New Zealand Tax Residency

New Zealand Tax Residency
What Is New Zealand Tax Residency?

There have been people who, even after many years overseas, are not sure if they are New Zealand Tax Residents; that is until it comes to filing their income tax returns.

So How To Determine If You Are A New Zealand Tax Resident?

Typically, the Inland Revenue (IRD) does this by determining if you:

❯ are in New Zealand for more than 183 days in any 12-month period and haven’t become a non-resident; or

❯ have a ‘permanent place of abode’ in New Zealand; or

❯ are away from New Zealand in the service of the New Zealand government in any capacity.

If you are a New Zealand tax resident then you are taxed on your total worldwide income, i.e., including both income sourced in New Zealand and overseas. If your are NOT deemed a New Zealand tax resident, you only pay New Zealand tax on income sourced from New Zealand itself.

Due to this, people living and working abroad could find themselves classed as New Zealand tax residents as long as they have ties and links to rental properties, holiday homes and the homes of close relatives in New Zealand. If you have a permanent place of abode in New Zealand you'll always be a resident, even if you maintain ties (or a physical home) in other countries you can still be a New Zealand tax resident. And if two countries tax their residents on worldwide income, this will result in paying too much tax as they discover they are now considered dual residents.

To avoid being overtaxed, it is important to determine in which country you are a tax resident.

Countries With Which New Zealand Has DTAs In Force With

Australia France Mexico Spain
Austria Germany Netherlands Sweden
Belgium Hong Kong Norway Switzerland
Canada India Papua New Guinea Taiwan
Chile Indonesia Philippines Thailand
China Ireland Poland Turkey
Czech Republic Italy Russian Federation UAE
Denmark Japan Samoa UK
Fiji Korea Singapore USA
Finland Malaysia South Africa Vietnam

What Really Is DTA?

A DTA or Double Tax Agreements is a tax agreement made between New Zealand and other countries to decide which country may tax income.

For example: John is a New Zealand citizen, but he does contract work in Australia. Where should he pay tax? An Australian tax advisor might deem him tax resident in Australia because that is where he is earning income. Meanwhile, a Kiwi tax adviser might take him for a tax resident in New Zealand because he owns a home there. In these situations, the 'Double Taxation Agreement' is designed to figure out in which country he is be deemed a tax resident. DTAs reduce tax impediments to cross-border trade and investment and assist tax administration.

Does This Apply To Seasonal Employees In New Zealand?

Yes. Seasonal employees, such as fruit-pickers and other short-term employment contracts are typically handled under double tax agreements. But in order to qualify, you:

❯ need to be from a country that has tax agreement with New Zealand; and

❯ must not exceed 183 days in any 12-month period in New Zealand.

Seasonal workers are taxed at a flat rate which includes ACC levies.

IRDs online tax residence questionnaire (IR886) is one way to evaluate your position, but, alternatively you can drop us a message and we can discuss your situation and future plans.

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