Foreign Tax Credits

Where a New Zealand resident derives overseas income, it is likely they pay tax offshore and then having to report the income in New Zealand.

This could lead to the possibility of paying tax twice on the same income. Where tax is paid offshore in respect to the overseas income, foreign tax credits may be claimable.

Tax

Claiming Maximum Foreign Tax Credits

Generally, a New Zealand tax resident is allowed a credit for income tax paid overseas. The maximum amount of foreign tax credit available is determined by the formula in the Income Tax Act 2007. In most cases, the credit is limited to the lesser of

  • Actual overseas tax paid on the overseas income, or
  • New Zealand tax applicable to the overseas income.

No credit of tax is permitted for taxes that are not substantially of the same nature as New Zealand income tax, including forms of withholding taxes.

In most cases, foreign tax credits must be made within four years from the end of the relevant tax year, supported by appropriate information.

If you would like to know more about International & Cross Border Tax, click here.

Foreign Tax Credits Assistance

Please refer to our people for more information on who we are and how we can assist with claiming foreign tax credits in your income tax return.

We offer a free no obligation consultation where we can discuss

  • your tax situation and requirements and whether you are eligible to claim foreign tax credits in your income tax return;
  • highlight any tax issues and opportunities; and
  • how we can add value and assist.
Book a Consultation