HOW DO I KNOW IF I’VE GOT NON-RESIDENT TAX STATUS (NZ)?

Jan 10, 2023

How do you know if you have non-resident tax status in New Zealand? Some of our clients live and/or work overseas, and have asked us about non-residency status with regards to tax.  

DTAs

The IRD has Double Taxation Agreements (DTAs) with a number of countries, meaning that tax paid in one country is counted when filing tax returns in the other country, so that you don’t get taxed twice.  

The IRD explains it this way: “You may be a tax resident in both New Zealand and another country or territory. This means that you are a resident in two countries or territories and subject to the tax laws of each.

If both countries or territories tax their residents on worldwide income you could be taxed twice on the same income. Double tax agreements (DTAs) have been negotiated between New Zealand and many other countries or territories to decide which country or territory has the first or sole right to tax specific types of income.”

Click here to see the current list of countries with whom NZ has a DTA.  Note that the arrangements vary from country to country, so you need to check out the specifics.

Non-residency status

Non-residency means that you are taxed as a non-resident on any income derived here in NZ. These rates are significantly lower than normal tax rates, e.g. the non-resident tax rate for the United Kingdom is 10-15%.  See here for details

Are you non-resident for tax purposes?

Are you non-resident for tax purposes? It may not be as straightforward as you think (I’m not trying to rain on the parade here!).  Here’s what the IRD says:

For tax purposes you are a non-resident if you are away from New Zealand for more than 325 days in any 12-month period, and do not have an enduring relationship with New Zealand.

So, how do you know if you have an enduring relationship with New Zealand?  Happily, IRD has published a guide to help you work it out.  As with virtually everything, this is self-assessed and honesty-based.  Make sure that your conclusion is that of the hypothetical “reasonable person.” See also this page at the IRD website, which contains a common example scenario, wherein someone lives in the UK but owns property in NZ

Tax return filing responsibilities

What are your tax return filing responsibilities? Let’s say that you work out that you are not tax-resident in New Zealand, and you own rental property here:

  • If you live and work in Australia and own rental property here in New Zealand, see this article for info on tax losses and how they can be offset against your Australian income.
  • If you live and work in the United Kingdom (UK) and own rental property here in New Zealand, see this article for info on tax losses and how they relate to your UK income.
  • If you live and work in Malaysia or Singapore, we recommend that you talk to a local accountant who specialises in property and in international clients, if possible.  We have written to the tax departments of these countries and are currently awaiting their responses.  We will update this blog once we receive a reply.
  • If you live and work in another country, we recommend that you talk to a local accountant who specialises in property and in international clients, if possible.

Other helpful links
What is my personal tax residency?
What income is taxable in New Zealand?
New Zealand tax residents with overseas interests
Top 10 facts on international tax

Need help?
Give us a call on 0800 890 132 or email us.

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net

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