New Zealand will tax its residents on their worldwide income. However, non-residents are only taxed on their New Zealand sourced income. Thus, the issue of tax residency becomes critical. 

New Zealand Tax Residency (domestic legislation)

Tax residency is a separate concept from immigration residency or visas. 

New Zealand has two tests for tax residency, the ‘Day Count’ test, and the ‘Permanent Place of Abode’ test.

Under the Day Count test, you will be treated as a New Zealand tax resident if you are present in New Zealand for more than 183 days in any 12-month period. You will be treated as a tax resident from the first day of this period. As this is a rolling 12-month period, it will take some care to manage.

Alternatively, you could also be treated as a tax resident if you have a ‘permanent place of abode’ here. This generally refers to a home that is available for your use on an enduring basis.  Depending on your level of connection with New Zealand, it is possible to trigger tax residency without being physically present in New Zealand for 183 days.

It will be critical to work with your tax advisor on an ongoing basis to manage your ties in New Zealand.

Transitional Residents

New Zealand does have a form of tax exemption available to new migrants where they meet certain criteria. If you qualify as a Transitional Resident you will not be taxed in New Zealand on your offshore income, unless that income is considered to be derived from your personal efforts, or services, such as employment or business income.  The exemption is available for up to 48 months. 

As the exemption runs from the date of your New Zealand tax residency, it is critical to know the date you become a New Zealand tax resident under the domestic legislation. You should carefully manage this process as:

• You can only qualify for a Transitional Resident Exemption once;
• After this period, you will be taxed on your worldwide income in New Zealand, potentially including pension transfers, foreign exchange gains and capital gains on overseas shares;
• If you have an offshore Trust, your residency date will be critical if you want to elect for this to become a Complying Trust in New Zealand.

Capital gains tax

New Zealand does not have a specific ‘capital gains tax’. However, there are tax regimes in place that will tax capital gains, for example:

• If you own overseas shares, the gain in value can be taxed under New Zealand’s ‘Foreign Investment Fund’ regime.
• If you purchase property with an intention to re-sell it, the gain is likely to be taxed.
• If you buy and sell a residential property within 10 years, the gain could be taxed. There is an exclusion for a ‘main home’. 
• Development properties are likely to be taxed.

Pension and Superannuation Transfers

If you transfer your pension or superannuation to New Zealand after your Transitional Residency period, the transfer may be taxed in New Zealand.

Tax Credits

If you are taxed by your home country after moving to New Zealand, you may be eligible for credits for tax paid overseas on the part of your income that is also subject to tax here.

Double Tax Agreements

New Zealand has 40 Double Tax Agreements in place with its main trading and investment partners. The Double Tax Agreements are in place to avoid double taxation on income.

If you come from a country with which New Zealand has a Double Tax Agreement, you may be treated as a non-resident of New Zealand even if you have triggered residency under our domestic legislation.

The Double Tax Agreements may also provide for a reduced rate of tax, for example, on interest and dividend earnings.

Information Sharing

In addition to the Double Tax Agreements, New Zealand currently has Tax Information Exchange Agreements in place with 19 other countries. New Zealand is also a participant in the Automatic Exchange of Information (AEOI) and Common Reporting Standards (CRS) which require ongoing monitoring and the disclosure of information held on residents of member countries.

Standard tax year:     31 March

New Zealand personal tax rates:

• 10.5 cents in every dollar for income up to $14,000
• 17.5 cents in every dollar for income from $14,001 to $48,000
• 30 cents in every dollar for income from $48,001 to $70,000
• 33 cents in every dollar for income from $70,001 to $180,000
• 39 cents in every dollar over $180,000.

Company Tax Rate: 28%

*This publication contains generic information only. New Zealand Tax Desk is not responsible for any loss sustained by anyone relying on the contents of this publication. We recommend you obtain specific taxation advice for your circumstances.