Overseas Investment Act 2005

16A Benefit to New Zealand test
Outline

(1AA)

This subsection shows the ways in which the benefit to New Zealand test can be met, but it is a guide only to the general scheme and effect of this section.

PathwayWhich subsections applyWhich counterfactual applies
General testSubsections (1), (1A)Subsection (1A)(a)
Modified benefit test if relevant land is or includes farm land described in subsection (1C)Subsections (1), (1A), (1C), (1D)Subsection (1A)(a)
Modified benefit test for things described in subsection (2) (forestry activities) Subsections (1), (3), (7), (9)Subsection (3)
Special benefit test relating to forestry activities Subsections (4) to (9)N/a
General test

(1)

The benefit to New Zealand test is met if both of the following are met:

(a)

the overseas investment will, or is likely to, benefit New Zealand (or any part of it or group of New Zealanders) to the extent required by this section, as determined by the relevant Ministers under section 17; and

(b)

if the relevant land is or includes residential land, the relevant Ministers are satisfied that the conditions that the relevant Ministers will impose on the consent in accordance with section 16B will be, or are likely to be, met.

(1A)

For the purposes of subsection (1)(a), the relevant Ministers—

(a)

must assess the benefit to New Zealand (or any part of it or group of New Zealanders) by comparing the likely result of the overseas investment against the existing state of affairs as at the time the overseas investment transaction is entered into or the time the application is made, whichever occurs first (counterfactual); and

(b)

must take a proportionate approach to whether the benefit test is met, by taking into account whether that benefit is proportionate to the following:

(i)

the sensitivity of the land (for example, the importance to New Zealand of the purpose for which the land is used, the size and value of the land, any sensitive features associated with the land, and the level of interest that the public have in the land) or the fishing quota; and

(ii)

the nature of the overseas investment transaction (for example, the estate or interest being acquired, whether the estate or interest is temporary or permanent, and the degree of overseas ownership or control of the land or of the estate or interest in land).

(1B)

However, subsection (1A) does not apply if subsection (3) or (4) applies.

Modified benefit test if relevant land is or includes farm land

(1C)

If the relevant land is or includes farm land that in area exceeds 5 hectares, the relevant Ministers must—

(a)

give the following factors high relative importance:

(i)

the economic benefits factor in section 17(1)(a) and, in particular, the creation or retention of jobs, introduction of technology or business skills, increased export receipts, and increased processing of primary products; and

(ii)

the oversight or participation factor in section 17(1)(f); and

(b)

ensure that the applicant has demonstrated, in relation to 1 or more of those factors, that the benefits of the investment are of a size or nature that represent a substantial benefit to New Zealand.

(1D)

However, the relevant Ministers may determine not to apply subsection (1C) if they are satisfied that—

(a)

the transaction is minor or technical; or

(b)

the transaction does not materially change the level of ownership or control that the relevant overseas person has over the asset; or

(c)

the farm land has no or limited productive capacity as farm land and will, or is likely to, be used promptly, as a result of the overseas investment, for industrial or commercial development (for example, a supermarket) or for the construction of 1 or more buildings that, taken together, will consist of 20 or more new residential dwellings.

(1E)

Subsection (1C) does not preclude the relevant Ministers also giving other factors high relative importance.

Modified benefit test for things described in subsection (2) (forestry activities)

(2)

Subsection (3) applies if the relevant Ministers are satisfied—

(a)

that the relevant land will be, or is likely to be, used exclusively, or nearly exclusively, for forestry activities; and

(b)

that—

(i)

the relevant land is not residential land only; and

(ii)

if the relevant land includes any residential land, the residential land adjoins other land that is included in the relevant land but is not residential land; and

(c)

that the relevant land will not be, or is not likely to be, used, or held for future use, for any residential purposes, except where—

(i)

accommodation is being provided for the purpose only of supporting forestry activities being carried out on the relevant land; and

(ii)

all buildings being used for that accommodation are located on land on which some or all of those forestry activities are being carried out or on land that adjoins land on which some or all of those forestry activities are being carried out; and

(d)

that, whenever a crop of trees is harvested on the relevant land, a new crop will be, or is likely to be, established on the relevant land to replace the crop that is harvested (subject to subsection (7)).

(3)

For the purposes of subsection (1)(a), the relevant Ministers may assess the benefit to New Zealand (or any part of it or group of New Zealanders) by comparing the expected result of the overseas investment with what is expected to happen in relation to the relevant land if—

(a)

the overseas investment is not given effect to; and

(b)

there were to be no future changes to the ownership or control (direct or indirect) of—

(i)

interests in the relevant land; or

(ii)

rights or interests in securities of persons who own or control (directly or indirectly) interests in the relevant land.

Special test relating to forestry activities

(4)

Regulations may provide that the benefit to New Zealand test is also met if the relevant Ministers are satisfied—

(a)

that the relevant land will be, or is likely to be, used exclusively, or nearly exclusively, for forestry activities; and

(b)

that—

(i)

the relevant land is not residential land only; and

(ii)

if the relevant land includes any residential land, the residential land adjoins other land that is included in the relevant land but is not residential land; and

(c)

that the relevant land will not be, or is not likely to be, used, or held for future use, for any residential purposes, except where—

(i)

accommodation is being provided for the purpose only of supporting forestry activities being carried out on the relevant land; and

(ii)

all buildings being used for that accommodation are located on land on which some or all of those forestry activities are being carried out or on land that adjoins land on which some or all of those forestry activities are being carried out; and

(d)

that any requirements set out in regulations in accordance with subsection (5) will be, or are likely to be, met (subject to subsection (8)); and

(e)

that, whenever a crop of trees is harvested on the relevant land, a new crop will be, or is likely to be, established on the relevant land to replace the crop that is harvested (subject to subsection (7)); and

(f)
[Repealed]

(g)

that any other requirements set out in regulations are met.

(5)

Regulations may, for the purposes of subsection (4)(d), set out requirements that must be met after the overseas investment is given effect to.

(6)

Requirements set out in regulations for the purposes of subsection (4)(d) may (without limitation) be about 1 or more of the following:

(a)

activities that must, or must not, be carried out on the relevant land:

(b)

the maintenance or protection of things that exist when or before the overseas investment transaction is entered into (including (without limitation) the maintenance of existing arrangements relating to historic heritage, biodiversity, environmental matters, public access, or the supply of logs):

(c)

outcomes that must result from the overseas investment.

Powers not to apply, or to modify, certain requirements

(7)

The relevant Ministers may decide—

(a)

not to apply the requirement set out in subsection (2)(d) or (4)(e) if satisfied that the relevant overseas person (together with the relevant overseas person’s associates) will not have sufficient ownership or control (direct or indirect) of rights in respect of the relevant land to ensure that the requirement will be met:

(b)

to modify the requirement set out in subsection (2)(d) or (4)(e) by not applying the requirement for a part of the relevant land if satisfied that the relevant overseas person (together with the relevant overseas person’s associates) will not have sufficient ownership or control (direct or indirect) of rights in respect of that part of the relevant land to ensure that the requirement will be met for that part of the relevant land.

(8)

The relevant Ministers may decide not to apply, or may modify, any requirement set out in regulations for the purposes of subsection (4)(d) if satisfied that the relevant overseas person (together with the relevant overseas person’s associates) will not have sufficient ownership or control (direct or indirect) of rights in respect of the relevant land to ensure that the requirement will be met.

Definitions

(9)

In this section,—

adjoins includes separated only by a public road (including a motorway or a State highway, and whether or not the road is formed)

forestry activities means any of the following:

(a)

maintaining a crop of trees:

(b)

harvesting a crop of trees:

(c)

establishing a crop of trees.

Section 16A: inserted, on 22 October 2018, by section 13 of the Overseas Investment Amendment Act 2018 (2018 No 25).

Section 16A(1AA) heading: inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1AA): inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1) heading: replaced, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1): replaced, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1A): inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1B): inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1C) heading: inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1C): inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1D): inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(1E): inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(2) heading: inserted, on 24 November 2021, by section 9(1) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(3): amended, on 24 November 2021, by section 9(2) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(4)(f): repealed, on 24 November 2021, by section 9(3) of the Overseas Investment Amendment Act 2021 (2021 No 17).

Section 16A(9) special land: repealed, on 24 November 2021, by section 9(4) of the Overseas Investment Amendment Act 2021 (2021 No 17).