Posted 10 28 09

New Zealand has put in place tax exemptions to encourage you to move to New Zealand.  Make the most of them.  A little forward planning can ensure that you gain the full benefit of tax exemptions available to you.

If you're new to New Zealand it is likely you will qualify for a tax exemption on foreign sourced income, which is available to new migrants and persons returning to New Zealand after an absence of ten years or more.  If the tax exemption applies, foreign sourced income, other than salary or income from the supply of services, will be exempt from tax in New Zealand for four years.

To maximise the effect of the transitional resident tax exemption, care should be taken to ensure that the start date of your residence in New Zealand is not unintentionally triggered earlier than expected.  A brief visit to New Zealand to attend a job interview or scope the housing market may result in backdating your residence start date.

If the tax exemption applies to you, give some thought to whether you really want to bring your money onshore.  If you place funds in a New Zealand bank account, you will derive interest income which is taxable in New Zealand.  Consider if you can derive the same return offshore at a lower tax rate.  That income would be exempt from tax in New Zealand.

The same principle applies to gains you make on foreign exchange, namely taxable onshore yet tax free offshore.  We will be discussing the issue of foreign exchange in more detail in our next contribution to this newsletter.

 The best results are achieved by making sure you understand your planning opportunities before arriving in New Zealand. 

For further information and to see if an exemption applies to you, or to book a no obligation consultation, please email Jones Law info@jones-law.co.nz or visit www.jones-law.co.nz/movingtonz