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New Zealand – Taxation

New Zealand’s taxation system is administered by the Inland Revenue Department (IRD). The country has a progressive tax system, which means that those who earn more pay a higher proportion of tax than those who earn less.

Double Taxation Agreements

New Zealand has signed double taxation agreements with many countries, including the United States, the United Kingdom, and Canada. These agreements aim to avoid double taxation on income earned in both New Zealand and the other country. They also provide relief from withholding taxes on dividends, interest, and royalties.

Main Taxes for Expats

Income Tax

Expats who are considered tax residents of New Zealand are subject to income tax on their worldwide income. The income tax rates for resident individuals are progressive, ranging from 10.5% to 39%.

Non-resident individuals are only taxed on their income earned in New Zealand. The income tax rate for non-resident individuals is a flat rate of 33%.

Goods and Services Tax

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Goods and Services Tax (GST) is a tax on the sale of goods and services in New Zealand. The current rate of GST is 15%. Most goods and services in New Zealand are subject to GST, but there are some exemptions.

Special Tax Breaks for Expats

Accommodation and Meal Allowances

Expats who have come to New Zealand for a short-term assignment may be eligible for accommodation and meal allowances. These allowances are tax-free up to certain limits, as long as they are paid in accordance with the IRD’s guidelines.

Transferring Personal Effects

Expats who are moving to New Zealand permanently may be able to bring their personal effects, such as household items and personal belongings, into the country without paying duty or GST. To be eligible for this exemption, the items must have been owned and used by the expat for at least 12 months before they were shipped to New Zealand.

Filing a Tax Return in New Zealand

Expats who are considered tax residents of New Zealand are required to file a tax return each year. The tax year in New Zealand runs from 1 April to 31 March of the following year.

Expats can file their tax returns online using the IRD’s online portal. To do so, they need to obtain an IRD number, which is a unique identification number used by the IRD to track taxpayers.

When filing a tax return, expats need to provide details of their income, deductions, and credits for the relevant tax year. If they have any foreign income or assets, they may also need to declare them on their tax return.

Tax Exit Procedures

Expats who are leaving New Zealand to move abroad need to follow certain tax exit procedures. Firstly, they need to notify the IRD of their departure and provide details of their new address abroad. They should also settle any outstanding tax liabilities before leaving New Zealand.

Expats who have paid tax in New Zealand may be entitled to claim a refund of some of the tax they have paid. To do so, they need to file a tax return for the relevant tax year and claim the refund through the normal tax refund process.

The taxation system in New Zealand is relatively straightforward, with a focus on income tax and GST. Expats in New Zealand need to be aware of the main taxes that apply to them, as well as any special tax breaks that may be available. They also need to ensure they file their tax returns on time and follow the tax exit procedures if they are leaving New Zealand to move abroad. By understanding the New Zealand tax system, expats can ensure they are complying with their tax obligations and maximizing any tax benefits available to them.

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