Tax Residency and Overseas Income

Tax Residency and Overseas Income can be a complex tax area. There are many rules and regulations, as well as double tax agreements with some countries.

The below article contains some general information you should find helpful.

If you need further advice, please get in touch.

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With improvements in technology it is possible for many people to work or consult from anywhere in the world.

We get many enquiries relating to tax residency and overseas income and no two are alike.

Some enquiries can be answered very simply, and others end up becoming complex tax issues that require specialist tax advice to resolve.

Moving overseas and need tax advice?

If you are moving overseas permanently and have assets that you will be retaining in New Zealand (held in a Trust, Company or personally), we would recommend seeking professional advice well in advance of your move.

How does Tax Residency and Overseas Income work in NZ?

In New Zealand, a person’s liability for income tax depends on that person’s residency status.

The concept of tax residency is based mainly on the “permanent place of abode” test or on a test involving the days present in New Zealand.

If you are a new resident to New Zealand, based on these tests you may need to complete a New Zealand Income Tax Return.

What are the rules for working out your tax residency based on?

Permanent place of abode test:

  • A person is deemed to be a New Zealand resident if that person has a permanent place of abode in New Zealand, whether or not that person also has a permanent place of abode overseas. 

 Day Count Test:

  • You are deemed a tax resident in New Zealand if you are present in New Zealand for more than 183 days aggregate in any 12-month period.
  • To lose your tax residency, you need to be absent from New Zealand for more than 325 days in any 12-month period.

What is a Double Tax Agreement?

New Zealand has a double tax agreement with a number of countries.

These tax agreements cover which country can tax which income source and at what rate.

They also have the tiebreaker tests for determining tax residency in dual residency situations.

Do I need to pay tax on overseas income?

If you receive overseas income and are a tax resident of New Zealand, you are required to declare and pay tax on overseas income in your New Zealand tax return.

We can assist with:

  • Foreign Investment Fund (FIF) income
  • New Zealand controlled foreign companies
  • Undeclared foreign income
  • Foreign trusts

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