Migrating to New Zealand? Here’s Why You Should Reach out to a Tax Lawyer

Moving to New Zealand, whether permanently or temporary, is a great move. There are plenty of opportunities and you’ll have a chance of achieving your goals. But some subtle tax issues could prevent you from living your dream in Kiwi land. There are significant tax implications that new migrants and returning kiwis should be aware of when moving to New Zealand and tax structuring advice should be taken to ensure you are not paying unnecessary taxes. We spoke with Julia Johnson, a tax lawyer at Saunders & Co Lawyers who specialises in migrant tax issues. She shed light on common tax traps and how a tax lawyer can help.

Read on and find out why you need to reach out to a tax lawyer if you are new, or considering to migrate, to New Zealand.

There are plenty of tax traps for migrants to New Zealand

It is said that little foxes can spoil the vine. But Solomon didn’t mention that, as the foxes munch on your vine, they’ll grow into wolves and might just swallow you too.

Migrants to New Zealand face a myriad of taxation issues yet there’s not so much specialized help. Julia says “For new migrants, there are many tax traps.” And also observes that “there are not many other tax specialists in New Zealand that focus in this area.” 

Migrant tax traps may seem like little foxes at first. However, if you hide your head in the sand or fail to address them conclusively, these tax traps could be your Achilles heel. Incorrect structuring, or lack of understanding of the law is not a defence. New tax residents and those with foreign assets are an audit focus of Inland Revenue due to the high level of non-compliance and understanding of the laws in this area. There are often multiple ways to do things which can lead to different tax outcomes. In most cases, without structuring advice the new migrant or returning kiwi can pay far more tax than they would have needed to had they sought expert advice.


Your income may be taxable both in NZ and in the foreign territory

The regime in New Zealand levies taxes on residency status, not citizenship status. It doesn’t matter whether you are a foreign student or specialist worker. Once you’ve become a New Zealand tax resident (either by time spent in New Zealand or making New Zealand your home) you are subject to tax in New Zealand on your world-wide income. This means that your total earnings, including earnings from properties owned in other countries, are taxable. Foreign interests are taxed in New Zealand under the international tax rules and not like the same New Zealand interest would be taxed.

As Julia advises, “Owning a property overseas can lead to a tax liability in both New Zealand and the foreign country, as well as the requirement to withhold and pay NRWT on the mortgage payments.” 

You can learn more about the tax implications of owning overseas property in this article.

But that’s not all. Another common tax trap for migrants is that any employment-related payments from abroad, are taxable in New Zealand. The presence in New Zealand of an employee of a foreign company can also lead to significant tax issues for the company such as leading to that company being New Zealand tax resident company. This would lead to income tax, GST, PAYE and all other tax obligations in New Zealand.

The IRD requires you to include such incomes in your tax returns.

Gains from offshore assets are taxable

Asyour world-wide income is taxable this means gains from offshore assets are also taxable to you in New Zealand as well as overseas. Ifyou lived in a country which has a Double Tax Treaty with New Zealand then there may be some relief provided against double tax, but this usually does not relieve you entirely from double taxes.

For instance, if you have a trust overseas, once you become a tax resident in New Zealand the trust could be liable for tax of up to 45%.

Also, retirement or annuity payments received from overseas become taxable in New Zealand, regardless of the tax policy in your country of origin.

Not to forget, if you currently contribute to an off-shore life insurance policy, the annual gains in the surrender value of the life policy are taxable in New Zealand.

Even having a foreign denominated bank account can create adverse tax implications in New Zealand.


The dates that residency commences matters 

The above migrant tax traps are often intertwined with the date of your tax residency. It is essential to know when you become a tax resident.

Currently, you become a New Zealand tax resident, thus liable to pay New Zealand tax on all your income, if you’ve been in the country for more than 183 days in any 12-month span. You can also be considered a tax resident if you have a permanent place of abode in New Zealand.

There is a tax relief extended to new migrants which extend for four years from the date that you acquired tax residency. However, this is applicable only if you’ve met specific eligibility criteria and have not cancelled (often unknowingly) out of the regime


To conclude, a tax lawyer can help you avoid the above migrant tax traps by assisting with structuring your move to ensure tax efficiency. But that’s not all they can do. Since he or she will be one of your earliest professional contacts, they can help you broaden your network. The right lawyer will make you feel at home faster. As Julia puts it, “I get to know my clients well, impact positively, their move to New Zealand, and help introduce them to other professionals to complete their advisory needs.”


Important; This article is high level and does not cover all of the possible issues on this topic. It is intended for informational purposes only and you should seek specialist tax advice for personalised advice.

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