New Zealand tax residents pay tax in New Zealand on their world-wide income. This means you are required to return all of your income in your New Zealand income tax return, regardless of where that money was earned, or where it is kept. If you do not earn money in New Zealand, you are still liable to return your overseas income in New Zealand.

You do not need to be a resident, have a New Zealand visa, or even have an IRD number to be tax resident in New Zealand. If you have a place to stay in New Zealand which has some level of permanence, whether rented or owned, you may have a permanent place of abode which will make you New Zealand tax resident. This is a very complex area of law, and careful analysis is required to determine whether or not you have a permanent place of abode. There is no list of do’s and don’ts. To give an idea of the complexity of determining tax residency, Inland Revenue’s interpretation statement is 83 pages long. It is possible to have more than one permanent place of abode, so you could have a permanent place of abode in multiple countries. Even if you do not have a permanent place of abode in New Zealand, you will be a New Zealand tax resident if you spend at least 183 days in New Zealand in any rolling 12-month period.

If you are also tax resident in another country, or you earn income or have assets in another country, it is necessary to see if a DTA applies. A DTA can provide relief against double tax in certain circumstances. New Zealand DTAs with 40 of our main trading and investment partners. Where there is no DTA, there is no relief from New Zealand tax on the overseas income. This is particularly concerning in the case of low or no tax jurisdictions such as Saudi Arabia, as full tax will be paid in New Zealand on your world-wide income with no relief granted at all, other than the recognition of a foreign tax credit where applicable.

A new migrant or returning kiwi can benefit from transitional tax residency status. This is highly beneficial as transitional tax residents are relieved from paying tax in New Zealand on foreign-sourced passive income for a period of up to four and a half years. Therefore, the correct calculation of the transitional tax residency period is vital. Note that income earned from work you do while New Zealand tax resident will be subject to tax in New Zealand, regardless of where the income has been earnt.

If you are working in New Zealand for a short period of time, it is possible that you may not need to pay tax in New Zealand on that New Zealand sourced income.

Companies looking to expand into New Zealand or offshore will need to understand how best to structure any new venture in order to remain fully compliant and to maximise any tax (or other) benefits available to them under the applicable laws.