Australian investors currently have the benefit of an exemption from the requirement for Overseas Investment Office (OIO) consent if they are investing in significant business assets in New Zealand, and the value of the transaction is below certain thresholds. These thresholds may be adjusted each year according to formulae set out in the Overseas Investment Regulations 2005 (the Regulations). From 1 January to 31 December 2019, Australian investors will benefit from increased thresholds under the Regulations.
The OIO has notified that, from 1 January to 31 December 2019, the thresholds will increase to:
NZ$530 million, if the investor is an Australian non-government investor; and
NZ$111 million, if the investor is an Australian government investor.
The threshold for Australian non-government investors is higher than the NZ$200 million threshold that will apply to certain investors from the 10 other Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) member nations and from certain other nations with which New Zealand has "most favoured nation" obligations under existing trade agreements, such as the People's Republic of China and Hong Kong. Click here to read our recent update on this development.
As we mentioned in our previous update, the higher threshold for Australian non-government investors is likely to provide them with a competitive advantage in sale situations where the Australian investor can put in a bid that is not conditional on OIO consent.
The definition of non-government investor is complex and some transactional structures can render the investor ineligible for the higher threshold. Overseas investment in sensitive land still requires OIO consent, regardless of the value of the transaction, unless the investor can rely on an exemption.
We recommend seeking professional advice at the outset to see if the higher Australian threshold could apply for you. For more information, please contact a member of our team or your usual Bell Gully adviser.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.