[PaulJ]

Hi,

I need some advice on tax for my offshore savings. I am in a bit of an odd situation at the moment:

- Activated my permanent residency visa in Christchurch in November 2006
- Returned to UK on my NZ Returning Resdients visa in December 2006

The stress of the move to NZ and other family issues at the time just got so much that I could not deal with the move. I decided to go to NZ for a short stay to activate my NZ visa, and try and deal with things back in UK. I hope to return to NZ before my returning residents visa expires, but finding it hard recoverring as I have had to partially rebuild my life back in the UK.

Back in 2005, I had moved most of my UK savings offshore(Isle of Man) as part of my preparations for the move. Mainly to postpone the payment of the interest to after I left my job to move to New Zealand, as I am in the higher tax bracket on my savings.

Now as far as I understand, I am currently a New Zealand resident, living and working temporarliy in the UK. As there is a Double Tax Agreement between UK and NZ, any UK income or interest on savings can be taxed in UK in exactly the same way before I moved to the UK and I don't need to declare this in New Zealand. Please correct me if I have got any of that wrong.

I am not sure about offshore savings interest, I guess I could declare that as foreign income for NZ or for UK. I feel the correct way would be to declare it for NZ, as technically I am currently a NZ resident operating on a returning residents visa. On the other hand, not sure that would be the right way, as I have not been in NZ for most of the year. I also have concerns if I declared in as NZ foreign income, and did not make it back to new zealand, wether that would cause complications.

I would really appreciate if anyone can clarify the situation for me, please feel free to PM me if you prefer to reply off list.

Regards,
Paul.

[incredible hulse]

From the info supplied you are not a NZ tax resident - you have to be in the country for >181(?) days for this to happen. I read it that you are currently a UK tax resident and as such declare your tax situation to the UK taxman and not NZ. I don't believe you can technically keep your savings "offshore" from the UK either; it doesn't matter whether you have activated your PR, it is more to do with where you reside during the tax year

[PaulJ]

Thanks for the reply, that makes it a lot clearer, and I need to declare my offshore savings in UK for current tax year.

I am hoping to get back to New Zealand sometime after April 2008, my return visa expires following November. I would like to know what happens for tax year 2008/2009. What from you have stated, so long as I live in New Zealand for at least six months of that tax year, as I expect will be the case, I would be resident in New Zealand for tax purposes, and can declare my offshore savings in New Zealand. Have I read that correctly ?

This has turned out to be much more complex than I thought, I expected that I would be able to take advantage of the four year tax free allowance for new residents and have factored this in to my planning. I don't know if the new 'non-dom' ruling from the UK pre-budget report will have an effect on this.

I have some other questions, but wil delve in to those later to stop this post from getting any longer.

Regards,
Paul.

[jryorkshire]

From the information you've given you will not be a resident of NZ (as per incredible hulse) as you have not been personally present in NZ for more than 183 days in a 12 month period, also from your brief stay it you will not have a permanent place of abode in NZ either. You will however remain a UK tax resident and will have to declare your worldwide income in the UK.

When (assuming) you permanently leave the UK sometime after April 2008, you will likely have a split year for tax in the UK. Basically you will be taxed in the UK from 6 April until the day of your departure. This is for income tax and is by concession only; you will basically be saying that you will not be returning to the UK to live within the next 3 years.

Form an NZ point of view you will likely become a tax resident in NZ from the date of your arrival (after April 2008). The transitional residents exemption (the 4 year exemption) on foreign income should apply on the basis that you have never been a tax resident of NZ during the last 10 years and you've never claimed the transitional residents exemption before. Accordingly you may wish to keep your income producing investments outside NZ for the 4 year exemption period.

If you only come to NZ for just over a 6 month period and then return to the UK you will be resident of both UK and NZ and would then have to refer to the NZ/UK Double Tax Agreement (DTA) to see who have first taxing rights. Article 4 covers this and on the very limited information given it will be likely you will be deemed as a tax resident of the UK, therefore would be taxed on your NZ sourced income only in NZ and on your worldwide income in the UK. You need to be careful with this to ensure you don't waste your transitional residents exemption which will apply from the time you obtain a permanent place of abode in NZ (this is a complex area and beyond this post!) and may not be saved by the DTA.

[Super_BQ]

In the case where you're resident in both countries, you'll find that both tax returns have a 'foreign tax credit' section to offset the tax you paid in each country.

Whether there's a benefit of residing only in NZ over UK depends on your personal preference - that is, I do not know which country has lower income taxes. On recent news, 40,000 Kiwis fled to Australia and critics say that taxes are lower there than in NZ (as for 1 of the main reasons for going...) Correct me if i'm wrong.

[andy141]

[QUOTE=jryorkshire;165587]
The transitional residents exemption (the 4 year exemption) on foreign income should apply on the basis that you have never been a tax resident of NZ during the last 10 years and you've never claimed the transitional residents exemption before. [QUOTE]

Hi,

My wife and I hope to move to NZ in '08 and I am wondering if UK pensions qualify for the exemption rule?

Andy