23 Aug Mr Yamada’s Succession Plan in New Zealand
Mr Yamada is a 58-year-old businessman from Japan. He has six Daiso franchise shops around the country. He has accumulated assets valued approximately at ¥900 million, including the commercial properties in which he operates the stores and the debenture stock in Daiso.
Despite never regretting the sacrifice he had to endure to become a successful businessman from a high school dropout, he doesn’t want his two children, Jun and Aoi – aged 22 and 20 – to go through the same ordeal.
He is still fit and healthy as a young stud but believes it’s time for him to have a solid succession plan, especially considering the heavy duty on the gift and inheritance.
Mr Yamada has an old friend, Mr Takenaka, who migrated to New Zealand in his early day. Mr Takenaka runs a small construction company in Auckland. Lately, Mr Takenaka heard that Auckland Council is about to rezone certain part of Mission Bay area to allow construction of high-density residential properties.
In an effort to seize the return on investment potential, Mr Takenaka finds a rundown property with a huge section which has been approved for construction of a block of 8 unit title properties which could sell for a minimum of $2.5 million each. The only problem, of course, is the land price of $14.5 million. He is told that he needs 40% equity for a mortgage from a bank.
Not prepared to let go of this investment opportunity, Mr Takenaka offers Mr Yamada to invest $5.8 million to a joint venture, which would purchase the land with mortgage and build a block of 8 luxury apartment properties
Mr Yamada does a quick number-crunching and decides to visit Mr Takenaka in Auckland. Mr Takenaka and Mr Yamada visit MK Law for an immigration advice. Mr Yamada receives a green light for the investment venture, which could be a solid vehicle for a residence visa under the Investment 2 Category for him and his family including his two children.
Unbeknown to Mr Yamada was the tax benefit of the investment venture, which will attract no tax on gift and inheritance should the return on investment be given to his children in New Zealand according to New Zealand tax law.
Eventually, Mr Yamada safely strikes a deal with Mr Takenaka to form the residential construction venture together.
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