Can somebody please help???Iv'e been living outside of NZ for the last three years. Most of that time was spent living in Australia and paying tax.I have decleared myself a non resident of Australia and moving to Indonesia. Just wondering if I will become a resident of NZ for tax purposes as I have rental properties in NZ. I work offshore now getting paid from Singapore, Malaysia ect and send some money back to my kiwi account to cover any extras on my loan. I dont have and cars, memberships just rental properties.Any advice or help would be great
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Am I a non resident of NZ for tax purposes?
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Depends ......practice vs theory.
People leaving New Zealand
If you leave New Zealand, you are a non-resident for tax purposes if:
- you go away for more than 325 days (in total) in any 12-month period, and
- you don't have an enduring relationship with New Zealand. http://www.ird.govt.nz/industry-guid...nresident.html
The enduring relationship test overrides any rules about the number of days you’re in New Zealand.
As long as you have an enduring relationship with New Zealand you’ll always be a resident.
http://www.ird.govt.nz/resources/a/3...4a30/ir292.pdf
In theory it's pretty much impossible for you to not have an enduring relationship with NZ.....you own property in NZ.
In practice it seems that the IRD are a little more pragmatic than that.
IR292 from the IRD web site has the info.
I would say you're technically going to be a resident to the letter of the law, but that the IRD will most likely not want to tax your overseas income. Just the NZ income from the properties.
Cheers
Spaceman
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You're non-res. But as Spaceman says you need to declare & pay tax on that NZ-sourced income to the IRD in NZ and technically you need to declare that income (and details of tax paid on it in NZ) on your local return too. You shouldn't be charged tax twice on that portion if there's a double-taxation agreement between NZ and Indonesia (assuming that's your abode).
Complicating factors would be if you have a main house (ex-PPOR) in NZ and if you have close family (wife & kids) living in NZ.
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How did you get on? This is an old thread but I am in a similar position, and as the non-res tax status requirements are so hazy I thought it worthwhile to reinstate the thread.
When I left NZ 8 years ago to work overseas, I applied for tax non-res to IRD. You have to apply and be acknowledged as non-res by them - don't risk it and just declare non-res on your annual return. I sold my car and all furniture, and had no family or memberships in NZ, but rented out my house. I pay tax on the rent. IRD said that as long as the house wasn't available for me to use upon return, and as long as I wasn't planning on returning, I met the requirements for non-res (in addition to the 325 day rule of course).
They told me in 2007 that I could not invest in NZ, so all my savings since then sat in a lousy 4% interest bank account. However, when I asked IRD again earlier this year ,they said I could invest in NZ - either shares or buying rentals - without it affecting my non-res status. I do not know whether they changed the rules or whether I was just given incorrect advice back in 2007. This year I bought a rental with savings. It is annoying though, that had IRD tod me I could buy a rental 5 years ago, I would have got the house for half what I paid this year.
It would be interesting to hear from any other investors who are NZ residents/citizens, but Non-residents for tax purposes.
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Look at Interpretation Statement 14/01, http://www.ird.govt.nz/technical-tax/interpretations/
It might help a bit.
This area used to be more clear, but has changed with this Interpretation Statement.
Worst case, your overseas income will be taxable in NZ, so you need to be careful in this area and perhaps seek expert advice.
RossBook a free chat here
Ross Barnett - Property Accountant
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Many thanks for the link - I had previously asked the Non resident dept of IRD for some further definitions on how they assess status, and I don't think the staff I spoke to was aware of this document.
I have taken "expert" advice before from tax lawyers in Auckland, and they knew even less about the non-resident tax laws and their application than I did. It remains a very grey flaky area for many.
Thanks again.
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The whole area is a bit of a nightmare. My experience with IRD was they will look for ways to consider you a local for tax purposes as then they get a crack at your world wide income.
If you DON'T want to be NZ tax resident then you have to ensure you meet ALL the criteria. This can include ensuring you have nothing here that can tie you to the place. No property, no yacht or golf club memberships, no NZ phone numbers no other discoverable assets etc.etc. It is a bit like interpretive dance these days, the judges make up the rules as they go along.
If Indonesia has a punitive tax system then you might want to be tax resident in NZ as you would easily qualify....
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Damap - very true.
But - I do have 2015 emails from the IRD Non-resident Dept saying it is fine to own and continue to buy rental properties, and to invest in NZ shares, and still retain non-tax status once it has been established and confirmed by them.
The criteria has always been fuzzy and having read the document Rosco posted a link to, it remains deliberately fuzzy and open to interpretation - but so long as you are away a long time, have no family/vehicles in NZ, do not come back more than 40 days/yr, and one of the rental properties was not your established family home, then it seems a few small things like membership of a professional institute or having a bank account will not go against you in their own right.
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Hi Tim,
What you say is generally right. There was an old interpretation statement (or similar document) that said over 3 years, and then OK. The new one doesn't have a specific timeframe, but you are right in the longer time away from NZ the better.
Also note, IRD information is generally not binding, and they can change their mind!
RossBook a free chat here
Ross Barnett - Property Accountant
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Originally posted by Rosco View Post....... but you are right in the longer time away from NZ the better......
LOLZ!!!!!....funny thing was I never applied for or was granted non-resident status, to the best of my knowledge
Cheers
Spaceman
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I am a NZ non tax resident. I work offshore and spend 5 months in NZ a year.
I have an excellent accountant that specialises in this area and abide by all the rules set out by the IRD.
I saw my accountant a few weeks back about purchasing an investment property in NZ. He said this was a non issue as long as the property was not available for me to live in. He is more concerned with the amount of time that I spend in NZ and suggested I go for more holidays overseas.
Hope this helps.
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