Tax in NZ
Hi guys - sorry but a boring tax question!
We moved to NZ in Oct 09. Jo has a full time job and I am due to start full time in the New Year. We have a rental property in the UK. Questions: 1. Will we have to fill in a NZ tax return (IR3)? I think on the IRD website it says that if you arrive half way through a tax year you will have to fill one in and if you income from outside NZ you have to fill one in - do they just send you one or do we need to ask for one? Anybody in or experienced the same situation? :confused: 2. The income from the UK rental property will be so little after agents fees, interest, wear and tear etc that it will be below our UK individual tax thresholds hence even though it will be included on our UK tax returns we will not have to pay tax on the income (split between the two of us). However, if we have to fill in a NZ IR3, it will ask what income we have from abroad (UK rental income) and if we have paid tax on it and if so we will not have to pay tax again this end because of the double taxation agreement. But, if it falls below the UK threshold then we have not technically pay any tax on the income in the UK - in which case will NZ tax it? :thumbdown: 3. Do you 'opt in' to the 4 year new migrant tax amnesty or do they do it automatically if you fill in IR3? In future we may have kids and want family tax credits so do not really want to use 4 year rule if I don't need to. ;) Sorry, I know they are boring questions but I assume others have been in this situation or are going through it or may go through it in the future and any info would be great :thumbup: |
Re: Tax in NZ
Originally Posted by Jo-Chris
(Post 8198695)
Hi guys - sorry but a boring tax question!
We moved to NZ in Oct 09. Jo has a full time job and I am due to start full time in the New Year. We have a rental property in the UK. Questions: 1. Will we have to fill in a NZ tax return (IR3)? I think on the IRD website it says that if you arrive half way through a tax year you will have to fill one in and if you income from outside NZ you have to fill one in - do they just send you one or do we need to ask for one? Anybody in or experienced the same situation? :confused: 2. The income from the UK rental property will be so little after agents fees, interest, wear and tear etc that it will be below our UK individual tax thresholds hence even though it will be included on our UK tax returns we will not have to pay tax on the income (split between the two of us). However, if we have to fill in a NZ IR3, it will ask what income we have from abroad (UK rental income) and if we have paid tax on it and if so we will not have to pay tax again this end because of the double taxation agreement. But, if it falls below the UK threshold then we have not technically pay any tax on the income in the UK - in which case will NZ tax it? :thumbdown: 3. Do you 'opt in' to the 4 year new migrant tax amnesty or do they do it automatically if you fill in IR3? In future we may have kids and want family tax credits so do not really want to use 4 year rule if I don't need to. ;) Sorry, I know they are boring questions but I assume others have been in this situation or are going through it or may go through it in the future and any info would be great :thumbup: |
Re: Tax in NZ
I think you may misunderstand how the double tax agreement works.
Although there is a "double tax" agreement between the UK and NZ this does not mean that if income is tax free in the UK (because of allowances) it will also be tax free in NZ In principle, the NZ IRD will take your UK gross income, convert it to NZ Dollars, calculate the NZ tax payable on that amount then deduct the tax already paid in the UK (in this case zero). You will then have to pay the difference. Because NZ income tax rates are higher than those in the UK and there are NO tax free allowances, you will certainly have to pay some tax here This is true even if you decide to leave the income in the UK and never bring it to NZ As Genesis has already said, as a new migrant you will be exempt from NZ income tax on your overseas income for the first 4 years. If you decide to take this option, however, you will be excluded from Working For Families tax credit. This information is based on my understanding of the NZ tax system, but is not intended to be taken as definitive advice |
Re: Tax in NZ
Thanks for the replies Genesis and NakiMan makes things a little clearer but I now I have a few mores questions:
1. Will IRD automatically send us an IR3 to fill in or should we 'request' one? 2. We are registered as non-resident landlords in UK so rent gets paid to us with no tax taken off. We will need to complete UK Tax Return's in April 2010 to sort out how much tax we are due in repayment or owe HMRC as we left (and finished jobs) in UK in Oct 09 - we submitted our P45's (P85) for repayments but HMRC have said that they will work it out with our Tax Returns in April instead of doing it sperately (some new computer system?). I think we are entitled to split year treatment, although not entirely sure what that means? 3. Because we have to do a UK Tax Return, we will not be sure how much tax we have paid / required to pay in UK so how can I put this in the NZ IR3 which is issued at the same time as the UK one - surely I need to know the results from UK one first? 4. Will NZ IR3 take into account everything from April 2009 - April 2010 or from when we landed in NZ to April 2010? As you can tell from the above I am confusing myself and getting mixed up with all this :blink: so to get it clear in my head, will the following be the process: 1. April 2010 - receive UK tax return and NZ IR3 2. Fill out UK return and wait for HMRC to calculate what tax I have/need to pay. 3. Once I have details of UK taxes, I can fill in NZ IR3 and send back to IRD. Please can you tell me if any of the above is correct or where I am going wrong? An idiots guide would be great!! :confused: |
Re: Tax in NZ
interesting thread: I was wondering the same as I took up employment on 1st Sep, and Neil on about 1st Oct. We both had tax rebates from the UK after we left (because we applied for them) but have no rented property there. As Jo-Chris said, does the form arrive automatically?
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Re: Tax in NZ
Originally Posted by Jan n Neil
(Post 8200300)
As Jo-Chris said, does the form arrive automatically?
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Re: Tax in NZ
Originally Posted by Jo-Chris
(Post 8199962)
2. We are registered as non-resident landlords in UK so rent gets paid to us with no tax taken off. We will need to complete UK Tax Return's in April 2010 to sort out how much tax we are due in repayment or owe HMRC as we left (and finished jobs) in UK in Oct 09 - we submitted our P45's (P85) for repayments but HMRC have said that they will work it out with our Tax Returns in April instead of doing it sperately (some new computer system?). I think we are entitled to split year treatment, although not entirely sure what that means?
3. Because we have to do a UK Tax Return, we will not be sure how much tax we have paid / required to pay in UK so how can I put this in the NZ IR3 which is issued at the same time as the UK one - surely I need to know the results from UK one first? |
Re: Tax in NZ
Just another story, slightly off topic.
We have a friend who has had a monthly Forces pension income from the uk for 5 years. This was taxed at source in the UK & then taxed again here (to make up the difference). Now, after 5 years of arguing he has managed to stop the tax at this end, so now only paying at the lower UK rate (backdated):thumbup: Thought that may be of interest to someone out here:) |
Re: Tax in NZ
Originally Posted by mickey_d
(Post 8200339)
Ours did:thumbup:
We have completed an IR3 each year since we have been here (2+ years) and we have always received a tax rebate :D One of us has been in in a part time since we have been here and the other in and out of a variety of jobs. So we may or may not be a good example. :p |
Re: Tax in NZ
Originally Posted by mickey_d
(Post 8200350)
Just another story, slightly off topic.
We have a friend who has had a monthly Forces pension income from the uk for 5 years. This was taxed at source in the UK & then taxed again here (to make up the difference). Now, after 5 years of arguing he has managed to stop the tax at this end, so now only paying at the lower UK rate (backdated):thumbup: Thought that may be of interest to someone out here:) Unless its treated differently because its Armed Forces? Any information appeciated |
Re: Tax in NZ
Originally Posted by NakiMan
(Post 8200499)
How on earth did they manage to do that? I would be very interested to know the grounds, as I too have an occupational pension from my UK employer and pay UK tax on it.
Unless its treated differently because its Armed Forces? Any information appeciated |
Re: Tax in NZ
Thanks for the advice so far guys, but still looking for the answers to the following if possible:
1. Do you 'opt in' to the 4 year new migrant tax amnesty or do they do it automatically if you fill in IR3? 2. From the replies it looks like IRD send IR3's out autmatically - what are others experiences? 3. Stupid question I know but what is split year treatment? 4. Because we have to do a UK Tax Return, we will not be sure how much tax we have paid / required to pay in UK so how can I put this in the NZ IR3 which is issued at the same time as the UK one - surely I need to know the results from UK one first? 5. Will NZ IR3 take into account everything from April 2009 - April 2010 or from when we landed in NZ (Oct 09) to April 2010? Is the following assumption right: 1. April 2010 - receive UK tax return and NZ IR3 2. Fill out UK return and wait for HMRC to calculate what tax I have/need to pay. 3. Once I have details of UK taxes, I can fill in NZ IR3 and send back to IRD. or if after we have done the UK Tax Return it shows a credit or debit, does this then go into the next tax years figures (2010-2011) and should not be included in the 2009-2010 return? Help please! :confused::blink: |
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