Tax information: Leaving New Zealand
Welcome to the tax guide on leaving New Zealand, produced by Deloitte. Looking for tax information about going to New Zealand, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you departQ. Should I complete any documentation prior to leaving New Zealand?
A. There are no specific procedural requirements to be undertaken prior to departure from New Zealand. However, New Zealand tax residents anticipating a lengthy overseas assignment may wish to ensure New Zealand tax residency is not maintained during their absence due to a permanent place of abode ("PPOA") in New Zealand. An IR 886 form may be filed with the IRD to outline your position in relation to residency. In this way, only your New Zealand sourced income will be subject to New Zealand income tax and/or non-resident withholding tax.
Individuals leaving New Zealand part way through an income year are in some instances able to file that income year’s return on departure. With employees who have had employee taxes withheld on an annualised basis, often filing earlier is a good idea as they may be in tax refund position.
Q. Is it beneficial to open an offshore bank account in comparison with retaining a New Zealand bank account when leaving New Zealand?
A. Non-residents of New Zealand are not liable to tax in respect of interest earned on offshore bank accounts, and it may also be advisable to open such an account from the tax perspective of the country that you are going to.
Q. Will I be regarded as not resident in New Zealand during my period overseas?
A. You will be deemed to be a non-New Zealand resident if you are absent from New Zealand for more than 325 days in a 12 month period. Non-residency is deemed to be effective from the first day of your absence from New Zealand if you satisfy the 325 day test. However, you should note that, if you maintain a permanent place of abode (PPOA) in New Zealand during your absence, you will continue to be regarded as a New Zealand tax resident, irrespective of the duration of your absence from New Zealand.
Q. Will I still need to complete a New Zealand tax return after my departure?
A.It is the New Zealand Inland Revenue Department’s practice to require a departure year return. As a non-resident where your only New Zealand sourced income is Non-Resident Withholding Income and Non-Resident Withholding Tax has been deducted correctly at source then no further returns will be required.
Q. Will I have to pay New Zealand tax in respect of the employment income I will earn overseas?
A. This will depend upon your residence status. Individuals resident in New Zealand are taxable on worldwide income, subject to the provisions of any double tax treaty. A credit will be allowed however for foreign tax paid on foreign sourced income provided that tax is “income tax” and subject to limitations on the amount of the credit. Non-residents are subject to New Zealand tax, or withholding, on New Zealand source income only.
Q. Will I have to pay tax in respect of New Zealand investment income earned while overeas?
A. Residents and non-residents are subject to New Zealand tax on all income sourced in New Zealand, including interest and dividend income.
Q. I plan to sell my New Zealand property while overseas. Are there any capital gains tax implications?
A. The gain from the sale of a "principal residence" is not subject to income tax.
Q. I have a number of New Zealand company shares. Will I remain liable to New Zealand capital gains tax(CGT) if I sell any of these while outside New Zealand?
A. New Zealand does not impose CGT. However, capital gains are treated as income and therefore taxable. Profits or gains on the sale of shares are taxable:
- Where personal property is acquired for the purpose of resale, even if it is an isolated transactions and unconnected with a normal trade or business.
- Where the person deals in that property, ie they are share traders.
- Where the person entered into a scheme or undertaking with the view to making profits in respect of those shares.
Q. What Social Security contributions will I pay when abroad?
A. New Zealand has no Social Security system.
