taxation

bktaylor · Testing The Water Joined: 17 Nov 2003 Posts: 3

if you get accepted for residency and still have income and/or assets back in the uk how is this income taxed ? is it taxed in uk or under nz tax laws when the funds arrive in nz.
any suggestions or help much appreciated

roberto · Posted: Wed Mar 17, 2004 4:56 am Post subject: Tax

Good thread bk.

Don't know the answer for sure but there is a double tax agreement between UK, NZ and OZ as they are reciprocal WRT taxtion. You only pay 1 lot of tax depending on where you are registered as your main domicile. So any income in the UK would be taxed via NZ IRD and if you transfer these funds to NZ, then IR will still tax you but from within NZ. This I assume will happen once you get an IRD number (and it's bound to be easier talking to NZIRD than UK IRD!)

http://www.ird.govt.nz/library/ecommerce/incometax/doubletaxationissues.html

How this happens or how it's set up I have no idea, hence the question below.

If I'm quitting work and will be unemployed for 3 weeks in the UK until I start work in NZ, what/how/who do I tell and should I sign on?

Many thanks
Rob

veronica · Posted: Wed Mar 17, 2004 7:24 am Post subject:

I could be wrong but as I understand it the uk tax bods take their normal tax rate out of it, and when the income gets to NZ the nz tax people take their cut. ie. if the uk tax rate was 15% and they'd have that and the nz 20% the the nz people would take 5%. don't hold me to that but thats my understanding. cheers Veronica

Robert · Posted: Wed Mar 17, 2004 5:49 pm Post subject:

I tried the Inland Revenue on this issue and even they could not explain it fully.

AFAIK The double tax agreement applies only to certain forms of income. All other income may be taxed in both countries(!) this could be read to include rental income from a property in the UK or it might not. UK tax inspectors have quite a lot of discretion in how they interpret the legislation.

The deal is that income 'arises' rather than being earned (don't ask me why they think you don't earn it) and as such it matters not where that arising takes place. IR want their piece of pie.

It would probably make your life a lot easier if you ensure that any income from the UK is negligible for tax purposes. If this is not appealing, I am sure the small amount of money paid to a tax consultant to analyse your affairs properly would be well worth while.

Another item worthy of note is that if you are non-resident for tax purposes, sale of property (and, I think stock) is free of CGT unless you return to reside in the UK within a set time (3 years?) so it may pay to keep large assets liable to CGT until you qualify (non residence commences at the start of the tax year after your departure from the UK)

With regards signing on, you should consult the CAB but it seems likely you would only be able to get income support (which is means tested) as your redundancy would be voluntary and brief. This is probably not enough money to be worth getting stressed over.

Regards

Rob (also confused over double tax!)

Raeven · Posted: Thu Mar 18, 2004 1:32 am Post subject:

Do any Americans have words of wisdom to contribute to this discussion? My husband and I, too, have concerns about how taxation between the US and NZ may affect us. As it is our intention to invest in rental properties and likely we will realize a limited amount of income from them, we are interested to know how the American tax officials will view this. We are clear that NZ will tax rental income as regular income, but we have yet to get any meaningful information on the US side of things. Any American tax horror stories to share by those Who Have Gone Before?

We have an appointment with a tax consultant here soon and will share our findings -- assuming he knows anything. Mostly when I call and lay out our proposed scenario to move to NZ, I am greeted with a hesitant, "Hmmmmmm..." Any and all information would be extremely appreciated!

All the best to our fellow migrants, Rae

bktaylor · Testing The Water Joined: 17 Nov 2003 Posts: 3

thanks for some great responses. i do smile to myself when i see how many further questions my initial enquiry has raised !
i think i will try some advice from an english accountant first, but they often never give a definitive answer when it comes to tax advice.

regards
ben