Kiwi Living Abroad Ruled Still Resident In NZ For Tax Purposes

By Editorial 04 February, 2014

A tax tribunal in New Zealand has ruled that a citizen who left the country permanently in 2003 remained resident for tax purposes for several years due to continuing family links and the ownership of property.

The Taxation Review Authority took the view that the disputant had retained "a permanent place of abode" in New Zealand, in the form of a property that was being rented out to tenants. The disputant argued that the way that the property was owned meant that it was not available for him to live in during the relevant tax years, but the TRA judged that, had he so wanted, he could have served notice to the tenants under the terms of the Residential Tenancies Act 1986. The TRA further noted that the property was in a location where the disputant had family and economic ties.

The TRA also took into consideration the fact that the disputant had not put down roots overseas during the relevant years, and that his intention to leave New Zealand permanently in 2003 was not documented prior to 2006. It was also noted that he had made frequent visits to New Zealand to see family.

The TRA imposed a shortfall penalty "for taking an unacceptable tax position in each of the relevant tax years," reduced by 50 percent in view of "previous behavior."

Rebecca Armour, who is head of the International Expatriate Services tax team at KPMG, described the decision as "very disappointing."

She added that the pessimistic interpretation of the ruling was that expatriates had to break all ties with New Zealand when they move overseas to escape tax liability, and that this was particularly relevant for expats residing in locations without a Double Taxation Agreement with New Zealand.

Tags: Court | Finance | Tax | New Zealand | Expats | Personal Finance | Working Abroad | Work | Working Abroad | Working Abroad |


News Archive