Grayling

If we were to move to NZ and our entire income came from overseas sources....does that mean we would pay no tax for the first 4 years?

The NZ tax website seems to indicate this.

Is there a catch....am I missing something?

Genesis

Read the small print? Maybe there is none. But from what I understand if you come stay here (one assumes you need PR status) all overseas income does not attract NZ tax..we missed the 2006 start date by arriving in 2005! One wonders if there is a limit that is tax free? All you need do is speak with an Nz tax consultant (NOT NZ IRD!!!) as they too often do not have a clue what they are on about and more than once I have been lead a merry waltz by them.

jmh

Yep - I have income from rent in the UK and don't have to declare it. There is a check box on the IRD form you tick and you have to put the date you arrived. You have to be a migrant or returning kiwi (after x years away - sorry can't remember how many and I'm too lazy to look it up).

The only catch is you can't claim family tax credit (or whatever it's called). Not an issue for me. I have an accountant because I am self employed here and she's on board with this.

jmh

Sorry should have clarified - you have to pay the tax in the UK, so I pay tax on my rent over the tax free allowance.

Grayling

At the moment I have to pay tax in Australia on my UK income.

Both NZ and Australia have double taxation agreements with the UK so you should only be taxed in your country of residence.

jmh

I need to check then - I thought you had to pay tax in the UK if you didn't in your country of residence. This is my first year of doing it so I'm still learning.

Grayling

From my experience I pay no tax at all in the UK even though that is where most of my income comes from. You should only be subject to the tax regime of your country of residence (although that may vary if you are on a temporary visa)....there is a form you need to complete but I can't remember the number

I do not know what the situation would be if I were a resident of NZ (therefore tax exempt) and not paying tax in the UK either

jmh

I filled out the form so that tax is not taken out at source. I assumed I would have to complete a tax return. Most of the rent would've come out of my tax free allowance so we're not talking about much, but it would be nice to know for sure.

I am a kiwi and resident in NZ.

luvwelly

My UK property rental has only just gone into profit as the mortgage has paid off, but it still comes in under our joint UK tax free allowance so even though I have to fill in a UK tax return because of it, I never owe any tax in UK. Your property in London may well be much more lucrative but I think you are correct that as a returning Kiwi with the exemption you do not have to declare it for the first 4 years to the NZ authorities.

From this year (my 4 years is up) NZ will want me to declare this so they can tax this. There is a double taxation agreement but I am assuming NZ will tax me on it even though the UK does not as it is within my UK allowance. NZ will also want to know about my UK based savings.

One of the reasons we are leaving shortly is that after 4 years NZ regard any Overseas Pension (even if it is your only one) as Overseas Investment Income and take their pound of flesh based on your premiums paid/increase in value - even though this is money you are not even seeing/drawing down yet....so you have to find it out of your NZ after-tax income.

This is the main reason corporate expats don't hang around for longer than 4 years.

luvwelly

This seems strange. May be true if your UK sources are interest income where the dual taxation agreement may cover it off but I think with rental property income the UK does look to tax you on the profit because it is income arising in the UK but for many people it falls within the tax allowance so is not an issue.
UK doesn't seem to be interested in overseas income at all (eg Kiwi salaries) only in stuff arising in UK, BUT if you live and work in UK they are interested in UK stuff and overseas investments.

Everyone needs professional advice really. It is such a complex area.

Grayling

None of my income is rental income....it is investments or pensions.....and some of it is in Australia...some from UK

At present I pay tax on it in Australia which has a similar double taxation with the UK as NZ does. NZ and Australia also have a double taxation agreement.

This means that you only pay tax in your country of residence.

If I moved to NZ I would be subject to NZ tax and therefore exempt under current rules

I would, of course, take professional advice before committing to anything.

It does make the idea of moving to NZ for a few years quite attractive (this has been my plan for a while).

Eventually I would return to the UK anyway.

luvwelly

In theory it seems to work but surely any of the stuff based in Australia would still be subject to Australian tax even while you are in NZ? Put it this way all the Aussies I know here are doing tax returns in both countries.
Did your road trip impress then?

Grayling

No....there is a double taxation agreement between the two countries.

jmh

I have only looked up rental income, but I thought that you paid the tax in the UK and then got tax credits towards tax payable here so that you are not taxed twice on the same income. Under the four year rule you don't declare it so don't get credits, but you still have to pay the tax in the UK. Other income may be different.

Grayling

I don't pay any tax in the the UK even though I have quite a large amount of income from there. All my tax is paid in Australia.....as is my wifes.