If you're leaving New Zealand, you'll need to know:
- if your tax residency status has changed
- whether double tax agreements affect how your New Zealand income is taxed
- how to finalise your tax position
- if you have social policy programmes to update.
Working out if your tax residency status has changed
- do not have a permanent place of abode in New Zealand
- are away from New Zealand for more than 325 days in any 12-month period.
If your tax residency status does not change, then you'll continue paying tax as a New Zealand tax resident.
Double tax agreements (DTAs)
Your new country or territory of residence may have a double tax agreement with New Zealand and this may affect how any income from New Zealand is taxed.
Finalising your tax position
If you're leaving New Zealand and your tax residency status changes, your tax obligations will change.
Your income tax obligations will change when you stop being a New Zealand tax resident and become a non-resident taxpayer.
Your change in tax residency is backdated to when you left New Zealand. If you know you're making a permanent move and you've earned income, you can file an Individual tax return - IR3 before the end of the tax year. Show the income you earned between 1 April and the date you left.
- You can also submit your tax return on the filing date. You'll have more time if you're using a tax agent.
- If your plans change and you return to New Zealand, you'll need to update us.
If you're still earning income from a New Zealand source after you become a non-resident taxpayer, you may need to pay tax on it.
- You may need to file a Non-resident individual tax return - IR3NR.
However, you do not need to file if your only income is either:
- from interest, dividends, and royalties and tax has been deducted correctly.
If you keep a bank account or hold shares in New Zealand, you'll need to update your details and note you're a non-resident taxpayer.
- This allows the payer of your interest or dividends to deduct the right amount of non-resident withholding tax (NRWT).
If you're planning on moving overseas, contact us for your options to pay off any debt you have.
We can help you make a full payment or set up an instalment arrangement. You may also be eligible for a partial or full write-off of tax debt in cases of serious hardship.
- If you're a New Zealander now living in Australia, the Australian Taxation Office can assist us in recovering your tax debt.
- We also have provisions with other countries, such as the United Kingdom, to help collect outstanding tax debt.
If you're planning to move overseas or spend an extended period away from New Zealand, your payments may be affected.
- You should contact Work and Income New Zealand to discuss your situation.
- The taxation of your payments may change depending on your circumstances.
Generally, if you remain a tax resident of New Zealand, you'll still pay tax on payments you get.
If you become a tax resident in another country, your payments may be exempt in New Zealand but you may need to pay tax on them in the other country or territory.
A portfolio investment entity is an entity which invests contributions from its investors in different passive investments.
- If you invest in a PIE and you become a non-resident taxpayer, you'll need to change your prescribed investor rate (PIR) to 28%.
- However, if you become a notified foreign investor (NFI), you'll be able to invest in zero-rate or variable-rate PIEs at lower rates.
You may need to include income in an Individual tax return - IR3 if you delay in notifying your PIE that your tax residency changed.
If you're both a New Zealand tax resident and settlor of a trust and you become a non-resident taxpayer, this will affect how your trust is taxed.
- We advise you to consult a tax professional before your status changes. It may become a non-complying trust if nothing is done.
If you're a beneficiary and you become a non-resident taxpayer, you'll only pay tax in New Zealand if that income is from a New Zealand source.
- The trustee should provide you with the information to complete a tax return if necessary.
- If your only income from the trust is from interest, dividends and royalties and non-resident withholding tax (NRWT) has been deducted correctly, you will not need to file a return for this income.
If you're a trustee and become a non-resident taxpayer, the settlor who is a New Zealand tax resident will become an agent for the trust.
- The settlor must pay tax to New Zealand on the trust's income and file a Settlors of trusts disclosure - IR462.
- The disclosure must be made within 3 months of the trustee becoming a non-resident taxpayer.
If you have shares in overseas companies and have applied the foreign investment fund (FIF) rules, you'll need to consider how your change in tax residency status affects you.
In general, if you become a non-resident taxpayer, you'll be treated as having sold your interests for market value immediately before the change for the purpose of calculating FIF income.
- You may need to consult a tax professional.
- The FIF rules will not apply to you as a non-resident taxpayer.
- If you did not need to apply the rules, you'll need to include any dividends you got in your return up to the date you leave.
Financial arrangements include foreign currency bank accounts, loans and government stock.
If you are party to any of these and you're leaving New Zealand, you may have to do a final calculation called a base price adjustment (BPA).
This is not necessary if you're a cash basis person who is a transitional tax resident and you:
- were party to the arrangement when you became a New Zealand tax resident and are party when you become a non-resident taxpayer
- stop being a tax resident before the first day of the fourth income year following the year in which you became a tax resident.
For example, if you became a transitional tax resident on 30 September 2018 and leave before 1 April 2022, you would not need to do the BPA on any financial arrangements you had when you became a tax resident.
Social policy programmes to update
If you're leaving New Zealand, there are some programmes that you may need to update, such as student loans, KiwiSaver, Working for Families and child support.
- The rules and timeframes are different for each programme, so you'll need to check what applies to you.