Income tax on overseas earnings

[boduke]

We have been in NZ for 18months and have just returned to UK for several personal reasons, now we have most of it sorted we would like to return. What we are concerned about is the amount of NZ tax we may owe on the 5months income we have earn't whilst being back in the UK.

I understand the double taxation treaty gives us credits but as I see it we are paying less tax in the UK than we would pay in NZ especially as we get a tax free sum and get national insurance and pension taken off prior to paying tax. Essentially this makes my gross earnings (on which NZ want to tax) out of proportion to my take home pay which I pay UK tax on.

Has anyone else been in this situation and what happened, by my rough estimates we could end up owing NZ approx $8-10,000 in unpaid tax, this could make or break our decision to return.

If anyone knew a NZ tax advisor/ accountant who would be willing to give advice over e-mail/phone (paid of course) We would be grateful for any help

Nicola

[IanW99]

If it helps any, I did a calculation on earning £40,000 in the UK which worked out about $12,000 dollars in tax owed (above what has already been paid to UK). This assumes that National Insurance does not get included as taxes paid (I have been unable to confirm this with IRD) and still learning really.

Wouldn't you owe them this money whether you came back or not as you are still NZ resident for tax purposes?

Also the latest date for submitting your IR3 is normally 7th July so if you haven't got an extension of time you will be liable to penalties.

If it was me, I would be phoning them up and trying to persuade them for an extension of time ASAP to give you time to sort everything out (assuming that you haven't already?).

Would also be very interested if you do find a good tax accountant.

Ian

[boduke]

As I understand it if you leave NZ for good and fill in the form telling the IRD this if you stay away for the 325 days or however many it is, then you cease to be a tax resident from the day you left.

I am doubly unhappy now as did not realise that tax returns had to be done by today thought it was the end of the month.

The payment of extra I am concerned about is for the current tax year so have some time to sort that and guess will be paying the late submission penalty for last years tax return now!!!

[Super_BQ]

You know you could always ignore the UK earnings as an option - at the risk of a possible tax audit by IRD. Despite the chances are pretty low, the IRD has little ability overseas to find out your earnings. Perhaps more ability in the form of land property transactions as conveying lawyers are required to record and submit directly to the tax dept.

But if you want to go strictly by the books, all you have to do is declare the 5 months UK earnings under the "Foreign Tax" section of the IRD tax return.