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Thread: 4 year tax amnesty

  1. #1
    Join Date
    Jun 2006
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    Default 4 year tax amnesty

    I just need to clarify my understanding or lack of on this tax break.

    My understanding is that this means people emmigrating dont have to pay interest on money earned outside of NZ for the first 4 years, ie interest or rent earned in the UK.

    I have read in another post that this only applies to people who arrived before the 1st April? Is that correct?

    We wont be getting there until later in the year and were hoping to take advantage of this.

    Cheers for any reply.

  2. #2
    Join Date
    Mar 2006
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    Wellington (from the UK)
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    Default

    Nope, it applies to anyone who arrived on or after 1st April 2005. You'll pay no tax on unearned income - i.e. interest or rent is untaxed, employment income would still be taxed.

  3. #3
    Join Date
    Jun 2006
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    Default

    Thats excellent. Potentially a nice earner if you have a lump sum from a house sale. Cheers for the reply.

  4. #4
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    Quote Originally Posted by MarkS View Post
    Nope, it applies to anyone who arrived on or after 1st April 2005. You'll pay no tax on unearned income - i.e. interest or rent is untaxed, employment income would still be taxed.
    Isn't it 2006 ? If it is 2005 I've suddenly cheered up a hell of a lot

  5. #5
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    Mar 2006
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    Default

    you're right. I was thinking this year was still 2006!

  6. #6
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    Damn - missed it by about a month then. Will have to keep on hiding that interest from the tax man

  7. #7
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    May 2006
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    Whangarei
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    I have heard that if you claim the 4-year tax break then you will not qualify for any government incentives, such as a child bonus. Can anyone speak to that?

    Mark.

  8. #8
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    Jun 2006
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    Quote Originally Posted by Jenny & Mark View Post
    I have heard that if you claim the 4-year tax break then you will not qualify for any government incentives, such as a child bonus. Can anyone speak to that?

    Mark.
    That is true. When you get an IRD number you choose the 4 year tax break thing but it does mean, like Jenny & Mark said, that you dont get the family tax credit thing in NZ. So you need to work out what is going to be best for you.

  9. #9
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    Mar 2006
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    Wellington (from the UK)
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    Deleted - I was talking rubbish again (as shown by the next post). Not having a good night!
    Last edited by MarkS; 24th May 2007 at 12:26 AM.

  10. #10
    Join Date
    Jun 2006
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    Somone posted this up for me on another forum which spells out pretty clearly. You need to do the sums but it could be really good for some people even with the loss of the family credits, i think if you take it you cant get the family credits for 4 years regardless, ie you cant opt back in again if you run out of savings abroad so you need to be sure its the right move for you:


    Temporary tax exemption on foreign income for new migrants and returning New Zealanders

    From 1 April 2006, people becoming tax residents in New Zealand may qualify for a temporary tax exemption on some of their foreign income. This temporary tax exemption is available to those who qualify as a tax resident in New Zealand on or after 1 April 2006 and are new migrants or returning New Zealanders (transitional residents) who have not been resident for tax purposes in New Zealand for at least 10 years prior to their arrival in New Zealand.

    The exemption can only be granted once in a lifetime.

    The exemption
    The temporary tax exemption for foreign income is for four calendar years (up to 49 months). The exemption starts on the first calendar day of the month you qualify as a tax resident in New Zealand and is valid until the last calendar day of that month four years later. For example:

    You qualify as a tax resident in New Zealand on 22 April 2006 and have one or more types of foreign income that are temporarily exempt for taxes in New Zealand (see list below). You are eligible for the exemption counting from 1 April 2006 until 30 April 2010, which effectively is 49 months.

    Exempt types of foreign income
    Types of foreign income which are temporarily exempt from tax in New Zealand:

    Controlled foreign company income that is attributed under New Zealand's Controlled Foreign Company (CFC) rules
    Foreign investment fund income that is attributed under New Zealand's Foreign Investment Fund (FIF) rules (including foreign superannuation)
    Non-resident withholding tax (for example on foreign mortgages)
    Approved issuer levy (for example on foreign mortgages)
    Income arising from the exercise of foreign employee share options
    Accrual income (from foreign financial arrangements)
    Income from foreign trusts
    Rental income derived offshore
    Foreign dividends
    Foreign interest
    Royalties derived offshore
    Income from employment performed overseas before coming to New Zealand, such as bonus payments
    Gains on sale of property derived offshore (held on revenue account)
    Offshore business income (that is not related to the performance of services).
    When your tax exemption ends after four years (up to 49 months), you must declare all foreign income on your annual income tax return (IR3 for individuals).

    These types of foreign income are not tax exempt in New Zealand:

    Employment income from overseas employment performed while living in New Zealand
    Business income relating to services performed offshore.
    If you have any of these types of income, you must declare them on your annual income tax return (IR3 for individuals) from the date of your arrival in New Zealand.

    To be eligible
    You must have become a tax resident in New Zealand on or after 1 April 2006, and
    You must not have been a New Zealand tax resident at any time in the past 10 years prior to your arrival date in New Zealand. Read more about tax residency
    This is a once in a lifetime exemption eg you can't extend your tax exemption or renew it after its expiry date
    You or your partner cannot receive Working for Families Tax Credits while being tax exempt from foreign income, but will have to determine which is better for your situation, for example:

    You and your partner have $1,000 worth of foreign interest per year, but are eligible for $5,000 per year Working for Families Tax Credits in New Zealand if you do not claim the exemption for foreign income. In this situation, it is in your family's best interest to waive the exemption and pay New Zealand tax on the foreign interest and receive Working for Families Tax Credits. You can inform us of your foreign income on your annual income tax return (IR3 for individuals).

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