Global

Details

  • Service: Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 12/12/2012

New Zealand - Proposal to revise policy on “tax residence” 

December 12:  New Zealand’s Inland Revenue Department (IRD) released a draft Interpretation Statement on “tax residence” that would reconsiders the tax authorities’ position on the tax residence of individuals, companies, and trusts.

The draft statement would revise the IRD's position concerning residence tax treatment for individuals, placing greater emphasis on the availability of a dwelling and lowering the standard for meeting that requirement. Also addressed in the proposal is whether an individual is to remain a resident even when overseas for an extended period, and whether rental property qualifies as "continuously available" when determining whether a dual resident is maintaining a "permanent home” in New Zealand.


It is unclear whether new provisions would apply prospectively or retroactively.


Comments on the draft are requested by 31 January 2012.

KPMG observation

The draft statement is the latest in a series of releases from the Inland Revenue Department that tax professionals view as likely to increase the tax burden on individuals and their employers.


The draft statement focuses heavily on situations that will cause individuals to become residents, and whether holding property in New Zealand indicates stronger ties to New Zealand. As a result, individuals currently overseas, who believe they are not taxable in New Zealand, may be surprised because of the Inland Revenue’s change in approach and the weight given to property retained in New Zealand


Read a December 2012 report [PDF 57 KB] prepared by the KPMG member firm in New Zealand: IRD releases updated statement on tax residence





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