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Macro Voices
MacroVoices #513 Why Are All The Rich Guys Moving To New Zealand and What Do They Know?
01:24:13
MacroVoices Erik Townsend & Patrick Ceresna welcome, Mark Williams, Graham Lawrence & Brendan Goodwin. They discuss why a surprising number of high-profile hedge fund legends and celebrities are establishing residency in New Zealand and what they might know that the rest of us don’t, beyond any doomsday narrative. https://bit.ly/3YiVdNL ✅Sign up for a FREE 14-day trial at Big Picture Trading: https://bit.ly/4d1fcag 🔴 Subscribe to Patrick’s Youtube Channel: https://www.youtube.com/@Patrick_Ceresna 🔴 Subscribe to Erik's Substack: https://eriktownsend.substack.com/
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- [00:08]
A
This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics telling it like it is, bullish or bearish. No holds barred. Now here are your hosts, Eric Townsend and Patrick Seresna.
- [00:34]
B
Macro Voices episode 513 was pre produced the first week of December to air on New Year's weekend. I'm Eric Townsend. Once again, it's time for our annual holiday special episode which won't contain any current market perspectives because it was pre produced several weeks ago to give our production team time with their families over the holidays. This year's topic what Gives? With all the high profile people such as fund manager Peter Thiel, hedge fund legend Julian Robertson, Google coach co founder Larry Page, Hollywood celebrity James Cameron, why are all these super high profile people either moving to New Zealand or obtaining resident visas there? The conspiracy theorists are already asking whether they have some sort of secret inside information that the end of the world is near, so they're moving to New Zealand to survive the coming nuclear winter. Well, researching this topic has been absolutely fascinating for me. At first I convinced myself that these people really do know something we don't. But that something has nothing to do with the end of the world. What I thought they must have all discovered was the four year tax holiday on all foreign sourced income that New Zealand automatically grants to all new residents and the fact that New Zealand has no broad based capital gains tax even after that four year tax holiday ends. At first I was sure that must be the explanation for why all these wealthy people were migrating to such a distant country. But as you'll hear from my first guest in this episode, that's not it at all. In fact, further research proved to me that almost nobody immigrating to New Zealand even knows about the four year tax holiday until after they've secured their resident visas. Well, I'm here to tell you that I think the tax benefits are quite extraordinary, particularly for global high net worth investors who are not Japanese or American citizens and therefore are not taxed on their global income by their home country even if they don't live there. But on further investigation, I learned that almost nobody even knows about these tax benefits New Zealand offers to global investors. So we're going to break that story in this episode and also learn why people who've already made the move to New Zealand did so. I have three featured guests lined up for you in this year's holiday special. First, Mark Williams is An immigration attorney who was one of the principal architects of New Zealand's active Investor plus Golden Visa program and his law practice specializes in helping high net worth investors obtain permanent resident visas, giving them and their families a lifetime call option on the right to move to New Zealand anytime they want without becoming tax resident until they actually do. Mark and I will discuss New Zealand's Golden Visa program and the motives of the people who have participated in it so far. Next, Graham Lawrence is a tax advisor based in Christchurch, New Zealand. Graham and I will discuss the tax related aspects of both obtaining New Zealand Golden Visas without taking up tax residency and also the particulars of taxation in New Zealand for those who do choose to physically move to the country. I think you'll be surprised to learn that the tax burden is much lower than other English speaking first world countries and even gives Singapore's coveted GIP Golden Visa program a run for its money in terms of tax appeal to global investors. It also requires a much lower financial commitment than Singapore's program. Finally, Brendan Goodwin is a veteran attorney who practiced commercial real estate law for DLA Piper all over the world before returning to his home country of New Zealand to develop a brand new business specifically catering to the needs of high net worth investor immigrants to New Zealand. All three of those interviews are coming up in this special holiday episode of Macro Voices, starting with immigration attorney Mark Williams.
- [04:50]
A
And now with this week's special guest, here's your host, Eric Townsend.
- [04:57]
B
Joining me now is Mark Williams who is a partner with Lane Neaves. Mark is not only an immigration consultant who processes investor visas, but he's actually one of the architects of New Zealand's active Investor plus visa program. So Mark, it's great to have you on the podcast. I want to start at the high level. We've heard a lot of news stories and so forth about famous people, Hollywood movie stars flocking to New Zealand to get residency there. A lot of our investors are familiar with Peter Thiel, a very high profile fund manager who didn't just get an investor visa, he actually got citizenship in New Zealand. Leads some people to wild eyed conspiracy theory speculation. You know, do these people know something? Are they going there to survive World War iii? I don't think that's what it's really about. So why don't we start with why are all of these people flocking to New Zealand for investor visas? What is the appeal and what's driving this sudden rush of interest?
- [05:54]
C
Typically, there seems to be two trains of thought around looking at New Zealand as an option. First train of thought is that a lot of family offices that we deal with identify that it's probably good to have assets or funds outside of one single jurisdiction. So it's seen as a way to diversify investment holdings into an alternative jurisdiction where there may be potential jurisdictional risk. Basically, I guess the old adage is not having all your eggs in one basket, as they say. And the second common piece of advice that our clients seem to be receiving from family offices is that it's wise to have a visa option banked in the event it becomes necessary or desirable in the future to be able to utilise a visa like New Zealand at relatively short notice without having to go through what can sometimes be a bit of a lengthy process.
- [06:48]
B
Let's talk about how this process works, what it takes to qualify for it. There's two different ways to qualify, different investment levels, depending on what you're investing in. Suppose that I want to get myself a New Zealand visa. And I think it's important to point out this is not just something that, you know, lasts for a year. If you go through this program, after a couple of years, you get a New Zealand permanent resident visa. That's good for life, if I'm not mistaken. What does it take to do that? How do you qualify? What's involved?
- [07:18]
C
Yeah, there's two subcategories under the active investor plus policy. The first is what's called the balance category, and that's for investors who wish to take a fairly soft entry into New Zealand's economy. It requires an investment of 10 million New Zealand dollars in the country for a period of five years. That investment can be placed into fairly passive investments such as New Zealand government bonds. And the main applicant in a family filing is required to spend 105 days physically in New Zealand during that five year investment term. So that's the first general category, balanced. The second category is the growth category that has by far been the Most popular. Around 80% of filings have been moved into that category. That requires investments that are of a higher risk in nature. Things like venture capital, private equity, private credit and direct investments into New Zealand companies. That's a three year investment commitment. And the main applicant is only required to spend 21 days in New Zealand during their three year term.
- [08:23]
B
Okay, so for a lot of our audience who thinks in US dollar terms, that works out. If you convert those New zealand dollars to US dollars, a choice of either about US$5.8 million equivalent in government bonds or some other very low risk investment, or much more likely, about US$2.9 million into some kind of either venture capital fund or something that invests in growth in New Zealand's economy after three years and spending 21 days visiting New Zealand during those three years, you wind up with a permanent resident visa that's good for life. Is that just for the investor? Does it cover their family as well? If so, is it just the spouse, is it children who gets this thing?
- [09:08]
C
Yeah, well, the growth category is a three year commitment, so it's 21 days over the three years. So it works out to be on average, say a week a year. But you can clock up all the days in one single visit if you wish. The policy focuses on a main applicant who is required to make that time commitment. Secondary applicants, such as a person's partner, independent children, can also be included in the application. The secondary applicants are required to come in within the first 12 months of residency to activate their residency and then after that they have no time obligation whatsoever. So as long as the main applicant spends those 21 days here in that three year term, they're able to then upgrade their residency visa to a permanent visa. And you're quite right, that can include all the individuals who are included in the application. And the permanent residency visa is indefinite, meaning there is no ongoing investment commitment or any other commitment required. So in theory, if someone invests their funds for that three year period, subject to what they invest in at the end of that period, there are no immigration restrictions. So they could technically take all of the funds out of New Zealand, never return, and then 10, 20 years later decide to buy a one way ticket, travel in here as permanent residency visa holders. So a lot of the people we're dealing with like securing the option because not only does it create a setting or a visa for the entire life of the individual investor, but also children included in the application will have this permanent residency visa for their entire lives. So a lot of our clients are looking at sort of long term succession and like the fact that they can secure a permanent visa for their children even at a very early age, that will be valid for their entire lives.
- [10:59]
B
So let's talk a little bit more about the 21 day visit and so forth. Basically, if I want to get myself, my spouse, all my dependent children, the right to move to New Zealand anytime they want to. So it's kind of a call option if the world really were to take a turn downhill, if there was a risk of a global war or something. New Zealand is one of the safest places on earth because of its physical location. It also has a ratio of people to natural resources that's very low. So in terms of competition for natural resources, if you really got to a Mad Max kind of situation, it's a very good place to be. You can basically, for a little less than a 3 million US dollar investment over a period of 3 years, you can earn that unlimited lifetime call option for you and all your family members. And the only thing that the government asks of you beyond that investment is to visit the country and kind of check the place out. That can be a single visit of three weeks, or it could be several visits that cumulatively total up to 21 days. What's the rationale? What's the reason for having that and how do people usually spend that time?
- [12:10]
C
Yeah, the rationale for having that desirable setting around 21 days is to make it manageable. You know, many people obviously have poor time at hand and it's just, it's New Zealand kind of sneaks up on people. So, you know, people would sort of see, well, 21 days is not too significant time they come in. But what the data shows us in New Zealand, and perhaps also a reason why we issue a permanent residency visa at the end of the investment term without demonstrating any ongoing obligation or commitments, is that the money tends to stay here. It grows over time, it diversifies. And the more time that people come into the country, the more integrated they get and the more, the typically more funds flow and they increase their commitment into the countries. So it's seen as desirable from an external point of view where you can commit and obviously move funds. Typically what we do see is we do see the money remaining here and people actually spending more time as they sort of integrate into New Zealand society, enjoy their time here, have, I guess, an incentive to spend more time. I think it's fair to say too that the, you know, if you look at the categories, people tend to score success in these categories in terms of the amount of capital that's becoming into the New Zealand economy. What's missing from that is the extent of, of the human capital, the value of that to New Zealand. So we're talking about obviously some very sophisticated, often very influential investors who not only invest their capital, but integrate into our society. They have offshore international connections which New Zealand can utilise. And we have quite a few people who are venture capital investors who are making quite significant contributions to early stage companies down here just because of their experience and their capability.
- [13:54]
B
Well, Mark, I want to congratulate you and the New Zealand government for the design of this program. I've evaluated quite a few of the golden vehicles visa programs around the world. I think this program is superior in many ways to almost all the others that I've looked at. There is one wrinkle though in the design of this that I want to ask you about, which is a story I've heard a couple of times now from immigration consultants who help people get these visas is the investor applies for this thing, they make their investment, they're granted the visa, they now have to make their their 21 day visit. A lot of them will do that in a single visit to knock it off, as you said. And frankly, from what I've heard, many of them kind of come with an attitude coming in of okay, well this is a burden. I have to go and spend these 21 days. I don't really want to. It's a long ways away. I'm going to do it. About halfway through those 21 days, their immigration consultant gets the phone call that says, okay, we can't believe this. We've discovered this place called Queenstown. We just can't imagine any place being more beautiful. We've got to have a home here. But the realtors must be confused because they're saying we can't buy one. Call them and tell them who we are. We've got these active investor plus visas. Surely even though we don't intend to become tax residents because we're really doing this for optionality. Now that we've seen what a beautiful place this is, we want to buy a home here. So we've got that home ready to go if we ever decide to move here and we'll just use it as a holiday home, spend a week or two, you know, a year here. They're not allowed to buy it. That actually is the truth. The realtor's not confused. That's the law. Why in the world, if the government is frankly trying to seduce people into falling in love with New Zealand by having this 21 day requirement, why wouldn't they allow them to buy a home?
- [15:42]
C
Yeah, it's I guess a long complicated history in terms of New Zealand's restrictions around buying residential property. In 2018, due to some offshore spectrum investment into the country into a residential property market, restrictions are put in place where individuals could only purchase a residential home here if they had a residency visa and they either were or had intentioned to become tax resident here within 12 months. However, when the government was looking at mechanisms to increase foreign direct investment in the country, they asked a simple question. You know what mechanics are missing or what do we need to change to facilitate increase foreign direct investment. And there were three inputs from the private sector on that. The first one was the visa or the previous visa was not up to spec to be competitive international and international stage. So that was the first thing that was reviewed, changed and this is the current policy we've got in contemplation of that. The second part of it is that we advised that people, if you're wanting to integrate people into New Zealand society, encourage them to spend more time in New Zealand, then they really should have the comfort of having their own home here. Two rationales for that. One, if you've got a property in New Zealand, you're likely to spend more time, so therefore the chance of integrating is is higher. And also of course, if you're investing in New Zealand, you want to be comfortable in terms of your stay here rather than having to move around hotels. Second rationale around that was that if individuals have got property here, they're likely to invite friends and those friends coming to New Zealand for the first time may also fall in love with the country and that may lead to a visa application made. So the current policy has been reviewed and that is about the change of legislation being introduced in Q1 next year which will basically confirm that if an individual holds one of these active investor visas, they will be permitted to purchase a single residential property in New Zealand or buy land and build a home in New Zealand as long as the price is in excess of 5 million New Zealand dollars and they do not need to become a tax resident to do so.
- [17:48]
B
Okay, so this podcast is going to air on New Year's weekend. So from a planning standpoint, anybody who's starting now, if they're about to go through the process of evaluating New Zealand, working with you or another firm in order to get that active investor plus visa. By the time the visa has been granted and they're making their trip to New Zealand, the law will have been changed and they will have the option, at least that's what's expected if the law goes through that they will be able to buy one home, but they're not allowed to buy a dozen homes and flip houses and do that kind of thing. You don't want that sort of speculation. But to buy your own personal use residence, that's going to be changed. It sounds like.
- [18:28]
C
Well, yes, that's more or less a certainty. So the coalition government have reached a deal in terms of this legislation coming in. Those requirements have been set. The legislation was supposed to be introduced into the House in November. However, this is a very busy government. They're introducing a lot of legislative changes at the moment, so it's been delayed. It's likely to come into force in Q1. So, yes, if you've got someone who say starting in January, by the time they've sort of moved through the process, completed the investment, then we're expecting this policy to be in place where they can then access New Zealand's property market conservatively. What we are thinking is that the policy should be in place by the 1st of April. However, that just depends on the legislative priorities. It's already. It's been bumped back a little bit because of the priorities. However, discussions with ministers recently indicate that this certainly is something that's going to be introduced in Q1, and it's designed to actually accelerate and further incentivise further applications under the policy. When the government made the announcement, they're making the changes and stipulated what they were. Within a week of that notice, we onboarded quite a few new applications from people who saw the ability to purchase a home was a trigger for them to actually commit and invest under these settings. So, you know, the theory around having that property as a draw card has been proven already. We've got multiple investors who are at various stages. Some of them already have their residency visas, some of them. We're still preparing filings, but they all have the intention to purchase a home here once the legislation is in place and they're able to do so and listeners Stay tuned.
- [20:07]
B
Later in this podcast, I'll have another interview where we'll go into the real estate aspects of moving to New Zealand in much more. Mark, I want to come back and stay focused on your specialty, which is the visa itself. I want to talk about how long it takes to do this and frankly, I think you guys are doing a fantastic job because I've been through this a couple of times myself with other golden visa programs. Normally there's a lot of red tape in bureaucracy and just a mountain, a ridiculous mountain of KYC background checks, private investigators have to be hired, all kinds of things have to be involved in getting a golden visa in a lot of countries. When I talked to another immigration consultant and they told me they were turning these visas around, in some cases in three or four weeks, I said, no, don't tell me the date when they first acknowledge the application. I mean, when you actually get the visa. And they said, no, we're actually getting visas issued in a matter of a few weeks. Is that really true? And how are you guys managing to do this, frankly, so much more efficiently than most of the other countries that offer golden visa programs.
- [21:15]
C
When the policy was set through and worked with the government, one thing we raised is that if you're aiming to create the best investment visa product available internationally, then you have to have a very swift process to do that. So the government actually scaled up personnel internally before this policy released on 1 April to achieve that, generally speaking, takes around two to four weeks for the documentation to be prepared. And we typically file applications which we term decision ready. So really, there should be a few questions, if any, coming back. When we were filing in April and May, I can tell you we could file one of these applications from a good jurisdiction, and we were getting approvals within as little as three to five working days from submission. That has pushed out a little bit due to the volume coming into the system. So it's fair to say at the moment, you know, from filing, I think people should expect preliminary approval within one to two months, and assuming there's no other complexities, and then from there, individuals have six months to actually transfer their funds to invest to then secure that visa. So a lot of resources at the government side have been put in place to actually create what is hopefully a very efficient, fast process. And if you think about that, it's logical, because if you're wanting foreign direct investment to come into the country, then the quicker you process those applications, the quicker that money lands and goes to work. So the processing times at the moment have pushed out a little bit because of the demand now that's come into the system. However, it's still fairly fast in our view, based on alternative jurisdictions.
- [22:45]
B
Well, I predict that that backlog is going to get even bigger because I think it is the best program that exists anywhere worldwide and also happens to be a country that's absolutely a beautiful, amazing place. So just to summarize all of that, if a listener of this podcast hears this New Year's weekend says, wait a minute, $3 million US investment, actually less than that, I put that to work for three years in a venture fund where I'm going to actually make a decent return, hopefully. And I end up with my entire entire family having a lifetime call option to move to New Zealand if they want to. If they call you after listening to this podcast, they want to go with that program. It sounds like by April 1, when the law is expected to change around purchasing real estate, they've probably got the visa in hand by that point. Is that realistic timeframe?
- [23:36]
C
It's Realistic if they move quickly. However, we sort of take a step back in terms of looking at the design of this policy. The prior durations of this policy a few years ago bought in around a billion New Zealand dollars into the economy per annum. And that was the aim was to achieve that standard and that the math works out to be around 200 applications per annum. However, as of the end of November, eight months in, there's been just over 450 applications already made. So it's well subscribed if we continue to see that momentum. We do believe applications all tend to slow. That said, we've had some very fast approvals through recently as well. So I think this visa product hasn't reached maturity in the market. And what I mean by that is when you design investor visa products like this internationally, it takes around two years for that to reach maturity where it's very well known internationally. So we think we see the demand is actually increasing over time and will continue to increase over time. We're hoping, you know, that people that are sort of applying Q1, they should expect quite swift processing times. But that certainly does depend upon how many applications are being made. You know, we've got multiple applications under management here which we're preparing to file, we're onboarding weekly and we just don't see that demand stopping. It's been extremely busy pretty much from the 1st of April.
- [25:02]
B
Mark. One more point I want to cover is we've discussed the immigration law requirement which is a three year commitment to this program. Over that time you've got to spend 21 days in the country. But if you're choosing the growth option, it's probably going to be something like an investment in a venture capital fund. Now most venture capital funds, as our investors already know, have a longer commitment period than that. Is that true in these investments? And what do people need to know in terms of. I suppose if they went for the larger investment in government bonds, they would be done after three years. I'm guessing that although they may have met the government requirement to get the visa after three years, they probably still have a longer lockup than that if they chose a venture capital fund, is that right?
- [25:50]
C
Yes, that's right. So taking the growth category as an example, it's a three year immigration related commitment. However, it depends. The actual investment commitment depends on the instrument entered into. So if people are looking at venture capital, obviously those legal investment commitments will exceed that three year term. There are however, alternative instruments within the growth category which do offer liquidity around year three or four Private credit for example, is one of them. But it is a common misconception where people confuse the fact that it's just a three year commitment. That's it. But it does depend on what you're committing to. But like I've said, the growth category is designed to channel funds into various investment options. We have people who are focusing just on venture. We had people have a spread venture, private equity. And then we've got private credit and some other development funds where infrastructure developments are being put into the country which have liquidity options. Most people look for liquidity at the end of the investment term if they're not familiar with the country. That said, like I've said previously, very few people end up withdrawing once they've got confidence in the system. They've spent some time here. So the investment class under the growth category is always under active review. It may well be, you know, by the time listors sort of prepare and file applications, there may be other more diverse investment assets available under the system. It's an ongoing piece of work around that. But definitely it is a common misconception that people have is that it's three years in and out. It certainly does depend on the investment instrument that you're entering.
- [27:22]
B
Well, Mark, I can't thank you enough for a terrific interview. But before I let you go, obviously some of our listeners may be interested in this program. Your firm Lame Neve is not only an advisor who helps people get these visas, but you're one of the designers of the program. So needless to say, you're highly expert on this. If someone is interested in pursuing this, how do they contact you?
- [27:43]
C
Yeah, certainly, probably email is the best contact for us. But yeah, I'm an immigration partner so I'm actually, well, I guess an attorney in New Zealand. So a little bit different than licensed immigration advisors. And we're a full service law firm. So in addition to the immigration aspects, we also handle property transactions, commercial corporate investments. The whole suite of services is typically required to manage one of these applications. Yeah, like I said, email is probably the best. My email address is Mark williamsaneve co nz. Happy to hear from everybody, anybody who wants to discuss this further. And we tend to set up teams or zoom calls or get them across the details to allow them to make fully informed decisions before they move forward with the process.
- [28:28]
B
And we'll put that email contact in the Research Roundup email so listeners, you'll be able to find it there or if you don't have a Research Roundup email. Again it's Mark Mark M A R K.williamsaneve that's L A N E N E A V E C O dot NZ listeners, I was surprised in talking to Mark off the air to learn that really the main reason that people are flocking to this visa, there's quite a few of them. It's primarily about the interest in New Zealand. It's a beautiful place. It's potentially if the world took a turn in the wrong direction, it would be a great place to move to with your family. They don't seem to be pursuing this visa for the sake of the four year tax holiday that's offered by New Zealand to new immigrant investors. I think the reason for that is nobody knows about it. We're gonna break that story next in my interview with Graham Lawrence, who is a tax advisor in New Zealand. We'll find out about that four year tax holiday which I don't think most people pursuing this visa are even aware of. That's coming up. Joining me now is Graham Lawrence, managing tax partner for New Zealand at Acclaim, which is a global tax advisory firm. Graham, it's great to have you on. Our listeners have heard about the active Investor plus visa from Mark. A lot of people, as Mark described, are really not intending to move to New Zealand full time. They're going to New Zealand or they're making a visit to New Zealand for the purpose of obtaining what eventually becomes a permanent resident visa that would but allow them to come to New Zealand anytime they want to. What, if any tax implication is there just to getting the visa? Is there a tax obligation if they don't move to New Zealand and they've got the visa?
- [30:24]
D
Yeah. Thank you, Eric for inviting me onto the show. I guess to answer that question, if people are looking to apply for a visa and not move to New Zealand, the tax implication is essentially nothing. New Zealand just taxes their investments that they make in New Zealand and they don't seek to tax their worldwide income.
- [30:46]
B
Okay, so if they made an investment in order to qualify for the active investor plus they took $5 million, put it in a New Zealand fund, the income that they make from that investment will be taxable in New Zealand, but any of their other global income is not taxable in New Zealand. Is that an accurate sum?
- [31:04]
D
Yeah, that's correct, Eric. And the tax rates are relatively low and in some instances the tax can actually be a zero percent tax rate.
- [31:11]
B
Okay, now I want to move on for people that would consider moving to New Zealand to something as far as I can tell, very few people know about which is New Zealand offers a four year tax holiday to what are called transitional residents. What's a transitional resident? Who qualifies for this and what are the details of this four year tax holiday?
- [31:32]
D
Yeah, that's a good question, Eric. So a transitional tax resident person is essentially someone who has not come to New Zealand and become a New Zealand tax resident for the previous 10 years. And what the rule seeks to do is exempt your worldwide assets and liabilities for a period of four years. Really, just to enable you to come to New Zealand settled in and give you four years to reorganize your affairs so that you don't get essentially a tax surprise.
- [32:05]
B
Okay, so that's the intention. But I'm going to go out on a limb here and say I think that there's a profound value for some global investors. Now, I don't think this helps Americans or Japanese or Eritreans very much. I'm not sure there's a whole lot of wealthy Eritreans to worry about. But those are the three countries that are going to tax those investors global assets or global income based on their citizenship, regardless of where they live. So for those people, I don't think that this particular rule has any profound advantage. But for Canadians or Western Europeans, if you're willing to move to New Zealand, physically take up residence in New Zealand, you know, pick up and leave the country that you were born in, as I understand this, for the first four years, you would have essentially the same benefits as moving to a territorial tax jurisdiction where any income that you make in New Zealand, you get a job, sure, you got to pay income tax on that like everybody else, but all of your global income from investments would be completely exempt from taxation for the first four years. That seems to me like a really big deal. And I was expecting, when I spoke to Mark, I was expecting to say, well, this is the reason everybody's flocking to New Zealand. It's because of this tax holiday. Mark said, no, actually that's very uncommon. A lot of people don't even know about. Most people are pursuing the active investor plus visa because they want to have optionality to come to New Zealand later or because they want their kids to have that lifetime visa grant which would hopefully benefit them, give them more flexibility of what they might do in life. Is this an undiscovered gem here and am I understanding it correctly in terms of its implications for people, let's say, from Canada or Western Europe, who could move to New Zealand and essentially be tax exempt on their global investment income outside of New Zealand for The first four years, yeah.
- [34:02]
D
That's a great summary, Eric. Look, I'd love to say as a tax guy, this is the reason why people are coming to New Zealand, but it isn't. Mark is absolutely correct. People are coming to New Zealand because of the friendly environment, the open spaces, the beautiful landscape. But then what they do understand is there is actually a significant tax advantage to actually moving to New Zealand. And the four years is a hidden gem. And then post those four years, there's even more surprises. New Zealand does not have a broad based capital gains tax. It doesn't tax shares, doesn't tax a lot of real estate. Obviously there's some exclusions around that, but we have a very good tax system here in New Zealand.
- [34:44]
B
Now this is something I was really fascinated to learn about because my first thought, being a skeptic and something of a cynic at heart, was, okay, if they're teasing you with this four year tax holiday, there must be a real gotcha afterwards. You know, in the fifth year they're gonna, they're gonna nail you with a really heavy tax. Actually, the opposite is true is I understand that it's called fif. It's not really a capital gains tax, it's not really a wealth tax. It's kind of a hybrid between the two. But the effect of it, as I understand it, is you are fully taxed on the first 5% of gains on your global income. So if you're an aggressive investor and you have a, and you make 40%. Yeah. You're going to pay a 39% tax on the first 5% of gains that you made in New Zealand. But the next 35% of gains, if you had a 40% year, as I understand it, is basically tax free. Am I interpreting that right?
- [35:44]
D
Yeah, it's a really complex area, this FIF or foreign investment tax regime. But if I were to take an example, someone who's moved to New Zealand, you post their four years and let's just say they've got some shares in Apple. So the way the rule looks at it is on the 1st of April, you take the market value of those shares and you just return 5% of that as taxable income. So you pay tax on that 5%, you don't pay tax on any gains, any dividends. And so essentially, if you're making more than 5% on those Apple shares during the year being capital gains or dividends, those are all tax free from a New Zealand point of view.
- [36:25]
B
Now what happens if at the beginning of the year you take that 5%. And it's not a tax of 5%, it's you take 5% of the value of those Apple shares, that's the presumed return that they think you might make, and you would be paying tax of whatever your marginal tax rate. The maximum is 39% on that 5%. So it really works out to about 1.95% of the asset value of the Apple shares is the maximum tax you're going to pay. What happens if it's a down year and you lose 10% because Apple shares go down that year? Do you still pay tax on that 5%?
- [37:03]
D
Yeah, I mean, that's where it hurts. Eric, we are talking about a paper tax here. So in down years, irrespective whatever the value of those Shares is on the 1st of April, so if it's down 10% compared to the year before, you're still paying tax.
- [37:18]
B
Okay, so it is effectively a form of wealth tax, but it's not on all of your assets. It's on stocks and certain other qualifying assets and it sounds like it's 5%. But if you multiply the 5% by the maximum marginal tax rate of 39% which you actually get is a 1.95% wealth tax on your overseas stock shares. What about things like overseas real estate and other types of investment that are not directly in financial markets?
- [37:50]
D
From a New Zealand point of view, we do not have a capital gains tax across the board on real estate. So the first premise is that you won't be taxed on any gains. From a New Zealand point of view, the couple ways to explain when you do get taxed on them would be if you're in the business. So if you're in the business of buying and selling real estate, you will get taxed on it. Or if it is residential real estate, if you're buying and selling within a two year period at the moment, you will get taxed on that gain. But outside of that, New Zealand does not seek to tax capital gains on real estate.
- [38:28]
B
Okay, so it really is, and I'm going to make a prediction here. I think what's going on is New Zealand is such a beautiful place that people are flocking to New Zealand because it's an amazing place to go and see the countryside. I don't think people know about this. I don't, because when I lived in Hong Kong full time, I met lots of Canadians, lots of Western Europeans, both Hong Kong and Singapore, because they're territorial tax jurisdictions, meaning that they don't tax your offshore income. A Lot of people were moving, moving to those countries just because they were high net worth investors. Most of their income was essentially tax free. They only had to pay tax on the income that they had inside of Hong Kong, which was typically minimal. I don't think that community of global high net worth private investors knows that there's a deal in New Zealand on, you know, it's an English speaking first world country where you can live in an absolutely beautiful place and really not be taxed at all for the first four years. And after those first four years, it still sounds to me like it's one of the best tax regimes anywhere in the world. Am I overstating that?
- [39:39]
D
Look, I don't think you are. I mean, New Zealand is one of the few countries without a broad based capital gains tax. For starters, we offer this four year exemption that you've explained really, really well. I, I think to add to that, when I travel and present on this matter, people are surprised that we don't have a wealth tax, we don't have an inheritance tax, we don't have a payroll tax, we don't have a Social Security tax. And on top of all of that, New Zealand has a vast network of what we call double tax agreements with other countries. From an exit point of view, a lot of the high net worth people that we look after, they are looking at. Yeah, when they come to New Zealand, that's great. But these people are really smart and they want to understand if they exit, what does it mean Also, so these double tax agreements allow us to plan really easily in terms of if they do potentially exit, how do we exit and how do we minimize any implications.
- [40:39]
B
On that side and that would be particularly relevant. As I said before, the real benefit of the four year tax holiday is mostly for people who are not American or Japanese. But for people who are American or Japanese, you don't want to have to pay tax in two countries. So you've got the agreements with both of those countries that you're not going to get double taxed. If you're paying U.S. taxes and new Zealand taxes, there's going to be a deduction on one side or the other so you don't get taxed twice.
- [41:06]
D
That's right, Eric. And we look after a lot of American Japanese clients. And what I would say is you're bang on. Those agreements allow those investors to be taxed relatively low rates and rates that allow a full tax credit back in their home country. So there is no double taxation so long as you look at what you're Investing in properly and apply the appropriate rates.
- [41:30]
B
Now, I heard a rumor that the government has looked at this and has realized that the four year tax holiday is such a good deal that there are some people that have come for four years and left just before the end of the fourth year. There's a rumor that the government may be revisiting the rules, trying to figure out how they could encourage those people to stay permanently, maybe making the deal even better than it is now. Any truth to that or do you know any more about that?
- [41:56]
D
There is some truth to that and we've been working with the government on those rules. Those rules are currently contained in a tax bill and that will be passed at this stage in probably March 26th. There's still a bit of discussion going on. We've gone one step forward and a couple steps back, if that makes sense. So we've made a positive step forward on the rules. But there's still some work to be done around those rules. But really what they're looking to do is instead of the 5% tax that we talked about earlier in this interview, they're looking to bring in a realized taxation. And the question is, does that realize taxation provide a better result result for the individual as compared to the 5% taxation under the foreign investment fund rules? So this is a little bit of wait and see, but we are making positive steps.
- [42:50]
B
Is there any consideration for making it a 5% cap so that you would have a 5% maximum, but if it's more than that, you don't get taxed on it.
- [43:00]
D
So that cap will still stay. So the old rules will still stay. It will just be more a realized basis. We have suggested a cap. At this stage there is no cap. And I guess to give the example in comparison, I talked about the Apple shares. So under the proposals as they are right now, you would essentially be taking an individual who's moved to New Zealand. They've done their four years, so we're now a full New Zealand tax resident. So at the end of those four years, a value on the Apple shares would be made, which would just be on the date. And then if that individual sold those Apple shares, the difference between the opening and closing value would be taxed at the New Zealand marginal tax rate. But only 70% of that gain is actually taxed. So in a roundabout way, the tax rate on the gain is about 27%, which is, you know, still relatively high. But you need to take into account that the valuation of it is the date that the individual finishes their four year tax holiday and when they sell the gains. So the cost base could actually be quite low in comparison to what the individual bought the Apple shares at some time ago.
- [44:16]
B
Let's imagine that international high net worth private investor from Europe, from Canada, someplace other than Japan and the United States where they don't have to deal with citizenship based taxation, they move to New Zealand. What about the part of, you know, you're still taxable obviously on your income in New Zealand? What about other taxes in terms of real estate taxes, Social Security taxes, Medicare taxes, et cetera? What is the tax regime like if you were considering moving to New Zealand to live there and be a private investor there?
- [44:51]
D
Pretty simple, Eric. We don't have any of the payroll, the Social Security. We don't have any, you know, real estate capital gains tax. We do have real estate taxes in terms of local councils. From a, I guess an insurance point of view, you are what we call acc and that will come out of your wages essentially. Or if you're a contractor, you make the payment yourself to the government and that is to cut, that covers you for personal, you know, and also business injury. Outside of that, really we just have a form of sales tax called gst. I guess it's just really a simple system, Eric.
- [45:32]
B
Well, it certainly, I think is a fantastic opportunity for people who can live anywhere who derive most of their income from investments and are not burdened by being Japanese or American and having the citizenship based taxation. It's one of the most beautiful countries in the world, fantastic place to be and at least for the first four years, all of your offshore income from capital gains, from interest, from dividends, whatever, is completely tax free. I don't think most people know about that. You heard it first here on Macro Voices, folks. Graham, I can't thank you enough for a terrific interview, but before I let you go, please tell our listeners how they could contact your firm if they're interested in learning more about the tax implications of either just getting the AIP visa or investing in New Zealand or moving to New Zealand and being a private investor based in New Zealand.
- [46:24]
D
Yeah. Thank you, Eric. It's been a pleasure to be on your show and I hope I'll be able to distill some of the matters around taxation. Look, we've been doing this for about 25 years. We've got a team of people that help investors from all around the world move to New Zealand. If people do want to get in contact for a discussion, please go to newzealand.aclimb.com and my details will be on there. Or alternatively, I'm on LinkedIn under Graham Lawrence. Lawrence, I'd be really happy to help you think about what this means in terms of New Zealand. And once again, Eric, thanks for being on your show.
- [46:59]
B
You're very welcome, Grant, and we tremendously appreciate your perspective listeners. Stay tuned. We've got one more interview coming up with Brendan Goodwin, who is a realtor, lawyer, jack of all trades and concierge to high net worth individuals migrating to or considering migrating to New Zealand. That's coming up next. Before moving on to the final interview with Brendan Goodwin, I want to add a point of clarification that Graham and I discussed off the air after the last interview was recorded. At one point it sounded like people in the business, such as fund managers would be disqualified from the four year tax holiday or the 5% capped FIF rules for capital gains on their own personal investments. Graham asked me to clarify that the in the business rule pertains only to income derived from fees for managing other people's money in the case of a fund manager who has his own money invested in the fund that he manages. Graham clarified that there's usually a path to treat the manager's investment returns on his own capital as tax free during the four year holiday and then tax advantaged under FIF rules after that tax holiday end. The in the business rule subjects only fees received for managing other people's money to being taxed at regular income rates with a maximum marginal tax bracket of 39%, but it does not apply to the manager's own assets. With that clarification in place, let's move on now to my final interview with veteran commercial real estate attorney Brendan Goodwin. Joining me now is Brendan Goodwin. Brendan, your background and career history is a little bit confusing. Why don't you walk us through it?
- [48:52]
E
Eric, thanks for having me on the show. I actually started my career as a lawyer which is a little bit unusual. I practice property law with DLA Piper, so I spent a lot of time on the legal and structuring side of commercial real estate transactions before I ever actually sold a house. About a decade ago I moved into the family business at Auckland which is Goodwill, a multi generational real estate firm. But over time I've specialized more and more in high end property and in looking after international clients. We're trying to make New Zealand home either part time or full time. So that's ultimately led to what I focus on now, which is dedicated offering for high net worth clients under my new brand called Unique, which is about a Little differently, Uniq?
- [49:32]
B
Well, I certainly can attest personally that you approach real estate quite a bit differently than most realtors I've encountered. And in the interest of full disclosure, I do want to let our listeners know that I do have a business relationship with Brendan. When I was looking to set up a second home in Auckland, I ended up meeting Brendan. He told me basically what I was looking for didn't exist in the market, but he thought it would. In about six months he went out of his way to basically call in a favor with a developer he knew. He showed me a penthouse that was, I think it's probably the most elaborate penthouse in Auckland, if not the entire country. A little bit overkill for what I was looking for. But he set up a short term lease on that property even though it wasn't listed for rent. It was only for sale as a holdover until I could find the property I was actually interested in. Turned out I never got to stay in that amazing penthouse because he was able to accelerate the availability of the property. That was a fit. So I definitely. My hat's off to you, Brendan for making that all come together. I never got to stay in the cool penthouse, but other than that it worked out fine.
- [50:40]
E
Yeah, yeah. And it's still available for sale, just quietly. But yeah. Anyway, it was a good, good experience.
- [50:44]
B
So I want to get into what really is going on in terms of this people flocking to New Zealand. To my surprise, I thought it was going to be about this tax holiday thing and people being interested for that reason. Mark Williams told us in the first interview. No, that's really not it. Almost nobody that he encounters is coming for that reason. Most people are coming because, you know, it's a beautiful country, countryside, English speaking, first world country and so forth. And they're setting up backup plan, having a place for them and their families to have a lifetime call option on residency which is fairly easy to obtain with this new active investor plus visa. You have the benefit though of talking to people not when they're considering this, but after they've already done it and they've come to New Zealand and you find out what their reactions are, tell us a little bit about who's doing this and also with respect to what they're doing. Give us the rundown for people who don't know the country well. North Island, south island, what's it all about? For people who are considering real estate, what are their options?
- [51:48]
E
Geez Eric, that's a good question. How long do we have? I guess I've Been lucky enough to travel a little bit globally and New Zealand really is a stunning even by global standards. So essentially we're three small islands located in the Pacific Ocean. We are never far away from the water and obviously a lot of stunning coastline. So recreational boating, scuba diving and fishing are all world class. But we have snow capped mountains with amazing hiking trails or lakes, rivers for freshwater fishing. So there really is something for everyone who loves the outdoors. And the convenient part for me, when you think about big larger countries like the US where you've got a, you know, a huge continent, you can pretty much drive the length of New Zealand under about 30 hours. You know, you can drive from Auckland three hours depending on the season and be either skiing or snowboarding or deep game fishing up north. So I think that's a pretty unique feature. But ultimately I think there's New Zealand does have a few layers. Cause I think probably a lot of people globally just think of the natural beauty. But actually you know, we do have trouve city living in Auckland, that's our commercial hub, to a lesser extent Wellington and Christchurch. But in Auckland you have a very international walkable lifestyle. You've got city and harbour apartments, you've got character inner city homes. So I think that's something that could appeal to a lot of your listeners. And then you've got the lifestyle destinations people might have heard of. Places like Queenstown, wannac parts of the Bay of Islands, Waiheke island. That's where you see the classic postcard scenery, you know, lakefront vineyards, big land holdings, coastal estates. You raise an interesting question. So in terms of is it restricted, you know, to purchase those types of properties for overseas people. New Zealand has a concept called sensitive land which simply means some types of property, like larger rural blocks, coastal land or islands like Waiheke, which is a 45 minute ferry from downtown Auckland, need extra consent if you're an overseas person. But that doesn't mean they're off limits, you can still buy them. There just is an overseas investment office consent process which you'll hear people referred to as OIO consent. But most high end urban homes in places like central Auckland aren't classified as sensitive and at all. So many buyers proceed without any additional approvals. But if someone is looking at coastal estate, a vineyard, a lifestyle block for example, or anything on Waiheke, the OI consent is required and we help clients navigate that from day one. So the takeaway really in that sense is simply awareness, not alarm. The rules aren't a barrier, they're just part of the buying premium off an iconic New Zealand property.
- [54:25]
B
Well, Brandon, as someone who's very well traveled, I can certainly attest that New Zealand is the only place I've ever been that really kind of outdoes Hawaii in terms of natural beauty. It really is a strikingly beautiful place for people who are interested in that kind of real estate. There's lots and lots of it. Personally, I happen to be more of a city dweller myself, so I can't speak from personal experience to living in that part of New Zealand or wanting to. And despite the fact that Mark said that's probably what most people are looking for, I'd like to talk a little bit more about, about this idea of mine, which is I don't think the offshore world knows about this tax deal yet. The combination of the four year blanket tax holiday where there's no tax whatever on your offshore income and then after that it's capped at 5% of your gains under these FIF rules. Now, it doesn't help Americans or Japanese very much, but for everybody else, all the people I met in Hong Kong, guys that were high end private investors or running hedge funds and so forth, they moved to Hong Kong and Singapore because of the territorial tax doctrine, not having to pay tax on offshore sourced income. There's a huge community there. And I think frankly that's the reason it costs 50 million US to buy a decent apartment in Singapore is because so much wealth has moved in because of Singapore's Golden Visa program. I think frankly that New Zealand's program is pretty darn close to as good as Singapore's. And it's an English speaking first world country that's more beautiful than Hawaii. It's an amazing deal. And from the sense I get from Mark, either I'm the only person who thinks that or a lot of other people haven't figured it out yet. So what's your take? You talk to people after they've come to New Zealand, after they're down this process, Is that part of this or is it just unknown?
- [56:21]
E
So so far, yeah, from my experience, it's unknown. And I guess one of the challenges that we have for those, you know, involved with the AIP Pathway program is to really get it out there into forums like this with people like you who are able to understand how much of a good opportunity this is not just in relation to tax, but lifestyle, as you say. We, you know, we've got a beautiful, generally a pretty beautiful climate and it's a really big opportunity which when I think it gets out There will potentially cause some issues with the amount of stuff stock that is in the market to meet the demand. So I think it's a really interesting time at the very beginning of the program.
- [56:56]
B
Well, the other thing that occurs to me is Australia a couple of years ago canned their significant investor visa program which was Australia's golden visa in terms of English speaking first world countries. Where else can you go besides New Zealand to get a golden visa that allows a path to permanent residency the way that you can get in New Zealand? I'm not sure if there's a. Is any.
- [57:19]
E
Yeah, I mean Australia closing what they called their SIV has definitely made New Zealand more interesting in the English speaking world. I mean particularly for people who like the idea of this part of the world and want a safe rule of law jurisdiction. I mean from what I hear from clients, which I guess is where you're asking me on the coal face, very few people will say, hey, I'm moving to New Zealand solely for tax. Normally it starts with lifestyle, sort of safety, education for children is a big one, political stability, quality of the life. And then the tax and the investment framework reinforces the move once they learn more about what is globally a pretty good financial framework as you've identified yourself. And I think for the European and Asian investors, once their tax advisers explain those transitional rules and how New Zealand treats offshore investment income, it becomes a much more compelling package. And I guess, you know, you touched upon the Americans and the Japanese as your market discovery discussed, that picture is different, but they're still very active because the value of the lifestyle and that diversification, that has value. So I'd say Mark is right, that sort of people don't lead with the tax conversation, but it absolutely features in the decision making for a lot of families once they dig deeper.
- [58:31]
B
Well, I'm going to posit a hypothesis that New Zealand has a serious marketing problem because I don't think that the community of high net worth global investors who have based themselves in Singapore and Hong Kong and much less so Hong Kong now because of the PRC complications. I don't think they know about this because if they did, I don't know why you would be paying 50 million US for a small apartment in Singapore when there's a better deal here. And I suppose the counterargument to that is Hong Kong and Singapore are both major financial centers. So there's a lot of people who came from banking in those financial centers and are staying in the town that they know. But frankly I met a lot of people in Hong Kong, Europeans, Canadians, people who were able to relocate and escape from their home country's tax regime to a much more favorable tax regime with territorial jurisdiction. And I think maybe because New Zealand is not technically a territorial tax jurisdiction, it doesn't get considered. I didn't know about it. I was curious as to why Peter Thiel and other people were relocating to New Zealand. I had absolutely no idea that I would ever consider it myself until I got curious about this. For the sake of this, we needed something to fill the year end special on macro voices. This year we did nuclear energy. Last year I was looking for something to do when I found out about the difference in quality of life and cost of living. The penthouse that you showed me at 51 Albert street in Auckland is I guess, ridiculously expensive by New Zealand standards, but it's dirt cheap by Hong Kong or Singapore standards. The thing that I think you've got a problem with though, if I imagine that community coming to Auckland is I think a lot of those people like myself are city dwellers. They're people who are used to living in a big city with walking distance to lots of really good restaurants and so forth. I'm actually very impressed with the restaurants in Auckland based on the size of the city. But in terms of housing, you showed me one very impressive penthouse. How many more of those do you have? Because if this was Hong Kong and I said, look, I want to see, see at least 30th floor or higher luxury condo and priced at 3 million US or higher, they would say it's going to take six months to look at all those properties. I think you could look at all of the properties like that in Auckland in about six minutes or maybe six hours. How much inventory is there? I mean, could you support a community of, let's say, metropolitan high net worth investors? Because frankly, I think that once this story breaks, maybe this podcast will be the cattle. I think that if people discover the tax deal, you're going to see an influx of the same people that move to Hong Kong for that reason.
- [61:23]
E
Yeah, and I agree with you. I think that once you're offshore world really understands the combination of the AIP pathway, the transitional tax rules and general quality of life proposition New Zealand should be on a lot more shortlist than it is for city dwellers. Sorry. Like yourself, people are used to Hong Kong and Singapore and London. Auckland is interesting because it gives you, I guess, a reasonable size city. You know, we're not huge, you know, but it has lovely food, good restaurants, as you have attested to. You know, the public transport connectivity is improving in the city and it's only 20 or 30 minutes from beaches and vineyards. It's not trying to be Hong Kong, it's a different scale but that's exactly the point at the end of the day. So I guess on the inventory piece I am a little bit nervous around, around. Hopefully people do engage with us around moving to New Zealand through this pathway. And I think there's going to be a real shortage because as you said right now there's one full floor luxury apartment on the market and it's sitting around 8 million USD and behind that there's part floors or there's apartments being built sort of on the city fringe. But I think there's going to be, I'm hoping a shortage of stock because this is going to be such a popular program which will be a good problem to have. But I think that marketing piece and getting, getting it out so they understand the opportunity in New Zealand not just from, you know, the tax implications and the financial structure, but the quality of life. I think there should be a really sound base to launch this program or encourage it to keep growing.
- [62:53]
B
Well and I suppose something else that I don't know is my own personal preference as a city dweller. I'm not sure the other people who are in Hong Kong and Singapore for those reasons share that value. They might prefer to be in, you know, an oceanfront home someplace. There are a few of those in Czech and Hong Kong, but it's quite expensive on that side of the island. What about the, not way down in Queenstown and snowboarding country but around Auckland is there plenty of housing, high end housing? If you did have an influx of high net worth migrants, is there enough inventory to support that outside of the city?
- [63:32]
E
Look, I think a lot of the high end real estate in New Zealand and in and around Auckland particularly it's around those networks and having someone plugged in to unveil those off market opportunities. Short answer, there's probably going to be a struggle of inventory but there's increasingly developments that are people the listeners might have heard of the golf enthusiast. There's a couple of becoming now pretty world famous golf courses called Tara Etntri. There's more and more development. You know these helicopter rides from Auckland airport up direct almost to those golf courses where there's international standards and there's an ever growing presence of those type of properties. But I think the window for people to be able to purchase those type of properties is definitely closing. And for our Australian friends or Singaporean Friends or even the expats, Kiwis that might be listening. You know, this change is coming legally where people under this program will be able to purchase one residential property at a minimum of $5 million. And I think we've already touched on it. That window is closing. And the reality of what's happening in the market, I can tell value for certain. There are already real estate transactions that are happening that are subject only to the change of the rule where one of these people down the pathway can buy a property over 5 million. For those that are considering this change in the new year, when this is, the sooner people can reach out, the better because I think the stock is going to become a problem. There is not enough properties to service a potential surge.
- [65:02]
C
So.
- [65:02]
E
So I think the best way to either grab that opportunity is to reach out as soon as possible because I think there's going to be fewer and fewer good quality properties to purchase.
- [65:13]
B
That's an interesting point because when I heard Mark's interview, I was thinking, boy, come April 1st, when they pass this new law, you better move quick if you want to get property in New Zealand, because it'll get, I should say, if you want to get city property, it seems like there's plenty of countryside in New Zealand. I don't think you're going to run out of that. I do think you're going to have an inventory problem in, in downtown Auckland. So you're saying it's not a question of hurry up. As soon as you get to April 1st, you're saying put an offer on a property that's contingent on that law passing and lock it up in a contract before the law changes. Did I get that right?
- [65:51]
E
That's what I'm saying. So it's December 2025 for those listening and those contracts are already happening, subject to the law changing. So for anyone who's considering it or thinking about about it, when you think about an investment of, I think just under 3 million USD to get into the program, and then you're looking at properties which, as you say, globally, really dirt cheap when you think about the US Dollar currency and those other global currencies, I think there's a real good chance that people are going to miss out if they don't act really quickly.
- [66:21]
B
Well, Brendan, I am still convinced that there is just an untold or unbroken story here and I hope that this podcast will break it, which is for that global investor and especially if you trade US markets and you're living in Hong Kong or Singapore. I've been there before trying to get up at 3 o' clock in the morning to catch that last hour of trading in New York. That all happens late morning in Auckland. So the time zone is way better for trading US markets if you're a trader and it's a way better quality of life. The real estate is dirt. Well, it's not dirt cheap compared to other places, but compared to Hong Kong and Singapore it's dirt cheap. I really think, think that this tax deal for non Japanese and Americans is going to bring all of the Canadians and Europeans that I met in Hong Kong, many of which have already moved to Singapore, flooding in. And frankly I'm fascinated by the idea of is there a market to create? I'm thinking of a residential tower that is designed to accommodate that community in Auckland. And frankly if the influx of high net worth investors because of the tax rate reason, which is nobody seems to be doing that yet, I think it's because nobody knows about it. If that influx happens, dude, I'll partner with you to build that building.
- [67:42]
E
And I think what you're describing is very plausible, right? The same type of people who moved to Hong Kong 20 years ago because it was a well run territorial tax jurisdiction and who now want this plan B that's geographically boring in the best possible way, will eventually look at New Zealand very seriously. And to touch on what you mentioned before, if the government keeps the settings sensible, particularly around FIF in the absence of a broad capital gains tax, then yes, I can see a future that is defined where a global community of investors who base themselves in and around Auckland live very well and they run their offshore affairs from here. You raise a funny point around Time Zone because I think for active investors and trade traders, that time zone is actually a quiet superpower. I mean you can trade US markets from here and still be functional human being the next day. You're not annihilating your sleep to watch the market open and then when you wake up you're in objectively a pretty easy place to live. So it's a nice combination. That tower concept you mentioned is exactly where I see this going. If the material, the demand materializes, it's about something that was be built to specific design requirements, a bespoke offering for people that have, you know, full double floor residences, lock up and leave security concierge services designed for frequent international travel, connectivity to the rest of those amazing places that we've talked about, the golf courses and the, and the ski resorts and you know, who knows, maybe a, a pretty cool helicopter on the roof for those that are sort of inclined to that sort of travel. But yeah, I mean if we get a dozen like minded financially qualified people aligned with that sort of of vision, then I think we could definitely get a building marketed to a very defined audience. And that's the sort of projects that I think Auckland has the opportunity to harness and create and like you say, create a hub of people of like minded opportunities.
- [69:41]
B
I've lived in a building like you're describing before where it wasn't just the penthouse, but every floor was a full floor apartment. And it really created a community of people of similar high net worth who worked well together. And the helicopter idea is amazing because the traffic from the Auckland International Airport is not exactly ideal. That's a five or ten minute helicopter ride with Helitrans. But the thing is, the Helitrans heliport is a good 15 minutes outside of the CBD if you had the helipad on the roof. So the concierge in the building could, could just get ahold of Helitrans and say pick my resident up in 15 minutes and take him to the airport. That would be at a pretty amazing lifestyle. And the cost of that building compared to Singapore or Hong Kong would be nothing compared to those other markets. So I think it's a really fascinating idea. I don't know, maybe it's just me, but I don't think anybody knows about this yet because there's a lot of people that go in. Singapore and Hong Kong used to have a golden visa program called CIE that was decommissioned years ago. And frankly with the PRC kind of taking over Hong Kong, I don't think anybody really wants to go there anymore. But Singapore's program, which is called GIP, is still extremely busy. That's I think a $25 million golden visa if you invest in a fund as opposed to 5 million in New Zealand. And then the cost of real estate here is so much less. I think probably the reason it's not on anybody's radar is technically speaking it's not a territor tax jurisdiction. But when you consider that there's basically no broad based gains tax, so what you're actually paying tax on is just your foreign stock investments capped at the first 5% of your gains. And a lot of investors do much better than that over the long term. So that really is a very modest tax burden. And frankly you can avoid that too because that's only on overseas stock shares. And if you've got overseas real estate or other types of investment, or if you invest inside of New Zealand, then there's no tax at all. So depending on how you structure your investments, you can basically completely eliminate or minimize your taxes. And I think it's much better than any other jurisdiction I've looked at other than Singapore. And you know, Singapore comes with some penalties of both living in an extremely expensive place and it also has some lifestyle restrictions that definitely don't apply to New Zealand. So I'll be very fascinated to see what kind of reaction we get to this podcast. I think there's a real potential for a significant influx of high net worth international investors who would come here for the same reason as you said, that they went to Hong Kong 20 years ago.
- [72:32]
E
Yeah, and my role in all of this is essentially to make it easier for people who are thinking seriously about New Zealand to sort of help them understand their options on the ground, you know, from where to live, what to buy, who to speak to, introduce them to the right people in relation to tax advice and lawyers and how to buy boats. And you know, I shared with you a contact to buy a car because I think a big part of any transition to a new country is, is about dealing with trusted people. And, and let's be honest, not a lot of people have a lot of time these days. And when you're based offshore before you move, having someone locally to help navigate that and, and save you time is an essential part of making that journey more palatable or even enjoyable, which is, I think we, you've sort of got to over the last few weeks. So I think that's an important part of that connectivity, that trust network, having someone plugged into those off market opportunities. So I'm on your page. I'm excited about this. I think there's a lot of opportunity not just for Auckland in the country, but also for people that are listening to the podcast that are thinking, hey, where do I go next? Or what are the other opportunities to have a nice quality of life for my family when, let's be honest, globally things are a little bit shaky. So, you know, the good thing about New Zealand is we're so far, far away. And that's probably the first time that people have seen that in such a positive light. And with air travel the way it is now, we're a lot closer to.
- [73:52]
D
The rest of the world.
- [73:53]
E
I'm helping people at the moment from the US and they're getting here in less than half a day. So I think that whole piece for people around thinking that we're so isolated will actually, we're not as isolated as you might think. And I think once people get here and they experience that lifestyle and that community, as you say, I think it will be high on, or it should be high on a lot of people's wish lists of where to base themselves.
- [74:14]
B
You know, that's an important point that you just made. And I guess most of our listeners probably already know this. But for anyone who doesn't, the face of long haul international air travel has changed radically in the last 10 or 15 years as a result of lay flat seats in first class or in business class. Make no mistake, traveling to New Zealand from anyone where in economy class sucks. It's just not a fun experience. But I've gotten to the point, Brendan, where I actually much prefer a 12 or 13 hour flight over an 8 hour flight, because on an 8 hour flight you don't really get to sleep. And I should actually correct that statement. I prefer a 13 hour flight with prescription sleeping pills over shorter flights. And the reason is with lay flat seats, you just sleep through the whole thing. I'm awake for the first hour on my laptop, checking email. I'm awake for the last hour and a half, two hours to make sure I'm ready to put my seat back and tray table forward so I don't get yelled at for landing everything that happens for those 12 hours in between. I'm zonked out on Ambien and it is so much better than it was 15 years ago. So I really am sold on this. And like I said, I had no idea until I started researching this podcast episode that I would actually end up with a second home in New Zealand. And I'm actually recording this episode from Auckland, New Zealand in real estate that Brendan helped put me in. So it's been a real discovery for me and I'm going to be fascinated to see what kind of reaction we get because maybe the people in Hong Kong and Singapore feel like they would only want to be in a place that is a major banking center. Although frankly, if you're running the kind of fund that most of the guys that I knew in Hong Kong were running, I think it's much more nicer here.
- [76:07]
E
You have been a really interesting test case or I guess scenario of people that were probably less than super positive or motivated about the move. You know, people make different moves for different reasons. And I've had clients that have come to New Zealand from all around the world for various motivations. But I think once people get here, they really do enjoy the environment and the lifestyle and the way things Sort of move relatively easily through. We're not a perfect country by any means, but I think globally, again, what we've got is something that people should look really strongly at and all those reasons you've highlighted for those high net worth individuals. I mean again, you know, the 21 day scenario of people coming through the country. We can help put together a curated 21 day tour to give people a feel for all those parts of of New Zealand that they might be interested in exploring before deciding, hey look, yeah, we would like to make New Zealand a second home or a primary place and we would like to buy a property. And one of the other things that I do which in New Zealand is not commonplace is I'm a buyer's agent so I represent the interest of those people coming in to the country and that right now I'm acting or various nationalities. Back to your point earlier in the conversation, you know, I'm helping someone from China, I'm helping someone from Switzerland, I'm helping someone that's just coming back from Ireland, I'm helping someone that's from the U.S. so I think more and more having people and networks that you can plug into quickly will make that experience so much easier. So yeah, I'm really excited about the opportunity for New Zealand and I think we should be sitting in a very different space talking about this maybe in 12 months time and looking at what impact hopefully Macro Voices has had on this program, which I think is a really important, exciting, smart and essentially well played out program. Like you say, so long as they keep it sensible and don't make huge changes to the taxation piece, then we should be good to go.
- [78:05]
B
That was something that I was kind of concerned about from Graham's interview is even though the tax holiday doesn't really do much for Americans and Japanese, although it's extremely valuable to Everybody else, the FIF rules around capping capital gains tax at 5% is important to me long term for sure. If they were to undo that and turn it into a realized capital gains tax, which sounded like maybe is under consideration, that would completely sabotage the whole thing. That would guarantee that everybody moves out after the first four years. What have you heard about that? Are they actually dumb enough to think about doing something like that? Because frankly I was a little bit disappointed in the government. We reached out to them several times to offer them the first interview on this episode and we couldn't get a reaction out it of of them. I think that they're not really that.
- [78:54]
E
Good at marketing and I've had heard that from various people coming in that are high net worth, that similar to yourselves. They just didn't realize the opportunity that was here. So I think that's one of the areas that the government can improve. And I know that there's a lot of people putting in a lot of time and effort, but ultimately, if people don't hear the story as clearly as what we're talking about with Graham and Mark, I think there's going to be really a lot of trouble punching through the noise that's potentially out there with a lot of these countries trying to attract the high net worse. I mean, you touched on the American and Japanese clients and even though that tax holiday isn't as transformative for them, as I said, there's still strong interest. You know, they're looking for political stability, English speaking jurisdiction, a safe base for family, access to good education. So I think New Zealand is often about diversification and quality of life rather than sort of headline tax implications. But as you've said, they're actually globally very good. They may not be the essentially the best, but those other jurisdictions come with lifestyle differences or you don't get to drive 30 minutes to the beach into the pristine water you do in New Zealand. So I think they may keep their primarily financial institutions in the US or Japan, but they want a well, well structured foothold that they can sort of genuinely call home and have a happy time. So I think that's how, that's our ace up the sleeve for sure down in New Zealand.
- [80:19]
B
If anyone wants to reach out to Brendan, particularly if you're interested in that idea of a themed building just for an investor community, which I think is a fascinating idea. It's Brendan. B R E n d a nique u n I q.nz or nz if you're American. In closing, if anyone listening decides to pursue an active investor plus visa, please tell them you heard about it on Macro Voices. As I mentioned, we were a little bit disappointed that the government didn't respond when we invited them to participate in this podcast. And particularly tell them not to screw this up by changing the 5% FIF rule because that would completely sabotage what I think is a fantastic deal that I think has the potential to attract a huge amount of capital into New Zealand and to really maybe change the face of Auckland's business community. Because I saw what happened in Hong Kong, all the people who moved in because of the tax opportunity that existed there. As far as I can tell, New Zealand a better deal when you consider the cost of housing and the lifestyle and everything else. Anyway, we'll see what happens. It's going to be a wrap for our 2025 New Year's holiday Special. We'll be back to our regular show format next week when Patrick Ceresna and I will welcome a regular format guest to the show. Happy Holidays, everyone.
- [81:50]
A
That concludes this edition of Macro Voices. Be sure to tune in each week to hear future interviews with the brightest minds in finance and macroeconomics. Macro Voices is made possible by sponsorship from BigPictureTrading.com the Internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account@macrovoices.com Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the Internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high profile feature interview guests for future programs. So please register your free account today@macrovoices.com if you haven't already. You can subscribe to Macro Voices on itunes to have Macro Voices automatically delivered to your mobile device each week, free of charge. You can email questions for the program to mailbagrovoices.com. and we'll answer your questions on the air from time to time in our Mailbag segment. Macro Voices is presented for informational and entertainment purposes only. The information presented on Macro Voices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on Macro Voices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macro Voices, its producers, sponsors and hosts Eric Townsend and Patrick Ceresna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macro Voices. Macro Voices is made possible by sponsorship from BigPicture Trading.com and by funding from Fourth Turning Cash Capital Management LLC. For more information, visit macrovoices.
- [84:00]
D
Com.