IRD Confirms What We Knew: PPOA Test Remains King

Inland Revenue has released draft guidance addressing a question that has generated significant discussion since the introduction of the Active Investor Plus (AIP) visa: can an AIP visa holder become a New Zealand tax resident under the permanent place of abode (PPOA) test?

We're pleased to see that the draft guidance confirms the position we have consistently taken when advising investors, immigration status is only one consideration. The PPOA test remains king, and do not change due to an AIP visa.

In particular, the guidance reinforces that there is no special tax residency regime for AIP investors. Holding an AIP visa, spending time in New Zealand, or owning a New Zealand property does not automatically make someone a New Zealand tax resident. The key question remains whether the individual has a permanent place of abode in New Zealand.

This distinction is important. Tax residency has always been determined by the facts and circumstances of each case, with the PPOA test remaining a cornerstone of New Zealand's residency rules. The AIP visa may form part of the factual background, but it is not the determining factor.

This is a welcome confirmation of the position we have long taken when advising migrants and international investors. You can read more about tax residency here.

At Johnston Law, we specialise in the advising on migrant tax issues.  We understand the case law, the Inland Revenue guidance, and most importantly, how to apply them to your unique circumstances.  If you are considering investing in New Zealand, please contact us for tailored advice.

This article is intended for informational purposes only and should not replace specific tax advice. For personalised advice on all tax matters please contact us.

This article was accurate at the time of publishing.