NEWS

Tax Issues for Migrants

Tuesday 9 April 2013, 11:46AM
By Andersen Accountants Limited
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With the Christchurch rebuild there are many foreign workers coming to New Zealand. It is important that they consider the tax issues that this raises. Some brief pointers:

  • If a non NZ resident employee is in New Zealand for 92 days or less in a 12 month period they are generally taxable only in the country they are tax resident in.
  • Non resident contractors (these can be companies or individuals) have to have non resident contractors tax deducted from payments made to them, unless:
  1. All payments received total less than $15,000 in a 12 month period; or
  2. They hold a certificate of exemption (this can be obtained from the New Zealand IRD); or
  3. They are in New Zealand for no more than 92 days in a 12 month period and they qualify for total relief under a tax treaty.
  • The issue of non resident contractors’ tax needs to be considered separately from the issue of the contractors’ actual tax liability.
  • Generally, if you are present in New Zealand for more than 183 days in a 12 month period you will be considered to be  a tax resident of New Zealand.
  • If you are present in New Zealand for less than 183 days in a 12 month period (even if you are never physically present in New Zealand) you may still be a tax resident in New Zealand based on your ties to the country.
  • If you are deemed to be  a tax resident in two (or more) countries and those countries have a tax treaty, the treaty will usually provide a means to decide which country is entitled to tax you so that you are relieved of multiple tax obligations.
  • If you are deemed to be a tax resident in two (or more) countries and those countries do not have a double tax treaty you may be liable to account for and pay tax in every country in which you are a tax resident - on your worldwide income. Credit may be given for tax paid in another country, however, the net effect is usually a great deal of paperwork and having to pay tax on your worldwide income at the relevant tax rate of the highest taxing country that you are deemed to be a resident in.

It is important to plan ahead so that you avoid unexpected tax issues, for example, accidentally becoming a tax resident in a  country, or becoming tax resident in more than one country, or being unaware of the tax obligations that have been created.

We are able to advise and assist with international tax planning and any tax issues for migrants leaving or arriving in New Zealand.

Kristina Andersen
Andersen Accountants Limited
Telephone: 09 3695198
Email: Kristina@andersen.co.nz
Website: www.andersen.co.nz