[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 366
unincorporated JV and partnership – care must be taken in drafting the joint venture agreement, including:
obligations. Confidentiality – no registration requirements whatsoever. Subject to the joint venture agreement:
Ensuring that management decisions are made independently of the participants; A clear lack of partnership or agency.
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The participants’ capital contributions can be in any form – including cash, loans, skills or assets; Participants own a proportionate share in the JV’s assets as tenants in common; There is flexibility to introduce and raise new capital; There is flexibility as to distribution of profits/income; specifically, there is no solvency test requirements.
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Tax : JVs are fiscally transparent for tax purposes – each participant’s income share is taxed according to its own tax status. Tax losses can be passed through, utilised or carried forward. No RWT/NRWT payable. Loss limitation rule does not apply. The JV can register for GST. Incorporated joint venture (JVC) Incorporated Joint Ventures (JVC) in New Zealand effectively take the form of a company (as discussed above). The same governance, requirements, advantages and disadvantages apply. TRADING TRUST Trusts are relatively common in New Zealand, especially in a family setting. A trust formed
Tax : As a JV is not a separate legal entity, participants are jointly and severally liable for GST obligations.
and existing for a business purpose is referred to as a ‘trading trust’. As with any trust in New Zealand, a trust requires a settlor, at least one trustee, and at least one beneficiary, and is governed by a specifically drafted trust deed and the Trusts Act 2019 (‘Trust s Act’). The settlor is the person or entity which establishes the trust – they appoint the trustees and beneficiaries and contribute the initial capital. The trustees are effectively the
ILN Corporate Group – Establishing a Business Entity Series
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