New Zealand imposes income tax on a residency basis. This means a New Zealand tax resident’s overseas and New Zealand sourced income are subject to tax in New Zealand. Accordingly, there may be income tax filing obligations and/or disclosure requirements in New Zealand.
Usually, most countries would tax on the tax residency basis. However, there is a small number of countries that would tax on the citizenship basis, such as United States and Philippines.
Determining residency can sometimes be difficult. Tax residency shall be considered when leaving or entering New Zealand because if the position is not clarified income tax implications may arise without knowing.
For those who arrive in New Zealand, tax residency may or may not obtained, in consideration of the COVID concession and Double Tax Treaty (where applicable); double tax treaty determines which country the taxpayer should “tie break” to. For those who leave New Zealand to live or work overseas for some time, tax residency may or may not be lost.
Transitional residency status may be available for new migrants or Kiwi expats, enabling the taxpayer to treat most overseas income as tax exempt for approximately four years from becoming a New Zealand tax resident. This is an one off concession and there may be advantages for opting out depending on the individuals’ circumstances.
