It is now easier for overseas businesses to operate in New Zealand. New financial reporting standards simplify audit requirements for overseas companies.
Currently if New Zealand business is owned by the Overseas Shareholders (company incorporated outside of New Zealand) the financial statements of the company must be prepared, audited and filed with the NZ Companies office. The auditing of financial statements does add financial burden especially on a small business, and this could be up to $8,000. The law itself had been quite stringent on all overseas investors so regardless of size of the business all financial statements must be audited with the exception of non-active status of the business.
However, from 01-04-2014 these requirements have been changed, and the new requirements making it simple for Overseas Companies to operate in New Zealand. For example, A New Zealand business which is owned by overseas shareholders will benefit from this exemption. The benefit would be mainly for businesses small in size i.e. less than $10 million in revenue or $20 million in assets.
This exemption is a remarkable improvement in the direction of facilitating foreign investments in New Zealand. It will help all small overseas businesses including Indian businesses to do business in New Zealand without worrying about compliance cost mainly auditing expense.
New changes to overseas companies audit requirements are coming into effect for the financial year beginning at 1-4-2014.Overseas companies will only be required to prepare general purpose financial statements and have their financial statements audited if they are (Company Act 1993, section 206)
• FMC reporting entities: includes issuers, non-bank deposit takers
• Large: Overseas companies with over $10 million revenue or over $20 million assets (Financial Reporting Act 2013, section 45).
All other (overseas) companies should only prepare the minimum reports required by the Inland Revenue Department and there are no audit requirements.
These changes ease the financial reporting burden from many overseas companies and allow them to focus on running their business.
Example: A successful restaurant in Port Villa, operating the same restaurant in Auckland, it is 100% owned by that business, the turnover of the New Zealand business is $1.5 million. The annual financial statements are not required to be audited and filed with the NZ companies office from 01st April 2014.
Date published: 06 June 2014
About the author:
Saurav Wadhwa is an Auckland based chartered accountant and a director of IBBZ Accounting Limited. He is very passionate about helping small business owners. His easy going personality and a friendly nature makes him easily approachable. For all your accounting and tax problems including overdue tax returns, and IRD audits & disputes you can contact him at
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