If you have income from overseas sources, it can be tricky to work out your tax position.
#1 Declare rental income from overseas properties. You can claim deductions for rental-related expenses, and you may also be able to claim a credit for tax paid in the other country on that income. It can be complex if you hold loans and mortgages overseas. Call us if this applies to you.
#2 Do you receive income from an overseas trust? The New Zealand tax treatment depends on where the settlor of the trust lives. As a trust does not have a legal personality, there is no concept of residency for trusts. However, a trust is recognised as a taxpayer, so New Zealand generally verifies the residency of the trustee to determine which income of the trust is subject to New Zealand tax. New reporting requirements for trusts have been introduced, so talk to us on how this may apply to you and trusts you are involved with.
#3 If you own shares in a foreign company, you must pay tax in New Zealand on foreign share dividends unless:
- You are a transitional resident, or
- The shares are subject to foreign investment fund or controlled foreign company rules.
Dividends paid by overseas companies to transitional residents or non-New Zealand tax residents are not taxable in New Zealand for the transitional period.
The rules for Foreign Investment Funds and Controlled Foreign Companies are complex. Get professional advice on the taxation of offshore investments, whether from us or your financial advisor.
#4 Having offshore bank accounts and credit or debit cards may trigger New Zealand tax obligations. Even if foreign withholding tax has been deducted on foreign income, it doesn’t necessarily mean the income is no longer taxable in New Zealand.
#5 Do you have interests in a foreign superannuation scheme? If so, any payments received from such schemes (including transfers into KiwiSaver) will need to be considered for New Zealand tax. As with other tax rules on foreign investments, these rules are complex. Please talk to us to ensure these are accounted for correctly.
If you’re not sure about any or all of these as they relate to your tax position, let us know.