What you need to know about Taxation in New Zealand
It is important to gain some understanding of New Zealand relatively simple taxation system before you migrate so you know what your taxation requirements and obligations will be. In 2007 new legislation was passed changing the way all investments are taxed.
What is subject to tax in New Zealand?
Income tax is payable on all income (salary, wages, business, interest, rents, investments etc) earned or derived both in New Zealand and overseas by a person resident in New Zealand for tax purposes. A credit is available in most cases for any foreign tax paid. If a person is not resident here for tax purposes, then New Zealand tax is charged only on income earned in this country.
The current individual tax rates in New Zealand:-
| Taxable Income | Tax Rate |
| Up to $14,000 | 12.5% |
| $40,000 – $48,000 | 21% |
| $48,001 – $70,000 | 33% |
| $70,000 and over | 38% |
Companies are taxed at a flat rate of 33%.
Trusts are taxed at a flat rate of 33%. Income distributed by a trust to beneficiaries, is taxed at the individual recipients tax rate.
Investment taxation
If a managed fund meets certain criteria it can elect to become a Portfolio Investment Entity (PIE). Within a PIE the capital gains made on investments in New Zealand and most major Australian companies are free of tax. In addition, rather than being taxed at the company rate of 33% on an income, individual investors are taxed at their Prescribed Investor Rate (PIR) of 19.5% or 30%.
Foreign Income for new migrants
This income may qualify for a temporary tax exemption of four calendar years ( up to 49 months) starting on the first day you qualify as a tax resident in New Zealand and going through until the last day of that month four years later.
Tax residency
Whilst it is relatively simple to determine most peoples tax residency, for others it is not so obvious. You can potentially be a tax resident of two countries. The area is complex and requires specific advice. New Zealand has negotiated Double Tax Agreements (DTA’s) with many other countries including the UK to decide which country has the first or sole right to tax specific types of income.
For specific tax advice we will refer you to a qualified tax expert resident in New Zealand.
For more information on the NZ taxation regime, visit the Inland Revenue Department website.
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