Question about New Zealand tax/finance

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Forums › Finance and wealth management › Question about New Zealand tax/finance

librax

3 posts

Wannabe Geek

#175510 2-Jul-2015 10:20

Hi guys,

I was looking for an active NZ forum and this seemed like a great community.

I have a rather isolated situation on NZ finance.

I am not from NZ, I am a Sri Lankan. I have a friend who works in NZ.

My question is this; I make money freelancing online but I cannot receive Paypal funds to SL
so my friend receives it on his NZ Paypal and then transfers it to me.

What are the implications for my friend from a tax perspective (or in any other manner)?

Is there any issue for him if I transfer funds this way on a regular basis.

Thanks for taking the time to read my issue, your assistance will be much appreciated.

Regards,
L

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2078 posts

Uber Geek

#1335574 2-Jul-2015 10:35

If he is just passing on what he receives I wouldn't expect any tax issues.

He should probably check out the law around money laundering and make sure he covers himself from that aspect.

You haven't said anything about how much money is involved but I assume it will not be enough to trigger any issues.

MikeB4

18435 posts

Uber Geek

ID Verified

Trusted

#1335575 2-Jul-2015 10:37

You would best be advised to contact the New Zealand Inland Revenue Department or the NZ Consulate in Colombo

surfisup1000

5288 posts

Uber Geek

#1335586 2-Jul-2015 10:55

There are no tax implications for your friend. He is not making any money.

If he were audited he would just need to explain this situation.

Bee

732 posts

Ultimate Geek

#1335592 2-Jul-2015 11:03

Bearing in mind this is a TECHNOLOGY forum... based in NZ sure, but I certainly wouldn't come here asking about tax and finance laws...

Doing your best is much more important than being the best.

librax

3 posts

Wannabe Geek

#1335597 2-Jul-2015 11:09

Thanks for the replies everyone.

graemeh: If he is just passing on what he receives I wouldn't expect any tax issues.

He should probably check out the law around money laundering and make sure he covers himself from that aspect.

You haven't said anything about how much money is involved but I assume it will not be enough to trigger any issues.

Between 300 to 4000 NZD per month

Bee: Bearing in mind this is a TECHNOLOGY forum... based in NZ sure, but I certainly wouldn't come here asking about tax and finance laws...

haha fair enough! Do you have any other suggestions where I can query this? Thanks.

Should probably have him check with NZ inland revenue has to say as suggested.

Bee

732 posts

Ultimate Geek

#1335600 2-Jul-2015 11:19

$4000 a month is $48k per year, so is getting pretty serious... Do you lose a lot in currency conversion fees?

If I were the friend in NZ I would be researching this very seriously. IRD would be the best place to start for sure and go from there...

Doing your best is much more important than being the best.

librax

3 posts

Wannabe Geek

#1335603 2-Jul-2015 11:25

Bee: $4000 a month is $48k per year, so is getting pretty serious... Do you lose a lot in currency conversion fees?

If I were the friend in NZ I would be researching this very seriously. IRD would be the best place to start for sure and go from there...

Thanks for the advice. Yes I do lose quite a bit, I lose when PayPal converts the USD I receive to NZD and also when the NZD bank converts the NZD to my local currency. The spread is higher than the actual forex market value.

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graemeh

2078 posts

Uber Geek

#1335611 2-Jul-2015 11:37

Bee: $4000 a month is $48k per year, so is getting pretty serious... Do you lose a lot in currency conversion fees?

If I were the friend in NZ I would be researching this very seriously. IRD would be the best place to start for sure and go from there...

Forget talking to IRD. They are not equipped to give advice and if they get it wrong it is still your friend's problem.

It is best your friend talks to an accountant and/or a tax attorney and gets some professional advice.

nakedmolerat

4629 posts

Uber Geek

Trusted

Lifetime subscriber

#1335641 2-Jul-2015 12:02

Your friend is in dangerous territory. He will need to explain this extra income and pay tax on it etc.

With that kind of money, it is BETTER to have a front company here in NZ.

You don't have to pay GST if it is under $60k a year and if you do not charge GST in your price.

The company is however required to pay income tax on it.

Get your friend to find someone and talk about setting up a business front here.

surfisup1000

5288 posts

Uber Geek

#1335646 2-Jul-2015 12:07

nakedmolerat: Your friend is in dangerous territory. He will need to explain this extra income and pay tax on it etc.

With that kind of money, it is BETTER to have a front company here in NZ.

You don't have to pay GST if it is under $60k a year and if you do not charge GST in your price.

The company is however required to pay income tax on it.

Get your friend to find someone and talk about setting up a business front here.

I would completely disagree with your advice (double taxation for a start).

Anyway, given the absolutely opposite advice the op is getting it is best to have a chat to an accountant.

IRD cannot be trusted for advice, as above.

Inphinity

2780 posts

Uber Geek

#1335648 2-Jul-2015 12:09

Agreed, your friend needs to contact a local tax professional for advice, and provide more specifics. Based on what you've described, I would anticipate it would need to be declared as income, and assuming he's not taking a cut himself, the total amount also declared as an expense, resulting in a neutral tax position. If it is completely undeclared and get's shown up from something down the track, it could lead to a lot of potential issues.

afe66

3181 posts

Uber Geek

Lifetime subscriber

#1335664 2-Jul-2015 12:28

Uneducated opinion.

If money sent to your friend in nz, it's his money legally and even if he gives it to someone else he would have to pay income tax on the money to nz tax department.

All sounds dodgy to me...

A.

surfisup1000

5288 posts

Uber Geek

#1335695 2-Jul-2015 12:37

afe66: Uneducated opinion.

If money sent to your friend in nz, it's his money legally and even if he gives it to someone else he would have to pay income tax on the money to nz tax department.

All sounds dodgy to me...

A.

So, anyone who legally receives money should pay tax on it :)

Western union and our banks would not be happy.

graemeh

2078 posts

Uber Geek

#1335711 2-Jul-2015 13:18

afe66: If money sent to your friend in nz, it's his money legally and even if he gives it to someone else he would have to pay income tax on the money to nz tax department.

No, he only needs to pay tax on any margin he keeps, NZ taxes the profit, not the cash going through.

mattwnz

20141 posts

Uber Geek

#1335721 2-Jul-2015 13:31

That is a lot of money to be transferring around. Certianly advice from an accountant is needed.

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