Working overseas, owning a property in NZ

[J_W_B]

Hi,
I've been offered a role overseas, in a country that has a tax treaty with NZ.
My wife and I own a property (the family home) and she will remain in NZ, residing in the property while I'm working overseas.
I'll still be contributing to the mortgage, and likely living overseas for the next 3-5 years.

Not sure what this means for treatment of income. I'll be paying tax overseas at similar rates to NZ personal income tax rates.

Will income earned elsewhere be taxed again if sent to NZ to pay mortgage?

[brokerman]

You need to speak to an Accountant around this, however my gut feeling is no you don't get taxed twice!

[Keithw]

I am no accountant, but this is what i have learnt over the years:

For an investor it can get complicated, however if all you are talking about is sending money home (NZ) it should be relatively simple.

You may need to file a tax return in both countries, if you have any NZ income (or remain NZ tax resident).

Tax paid in the foreign country (with tax agreement) will be declared on your NZ tax return and is a credit against any tax owed in NZ, however is not refundable. ie if you have paid 10k tax overseas but only owe 1k in NZ, you will get the 1k credit but not a 9k refund in NZ.

Other issues can have an effect such as where you are tax resident, where are your property and family ties. This can leave you a NZ tax resident even though you work overseas. NZ tax residents need to declare their worldwide income.
So if the tax rate overseas is lower than the rate you must pay in NZ, you may get credited for the 10k paid overseas, but may still have to pay a bit more in NZ.
You can advise IRD that you are no longer tax resident in NZ while working overseas, but this may have implications to whatever income you have in NZ. They (IRD) still apply the main residency test (property, family, business location) and may not accept that you are no longer tax resident, hence the two tax return requirement.

Finding definitive answers on this seems to be deliberately vague in the IRD literature, which is stupid for a system that relies on personal honesty in filing tax returns.

[McDuck]

Tax treaty.

I like that.

It would be a pretty poor treaty if you had to pay twice.

But yes, it's the sort of thing best checked with a tax accountant who does international work.

[Rosco]

I am no accountant, but this is what i have learnt over the years:

For an investor it can get complicated, however if all you are talking about is sending money home (NZ) it should be relatively simple.

You may need to file a tax return in both countries, if you have any NZ income (or remain NZ tax resident).

Tax paid in the foreign country (with tax agreement) will be declared on your NZ tax return and is a credit against any tax owed in NZ, however is not refundable. ie if you have paid 10k tax overseas but only owe 1k in NZ, you will get the 1k credit but not a 9k refund in NZ.

Other issues can have an effect such as where you are tax resident, where are your property and family ties. This can leave you a NZ tax resident even though you work overseas. NZ tax residents need to declare their worldwide income.
So if the tax rate overseas is lower than the rate you must pay in NZ, you may get credited for the 10k paid overseas, but may still have to pay a bit more in NZ.
You can advise IRD that you are no longer tax resident in NZ while working overseas, but this may have implications to whatever income you have in NZ. They (IRD) still apply the main residency test (property, family, business location) and may not accept that you are no longer tax resident, hence the two tax return requirement.

Finding definitive answers on this seems to be deliberately vague in the IRD literature, which is stupid for a system that relies on personal honesty in filing tax returns.

This is a pretty good answer! As Keith mentions it is unlikely that you would be a non resident for tax in NZ, as your family and home is still here. Therefore have to return your world wide income in NZ with a credit for overseas tax paid.

Ross