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Overview of Tax Issues for Expats in New Zealand

Submitted: October 2014

The New Zealand tax year runs from 1 April to 31 March.

Tax Residence

If you are working in New Zealand for less than 183 days you will generally be considered non-resident and taxed on New Zealand-source income only. If you stay longer than 183 days during a 12 month period, you will generally be considered resident, and become liable for tax on your worldwide earnings. There are some circumstances where you may be considered resident even if you are in New Zealand for less than 183 days in a year.

 

Employment & Business Taxes

For residents, withholding tax is deducted by your employer from your wages or salary. They will also deduct the Accident Compensation Levy. The marginal (highest) tax rate is 33%. You may have to fill in a tax return after the end of the year to claim allowable rebates, and calculate the final amount of tax payable. If you are self-employed, you will pay income tax based on the profits of your business after deduction of costs. For more details, see: Taxation - Employment Taxation for Expats in New Zealand.

If you come to New Zealand to set up in business and start a company, you will be liable to corporate tax on the profits from your trade or business. The general rate of corporate tax is 28%. Passive income including interest, foreign dividends and rental income is all taxed at the general rate, as is income from land dealing and other capital gains. New companies must complete a registration process and obtain an IRD number prior to commencement of activities. Companies must pay tax on an annual basis, and have to make payments of preliminary tax during the course of the year. After the end of the year a tax return must generally be filed by 7 July following the end of the tax period. For companies using a tax agent, this deadline is extended to 31 March of the following year. Companies using a different tax year can have different deadlines. For more details, see: Taxation - Business Taxation for Expats in New Zealand.

 

Other Taxes

For residents, dividend income from New Zealand sources is subject to a resident withholding tax (RWT) rate of 33%. However whether the dividend carries an imputation credit or not affects the final tax outcome. For non-residents, dividend income from New Zealand sources is subject to a withholding tax rate of 30%. However this may be reduced by the existence of a tax treaty, or by the size of the payee’s voting interest in the company paying the dividend.  Rental income after allowable deductions from New Zealand property is subject to income tax at progressive rates. There is no capital gains tax in New Zealand. For more details, see: Taxation - Investment Taxation for Expats in New Zealand.

 

Tax Treaties

New Zealand has signed tax treaties with over 35 countries worldwide. Withholding tax rates on interest and royalties payments made to taxpayers in other countries, which have tax treaties with New Zealand in place (or non-residents in New Zealand), can be reduced. The treaties also mean that the amount of withholding tax charged by the originating country on money flowing into New Zealand can be reduced. The amount that can be charged under a treaty is often reduced to 10% or 15%. For more details, see: Taxation – Tax Treaty Considerations for Expats in New Zealand.

 

 

 




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