Moving to New Zealand:
Managing Dual Residence

In today's global marketplace more and more people are choosing to move countries but maintain their old employment, directly or as a contractor, by working remotely and returning from time to time. In other cases, you might be coming up to retirement age, reducing working hours and spending several months in each country. In each of these cases, you will need to carefully consider your tax residence position and, where applicable, understand how to manage your dual residence.

You will be tax resident in New Zealand if you spend more than 183 days in the country in any 12 month period or if you have a permanent place of abode in New Zealand, even if you have a permanent place of abode elsewhere. To have a "permanent place of abode" requires an enduring relationship with the country in question. A permanent place of abode is a fixed and habitual place of abode, so is more than merely having a place to stay from time to time.

The New Zealand Inland Revenue (IR) has recently released a draft interpretation statement dealing with residence for income tax purposes. This has been updated to strengthen the importance of having a place to live that is available whenever it is required. The property does not need to be immediately available for occupation so a tenanted property may be a place of abode for its owner.

It is clearly possible to be treated as tax resident in New Zealand while retaining your tax residence in the United Kingdom (or elsewhere). In these cases, you will need to look to the applicable double tax treaty between those two countries to determine which country has the primary taxing rights.

The double tax treaty contains several tie-breaker tests for tax residence. The first test is where is your "permanent home"? The draft IR interpretation statement also changes the view on when a person will have a "permanent home" in New Zealand under double tax treaties, making it more difficult for persons who are away from New Zealand for a set period (even if several years) to claim that they no longer have a permanent home in New Zealand.

It is important to consider your tax residence position as soon as you start building ties with New Zealand, even if you are in the country for less than six months each year. If you acquire a permanent place of abode in New Zealand, you will become subject to tax as a resident of New Zealand, unless you can show that you are entitled to relief under an applicable tax treaty.

Jones Law is a boutique law firm based in Takapuna. Our partners are internationally qualified and practice in the areas of cross-border tax planning, estate planning and acquisition structuring.

The above article is provided for general information purposes and does not constitute legal advice. We invite you to contact us to discuss your specific circumstances. We can assist you with your global estate plan, in conjunction with our overseas network of qualified experts.

We invite you to contact us at info@jones-law.co.nz to discuss your specific circumstances. We can assist you with your global estate plan, in conjunction with our overseas network of qualified experts.

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