A cautionary word of advice for people leaving New Zealand – be sure to leave nothing that binds you to the country country for tax purposes.
That house you couldn’t sell and had to rent out, or the family you still send money back to, could possibly make you a resident for tax purposes.
With a little over 4 million residents, Middle Earth is keen to raise as much precious revenue as it can, be sure that none of it comes from you.
Here’s the story:
Kiwis with rental property and strong family links back home are being warned of a court decision that could have tax implications for them.
Rebecca Armour, head of KPMG’s international expatriate services tax team, said a recent ruling from New Zealand’s Taxation Review Authority had found that a man who had been out of the country for 10 years was still considered a resident for tax purposes.
The case involved a former soldier who left New Zealand permanently in 2003 to work as a security consultant.
He had separated from his wife a decade earlier and later divorced, but continued to visit and financially support his children in New Zealand.
The authority has ruled that the man’s family links and some property investments he kept in New Zealand counted against him.
He is now liable for the outstanding tax, 20 per cent penalties and “use of money” interest, in addition to the tax paid in the countries he worked in.
So whatever happened to New Zealand’s international double taxation agreements?
To escape the grasp of the Kiwi taxman you will need to be out of the country for 325 days in a 12 month period
In the security consultant’s case, one of the houses he jointly owned with his ex-wife was rented out on a periodic rather than a fixed term basis.
The authority said that theoretically, the house was available for the consultant to live in at short notice, even though he had never lived there…
The ruling is likely to have an effect on thousands of expat Kiwis who rent out property and still have family ties back to New Zealand.
If you think this may affect you, read the full article here. We also recommend that you also seek professional financial advice.
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5 thoughts on “Leaving New Zealand? Cut All Ties or Pay the Taxman His Cut”
Because of what I do professionally, understanding legislation like FATCA is a “hobby” of mine. I spoke to IRD regarding FATCA and they explained that they are negotiating an agreement with the USA whereby New Zealand financial institutions will automatically pass on information to IRD about US persons, which IRD will share with the IRS. Similarly, US financial institutions will automatically pass on information about New Zealanders to the IRS who will then pass it to IRD.
New Zealand is in bed with the USA/UK/Israeli Axis of Evil. They are quite willing to share information with each other to tighten the net on their own citizens.
Many people mistakenly take the attitude that “you do not need to worry if you have nothing to hide.” However, financial regulations are so complex and opaque that it is easy for anyone unwittingly to violate a law.
I pay my folks back in NZ a monthly mortgage payment for a house they brought for me here in the states, IF the IRD thinks they can get money out of me then LOL I would like to see them try.
Hi USA, so good to hear from you again. Trust all is well with you and your family?
Bill English realises that he will not deliver his “surplus” in time for the election, so he is trying to gather a few more shekels. The previous Gillard/Rudd government in Australia promised one in 2013, but the new government now says it will only be 2016/2017.
At any rate, my wife and I just filed an early return for 2014, so we can obtain a refund. Moreover, we are Swiss tax residents and we informed IRD that we have left New Zealand permanently.
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