Personal Tax status for NZ'er working in Aus

[Keithw]

I've given up on the business climate getting any better here, so looking at jobs in Aus.
I will still have NZ rental income but LTC losses.
Thus I expect to be an NZ tax resident with Aus income (while I temporarily reside in Aus).

So a couple of questions arise:
Do I just get an Aussie tax number, file an Aussie tax return,then file an NZ return ?
If so & my NZ income is a loss, does NZ IRD refund tax that has actually been paid in Aus (assuming my Aus return results in tax/ PAYE being paid)?
ie I pay tax in Aus but NZ refunds it


A couple of other bits of info that may affect the situation:
I have a loss making property in Aus. (which will reduce Aus tax liability by a bit, but not to zero)
I have a couple of rentals in NZ in my name, which provide my NZ income. They make money but are offset by LTC
I have loss making properties in NZ in an LTC (ex LAQC)

I also have an Aus GST registered ABN, but the job is more likely to pay salary than a contract to my company, so I dont expect that will be a viable option.

Any other useful hints, I know Spaceman & others have experience with working overseas while also having NZ income, & will no doubt have some tricks of the trade.

[Rosco]

This can be quite tricky.

First part, is you might not neccessarily stay a NZ tax resident. There are a whole number of factors that affect tax residency like bank accounts, furniture, cars, family, personal house and other ties to a country.

Your questions depend a lot on which country you are tax resident in.

If tax resident in NZ, but working in Aussie. Then yes complete Aussie tax return. Then income and tax paid goes into NZ tax return. NZ will only refund any NZ paid tax, and you won't get a refund for Aussie tax paid.

Better way, might be to cease ties with NZ, and become tax resident in Aussie as this is your home, have family, bank accounts, furniture, cars etc. This way rental loss in NZ is returned in NZ. This loss should be in your personal name (due to LTC), therefore would be a loss in Aussie (just need to double check Aussie rules, but I think you can offset personal rental loss from NZ against Aussie income tax - I'm not an Aussie expert) so you would get some Aussie tax back.

Hopefully this gives you a start

Ross

[Keithw]

Thanks Rosco
As I read your second alternative, that of becoming an Aussie Tax resident, the thought of building depreciation popped into my mind.
Will need to check, but if the Aussies still have building depreciation, then presumably claiming my NZ property losses on my Aus tax will allow me to regain the depreciation allowance that NZ Govt deprive us of.

So what happens with acrued NZ tax losses, can they be used against Aus income, or do they need to remain until there is NZ income ?

[Keithw]

Re tax residency, what happens if you have property in both countries, a car in both countries, Bank accounts in both countries ?
Presumably the arguement would be where do you have the most, but if you spend six months in NZ & 6 in Aus then it must get hard to define.

What is the process of defining your tax residency, do you just fill in a form, in this case in Aus, to say you now want to be Aus tax resident. ?
Does that cancel the NZ tax residency ? are the 2 countries linked in such a way that this is detected.

If you dont fill in that form, then presumably the NZ residency remains by default, even though income is derived from Aus.

& if it comes down to a question of where is the most income generated from, is that net income, ie rent minus expenses, or just gross rent, because in my case my gross rent would still exceed my gross salary in Aus.

[TheLiberalLeft]

As you imply, the length of time you spend in any one country can determine tax residency.

[spaceman]

I don't think I can add much as when I was overseas my wages were tax exempt.........which solved a lot of problems and I don't guess that's going to apply to you.

A couple of points to ponder.

The old LAQC meant you had to use the loss each year (it didn't accrue)....is this the same for LTC's???....if so it could raise issues.

In theory it's easy to leave your NZ tax residency behind.....but on the other hand almost impossible if you read the ird rules and have any sort ties left back in NZ.....after about 7 years overseas, the ird tried it on with me (and lost)

Good luck and remember, there's more than just Oz out there.

Cheers
Spaceman

[Micky]

I am about to be in a very similar situation in which if anyone could provide some information it would be gratefully received. Even my accountant is confused as he is not an Aus specialist.

I will be working in Aus approx 200-225 days per year on a Fly in Fly out 12 on 9 off consultancy based role probably for at least a couple of years or more. My wife, kids, car, house and every other part of my life will remain in NZ. I will have no assets in Aus and will stay in accomodation provided by the company. We also have an LTC with several properties making a loss in NZ which I can offset against jointly against mine and my wifes income at the moment. Although I will need an Aus bank account and will get paid in Aus dollers into that bank account by the company I am consulting for I am confused about which country I will be tax resident in and need to file tax returns for. Trying to interpret the rules it looks like I will require an ABN in AUS and will need to pay tax as I go in Aus so I don't get stung with withholding tax at the higher rate. I think this means I must also file a tax return and elect to be either an Aus resident or foreign resident. If I elect the later I get taxed at a much higher rate. It seems that Aus wants to declare me a tax resident because I am working more that 183 days in Aus however NZ determines me a tax resident because I have my asset base and life here in NZ. I will still need to file tax returns in Aus because of the LTC.
1. If I pay tax in Aus can I offset my LTC loss against my Aus income and what happens when I sell properties in regards to Aus capital gains Tax. Do I need to declare my properties in NZ to the ATO?
2. If I am an NZ tax resident can I offset my losses against Aus income? The answer from the above thread seems to be No.
3. Could I sell my share of the LTC into our trust (or my wife) to avoid them being caught up in the Aus tax system especially in regards to CGT when I eventually sell?
I hope this all makes sense? Any thoughts or experiences? Any reccomendations for an accountant familiar with the tax systems between the two countries?

[TheLiberalLeft]

I'm no accountant, but imo you're a tax resident of Aus. It simply comes down to the location in which you spend most time. Your DOMICILE is NZ. There's a difference.

[Rosco]

At a quick glance I would have said the opposite, I would have said Micky is a tax resident in NZ, as he still has substantial ties to NZ (wife kids, house etc)

But you need to complete a residency questionaire with IRD to determine which you are!

Ross

[gunch533]

Help!

Hi Micky.

I am in a very similar situation and was wondering what verdict you came up with.

any help would be greatly appreciated.

Cheers

I am about to be in a very similar situation in which if anyone could provide some information it would be gratefully received. Even my accountant is confused as he is not an Aus specialist.

I will be working in Aus approx 200-225 days per year on a Fly in Fly out 12 on 9 off consultancy based role probably for at least a couple of years or more. My wife, kids, car, house and every other part of my life will remain in NZ. I will have no assets in Aus and will stay in accomodation provided by the company. We also have an LTC with several properties making a loss in NZ which I can offset against jointly against mine and my wifes income at the moment. Although I will need an Aus bank account and will get paid in Aus dollers into that bank account by the company I am consulting for I am confused about which country I will be tax resident in and need to file tax returns for. Trying to interpret the rules it looks like I will require an ABN in AUS and will need to pay tax as I go in Aus so I don't get stung with withholding tax at the higher rate. I think this means I must also file a tax return and elect to be either an Aus resident or foreign resident. If I elect the later I get taxed at a much higher rate. It seems that Aus wants to declare me a tax resident because I am working more that 183 days in Aus however NZ determines me a tax resident because I have my asset base and life here in NZ. I will still need to file tax returns in Aus because of the LTC.
1. If I pay tax in Aus can I offset my LTC loss against my Aus income and what happens when I sell properties in regards to Aus capital gains Tax. Do I need to declare my properties in NZ to the ATO?
2. If I am an NZ tax resident can I offset my losses against Aus income? The answer from the above thread seems to be No.
3. Could I sell my share of the LTC into our trust (or my wife) to avoid them being caught up in the Aus tax system especially in regards to CGT when I eventually sell?
I hope this all makes sense? Any thoughts or experiences? Any reccomendations for an accountant familiar with the tax systems between the two countries?

[Dugster]

Micky,

I work for an Australian branch of a company, paid in Australian $$ (it's falling dammit) but live in NZ. I have no house or property in Aus and when I go to work I stay in a hotel or at a friends place. I don't however spend >183 days a year in OZ, but this is not due to minimising tax, just due to not working that often.
I am a tax resident of NZ, because my life is here, I spend my time here, my family is here etc. It's not as simple as the number of days or where you earn your money. I pay my tax in NZ with the income worked out against the exchange rate by my accountant. I don't even file a tax return in Oz. The only thing you need to somehow achieve really is to be paid your salary gross, rather than having PAYE and Super contributions deducted. I don't contribute to Aus super either.
I'm no accountant, but it seems to me you'd be an NZ tax resident. Additionally, from the IRD NZ website:

"Am I still a tax resident when I have left New Zealand?

Yes until you have been out of New Zealand for 325 days in any 12 month period and you stop having an "enduring relationship" with New Zealand."

The best thing to do is to get an accountant from each country to keep it clear, but both the ATO and IRD websites have some info. Tax residency between NZ and Aus is treated differently sometimes to other countries, as Nz and Aus have agreements.

Good luck,