[Kalla]

for tax purposes that is?

I read and re-read the descriptions on the websites but I'm still confused (and I studied accountancy at Uni - go figure - must be the last 3 years of being a stay-at-home mum - what's happened to my brain)

basically, I'm filling the forms for the bank accounts that we are opening while still in the UK. we leave for NZ on 8th August.
One of the questions is - are you a resident or non-resident for tax purposes.

from what I understand new migrants get exemptions for their overseas income for a certain period of time so does that mean that we are residents for tax purposes (because we have enduring ties to NZ ie a job contract and PR) but we just get expemptions???

Can someone clarify for me?

[mikey and tor]

i ticked non resident, until i get there and have some more money deposited or withdrawn.

[IanW99]

...
basically, I'm filling the forms for the bank accounts that we are opening while still in the UK. we leave for NZ on 8th August.
One of the questions is - are you a resident or non-resident for tax purposes.

from what I understand new migrants get exemptions for their overseas income for a certain period of time so does that mean that we are residents for tax purposes (because we have enduring ties to NZ ie a job contract and PR) but we just get expemptions???

Can someone clarify for me?

If you have opened the account and are transferring funds before you go to NZ then you could tick non-resident and thus pay a lower rate of tax but when you arrive you will need to change this declaration to resident.

If you are just transferring funds on arrival, then I would just tick the resident option straightaway.

Once you have been in the country for more than 183 days you will become resident for tax purposes and this will be from the time you enter the country (and not 183 days later). So if you declared you were non-resident for this period then you would have underpaid tax and will have to pay the outstanding amount.

BTW, even if you do declare as non-resident you would of course have to tell your home country tax office about these earnings.

The issue of 4 year tax exemptions is unrelated to this question.

Ian

[Kalla]

Ok, let me see if I understand:

if I am doing a transfer before I set foot in NZ, I can tick 'non-resident' but basically from the second I enter NZ I will be a 'resident' for tax purposes - so is there any advantage to me ticking 'non-resident'? Should I not just tick 'resident' straight away to avoid any issues with underpaying tax etc etc?

Sorry if I'm sounding a bit dense - my head is so full of stuff at the moment with 2 months to go before the move that the details are foggy!!!

Thanks for your help.

[James 1077]

If you transfer from the UK before you arrive then the interest earned at the bank should be taxed at a non-resident rate. So you should declare, when opening the account, that you are a non-resident for NZ tax purposes so that tax is withheld at the correct non-resident rate.

As soon as you arrive you will become NZ tax resident so will need to pop into the bank and change the declaration to reflect your current tax rate (you'll be going in anyway to pick up EFTPOS cards and show ID so make this change then).

If you aren't going to transfer any money until you arrive / a few days beforehand, then you won't be earning any NZ interest whilst you are a non-resident so you might as well declare yourself as tax resident on the form to avoid the change (as it won't make any difference either way).

If you transfer money to NZ before you become NZ resident then any interest that you earn on it should be taxable in your country of residence (ie the UK). You'll therefore need to declare this interest when you file your final UK tax return. You should make sure that you declare the gross interest (ie the amount you earn before any NZ tax is taken off) as this is what is taxable in the UK - you then get a tax credit in the UK for the NZ tax you have suffered on the interest so that you only have to pay the difference in tax between the NZ non-resident rate and your UK tax rate.

[IanW99]

Ok, let me see if I understand:

if I am doing a transfer before I set foot in NZ, I can tick 'non-resident' but basically from the second I enter NZ I will be a 'resident' for tax purposes - so is there any advantage to me ticking 'non-resident'? Should I not just tick 'resident' straight away to avoid any issues with underpaying tax etc etc?
...


It would come down to how long before entering NZ you are going to do the transfer but if it was only for a few weeks, then yes I would just tick the 'resident' box.

You won't technically be tax resident from the second you arrive in NZ, for example if you were to leave again before 183 days you may never actually become tax resident. But if you do become tax resident then yes it will count from the second that you arrive in NZ.

Or, what James says :)

Ian

[Kalla]

Ok - hooray!! Got it!!!

Thanks guys! The penny dropped. We don't intend to transfer funds until a few days before we leave so probably just gonna tick 'resident'.

Thanks for your help with this!

I'll probably have loads more questions later on ;)

[kiwishred]

One thing you might want to watch for is if you have made a 'scouting' trip to NZ within six months of your final move. Then the residency will start from the date first day of the scouting trip (but you won't know that for sure until a year has gone by)

The rule is "If you are in New Zealand for more than 183 days in any 12-month period, you are considered to be a New Zealand tax resident from the date of your (first) arrival here." I added the (first).

As an extreme example, let's say you fly to NZ on January 1, have a 1 hr job interview, and fly back. That counts as one full day and starts the clock ticking. There are 181 days in January through June (non leap year). So, if you subsequently arrive for good on July 3, you will accumulate an additional 365 - 181 - 2 = 182 days before the end of the year (or 183 days total within the year period). You will be deemed a tax resident on Jan 1. At least that is my interpretation.

Brent.