4-Year Tax Exemption Regime for New Zealand Tax Residents in 2024
Since 2003, Healy Consultants Group assisted multi-national Clients’ relocate or return to New Zealand, together with our business support services from A to Z.
Summary
For the first 4 years after becoming tax resident in New Zealand, qualified individuals (new migrants and returning nationals) can remit international income to New Zealand, without suffering New Zealand personal income tax. For those 4 years, overseas income is also legally tax exempt of New Zealand personal income tax!
Criteria for entitlement to temporary tax exemption in New Zealand
The criteria to benefit from the above tax benefit include:
- The individual is a new migrant to New Zealand;
- The individual was not a tax-resident in New Zealand within the past 10 years;
- The individual has his principal home in New Zealand.
- For each of the first 4 years, the individual has lived in New Zealand for a minimum of 183 days in a period of 12 months (day count test);
Types of foreign income temporarily exempt from tax in New Zealand
- Income generated by Controlled Foreign Companies (CFC);
- Income generated from foreign i) trusts; ii) foreign investment funds (FIF); iii) mortgages; iv) accrual income;
- Foreign dividends, interest and offshore royalties, usually subject to withholding taxation;
- Real estate income such as i) rentals and ii) offshore property gains;
- Income, including bonuses, from employment performed overseas before relocating to the country.
Foreign income that is not tax-exempt
- Salary and other employment income (such as bonuses) derived locally or overseas, but performed within New Zealand after relocation;
- Business income relating to services performed outside of New Zealand.
Features of the Temporary tax exemption regime in New Zealand
- In 2006, The New Zealand Inland Revenue Department introduced a temporary tax exemption regime for new migrants and returning nationals to the country, allowing full exemption from personal taxation in New Zealand;
- This exemption is granted only once in a lifetime on the international income of the qualified individuals;
- Successful applicants enjoy up to 4 years (49 months ) of tax-free residence in New Zealand;
- A temporary tax exemption is available only one time, and cannot be extended, nor renewed;
- No participation of the entitled individual in any other tax credit programs available in New Zealand;
- Compulsory submission of self-assessed tax returns by 31st of March each year via Form IR3.
How can Healy Consultants help me?
- We assist our multi-national Clients’ select the appropriate business visa option and submit a quality complete visa application package to the New Zealand Immigration authority, including a detailed business plan;
- Discuss global income sources and how we legally minimize international tax, including New Zealand personal income tax liability. We secure written confirmations from multiple New Zealand lawyers and accountants;
- Discuss global income sources and how we legally minimize international tax, including New Zealand personal income tax liability. We secure written confirmations from multiple New Zealand lawyers and accountants;
- On behalf of our multi-national Client, we secure approvals from the New Zealand Government to participate in the regime of Temporary tax exemption on foreign income;
- Annually thereafter, Healy Consultants prepares and timely submits and accurate and complete personal income tax return to the New Zealand Inland Revenue Department;
Conclusion
- Migrating to New Zealand for 5 years or more is a clever strategy, similar to taking up tax residence in Italy or Singapore or Hong Kong or Monaco.
