New Zealand residents are liable for income tax on their worldwide income. If you are a New Zealand tax resident, you will need to pay income tax on all income you receive from both New Zealand and overseas. If you have a taxable activity in New Zealand, you will need to pay Goods and Services Tax (GST).
You are a New Zealand resident for tax purposes if:
- you are in New Zealand for more than 183 days in any 12-month period. You are considered to be resident from the day you arrive in New Zealand. The 183 days need not be consecutive
- you are overseas in the service of the New Zealand Government
- you have an 'enduring relationship' with New Zealand.
To decide whether you have an enduring relationship with New Zealand, Inland Revenue considers things such as:
- whether you are here for continuous periods from time to time
- whether you own, lease or have access to property in New Zealand
- your social ties (where your immediate family lives, if you have children being educated here, if you belong to any New Zealand associations)
- your economic ties (if you have bank accounts, credit cards, life insurance, investments or superannuation funds here)
- your employment (if you work here)
- your personal property (if you own or keep possessions here)
- whether you intend to live in New Zealand
- whether you receive welfare benefits, pensions and other payments.
Note: you can keep similar ties, or even a home, in other countries, but still be a New Zealand resident for tax purposes.
You may be a tax resident in New Zealand and another country. This means you are resident in two countries under the tax laws of each of those countries. If both countries tax their residents on worldwide income, you could be taxed twice on the same income. New Zealand has double tax agreements with many other countries. These agreements establish which country has the first or sole right to tax certain types of income. Inland Revenue provides expert advice on these issues.
Temporary tax exemption on foreign income for new migrants and returning New Zealanders
From 1 April 2006, people becoming tax residents in New Zealand may qualify for a temporary tax exemption on some of their foreign income. This temporary tax exemption is available to those who qualify as a tax resident in New Zealand on or after 1 April 2006 and are new migrants or returning New Zealanders (transitional residents) who have not been resident for tax purposes in New Zealand for at least 10 years prior to their arrival in New Zealand. The exemption can only be granted once in a life-time.
The exemption
The temporary tax exemption for foreign income is for four calendar years (up to 49 months). The exemption starts on the first calendar day of the month you qualify as a tax resident in New Zealand and is valid until the last calendar day of that month four years later.
For example, you qualify as a tax resident in New Zealand on 22 April 2006 and have one or more types of foreign income that are temporarily exempt for taxes in New Zealand. You are eligible for the exemption counting from 1 April 2006 until 30 April 2010, which effectively is 49 months.
For more info on this policy, visit the IRD website.
