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People becoming tax residents in New Zealand may qualify for a temporary tax exemption on some of their foreign income. This temporary tax exemption is available to those who:
The exemption can only be granted once in a lifetime.
The temporary tax exemption for foreign income is for 4 calendar years (up to 49 months). The exemption starts on the first calendar day of the month you qualify as a tax resident in New Zealand and ends on the last calendar day of that month four years later.
Matt qualifies as a tax resident in New Zealand on 22 April 2010 and has one or more types of foreign income that are temporarily exempt for taxes in New Zealand (see list below). Matt is eligible for the exemption from 1 April 2010 until 31 April 2014, which is 49 months.
The following types of foreign income are temporarily exempt from tax in New Zealand.
When your tax exemption ends after 4 years (up to 49 months), you must declare all foreign income on your annual income tax return (IR3 for individuals).
These types of foreign income are not tax exempt in New Zealand:
If you have any of these types of income, you must declare them on your Individual tax return (IR3) from the date of your arrival in New Zealand.
To be eligible for the transitional resident concessions, you must satisfy the following requirements.
You and your partner have derived foreign interest of $1,000 per annum. You are also eligible for Working for Families Tax Credits totalling $5,000 per annum if you do not claim the exemption for foreign income.
In this situation, it is in your family's best interest to waive the exemption and pay New Zealand tax on the foreign interest and receive Working for Families Tax Credits. You can tell us about your foreign income on your IR3.
The tax exemption is automatically granted if you qualify. You do not have to contact us with your information.
You are required to provide us with accurate information and to notify us of any foreign income that is not tax exempt by filing an IR3 every year as long as you have foreign income.
When your tax exemption expires, you must include all your foreign income when you file your IR3 along with your New Zealand income. You must file an income tax return after the end of your exemption, and every tax year after that as long as you have foreign income, regardless of whether or not you notified us of your foreign income upon your arrival.
If your exemption expires at any time in a tax year other than on the standard balance day of 31 March, you will have to apportion your foreign income in your tax return for that year.
Simon qualifies as a tax resident in New Zealand on 10 September 2010 and has one or more types of foreign income that are temporarily exempt for taxes in New Zealand. Simon also fulfils the other eligibility criteria as listed above. In this case, Simon will be eligible for the temporary tax exemption from 1 September 2010 until 30 September 2014.
However, September is in the middle of a standard New Zealand tax year that runs from 1 April to 31 March. As Simon receives foreign income after 30 September 2014, he needs to declare the foreign income earned from 1 October 2014 until 31 March 2015 on his IR3 for the 2015 tax year (to 31 March 2015).
If you need to contact us, you can either: