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New Zealand Tax Resident?

October 15, 2015

You may think you are not tax resident in the New Zealand but the Inland Revenue Department may not agree with you.

An individual retains tax residency in New Zealand if they have a permanent place of abode in New Zealand, irrespective the amount of time they are physically present in the country.

Previous to a Tax Review Authority (TRA) decision in 2013 retaining an investment property in New Zealand did not mean you had a permanent place of abode in New Zealand.

In 2013 the TRA found that Mr Diamond, who had been working overseas for 10 years, was a New Zealand tax resident. Mr Diamond had an estranged wife and four children in New Zealand, and several investment properties. One property was located in the area his family lived in, and was managed by his estranged wife. Mr Diamond had never lived in this property. The TRA considered that because Mr Diamond could terminate the periodic rental with 42 days’ notice he had a permanent place of abode and was New Zealand tax resident.

This case has been considered by the High Court and the judge decided in favour of Mr Diamond. However the Department are appealing this decision. And in the meantime have issued an Interpretative Statement which includes a lengthy review of what they consider to be a permanent place of abode.

This appeal and the Interpretative Statement mean that if you are leaving on your OE or to take up a longer term position overseas and you have a domestic property in New Zealand you need to contact us.

Margaret Pepper

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