the property after signing. Common conditions of sale relate to reviewing records of title, completion of a satisfactory building inspection, resolution of resource management issues, arranging finance and, frequently, in respect of leased commercial or industrial buildings, the review of leases.

Tax on land held as an investment property 

New Zealand taxes net rental income derived from real property. The applicable income tax rate depends on the profile of the investor(s). 

Deductions for tax depreciation are generally available in relation to commercial and industrial buildings (excluding land), but not in relation to residential property (including most build-to-rent developments). Inland Revenue prescribed depreciation rates must be used for tax purposes irrespective of what rates are used for accounting.

Deductions for interest are generally available in relation to borrowing used to acquire commercial property, subject to several restrictions (e.g. the general anti-avoidance provisions, thin capitalisation, transfer pricing and anti-hybrid rules). There are currently significant restrictions in place for deductions for interest paid on borrowing related to residential property. 

Tax on disposal of land

While New Zealand does not have a comprehensive capital gains tax, there are a number of land taxing provisions that can apply to tax gains on the sale of land that could otherwise be considered a capital investment. These include, for example:

• a 10 year bright-line test applying to residential land that is disposed of or sold within  10 years of acquisition (subject to some exclusions, including where the property is used as the owner’s main home). As outlined below, the Government has announced it intends to reduce the bright-line period to 2 years in the short term

• rules that can apply to tax gains in relation to land acquired by land dealers, developers, or builders (or anyone associated such persons)

• gains arising in relation to land developed for the purposes of sale; and

• land acquired for a purpose or with an intention of disposal

Upcoming tax policy changes 

New Zealand’s coalition Government has announced a number of upcoming changes to the current tax policy settings for real property in relation to the bright-line test, interest deductibility on residential property and tax depreciation on commercial/industrial buildings. 

On 20 December 2023, the Government announced that it intended to reduce the bright-line period for residential property from 10 years to 2 years, effective 1 July 2024. 

Tax depreciation on buildings was removed in 2010, and subsequently reinstated (but limited to commercial/industrial buildings) in 2020 as part of the New Zealand COVID-19 relief measures. However, the Government has indicated that legislative changes will be made to repeal the ability to claim tax depreciation on commercial/industrial buildings for income years starting on/after 1 April 2024.

Interest deductibility for residential property is also expected to be reintroduced gradually from the 2023/24 income tax year.

Environmental management

Aotearoa New Zealand has strong cultural respect for the natural environment which is reflected in our legislation. Aotearoa New Zealand’s resource consenting framework is a primary consenting process for activities which affect the environment, and deals with the management of natural and physical resources such as air, soil, freshwater and coastal marine areas. The resource consenting regime has been subject to recent overhaul, with the Natural and Built Environment Act 2023 and Spatial Planning Act 2023 having passed into law in August 2023. This new regime replaces the Resource Management Act 1991, albeit with a long transition and implementation period. 

The new legislation (including in forming the operative committees, plans and strategies) was to be rolled out on a region-by-region basis, with full rollout to take around 10 years. However, following the outcome of the general election in 2023, this new legislative regime is in the process of being repealed. 

Many development and infrastructure projects are required to obtain various types of consents under the relevant resource consenting framework prior to commencement. Consents include subdivision consent, land use consent, coastal permits, water permits and discharge permits.

Building standards and consents

In addition to the resource consenting regime, the Building Act 2004 and the New Zealand Building Code provide performance standards for all building work in Aotearoa New Zealand, covering aspects such as structural stability, fire safety, access, moisture control, durability and energy efficiency. Like consents under the resource consenting regime, building consents can be obtained from a local authority. 

Seismic activity can be a particularly relevant consideration in Aotearoa New Zealand, and the building consent regime includes minimum seismic performance requirements for buildings.

Employment

The employment landscape in Aotearoa New Zealand

The labour force in New Zealand is skilled, productive and cost competitive.

The unemployment rate currently remains low (measuring 4.0 percent in the forth quarter of 2023)⁷ and the labour market continues to grow. Despite the global challenges of the COVID-19 pandemic, the employment landscape continues to support New Zealand’s international reputation as a great place to do business.

Employment relationships in Aotearoa New Zealand

The Employment Relations Act 2000 (ERA) is the primary piece of legislation that governs relationships between employees and employers and establishes New Zealand’s employment dispute resolution process. Many aspects of employment law in New Zealand are governed by common law.

Good faith

The legal duty of good faith is central to employment relations in New Zealand. It requires parties in an employment relationship to be responsive and communicative, and to not mislead or deceive the other. As a general rule, employers must consult with employees before taking any action that might impact the workforce and particularly before making any changes that may affect their ongoing employment.

Employment agreements

All employees must have written employment agreements which contain certain minimum terms required by legislation. Employment agreements may take the form of an individual agreement between an employer and employee, or a collective agreement if there are union members.

Most employees in New Zealand work on a permanent basis. A person can also be employed on a part-time, fixed-term or casual basis. There are different legal requirements and entitlements for these types of employment relationships.

Dismissal

Employers cannot “fire at will” in New Zealand. Termination must meet the statutory test of “justification”, meaning it must be justified by one of a limited set of reasons (for example, misconduct, performance issues, redundancy or incapacity) and there are procedural requirements that must be followed.

Employers are permitted to apply a trial period of 90 days or less to new employees. Correct use of a 90 day trial period provision in an employment agreement precludes an employee from bringing an unjustified dismissal claim.

Redundancy

New Zealand employees are not entitled to any statutory compensation or severance payments. However, there may be a right to compensation as agreed between the employee and the employer as a matter of contract. All employees are entitled to their contractual notice period, as well as any outstanding salary and annual leave entitlements if they are made redundant.

Employees in specific industries (e.g. cleaning services, food catering and aged care) where jobs are particularly vulnerable to restructuring have additional statutory protections under the ERA.

Dispute resolution

All employees who believe they have been treated unfairly have access to New Zealand’s personal grievance regime. A personal grievance is a particular type of complaint which must be made to the employer within 90 days of any alleged instance of discrimination, harassment, bullying, or any disadvantage or dismissal, or within 12 months of any alleged sexual harassment.

If a dispute cannot be resolved directly between an employee and employer, the Government provides a free mediation service. A dispute that cannot be resolved at mediation may be escalated to the Employment Relations Authority, and further to the Employment Court. The vast majority of disputes are resolved by way of a confidential settlement agreement before, or at, the mediation stage.

Independent contractors

Businesses can also engage independent contractors to provide services. Independent contractors are not afforded the same minimum statutory entitlements as employees and are responsible for their own taxes.

Contractors can challenge their status in the courts if they believe they are not genuine contractors, and should be classified as employees (despite any contractual or other documentation). If they are successful, this can give rise to liabilities for minimum entitlements under employment legislation and tax issues for the employer.

Collective representation

Employees in New Zealand can choose whether or not to join a trade union. Overall, national union membership remains low (approximately 14% of all employees in the 2022 financial year). The public and community services industries (such as health care and social assistance, public administration and safety, and education and training) are the most unionised sectors.

Employers, unions and employees are encouraged to work together in good faith to agree to suitable employment terms.

Health and Safety

The Health and Safety at Work Act 2015 and related regulations set out New Zealand’s comprehensive health and safety regime.

Businesses are responsible for the health and safety of their workers (including employees and any independent contractors) and anyone affected by their work, and must provide and maintain a safe working environment, taking into consideration both physical and mental wellbeing.

In the case of a breach, a business and its officers (including directors) can be prosecuted in the criminal courts by the regulator, WorkSafe New Zealand, and significant penalties can be imposed (including fines and imprisonment).

Insurance

Accident Compensation Corporation (ACC) is a form of social insurance which provides personal injury cover for everyone in New Zealand. It is a no-fault system that provides compensation to people who are injured in accidents (including those suffered at work). Legal action for damages as a result of personal injury is generally prohibited in New Zealand.

Employers in New Zealand are not required to offer health insurance to employees, but they must contribute to ACC through regular levies. Employers that do not pay ACC levies can be liable for significant penalties.

Kiwisaver

KiwiSaver is a voluntary, work-based savings scheme designed to help New Zealanders save for their retirement. While KiwiSaver is not compulsory, employees must “opt-out”, meaning all employers that are resident in New Zealand must enroll any eligible new hires and provide them with opt-out information.

Employees that participate in KiwiSaver must contribute a defined percentage of their before tax earnings (at least 3%). These contributions are deducted by their employer each time they are paid. Separately, employers must also make a compulsory contribution of at least 3% of each participating employee’s salary or wages before tax. Private superannuation schemes are fairly uncommon in New Zealand.

Privacy

Data privacy

Data privacy in New Zealand is governed by the Privacy Act 2020 (Privacy Act). The Privacy Act sets out how individuals and organisations (both public and private) can collect, hold, use, and disclose Personal Information. Personal Information means any information about an identifiable individual (for instance, an individual’s name, address, financial information, or health details). 

Any organisation carrying out business in New Zealand, providing services to New Zealanders, and/ or collecting their Personal Information for its own purposes is subject to the Privacy Act. The Privacy Act does not use the same definition of “carrying on business” as applicable to overseas companies carrying on business (and therefore required to register under the Companies Act 1993). 

1. Data minimisation - only collect information necessary for your lawful purpose and nothing more
   
2. Source of information - collect the information directly from the individual concerned
   
3. Transparency - when collecting information directly from the individual, make the individual aware of a number of elements including why the information is being collected
   
4. Manner of collection - collect the information in a fair and lawful way without being unreasonably intrusive
   
5. Security - implement security safeguards to protect the information from being lost, misused, or disclosed
   
6. Individual rights - individuals have the right to access or correct their personal information
7. Accuracy - take reasonable steps to ensure the personal information is current, complete, and not misleading

8. Storage limitation – ensure personal information is not held longer than necessary

9. Use limitation – ensure personal information collected for one purpose is not used for another purpose

10. Use of personal information – only use personal information for the purpose it was collected

11. Disclosure limitation – keep personal information confidential unless permitted to disclose it under the Privacy Act

12. Transfer of personal information outside Aotearoa New Zealand – disclose personal information outside of New Zealand only if the required statutory safeguards under the Privacy Act are in place

13. Unique identifiers – ensure unique identifiers used by other companies are not replicated (for instance, requiring an individual to use their Tax number to identify them to you).

Intellectual Property

New Zealand has a comprehensive and robust legal regime for the protection of intellectual property rights. These laws are aligned with international norms, with New Zealand being a signatory to a number of international intellectual property treaties and conventions including TRIPs, the Paris Convention, the Berne Convention, the Patent Cooperation Treaty, the Singapore Treaty, and the Madrid Protocol. 

Many New Zealand companies are adept at developing valuable intellectual property and often seek out offshore capital to enable them to deploy the intellectual property, both domestically and for sale or licence overseas. The robust intellectual property regulatory system in New Zealand is attractive to foreign investors, as it establishes the framework for protecting their investment in new products, brands and ideas while allowing firms to drive innovation and productive uses of these assets.

Trade marks

Trade marks can be registered in New Zealand under the Trade Marks Act 2002. A trade mark grants the owner the exclusive right to use that trade mark in New Zealand in relation to the goods or services for which it was registered as long as the registration is renewed every 10 years. Trade marks that qualify for registration can include signs, symbols, words, logos, shapes, colours, sounds, and smells. New Zealand is a signatory to the Madrid Protocol, which facilitates trade mark applications internationally and into New Zealand. 

Both registered and unregistered trade marks are protected under the common law tort of passing off and the Fair Trading Act 1986 (FTA). A passing off action can be used to prevent use of an identical or similar trade mark by third parties where that use would likely lead the public to believe that the third party is the same as or related to the trade mark owner. The FTA prohibits misleading and deceptive conduct in the course of trade, which includes misleading use of someone else’s trade mark. The scope of protection under passing off and the FTA will depend on the use of and reputation in the trade mark, and generally registration of your trade mark provides better protection.

Copyright

Copyright applies automatically on the creation of certain original works, including writing (literary works), artistic works, music, sound and video recordings, designs, and software code. Copyright duration depends on the category of work, but is generally the life of the author plus 50 years. The Copyright Act 1994 also provides protection for industrial designs for a period of 16 years from the date of first mass production. 

Tax

Numerous tax issues may arise where intellectual property is deployed offshore. During the early research and development stages, research expenditure is generally deductible in the year incurred, while development expenditure tends to be capitalised and amortised over the life of the asset. At the commericalisation stage, effective structuring will be important where intellectual property is deployed offshore. 

If intellectual property is licensed offshore, royalties may be received in, or paid out of, New Zealand. Most countries with which New Zealand businesses trade will impose withholding tax on royalties paid to an offshore company. Tax considerations will also apply on the sale of intellectual property and depend on the types of intellectual property involved. 

New Zealand offers a Research and Development (R&D) Tax Incentive to encourage businesses to invest in innovation in New Zealand. The tax incentive provides a tax credit at a rate of 15 percent of eligible R&D spend, up to $120 million a year, which is broadly refundable as cash. Subject to certain restrictions, entities may be eligible for the incentive even when the R&D is performed on behalf of a related party or the IP generated is held internationally within the group, or if being performed in New Zealand through a permanent establishment.

Registered designs 

The Designs Act 1953 governs the registration of ‘designs’ applied to an article (by an industrial process or means) that are new or original features of shape, configuration, pattern or ornament. Protection through registration can last up to 15 years, subject to the payment of renewal fees.

Patents

Patents grant the owner the exclusive right to exploit their inventions and licence them to others for a period of up to 20 years, subject to the payment of annual renewal fees after the first four years. The invention must be novel, inventive, and useful. Novelty is assessed on an absolute (or worldwide) basis. It also means that your invention must remain confidential (and not be in use or widely known) until you seek patent protection. In New Zealand, patents are examined for patentability prior to grant. There are pre-grant opposition processes should third parties wish to challenge a patent, and re-examination and revocation processes post-grant.

Other intellectual property rights

New Zealand legislation also provides protection for:

• plant varieties

• geographical indications (currently only for wines and spirits, but this will expand to a broader range of food and agricultural products once the provisions of the New Zealand-European Union Free Trade Agreement are implemented domestically)

• layout designs for integrated circuits

• ambush marketing in connection with designated major events

• moral rights

Partnering with Māori and the Māori economy

Māori are the indigenous people of New Zealand and are key players in the New Zealand economy.

The Māori economy

The Māori economy plays a crucial role in driving New Zealand’s economic success and is experiencing significant growth – this is projected to continue. Over the last ten years, the Māori asset base has also grown at a significantly faster rate than the overall economy. Today the Māori economy is valued at more than NZD$70bn, and estimates suggest it will have assets worth NZD$100bn by 2030.⁸

Treaty settlements (see Te Tiriti o Waitangi below) and a rapidly growing Māori asset base continue to provide Māori with capital for opportunities beyond the primary sector, with diversification among post-settlement governance entities (a legal entity established to receive and manage settlement assets on behalf of the claimant group) into the education, tourism, infrastructure, property development, and technology sectors.

We have also observed the emerging collective voice of Māori authorities and land trusts who are significant contributors to the Māori and national economy. Many have "hundred million plus" balance sheets, strong governance and management, and long-term growth strategies.

Most Iwi and Māori collectives invest with wider social and cultural objectives in mind.

Core values underpinning these social and cultural objectives include:

• Kaitiakitanga: Guardianship, particularly in respect of the natural resources
• Manaakitanga: Care and hospitality, particularly for visitors, and building unity
• Rangatiratanga: Stewardship of others and empowering Māori to advocate for their own people
• Whanaungatanga: Building and maintaining relationships

Overseas investors who are considering partnering with Māori collectives and organisations, or who are considering an investment that involves land or natural resources, may benefit from understanding some of the guiding cultural values that Māori people and Māori organisations hold themselves to and should engage with Iwi early in the project.

Māori organisations and collectives will also often have their future generations in mind and will look for long-term relationships where economic success can facilitate greater social outcomes and benefits for their people. It is important to Māori organisations and collectives that commercial investments perform to their maximum potential in order to achieve, and/or directly impact, their wider social and cultural objectives.

Investors looking for purposeful businesses could invest in Māori-owned technology companies to help take the unique essence of Aotearoa to the world. Māori values are often strongly aligned with alternative or new investment models that accommodate both social and/or environmental impacts alongside financial returns.

Climate Regulations

For overseas investors, there are opportunities to align with national and international obligations for climate change action within domestic legislative frameworks. In terms of carbon risk exposure, emissions-intensive industries and business models may face additional costs through carbon pricing under the Emissions Trading Scheme, and disclosure requirements under the Climate Related Disclosures regime.

New Zealand has set a goal to be net zero carbon by 2050. This goal was passed into law through the Climate Change Response (Zero Carbon) Amendment Act in 2019, which provides a framework for New Zealand to develop and implement clear and stable climate change policies that:

• Contribute to the global effort under the Paris Agreement to limit the global average temperature increase to 1.5° Celsius above pre industrial levels.

• Allow New Zealand to prepare for, and adapt to, the effects of climate change.

Aotearoa New Zealand Climate Standards (NZCS)

The majority of large New Zealand financial organisations provide inconsistent information on what climate change might mean for them. To improve climate change disclosures by New Zealand entities, the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 amends the Financial Markets Conduct Act 2013 (FMCA), the Financial Reporting Act 2013, and the Public Audit Act 2001. The purpose of the NZCS is to “support the allocation of capital towards activities that are consistent with a transition to a low-emissions climate-resilient future”.⁹

This new law mandates around 200 large financial institutions covered by the FMCA to start making climate-related disclosures. New Zealand is one of the first countries in the world to require financial institutions to make climate-related disclosures under these new laws. Affected organisations are expected to publish disclosures from financial years commencing in FY 2023, in line with the Climate Standards produced by the External Reporting Board (XRB), which are based on the Task Force on Climate-related Financial Disclosures (TCFD) and International Sustainability Standards Board (ISSB) international frameworks.

Entities required to make climate disclosures include: