Question 2: Residence and double tax agreements a. The top level of management of Koru Airways...

Question 2: Residence and double tax agreements

a. The top level of management of Koru Airways Ltd is based at its head office, situated in Los Angeles, California. Three of the company's nine directors are New Zealand residents. They fly to Los Angeles for monthly meetings of the board of directors. The majority of the company's shares are owned by shareholders who are resident in New Zealand. Although the company was incorporated in New Zealand, it was decided to base the company's operations in Los Angeles because that was where most of the company's business originated.

Explain, giving reasons, whether or not the company is resident in New Zealand for income tax purposes.

In answering this question you do not need to consider the possible effects of the New Zealand/USA double tax agreement.

b.Norma made the following trips to New Zealand:

i> 6 March to 9 July 2015

i> 11 January to 27 March 2016

i> 6 June to 9 July 2016

i> 3 November 2016 to 22 March 2017

Norma does not have a permanent place of abode in New Zealand at any time during this period.

Explain, giving reasons, whether Norma is resident in New Zealand for tax purposes.

If you decide that she is resident, state the date from which she becomes resident, and why.

Expert Solution

Answer to question no.2a.

A company is resident in New Zealand if it meets any one of the following criteria:

It is incorporated in New Zealand : A company incorporated under the New Zealand Companies Act 1993 is resident in New Zealand.
Control by company directors is exercised in New Zealand: Those acting in their capacity as directors control the company here, whether decision making is confined to New Zealand or not.
It has its center of management in New Zealand: This is the place from where the company as a whole is managed on a day-to-day regular basis.
It has its head office in New Zealand: The head office of a company is the office from which the business of the company is directed and carried out. The focus of the test is the physical place of administration and management which is superior to all others.

Ignoring the possible effects of the New Zealand/USA double tax agreement, since Koru Airways Ltd. is incorporated in New Zealand, the company is said to be resident in New zealand for income tax purposes

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ekkarill92 answered 1 year ago

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