Marcus Beveridge, Principal, Queen City Law Bradley So, Lawyer, - - PowerPoint PPT Presentation

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Marcus Beveridge, Principal, Queen City Law Bradley So, Lawyer, Queen City Law

Examining the Long Term Business Visa: Comments

• n the recent changes

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Topics

• What’s Changed?
• Background
• Why change?
• Trend
• Approvals
• Decline
• Changes
• Specific Business Plan
• Capital
• Benefit to NZ

OVERVIEW

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Background

• LTBV introduced in 1999
• Objective – cater for business people

Why change?

• Raise the quality of applications
• Ensure the benefit to NZ

WHAT’S CHANGED?

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TREND - APPROVALS

Art & design 1.2% Automotive 1.6% Building & Renovation 6.3% Cleaning & Maintenance 3.1% Consultancy 2.6% Cultural Businesses and Services 1.6% Education 1.9% Entertainment & Leisure 2.1% Export 4.9% Farming & Agriculture 2.1% Fashion & Clothing 2.6% Health & Beauty 2.1% Healthcare 0.9% Import/Export 2.1% IT & Technology Services 10.6% Manufacturing 1.2% Migrant Services 1.9% Other Professional Services 1.4% Retail - Other 19.5% Retail/Export 0.9% Transport & Logistics 1.6% Wholesale 3.5% Food & Dining 15.0% Retail/Wholesale 2.1% Tourism and Accomodation 7.0%

LTBV Approvals by industry type (previous 12 months)

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TREND - DECLINES

Advertising & Marketing 1.4% Art & design 0.5% Automotive 2.4% Building & Renovation 2.4% Cleaning & Maintenance 4.3% Consultancy 2.4% Cultural Businesses and Services 1.0% Entertainment & Leisure 3.4% Export 2.9% Farming & Agriculture 1.9% Fashion & Clothing 3.8% Health & Beauty 1.4% Healthcare 1.0% IT & Technology Services 22.6% Manufacturing 1.0% Migrant Services 1.9% Other Professional Services 2.9% Retail - Other 16.8% Retail/Export 1.0% Transport & Logistics 0.5% Wholesale 1.0% Food & Dining 15.4% Retail/Wholesale 2.9% Tourism and Accomodation 5.3%

LTBV Declines by industry type (previous 12 months)

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CHANGES

Commenced on 8 April 2013

• Specific Business Plan
• Capital
• Benefit to NZ

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SPECIFIC BUSINESS

BEFORE “BC4.1 Definition of a business plan (29/11/2010) A business plan is a plan to establish a specific business in New Zealand, which contains information as set out in the business plan form, and is supported by appropriate documentation.” AFTER “BC4.1 Definition of a business plan (8/04/13) A business plan is a plan to establish or purchase a specific business in New Zealand, which contains information as set out in the business plan form, and is supported by appropriate documentation.” CASE STUDY - PIZZA Type of Business Buy or set up a new Pizza business. Location Auckland Investment Fund NZD $100,000.00 – NZD $150,000.00 Settlement Fund NZD $100,000.00 (family of four) Benefit to NZ Creation of Employment

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SPECIFIC BUSINESS PLAN

FACTORS TO CONSIDER

• TYPE OF BUSINESS
• Existing Business
• Documentation – BC4.5.1
• Benefit to NZ - Employment
• Creating a New Business
• CAPITAL REQUIREMENT
• Existing Business
• Share Acquisition
• Asset Acquisition
• LOCATION
• Forecast
• Market Research

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SPECIFIC BUSINESS PLAN

Practical Implications

• Offshore applicants will need to come to NZ before a visa is granted
• Interim visa of 9 months is purely to set up the business
• Minimal variation of business plan opportunities
• Decrease in buying existing businesses (time constraint)
• Pro forma business plans will no longer apply
• Applicants are better prepared for Residency

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CAPITAL CAPITAL

NEW DEFINITION

BH3.5 Consistency with business proposal under the Long Term Business Category

• ii. the business that has been established required the same or a greater level of capital investment than

a business proposal in respect of which the applicant was granted or issued a work visa under the Long Term Business Category; …

• c. For the purposes of BH3.5(b)(ii), account will only be taken of the amount of capital that has been actively

invested in the business. No account will be taken of:

• i. working capital (see BH4.5.15); or
• ii. passive or speculative investments, such as reserve funds or term bank deposits; or
• iii. expenditure on items for the personal use of the applicant(s), such as personal residence, cars or

boats. BH4.5.15 Working capital For the purposes of Entrepreneur Category instructions, working capital is capital that is tied to assets used in the on-going maintenance or day-to-day running of a business.

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CAPITAL

CASE STUDY

• Applicant’s proposed business is to establish a Restaurant for $500,000.00.

$50,000.00 will be used as working capital for stock.

• Does the applicant qualify under the Entrepreneur Plus category?
• Question; Can stock qualify as a capital investment as opposed to a working

capital?

• Long Term Fashion
• Maintain a minimum stock
• Re-purchase stock to maintain Lowest inventory level

Practical Implications

• Business Plan has to separate the capital that will be used as working capital and

capital that will be used to purchase assets, equipment, fit out and shares.

• Definition of working capital does not take into account the different type of

businesses that required substantial amount of working capital e.g exporting businesses.

• Requires more capital refer to the graph below.

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$0 - $24,999 4.1% $25,000-$49,999 6.0% $50,000-$74,999 11.0% $75,000-$99,999 7.3% $100,000-$149,999 21.5% $150,000-$199,999 14.5% $200,000-$249,999 20.0% $250,000-$299,999 3.5% $300,000-$399,999 2.7% $400,000-$499,999 1.4% $500,000- $749,999 6.0% $750,000-$999,999 1.4% $1,000,000 - $1,999,999 0.4% $2,000,000+ 0.2%

CAPITAL

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BENEFIT TO NZ

CHANGES

BH4.10 Criteria for a business benefiting New Zealand

• a. A business is considered to add significant benefit to New Zealand if it can demonstrate that it has

promoted New Zealand's economic growth by for example:

• i. introducing new, or enhancing existing, technology, management or technical skills; or
• ii. introducing new, or enhancing existing, products or services; or
• iii. creating new, or significantly expanding existing, export markets; or
• iv. creating sustained and on-going full time employment for New Zealand citizens or residents; or
• v. the revitalisation of an existing New Zealand business that has led to significantly increased financial

performance; and

• b. The business is trading profitably on the date the application is lodged or a business immigration specialist

is satisfied that it clearly has the potential to become profitable within the following 12 months.

• c. If the associated Long Term Business visa application was made before 30 November 2009 the 'creating

employment' benefit can also include non-New Zealand citizens or residence class visa holders, with the exception of the principal applicant. Note: For the purposes of BH4.10(a)(i) and (ii):

• “new” means new to New Zealand or the region of New Zealand in which the business would be located;

and

• “existing” means existing within New Zealand or the region of New Zealand in which the business is located.

For the purposes of these instructions, the employment of non-New Zealand citizens or residents is not considered an acceptable example of a business benefiting New Zealand.

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BENEFIT TO NZ

Practical Implications

• Significant is intended to ensure that the proposed business maximizes the benefit

to NZ

• Holistic approach
• Creation of employment has a higher threshold
• Revitalization of business requires significant increase in financial performance

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CONCLUSION

REMEMBER – BEFORE SUBMITTING AN APPLICATION

• “SPECIFICALITY” - IS IT SPECIFIC ENOUGH?
• Existing or New
• Benefit to NZ
• Supporting Documents
• “ADDITIONALITY” – SIGNIFICANT BENEFIT?
• Primary
• Ancillary
• ENOUGH CAPITAL?
• Working Capital?
• “Stock Test”