[UktoKiwi]

Due to new migrant tax laws it seems that if you arrive after April 06 it would be better to keep NZD outside of NZ for up to 4 years as you could not have to pay any tax on the interest.
With this in mind does anyone know where one might get the best rate of interest on NZD keeping the NZD outside of NZ??

[Delson]

Hi UKtoKiwi

Here is what the IRD say:

Temporary tax exemption on foreign income for new migrants and returning New Zealanders

From 1 April 2006, people arriving to live in New Zealand may qualify for a temporary tax exemption on most of their foreign income. This temporary tax exemption is available to those who arrive in New Zealand on or after 1 April 2006 and are new migrants or returning New Zealanders who have not been resident for tax purposes in New Zealand for at least 10 years prior to their arrival in New Zealand.

The exemption can only be granted once in a life-time.

The exemption
The temporary tax exemption for foreign income is for four calendar years (up to 49 months). The exemption starts on the first calendar day of the month you arrive in New Zealand and is valid until the last calendar day of that month four years later. For example:

You arrive in New Zealand on 22 April 2006 and have one or more types of foreign income that are temporarily exempt for taxes in New Zealand (see list below). You are eligible for the exemption counting from 1 April 2006 until 30 April 2010, which effectively is 49 months.

Exempt types of foreign income
Types of foreign income temporarily exempt from tax in New Zealand:

Dividends
Interest
Bonuses from a previous job overseas even if received after arriving in New Zealand
Controlled foreign company (CFC) income - under New Zealand's CFC rules. Read more about Controlled Foreign Company
Foreign Investment Fund (FIF) income, including foreign superannuation - under New Zealand's FIF rules. Read more about Foreign Investment Fund
Non-resident withholding tax on foreign mortgages
Approved issuer levy on foreign mortgages
Taxation arising from employee share options
Accrual income from foreign financial arrangements
Certain trust income
Rental income derived offshore
Royalties derived offshore
Gains on sale of property derived offshore
Offshore business income that is not related to the performance of services.
When your tax exemption ends after four 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:

Income derived from overseas employment performed while receiving the exemption
Business income relating to services performed offshore.
If you have any of these types of income, you must declare them on your annual income tax return (IR3 for individuals) from the date of your arrival in New Zealand.

To be eligible
You must have arrived in New Zealand on or after 1 April 2006, and
You must not have been a New Zealand tax resident at any time in the past 10 years prior to your arrival date in New Zealand. Read more about tax residency
This is a once-in-a lifetime exemption eg you can't extend your tax exemption or renew it after its expiry date
You or your partner cannot receive Family assistance while being tax exempt from foreign income, but will have to determine which is better for your situation, for example

You and your partner have $1000 worth of foreign interest per year, but are eligible for $5000/year Family assistance in New Zealand 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 Family assistance. You can inform us of your foreign income on your annual income tax return (IR3 for individuals).

Read more about Family assistance and how to apply.

I took that to mean you take your money over and you are exempt from paying tax on it for 49 months?.

[xJenniex]

I have a ? on Income Tax.
searched high and low for information. Plenty on Tax rates etc but I cannot find a single word on Tax free allowances. i.e the amount of money you can earn before paying tax.
Or do they not have them in NZ?

[Toto]

My understanding is that there are no tax free allowances! You pay tax on every penny you earn.

http://www.ird.govt.nz/income-tax-individual/itaxsalaryandwage-incometaxrates.html

[katiejay]

I took that to mean you take your money over and you are exempt from paying tax on it for 49 months?.

I would agree with uktokiwi - that this means that you have to be receiving interest from overseas investments for 49 months, ie you are in NZ, but your money is invested outside NZ - it is then 'foreign income' while you are in NZ.

[Trigirl]

i agree with uktokiwi and katie - if you take your money over to nz you'll pay tax on the interest.

[Delson]

After re-reading it, yes you are right. Has anyone looked into off shore accounts? The interest rates don't look very good, a lot lower than NZ.

[UktoKiwi]

Some of us really need to find a good offshore (out of NZ) rate for NZD. If we arrive after April 06 we get up to 4 years exemption from taxes on most income outside NZ including interest on bank accounts. I am an investor migrant so will be paying a substantial amount of tax to NZ anyway on what I have had to invest in NZ already.
I wonder if one can have ones money in an overseas account from a NZ bank such as RaboPlus or HSBC etc. In Nz one can get with these banks at least 7%. Seems little reason why we should not be able to but I have no information as yet.