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Do i need to do a NZ tax return?

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  • Do i need to do a NZ tax return?

    hi everyone,
    this is site is fantastic and I've spent quite a few hours reading through so many different topics. Its great.

    I've been trying to get some info that would apply to my situation, but each person's circumstances are so unique I'm finding myself getting a bit confused.

    so here's my story............and ultimately I'm trying to work out if i need to do a NZ tax return and what impact that has against OZ income (and subsequent personal tax return), as i believe there has been a new tax law come into effect here in oz.
    Apparently i cant give you a URL until i've posted 10 times, but you can search the ATO website for this:
    Summary of changes to foreign loss and foreign tax credit calculation rules from 1 July 2008 including transitional rules

    anyway, my partner and i live in Brisbane Australia. house was purchased 2 years ago in Dunedin as an IP in our joint names. it has been vacant since we purchased, so no rental income and none in the short term future - needs renovations. so I'm wondering if no income means no tax return? seems like common sense, but im wondering whether intent comes into play, as in, intent to run this property as a business?

    my partner holds dual citizenship, he's been living in OZ since he was a kid. there are family ties on the north island. not sure if this comes into play anywhere as far as tax rules go.

    we have been making 2 trips per year to go and work on the house, and have had a small amount of work done by trades people. from my small base of knowledge the work sounds like capital work that can be depreciated (probably not until completed im guessing - at this stage ripping stuff out and painting the exterior - not very major work).

    however our flights are an expense, as with interest and bank fees on NZ mortgage. not sure where draftmans fees fit.

    so do we need to do a NZ tax return? one each or just one for the 'business' even though its not a business structure? can the losses be a reduction on our personal tax returns in OZ even though we didn't earn any income from the activity?
    and if not, can we include any of these NZ property expenses directly into OZ personal income tax returns, or must it go through a NZ tax process first?

    cheers, kerry

  • #2
    Hi Kerry,

    Generally you have to file a NZ tax return, as you have a rental in NZ.

    But, to date your property is unavailable to rent, therefore no deductions can be claimed. You should keep track of all your expenses and these will become a capital cost of your property, and some of this you may be able to depreciate once its available to rent.

    Book a free chat here
    Ross Barnett - Property Accountant


    • #3
      I'm with Ross. We have rentals in NZ and we live overseas too. Some are in a business name and some under personal names but it all still counts according to IRD, regardless of our location as you still have 'an enduring relationship' with NZ, being that the places are in NZ in your own names.

      Definitely keep track of everything expense wise in case you can utilise it to your advantage when the property is able to be rented. And check out the IRD site in terms of the difference between how they classify repairs versus assets as that will influence how you describe the improvements you are making and what can be depreciated or claimed back.


      • #4
        Hi Heather,

        The enduring relationship part is not relevant to this question.

        If any person (tax resident in any country) earns rental income in NZ, they will have to return this income in NZ. ie Kerry's situation. It doesn't matter if they are a NZ tax resident or not.

        If you are a NZ tax resident, then you also have to return your world wide income in NZ. There are various factors that determine if you are a NZ tax resident, like enduring relationship.

        Book a free chat here
        Ross Barnett - Property Accountant