GLOBAL MOBILITY SERVICES - TAXATION OF INTERNATIONAL ASSIGNEES - NEW ZEALAND - PWC
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Global Mobility Services
Taxation of International
Assignees – New Zealand
People and
Organisation
Global Mobility
Country Guide
April 2018
194047_1
Last Updated: April 2018 This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer.
Country:
New Zealand
Introduction: International assignees working in New Zealand 4
Step 1: Understanding basic principles 5
Step 2: Understanding the New Zealand tax system 9
Step 3: What to do before you arrive in New Zealand 14
Step 4: What to do when you arrive in New Zealand 19
Step 5: What to do at the end of the year 20
Step 6: What to do when you leave New Zealand 22
Step 7: Other matters requiring consideration 24
Appendix A: Overview of income tax rates 26
Appendix B: Typical tax computation 27
Appendix C: Double-taxation agreements 29
Appendix D: Social security agreements 31
Appendix E: Elements of remuneration packages 32
Appendix F: New Zealand contacts and offices 33
Additional Country Folios can be located at the following website:
Global Mobility Country Guides
Global Mobility Country Guide (Folio) 3
Introduction:
International assignees
working in New Zealand
Foreign nationals sent to work in New The folio reflects tax law and practice As details of tax rates,
Zealand often find themselves in New Zealand as of April 2018. It exemptions and allowances
confused by the unexpected concentrates on the income tax issues may vary from year to year, we
complexity of the New Zealand tax that typically confront foreign suggest that you refer to our
system. Before they arrive, they may nationals working in New Zealand. publication "Tax Facts and
have been advised on an employment Figures," which is revised
contract, on banking arrangements This folio is not intended to be a annually.
and on dealing with government comprehensive handbook dealing with
authorities. Even so, often they fail to all the potential problems that an For further information,
understand the precise reasons for the individual might face. It is a guide to please contact Suzie
actions they have been advised to take. the tax system designed to provide Chichester (Tel [64] 9 355
readers with a basic understanding of 8386) or Jenny Ruiz (Tel [64]
This guide is intended to help foreign the system and areas where problems 9 355 8476), in our Auckland
nationals in an effort to avoid any tax may arise. Accordingly, we must advise office, and Naomi Burwell (Tel
problems before they arrive in New our readers, particularly those with [64] 4 462 7369 or Alice Chiu
Zealand, as well as afterwards. unusual or complex situations, to seek (Tel [64] 4 462 7237), from
professional advice before any our Wellington office.
definitive actions are taken.
4 People and Organisation
Step 1:
Understanding basic principles
The scope of taxation in resident, transitional – Interest/dividends
New Zealand resident, or a non-resident. subject to the RWT rules
at the correct rates
1. Government revenues are Capital gains tax
raised largely through income – Certain income where
taxes, excise taxes and 3. There is currently no separate the total amount derived
custom duties, and a value- capital gains tax in New is less than NZ$200 that
added goods and services tax. Zealand. Gains arising from has not been correctly
No separate social security certain transactions in taxed at source.
contributions are levied other personal property, real estate,
than a small levy to fund financial arrangements and 6. At the end of the income year,
personal accident insurance. certain foreign investments Inland Revenue (IR) may
There are no local taxes other may, however, be subject to issue a personal tax summary
than property taxes (rates) income tax (please refer to based on wages and salary
payable to local authorities as paragraph 49 for further information provided by
a result of the ownership of comments). employers. This summary
land. will show if there is a refund
Tax year of individual due or tax to pay.
2. Income tax is imposed on the 4. The tax year for an individual
worldwide income of 7. A personal tax summary will
runs from 1 April to 31 be sent automatically to
individuals who are treated as March. The 2018 tax year,
resident in New Zealand for individuals who qualify for a
for example, ends on student loan interest write-
tax purposes unless relieved 31 March 2018.
by the ability to access the off, family assistance, who
transitional residence Filing in lieu of a tax have incorrect or special tax
exemption (see paragraph return: codes, or have secondary
23). Income tax is also employment income.
imposed on New Zealand- 5. Individuals who only derive
income from the following 8. Other individuals may
sourced income of non- request a personal tax
residents, although the sources are not required to
file a tax return: summary. You may wish to
liability may be reduced by consider requesting a
the provisions of a double personal tax summary if you
– Employment income
taxation agreement entered
subject to the PAYE only worked part of the tax
into between New Zealand year, or want to claim
rules at the correct rates
and various other countries. expenses such as income
As a result, your New Zealand
protection insurance
tax position will depend on
premiums.
whether you are a tax
Global Mobility Country Guide (Folio) 5
9. If you request a personal tax 12. Individuals who are required Provisional tax is due in three
summary, you need to check to complete a tax return (this equal instalments during the
it and inform IR if there are will be the case for most year in which the income is
any corrections or additions. international assignees) will earned, unless the person is
If you receive the summary receive a summary of GST registered, in which case
and do not contact IR you are earnings from IR that shows specific advice should be
deemed to have accepted IR's all the employment details sought. Interest and penalties
view of your tax position. supplied by employers. may apply to underpayment
Individuals must file their tax of a taxpayer's tax liability for
10. From 1 April 2017 onwards, returns by 7 July following the year.
as employee share scheme year end, with any balance of
income will be reported by tax due before the following 7 14. Failure to file a return or
employers to IR (see February, although filing make payments by the due
paragraph 38 for details) we dates and payment dates may date may result in penalties
are expecting an increase in be extended to the following and interest charges.
tax summaries issued by IR 31 March and 7 April, Provisions exist for
to collect any tax due from respectively, if extension of extensions of the filing and
employees. time arrangements are tax payment deadlines on
available. request if the services of a
11. Individuals who wish to claim recognised tax practitioner
a tax credit for donations 13. Taxpayers who earn income are used.
must complete a separate other than salary or wage
donations tax credit form income may be liable to make
(IR 526). provisional tax payments.
6 People and Organisation
Tax residence status day within the 12-month basis, for that part of the year
period in which the person is that they were resident.
15. A person is a tax resident of personally present in Income attributed to the
New Zealand if he or she has New Zealand. period of non-residence will
a permanent place of abode not normally be taxable in
in New Zealand (whether or 17. A person will cease to be a tax New Zealand unless it was
not that person also has a resident in New Zealand if he derived from New Zealand
permanent place of abode or she ceases to have a sources.
outside New Zealand) or has permanent place of abode in
been personally present in New Zealand and is The impact of tax treaties
New Zealand for more than personally absent from New
183 days in any 12-month Zealand for more than 325 20. New Zealand's double
period. days in any 12-month period. taxation agreements (listed in
Residence is deemed to cease Appendix C) contain special
16. The term "permanent place of from the first day within the rules for determining the
abode" is not defined in New period in which the person jurisdiction to tax specified
Zealand tax statutes. Case law satisfies the above tests. The types of income. Some
and recently updated IR cessation of one’s permanent treaties contain "tiebreaker"
guidance has confirmed that place of abode is a critical rules which attempt to
one must first have a dwelling issue for those New Zealand overcome situations where an
in which one habitually tax residents who undertake individual is treated as a
resides (generally interpreted assignments in other host resident of both New Zealand
widely) to have a place of countries. Advice is critical as and the other tax treaty
abode. However, factual the concept of a permanent country. The determination
circumstances (e.g. the place of abode is often of resident status under these
duration of their presence, misunderstood by individuals tiebreaker rules does not
the nature and quality of the and is a common reason for override the operation of the
use of the place of abode, the residence disputes raised general resident status tests
durability of the person’s by IR. referred to earlier, but may
association with the place of provide relief in dual-
abode, overall connection to 18. For the purposes of the 183- residence scenarios such that
the place of abode, etc.) must day and 325-day count tests, New Zealand’s taxing rights
be then reviewed on a case- where a person is present in on foreign-sourced income
by-case basis to determine New Zealand for part of a are removed or reduced if the
whether that place of abode is day, that person is deemed to tiebreaker rules determine an
sufficient to be a permanent be personally present in New individual is solely tax
place of abode in New Zealand for the whole of resident in another state.
Zealand. It is contemplated that day.
that a person can have more Under most double taxation
than one permanent place of Part-year resident agreements, an individual is
abode. Often, it will not be considered to be tax resident
19. Where an individual is tax in the country in which he or
critical to establish if a resident in New Zealand for
permanent place of abode she has a permanent home
part of the tax year and was available. Relevant for
exists because the 183-day not resident for another part
test will be met. Note that international assignees, IR
of the tax year, they will be generally holds the view that
residence under the 183-day
taxed on their worldwide a permanent home available
test commences from the first income, usually on a received
Global Mobility Country Guide (Folio) 7
does not exist if the Tax exemptions (employer superannuation
accommodation is temporary contribution tax) applies to
in nature such as multiple 23. The government enacted a all employers’ cash
short stay serviced temporary exemption (the contributions to employees'
apartments even though the “transitional resident” superannuation funds
total length of time in the exemption) on certain including KiwiSaver accounts
host country may be much foreign-sourced income for (and complying
longer. Where the permanent first time tax residents or superannuation funds). The
home available tiebreaker returning New Zealanders minimum compulsory
test does not resolve the issue (who have been non-resident contribution amount
of residence, other tiebreaker continuously for at least 10 required of employers is 3%
rules may be applied to reach years) effective 1 April 2006. although additional voluntary
a conclusion. If eligible, a tax resident will contributions may be made
automatically receive this by the employer. Initial
Spouses exemption for a minimum KiwiSaver enrolment applies
48-month period. Specific to employees who are New
21. Spouses are treated as advice on eligibility, the Zealand citizens or entitled to
separate taxpayers in New extent of the exemption and
Zealand and separate tax be in New Zealand
planning for the expiry of the indefinitely.
returns are filed. However, exemption period should
for certain welfare purposes, be sought. International visitors
the concept of family income (excluding certain Australian
is relevant. 24. There is a separate 48-month citizens) and those on
exemption in the context of temporary work permits
Family assistance foreign pension lump sum cannot become KiwiSaver
22. Since April 2005, the withdrawals or transfers. The members so KiwiSaver will
government has been phasing exemption is designed to not affect most international
provide targeted relief for assignees to New Zealand.
in the “Working for Families”
package to assist low to returning residents (holding Migrants to New Zealand
middle-income families. It foreign pension entitlements) from Australia will have the
aims to increase family who do not satisfy the option of transferring any
incomes and make housing transitional residence criteria Australian Superannuation
and childcare more (see above). Funds to certain New
affordable for families. KiwiSaver Zealand KiwiSaver funds
Working for Families is not where they have permanently
available to individuals who 25. All full and part-time emigrated from Australia.
are within their 48-month employees aged between 18
transitional resident to 65 are able to participate in 26. New eligible employees will
exemption period (see below) the “KiwiSaver Scheme,” a automatically be enrolled and
have a six-week period in
and should such an New Zealand superannuation
individual claim Working for scheme with certain tax which to opt out.
Families, they will be deemed benefits on employee
to have elected out of the contributions and
transitional resident compulsory employer
exemption. contributions. ESCT
8 People and Organisation
Step 2:
Understanding the New Zealand
tax system
Taxation of New Zealand arrangement. Only employers – Low-interest loans;
tax residents can determine the tax
treatment of employer – Subsidised transport;
Worldwide income provided accommodation or – Employer contributions
allowances and therefore
27. An individual who is a New to foreign employee
Zealand tax resident is employers should obtain superannuation
subject to New Zealand tax specific advice in the schemes or other
structuring of inbound and
on their worldwide income, insurance benefits.
whether or not the income is outbound assignments.
earned in or remitted to Employee share purchase
30. Some relocation expenses schemes
New Zealand. paid by an employer are, in
Employment income some cases, non-taxable to 33. A benefit received under a
the employee. The “share purchase agreement”
28. Amounts derived in government has legislated the in connection with an
connection with an scope of what relocation costs individual’s employment or
individual’s employment or are non-taxable. service is income of that
services are taxable in the individual. A share purchase
31. Employers are required to
hands of the employee. This agreement is defined as an
includes salaries, wages, withhold and remit income agreement to sell or issue
bonuses, allowances and taxes (PAYE) to IR when shares in a company to an
paying an individual's
expenditure incurred on employee that is entered into
employment income. in connection with the
account of an employee.
32. Certain non-cash forms of employee’s employment or
29. Accommodation benefits an service, whether or not an
remuneration received by
individual receives in employment relationship
connection with his/her employees are not subject to
income tax in the employee's exists when the employee
employment or service are receives a benefit under the
hands, but are subject to
taxable unless an exemption agreement. A benefit includes
applies. There are fringe benefit tax (FBT),
which is payable by the free or discounted shares
exemptions for employer received through an
employer. This tax applies
provided accommodation in employee share purchase or
specific assignment related primarily to:
option scheme.
scenarios, provided they are – Private use of employer
not part of a salary sacrifice provided cars;
Global Mobility Country Guide (Folio) 934. Individuals who have been 38. From 1 April 2017 onwards, Zealand. The gross amount of
awarded options to purchase employers have compulsory interest is taxable to the
or acquire shares at a reporting requirements in individual while a credit is
discount in an employee New Zealand in respect of given for any tax withheld on
share purchase scheme will most ESS income. From this the interest payment.
be taxed on any gains on the date, employers also have the Resident withholding tax
date the taxpayer exercises ability to voluntarily withhold (RWT) is automatically
the options or acquires the tax on ESS income. Both the deducted from New Zealand-
shares. mandatory reporting and sourced interest payments at
voluntary withholding will be the rate of 33% if the person
35. New legislation was enacted via the PAYE (payroll) does not notify the interest
on 29 March 2018 system. Where employer payer of their correct tax rate.
introducing new rules to align reporting is completed,
the taxing point of employee employees will no longer 40. The gross amount of foreign-
share scheme (ESS) income need to separately disclose source interest income is
to when economic ownership this income on their taxable in New Zealand. A tax
of the shares is received by individual income tax credit is granted for foreign
the employee. . Employers returns. Where PAYE tax withheld at source. Credit
are encouraged to take advice withholding is applied, no provided for foreign tax paid
on the tax implications of further tax should be payable is capped at the New Zealand
employee share schemes. by employees. Where no tax payable.
36. In practice, based on current withholding is applied, 41. The transitional resident
rules, individuals are taxed in employees will need to exemption, if applicable, will
New Zealand on discounts continue to pay the tax due to exempt foreign interest
obtained from an employee IR via their income tax return income during the 48-month
share purchase scheme if or on receipt of the personal exemption period.
they are either New Zealand tax summary. Employers
tax resident at the time the should obtain advice on their 42. If an individual has a foreign
requirements particularly in mortgage there may be a
options are exercised or, if
non-resident, the benefit has relation to internationally requirement to register the
a New Zealand source. mobile assignees where the mortgage and deduct non-
amount to be reported may resident withholding tax
Apportionment may be
required, however, where the vary due to foreign service. (NRWT) from the interest
employee's tax residence Employers will also need to payments. Certain
decide if voluntary exemptions are available if
status changes between the
withholding will be applied the bank has a branch in New
dates of grant and exercise.
and how this would be Zealand. Further advice is
37. The transitional resident funded. recommended.
exemption, if applicable, will
exempt the portion of foreign
Interest Dividends
income if exercise of options 39. Interest income is treated as 43. Dividends received by
or acquisition of shares ordinary income whether or shareholders are treated
occurs during the 48-month not the interest is derived differently depending on the
exemption period. from a source in New source of the dividend. New
10 People and OrganisationZealand-sourced dividend determining the net rental during the 48-month
income may have imputation income subject to tax. exemption period.
credits attached. The Deductions allowed from
imputation credits represent gross rental income include Capital gains
company tax already paid on repairs and maintenance,
49. Certain capital gains derived
the underlying profit. In agent's fees, insurance, from real property
addition, a withholding tax of mortgage interest and a transactions may be taxable
33% is required to be depreciation allowance
to the individual. Liability is
deducted from the gross (limited only to chattels). based on factors such as
amount of the dividend but is Foreign exchange gains or length of ownership, whether
reduced to the extent that losses on mortgages
the property has been re-
imputation credits are denominated in foreign zoned, and the business
attached. Credit against currency, whether realised or activities of the individual or
income tax payable is given unrealised, may also be
persons associated with the
for the withholding tax and subject to tax. Total allowable
individual.
imputation credits. rental expenses are currently
not restricted to the amount 50. With effect from 1 October
44. Foreign dividend income is of rental income received. 2015 a new ”bright line” test
taxable in full unless the Rental losses may be offset was introduced that will
individual is subject to the against an individual's other require income tax to be paid
Foreign Investment Fund income and carried forward if on any gains from residential
(FIF) rules (please refer to unused. An issues paper was property that is disposed of
paragraph 110 for further released in March 2018 within 2 years of acquisition.
details). The gross amount of proposing to ring fence rental This has been extended to
the dividend received must be losses. within 5 years of acquisition
converted into New Zealand for residential properties
currency before inclusion in 47. Rental properties that are purchased from 29 March
income. A foreign tax credit is used for both private and 2018. Tax on gains will be
available for taxes withheld at income earning purposes are payable at an individual's
source on dividends. The subject to the mixed use marginal income tax rate.
credit for foreign tax paid assets rules. This legislation These rules are broad enough
cannot exceed New Zealand limits taxpayers’ ability to to capture gains on the
tax payable on the income. claim tax deductions for costs
disposal of foreign property
associated with the of New Zealand residents if
45. The transitional resident properties. It is important
exemption, if applicable, will they meet the criteria.
that individuals with mixed
exempt foreign dividend use assets keep records of the Exemptions apply to the
income during the 48-month days the asset is deriving taxpayer's main (family)
exemption period. income and days where the home, or where the property
Rents asset is used for private is part of a decease estate or
purposes. inheritance or where the
46. Rental income is treated as property is transferred as
48. The transitional resident
ordinary income. Certain part of a relationship
expenses incurred are exemption, if applicable, will settlement. As part of these
allowed as a deduction in exempt foreign rental income new requirements, non-
International Assignment Taxation Folio 11resident / offshore employment income such as exclusively in New Zealand,
individuals will need to apply professional fees for business income must be
for a New Zealand Inland preparing tax returns and apportioned.
Revenue number (see certain premiums for loss of
paragraph 78) in order to earnings insurance. 55. Interest deductions on New
acquire certain New Zealand Additionally, there are a Zealand business operations
real estate. Additionally, small number of exemptions /rental properties could be
withholding tax can apply to and rebates that may be restricted – a thin
transactions involving non- available to reduce the tax on capitalisation regime exists
residents. Specific advice is gross income. As noted and this also applies to
recommended. earlier, deductions can be individual taxpayers.
made insofar as they relate to Withholding tax
Self-employment the earning of rental income
and income from self- 56. Non-residents deriving
51. Self-employed individuals
may deduct expenditure employment. Interest on interest, dividend or royalty
incurred in deriving taxable money borrowed to acquire income from New Zealand
investments is also deductible will be subject to a
income from their businesses.
The individual may also be provided the interest is withholding tax. The rates of
required to register for goods incurred in deriving gross the withholding tax (0%-
and services tax and may income for the individual. 30%) will often be reduced
have certain legal under New Zealand's double-
Foreign superannuation taxation agreements with
responsibilities as an
employer. It is recommended 53. The taxation of foreign other countries. Generally,
that professional advice be superannuation (accruing the withholding tax deducted
sought before commencing entitlements, pension and will be the final tax liability of
any such undertaking. annuity amounts as lump the individual in respect of
Certain self-employment sum amounts) is complex and that income. Resident
income is subject to advice is strongly individuals making interest
withholding tax deductions recommended. payments to offshore banks
by the payer depending on may be subject to these
the nature of the services and Taxation of non-residents withholding tax obligations
/ or where the services are unless exemptions apply.
New Zealand income
provided. New Zealand now Computation of tax
allows certain contractors to 54. Non-residents of New
voluntarily choose a rate of Zealand will generally be Tax rates
withholding tax if certain taxed on employment income
criteria are met. earned in New Zealand in the 57. Personal tax rates, at the date
same manner as a resident of of this publication, are set out
Deductions from income New Zealand. In addition, in Appendix A. Income tax
non-residents may be taxed rates are the same for
52. Income tax is assessed on residents and non-residents
virtually all gross on all income from the
operation of a business (except where non-residents
employment income. There suffer a final non-resident
are limited allowable carried out in New Zealand. If
operations are not carried on withholding tax on interest,
deductions against dividend or royalty amounts).
12 People and OrganisationA typical tax computation is individual may be entitled to
set out in Appendix B. receive a tax refund. Excess
imputation tax credits are
Tax Credits carried forward to
subsequent income years
58. Tax credit schemes exist to
give effect to social policy. until they are used.
The availability of tax credits Provisional tax payments
is generally limited to tax
residents. The following tax 61. Where the tax credits and tax
credits may be available to deductions are insufficient, a
taxpayers: final payment of income tax
is required. If this residual
– Making charitable or income tax liability is
other public benefit gifts NZ$2,500 or more the
of more than NZ$5; tax individual may be required to
credits arising through pay provisional tax in
gifts cannot exceed the instalments for the following
income tax otherwise tax year. Where this residual
payable; and income tax liability is more
– Independent Earner Tax than NZ$60,000 backdated
interest may be payable on
Credit (IETC).
the amount of underpaid tax
59. Once an individual's final tax (this threshold was
liability is determined, the previously NZ$50,000 for
applicable tax credits and income tax years
source deductions are applied commencing prior to 1 April
to calculate the final amount 2017).
due. These arise from:
– Employer deductions
from wages and salaries;
– Withholding tax
deductions from receipts
of interest and
dividends;
– Imputation tax credits
attached to dividends
received; and
– Foreign tax credits.
60. Where total tax credits and
tax deductions exceed the
individual's tax liability, the
International Assignment Taxation Folio 13Step 3:
What to do before you arrive
in New Zealand
Planning is the key Timing of income receipt Trusts
62. Depending on the particular 64. As mentioned previously, 65. New Zealand operates a
circumstances of the individuals resident in New complex regime for the
individual, the taxation Zealand are normally taxed taxation of trusts involving
system of the country the on employment income upon non-resident settlors or
individual is leaving and the receipt. As a result, income beneficiaries. The regime
existence of a double taxation which is earned prior to looks to the residence of the
agreement with New Zealand, becoming a New Zealand tax settlor and, in some
a wide range of taxation resident will not generally be instances, can impose tax at
matters will have to be taxable in New Zealand the rate of 45% on
considered before the (unless the income is sourced distributions from the trust.
individual moves to New in New Zealand). Depending Where certain disclosure
Zealand. Specific advice on on the taxation of such requirements are met and
their eligibility for the income in the foreign country elections made, it is possible
transitional residence of residence and the tax rates to bring an offshore trust
exemption, the extent of the of that jurisdiction, an within the regime applying to
exemption and planning for individual may wish to domestic trusts. Disclosure
the expiry of the exemption arrange to receive such requirements apply in a wide
period should be sought. income prior to entering New range of circumstances to
Zealand. Note, however, that both trustees and settlors.
63. The following paragraphs any international assignment The trust regime is complex
outline a few of the issues bonuses and allowances that and potentially costly.
that should be considered are deemed to be earned in Specific professional advice
before the move. New Zealand will be subject should be sought even where
to New Zealand tax, even if the transitional residence
they are paid pre-arrival or exemption exists.
post-departure.
Global Mobility Country Guide (Folio) 14Foreign trust disclosure how such investments the spouse with the
will be treated for New higher income.
66. Disclosure requirements Zealand tax purposes. If
apply in respect of foreign such investments prove – Certain foreign life
trusts. Legislation has not to be tax-effective insurance policies may
recently been enacted for New Zealand tax be subject to New
increasing the disclosure purposes, consider Zealand tax on an
requirements and including, disposing of them before unrealised basis.
amongst other changes, the coming to New Zealand
creating of a register of – The taxation of foreign
or, if the transitional superannuation and
foreign trusts, more detailed resident exemption is
information to be provided retirement schemes is
available, before that
on trustees and beneficiaries complex; therefore,
exemption period of 48 professional advice
and annual return filing months expires. In other
obligations. Specific advice is should be sought to
instances, it may be
recommended on these determine any taxation
advantageous to hold obligations in both these
requirements. investments until after areas.
Some useful points arriving in New Zealand
(e.g., if a capital gains Structuring the
67. Consideration might be given tax exposure at home remuneration package
to the following tax may be eliminated
planning points: where a share portfolio 68. Some employers may offer
is disposed of after their employees a complete
– The income from certain becoming a non- remuneration package for
foreign equity resident of the home working in New Zealand. In
investments may be country). addition to regular salary,
subject to the FIF rules commissions, bonuses, etc.,
(please refer to – Consideration might be the employer may
paragraphs 108 to 111 given to disposing of compensate the employee by
for further details). In investments that have providing an allowance and
some instances, it may accrued losses before payment for any additional
be desirable to realise New Zealand residence costs which arise from living
the investments before commences, in order to away from his/her home
entering New Zealand prevent the erosion of country. Certain eligible
or, if the transitional their tax cost resulting relocation costs and
resident exemption is from the application of accommodation benefits /
available, before that rules deeming allowances can be treated as
exemption period acquisition. non-taxable. Employers
expires in order to defer should obtain advice when
the application of these – Investment portfolios drafting the employment or
should be organised
rules. assignment offer to maximize
between spouses so that the benefit of exemptions
– Re-evaluating individual recipients can where applicable.
investments, especially be clearly established, in
those which provide tax order to ensure limited 69. A decision must be made as
shelter in the home attribution of income to to whether the remuneration
country, to determine is to be paid in New Zealand
Global Mobility Country Guide (Folio) 15dollars or in the currency of variations in such plans. Work Visas
the home country. This will Consideration should be
be an important issue if there given to inclusion of such a 73. Before an individual is
may be significant plan as one of the conditions allowed to work in New
fluctuations in exchange of the assignment. Zealand he or she must have
rates. This decision will not a valid work visa, unless the
affect the tax payable in New Customs person is a citizen of
Zealand, as a resident Australia or New Zealand, a
72. On entering New Zealand to holder of a New Zealand
individual will be taxed on
take up permanent residence, Resident Visa, or a holder of
worldwide income and non- an individual may import
residents are taxed on New an Australian Permanent
personal and household Resident Visa. In cases where
Zealand-sourced income
effects (but not items of a a work visa is required, an
regardless of the currency in commercial or business
which it is paid. application should be
nature) free of duty and submitted (in conjunction
70. An employment contract taxes. Note that such with the proposed employer)
should be reviewed by a New personal and household to Immigration New Zealand
Zealand tax adviser prior to effects must have been owned in sufficient time prior to
finalisation. This is important and used by the individual departure for New Zealand.
for the purposes of prior to departure for New Work visas are typically
identifying possible residency Zealand. Stringent issued in line with the
issues, exemption agriculture quarantine duration of their New
opportunities and putting in requirements and import Zealand employment, up to a
place tax-effective restrictions apply to plant period not exceeding five
remuneration packages from and animal products. years. PwC New Zealand has
both home and host country Personal effects do not fully licensed immigration
perspective. Aside from include motor vehicles, but advisors that can assist you in
exemption opportunities, there is a concession enabling your immigration needs.
cash benefits may be more first-time immigrants to
import a motor vehicle free of Foreigners who breach any of
tax-effective than non-cash
duty and taxes where that their visa conditions (for
benefits, if foreign tax credit example working
issues are relevant. In other motor vehicle has been
without a valid work visa, or
cases, non-cash benefits may owned and used for at least working for a different
be more tax efficient. 12 months prior to its import. employer or location
However, it should be noted than what is allowed on their
Tax reimbursement plan that if motor vehicles are sold work visa) are liable for
or otherwise disposed of deportation.
71. It is not uncommon for within 24 months after
employers to provide a tax There are significant
importation, they may be penalties for employers for
equalisation program in subject to duty calculated on non-compliance and
conjunction with an overseas a sliding scale basis, with the implications for the approval
assignment. This usually value on the day of of future application.
consists of a plan to ensure importation being
that the employee's total tax apportioned to the period
Employment contracts
liability is not increased by remaining of the 24 months.
accepting the overseas 74. New Zealand has a
assignment. There are many deregulated labour market
where labour union
16 Human Resources Servicesmembership is not – Children's educational
compulsory. Employees and matters;
employers, or their appointed
agents, negotiate – Care and transport of
employment contracts, which domestic pets and
can be written or unwritten, New Zealand quarantine
individual or collective. A rules;
minimum code of conditions – Consultation with your
is established to cover holiday
legal adviser,
entitlement, sick and parental particularly with respect
leave rights as well as to the validity of your
minimum health and safety
current will on
standards. An individual relocation to New
should review his/her Zealand. In addition, if
employment contract to
you have no will,
ensure it reflects the terms consider whether New
and conditions of the Zealand intestacy rules
secondment. This may be
may apply should you
important to ensure die while resident in
continued participation in the New Zealand.
employer's benefit plans.
Pre-arrival consultation
Other matters
76. If possible, a pre-arrival
75. There are numerous other consultation should be
matters that while not
held with a PwC expatriate
compulsory, should be tax specialist and
attended to prior to moving immigration advisor well in
to New Zealand, including: advance of the transfer to
– Insurance coverage New Zealand. This enables
(both personal and potential tax problems and
assets); planning opportunities to be
identified and acted upon. It
– Granting of power of also facilitates contact
attorney where between New Zealand and
appropriate; home country tax advisers,
and with the assignee.
– Shipment of personal
and household goods;
– Notification to banking
and financial
institutions and
arrangement for
continuation of
payments;
International Assignment Taxation Folio 17Global Mobility Country Guide (Folio) 18
Step 4:
What to do when you arrive
in New Zealand
Tax file number non-resident individuals in continues to monitor and
(IRD number) opening a New Zealand bank comply with any obligations
account in order to obtain an arising under their home
77. Individuals should apply to IRD number. Individual country tax law. Assistance in
IR for a tax file number upon assignees may require meeting these obligations can
arrival in New Zealand guidance on the appropriate be provided by a PwC
(known as an IRD number). application form and process expatriate tax specialist
to be completed to obtain an through access to our
78. IR has changed the process
for applying for an IRD IRD number. international network
number. There are now two of offices.
Social welfare
different IRD number
application forms with 79. New Zealand does not have a
separate forms for resident separate social security tax.
individuals and non-resident No separate social security
/ offshore individuals. contributions are levied,
Resident individuals should other than a small levy to
complete Form IR595. Non- fund personal accident
resident / offshore insurance. Individuals and
individuals should complete their families may be
Form IR742. Previously IRD immediately entitled to
numbers needed to be certain social welfare
applied for in person, benefits. Note, however, that
however, there is now the some benefits are income
ability to apply online for an tested and most are subject to
IRD number where certain tax. New Zealand has
conditions are satisfied. Non- reciprocal social security
resident individuals (other agreements with certain
than Australian passport countries - please refer to
holders) will require a fully Appendix D.
functioning New Zealand
bank account in order to Complying with home
obtain a New Zealand IRD country tax law
number. Practical difficulties 80. Whilst in New Zealand, it is
have been encountered by important that an individual
19 People and OrganisationStep 5:
What to do at the end of the year
Tax return (31 March). Generally, the summary as being correct,
completed tax forms must be they are deemed to have
81. The annual income tax filed with IR by the 7 July signed it as if it was a return
liability and available tax following year end. of income. If an individual
credits are determined by Extensions of the time within disagrees with their income
way of personal tax which a tax return must be statement but fails to notify
summaries issued by IR and filed may be obtained on IR, they are deemed to have
tax credit claim forms filed by application or where the taken the same tax position
the individual. services of a recognised tax as that adopted by IR.
82. Some individuals (including practitioner are used.
88. IR has advised that the
most international assignees) 84. Most individuals who receive confirmation of a personal
are required to furnish salary, wages, interest or tax summary can be done via
returns. These include most dividends from a New IR's online services or toll-
non-residents who receive Zealand source with the tax free telephone service.
New Zealand sourced deducted at source will have
income, provisional their final income tax liability 89. An individual must notify IR
taxpayers, recipients of determined by a personal tax of any error in his/her
withholding payments, summary issued by IR. personal tax summary,
taxpayers who have made a together with the necessary
net loss or have a net loss to General Assessment corrections, unless the
carry forward, taxpayers with amount of gross income from
interest or dividends that 85. A personal tax summary employment, interest or
total more than NZ$200 and which is deemed to be a dividends not included in the
have not had sufficient return of income will also be personal tax summary is less
withholding tax deducted at deemed to be a general than NZ$200.
source, and individuals who assessment of an individual's
arrive in or leave New taxable income and the 90. If a personal tax summary
Zealand during that year. income tax payable/ shows that the taxpayer is
refundable. due a refund of less than
83. Individuals who are required NZ$200, it will be paid
to file a tax return must 86. If the personal tax summary automatically within 30 days
complete Form IR3 or, in the is deemed to be a general of the personal tax summary
case of certain non-residents, assessment, then IR will not being issued. A refund that
Form IR3N. These forms can send the individual a separate exceeds NZ$200 will not be
be obtained from IR if they notice of assessment. refunded by IR until the
are not posted out at the end taxpayer has confirmed the
87. If an individual accepts
of the tax year his/her personal tax
Global Mobility Country Guide (Folio) 20personal tax summary is
correct.
Payment of tax due
91. Where an assessment shows
a balance of tax payable, the
outstanding amount is
payable by 7 February of the
following year. However,
where the taxpayer has a
recognised tax agent, the due
date for payment will be 7
April of the following year.
Where payment is not made
by the due date, late payment
penalties will be imposed and
interest can arise in certain
circumstances. These
penalties and interest will
compound where tax remains
unpaid.
Global Mobility Country Guide (Folio) 21Step 6:
What to do when you leave New Zealand
Tax return sometimes request a residence with a minimum of
residence assessment form formality. There are limited
92. An individual who ceases to when assessing the final restrictions applying to the
be resident in New Zealand is resident New Zealand export of goods. Controls
still subject to New Zealand tax return. limit trade in endangered
tax on worldwide gross species of flora and fauna.
income from 1 April to the 96. For share/option income yet
date of departure. After the to be realised, there are no 99. Purchases of items prior to
date of departure to the departure tax rules. departure can be free of
following 31 March, the Therefore share benefits goods and services tax,
individual is only subject to income that relates to provided that they are
New Zealand tax on New services performed wholly or exported by the vendor and
Zealand-sourced income, partly in New Zealand during do not come into the
assuming the individual the vesting period may be purchaser's possession while
becomes a non-resident on taxable in New Zealand at a still in New Zealand.
departure. later time (in the year of full
vesting/exercise) even though Becoming non-resident
93. To file a part-year return the share taxable income is
(Form IR3), you will need to 100. An individual will remain a
realised after ceasing New resident of New Zealand for
obtain details of your total Zealand tax residence – a
earnings and tax deductions tax purposes until such time
subsequent non-resident as they cease to have a
to date from your employer return declaring this income
or from IR. permanent place of abode in
may be required (where there
New Zealand and have spent
94. If you are leaving part way is no employer reporting on 325 days in any 12-month
through an income year, it is this equity income). period away from New
likely that you will be entitled 97. An individual with a New Zealand. In such a case, they
to a tax refund; therefore, it Zealand student loan who is will be deemed to be non-
is to your advantage to file going overseas for 6 months resident from the first day
a return. or more should confirm their they were absent in that 12-
notification and repayment month period. Often this will
95. Individuals are not coincide with the departure
specifically required to notify obligations with IR.
date, but return visits to
IR that they are leaving New Transferring possessions New Zealand after departure
Zealand. The IR is notified of might affect the position.
their departure via a 98. Most of an individual's
disclosure item in the tax belongings may be returned 101. An individual retaining a
return, although IR to his or her usual place of permanent place of abode in
Global Mobility Country Guide (Folio) 22New Zealand after his/her permanent in nature. A cash appropriate actions taken.
departure will still have a withdrawal cannot be done This could include filing the
liability to New Zealand earlier than 12 months after final tax return, pursuing
income tax on their departure from New Zealand; appropriate tax planning
worldwide income, subject to however, transfers to a opportunities and taking
the provisions of any suitable foreign scheme are advantage of any
applicable double taxation possible within the 12-month concessional tax rates
agreement. period. The cash withdrawal applicable. Cessation of tax
option is not available to residence could have an
102. A non-resident individual will those permanently moving to impact on New Zealand
only be liable to tax on Australia. Tax implications of settled trusts, New Zealand
income sourced in New the foreign tax jurisdiction on held companies or
Zealand. Some relief may be the transfer should be partnerships and the taxation
available where a double considered prior to any of non NZD bank accounts
taxation agreement applies. withdrawal from the and foreign debt instruments.
KiwiSaver superannuation fund. The tax treatment of
negatively geared
103. An individual that has joined
Exit consultation investments (thin
KiwiSaver may wish to 104. A final consultation with an capitalisation) may also
consider a withdrawal of change. Advice is always
expatriate tax specialist prior
his/her KiwiSaver to departing New Zealand recommended.
superannuation funds after will enable all the relevant
his/her departure, New Zealand tax issues to be
particularly if the departure is identified and the
Global Mobility Country Guide (Folio) 23Step 7:
Other matters requiring consideration
Gift duty up to maximum earnings of There are 3 different
$126,286from 1 April 2018. regimes as explained
105. Gift duty has been repealed below:
from 1 October 2011. Gifts Estate duty
made on or after 1 October 109. CFCs: The CFC regime
2011 are not liable for gift 107. Estate duty has been applies to non-resident
duty and gift statements (and abolished in New Zealand. companies which are
accompanying documents) International taxation controlled by New Zealand
do not need to be filed for residents. The government
these gifts any longer. Even 108. Complex tax regimes apply has previously enacted
though gift duty has been where persons hold interests changes to the CFC regime -
repealed, the income tax and in controlled foreign changing to an active/passive
legal implications of gifts still companies (CFCs) and income test rather than a
need to be considered. foreign investment funds country by country based
(FIFs). exemption. Income
Accident compensation attribution only applies to
New Zealand’s approach to passive income and there is
106. Anyone who suffers personal worldwide taxation may
injury by accident while in usually a 5% threshold before
require resident shareholders that passive income is
New Zealand is covered by of foreign entities to attribute
the Accident Rehabilitation taxable.
income from a CFC or FIF.
and Compensation Insurance Such rules may also extend to 110. Portfolio FIFs: The FIF
Scheme (ACC). The scheme certain foreign regime applies where an
provides benefits, on a no- superannuation schemes offshore investment is held
fault basis, to meet medical prior to 31 March 2014 and to by a New Zealand resident
costs and to provide certain life insurance policies. taxpayer who holds less than
earnings-related As the CFC and FIF regimes 10% of the shares in a foreign
compensation where company or less than 10% of
are complex, professional
appropriate. The scheme is advice should be sought to the units in a foreign unit
funded by special levies determine any taxation trust, certain foreign
imposed on motor vehicle superannuation interests or
obligations.
registration, petrol, and certain foreign life insurance
business income from self- policies. For such
employment, payroll and investments, individuals will
employees' earnings. The need to calculate income on a
employee levy is charged at a deemed basis under several
flat rate of 1.39% of earnings available income calculation
Global Mobility Country Guide (Folio) 24methods unless specific Foreign exchange – The level of
exemptions apply. remuneration required
115. New Zealand has no foreign to provide a proper
111. Non portfolio FIFs: this exchange controls. standard of living for an
regime applies where an Individuals may move funds individual and his or her
offshore investment of 10% or into and out of the country family;
greater is held by a New without restriction. However,
Zealand resident but it is not gains or losses arising from – Motor vehicle
necessarily a CFC: Investors the effect of exchange regulations;
may have a choice to apply variations on money lent or
the CFC rules or to apply the borrowed in a foreign – Life insurance and other
Portfolio FIF rules. currency may be required to insurance coverage
be included when calculating while working in New
112. The transitional resident the taxable income of a Zealand.
exemption, if available, will resident individual. Many
provide relief from these loans and investments
regimes during the 48-month outside New Zealand may be
exemption period. exposed, including mortgages
Goods and services tax over properties in an
individual's home country.
113. Goods and services tax (GST)
116. The transitional resident
is a broad-based
consumption tax on goods exemption, if available, will
and services supplied in New provide temporary relief from
these regimes during the
Zealand other than exempt
financial services and 48-month exemption period,
domestic rental but only in respect of non-
New Zealand-based financial
accommodation. GST is
currently chargeable at the arrangements.
rate of 15%. Goods imported Miscellaneous
into New Zealand are also
subject to GST. Exports of 117. Although this folio is
goods and certain services are primarily concerned with tax
zero rated. matters, we recommend that
advice be sought on the
Other indirect taxes following topics before
114. Other indirect taxes include arriving in New Zealand:
customs duties levied on – The availability of
certain goods imported into housing and the likely
New Zealand and costs of accommodation;
miscellaneous excise duties
levied on alcoholic beverages, – Educational facilities for
tobacco products, vehicles children, where
and petroleum-based fuels. appropriate;
Global Mobility Country Guide (Folio) 25Appendix A:
Overview of income tax rates
Personal income tax rates
Tax rates applicable to individuals for the period 1 April 2017 – 31 March 2018 are as follows (in NZ$):
Taxable income over Not over Tax on Column 1 Percentage on excess
0 14,000 1,470 10.5%
14,001 48,000 7,420 17.5%
48,001 70,000 14,020 30.0%
70,001 and above 33.0%
Global Mobility Country Guide (Folio) 26Appendix B: Typical tax computation Typical tax computation for 2017/18 Tax computation NZ$ NZ$ Salary 120,000 Interest income 10,000 Dividend income 5,000 Overseas taxable income 6,000 Total taxable income 141,000 Income tax payable First [0 - 14,000] @ 10.5% 1,470 Second [14,001 - 48,000] @ 17.5% 5,950 Third [48,001 - 70,000] @ 30% 6,600 Fourth [70,001 - 141,000] @ 33% 23,430 Total tax 37,450 Less: Overseas tax credit (600) Imputation credit (1,400) Tax deducted at source (PAYE) (38,070) Resident withholding tax (3,550) Residual income tax (6,170) Less: Provisional tax paid - Tax to pay/(refund due) (6,170) 27 People and Organisation
Please note that “new migrants” and certain returning New Zealanders may be exempt from New Zealand tax on certain income (includes foreign interest and dividend income) if they obtain New Zealand tax residence after 1 April, 2006 and meet other criteria. If the exemption applies, the above calculation would change per below. Tax computation – Transitional Resident NZ$ NZ$ Salary 120,000 Interest income 10,000 Dividend income 5,000 Overseas taxable income - Total taxable income 135,000 Income tax payable First [0 - 14,000] @ 10.5% 1,470 Second [14,000 - 48,000] @ 17.5% 5,950 Third [48,000 - 70,000] @ 30% 6,600 Fourth [70,000 - 135,000] @ 33% 21,450 Total tax 35,470 Less: Overseas tax credit - Imputation credit (1,400) Tax deducted at source (PAYE) (38,070) Resident withholding tax (3,550) Residual income tax (7,550) Less: Provisional tax paid - Tax to pay/(refund due) (7,550) 28 People and Organisation
Appendix C:
Double-taxation agreements
Australia France Mexico Spain
Countries with which
New Zealand currently Austria Germany The Netherlands Sweden
has double taxation Belgium Hong Kong Norway Switzerland
agreements:
Canada India Papua New Guinea Taiwan
Chile Indonesia Philippines Thailand
China, P.R. Ireland Poland Turkey
Czech Republic Italy Russian United Arab
Federation Emirates
Denmark Japan Samoa United
Kingdom
Fiji Korea Singapore United States
(Republic of)
Finland Malaysia South Africa Vietnam
Treaty negotiations and re-negotiations are continuing with a number of countries. New Zealand is currently
negotiating new DTAs or protocols with:
Austria (2nd Protocol)
Belgium (3rd Protocol being negotiated, 2nd protocol signed but not yet in force)
China (DTA)
Fiji (DTA)
Hong Kong (2nd protocol signed but not yet in force)
Korea (DTA)
Luxembourg (DTA)
Netherlands (Protocol)
Norway (DTA)
Portugal (DTA)
Saudi Arabia (DTA)
Slovak Republic (DTA)
United Kingdom (DTA)
29 People and OrganisationTax information
exchange agreements
(TIEAs)
Tax information exchange agreements (TIEAs) are a limited form of a double-taxation agreement that is
concerned only with assisting in the prevention of tax avoidance and tax evasion. New Zealand has TIEAs with:
Anguilla Curacao* Marshall Islands Sint Maarten*
Bahamas Dominica Netherlands Turks and
Antilles* Caicos Islands
Bermuda ** Gibraltar Niue Vanuatu
British Virgin Guernsey Saint Vincent and
Islands the Grenadines
Cayman Isle of Man Saint Christopher
Islands and Nevis **
Cook Islands Jersey San Marino
* The islands of Curacao and Sint Maarten are separate constituent countries within the Netherlands. The
Netherlands Antilles TIEA continues to apply, however the agreement is now administered by each country.
** These agreements are not yet in force.
TIEA discussions are continuing with Antigua and Barbuda, Aruba, Grenada, Macao, Monaco, Montserrat,
Nauru, St. Lucia, San Marino and Seychelles.
FATCA
New Zealand has entered into an agreement with the United States which helps financial institutions to
minimise compliance costs in meeting United States reporting requirements.
Multilateral Conventions
New Zealand is a party to OECD’s: Convention on Mutual Administrative Assistance in Tax Matters and
Multilateral Convention to Implement Tax Treaty related measures to prevent BEPS.
Automatic Exchange of Information (AEOI) ad Common Reporting Standard (CRS)
Although not represented by any specific treaty, the AEOI initiative provides for the exchange of FATCA-type
information under the OECD Convention on Mutual Administrative Assistance in Tax Matters and under some
DTAs. The CRS sets out the international rules for the collection and reporting of this information
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