Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Little tax comfort for Kiwi expats

FOR IMMEDIATE RELEASE – 13th March 2014

Little tax comfort for Kiwi expats

Rebecca Armour, Tax Director and Head of International Executive Services at KPMG


Inland Revenue today released its interpretation of what it means to be tax resident.

“This is a particularly important document for New Zealanders living and working overseas. For these people, remaining tax resident in New Zealand can have significant financial implications.” says Rebecca Armour, Tax Director and Head of International Executive Services at KPMG.

"We therefore welcome its release. Residency issues have recently been at the forefront of many expats’ minds following the approach taken by the Taxation Review Authority in the recent decision about tax residency of an overseas based security consultant.” says Armour.

The initial draft of the statement caused some unease when it suggested that retaining any property in New Zealand may cause taxpayers to remain taxable on their worldwide income. Following extensive consultation, Inland Revenue has amended several areas of the interpretation statement.

“Aspects of these changes have resulted in a more reasonable outcome.”says Armour.

The Interpretation Statement still requires that individuals consider their entire circumstances and the level of their enduring connections with New Zealand when determining whether or not they are tax resident in New Zealand.

Armour notes that “The importance of the holistic approach to the consideration of residence as outlined in the Interpretation Statement is highlighted following the recent Taxation Review Authority decision.”

The residence test is still subject to judgment to be exercised and can be difficult to apply in marginal cases. “The most important thing is that taxpayers have certainty. Inland Revenue’s position for any specific person must be predictable at the time decisions need to be made.” says Armour. "In this respect the Inland Revenue operational guidance, is unhelpful."

For expats who have previously filed a New Zealand tax residence questionnaire and are relying on confirmation they received from Inland Revenue that they are not tax resident in New Zealand, Armour says that the operational statement suggests they will need to re-evaluate their positions, particularly where they are relying on the fact they have been outside New Zealand for three years or more.

“Unfortunately for those individuals, no comfort has been provided that their previously approved positions will not be challenged, as that type of confirmation is non-binding on Inland Revenue” says Armour. “In those cases we strongly recommend that individuals re-look at their residency position and seek advice if necessary, to ensure that they have correctly applied the published guidance. An 'incorrect' application could have serious consequences as the recent Taxation Review Authority decision illustrates.”

The tax residence of an employee can also impact on their employer’s tax obligations. It will determine whether they need to deduct PAYE, ACC and fringe benefit tax in New Zealand. The tax costs associated with an employee will impact on the cost of remuneration, the pricing of contracts and how competitive New Zealand tenders are for overseas projects. Therefore employers also need to be wary of the implications of the residence tests.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news