Results 1 to 8 of 8

Thread: Status of taxation on savings bought in by new migrants

  1. #1
    Join Date
    Feb 2011
    Location
    Germany
    Posts
    126

    Default Status of taxation on savings bought in by new migrants

    Hi,
    I was wondering whether savings bought into NZ by new migrants are taxed or not (when they become tax resident of course).

    If I have savings from my past employment and if I decide to transfer them to NZ$ and into a NZ bank account when I move there, do I need to declare this to the tax authorities? What kind of tax applies on this?
    Note: Income tax has already been paid on these savings (as they were from paid employment)

    Thanks!
    Zeiger

  2. #2
    Join Date
    Sep 2008
    Location
    Christchurch from Scotland
    Posts
    2,226

    Default

    Hi Zeiger

    There will be non resident withholding tax applied to your interest by the bank until such time as you supply an IRD no. Once the bank receive this they will then tax at resident rates which are dependent upon your income levels. There is no tax charge purely for transferring your savings into NZ.

    Hope this helps

  3. #3
    Join Date
    Feb 2011
    Location
    Germany
    Posts
    126

    Default

    Thanks for your reply!

  4. #4
    Join Date
    Mar 2013
    Location
    Auckland, New Zealand
    Posts
    5

    Default

    You'll need to declare the interest here whether the money is here or overseas (unless you are within the 4 year new migrant exemption period in relation to overseas interest)

  5. #5
    Join Date
    Nov 2012
    Location
    New Zealand
    Posts
    34

    Default

    New migrants are not taxed on overseas income and assets for their first 4 years of NZ residence (although offshore services income is the exception). If any offshore assets are transferred to NZ during this 4 year period, there is generally no NZ tax implication because of the 4 year tax exemption. This is the case even if the transfers are transfers from a trust, company, super scheme, pension or just cash. It is important to note that the 4 year tax exemption is personal to you i.e. it would not apply to an entity you may control offshore such as a company or trust.

    If you bring tax-paid cash into NZ, you will have to pay NZ income tax on any interest income from that investment (assuming you are a NZ tax resident at that stage). Therefore, if you did not need all of the funds in NZ during the first 4 years, you would be wise to leave the funds earning interest offshore in your name so no NZ tax is payable (and ideally find a country where no tax is payable in that country either!).

  6. #6
    Join Date
    May 2012
    Location
    NZ (Auckland; via Canada)
    Posts
    1,350

    Default

    Mostly true. Overseas income is taxed; overseas assets are exempt for the 48 months. Just met with an accountant last week!



    Quote Originally Posted by chrisl34 View Post
    New migrants are not taxed on overseas income and assets for their first 4 years of NZ residence (although offshore services income is the exception). If any offshore assets are transferred to NZ during this 4 year period, there is generally no NZ tax implication because of the 4 year tax exemption. This is the case even if the transfers are transfers from a trust, company, super scheme, pension or just cash. It is important to note that the 4 year tax exemption is personal to you i.e. it would not apply to an entity you may control offshore such as a company or trust.

    If you bring tax-paid cash into NZ, you will have to pay NZ income tax on any interest income from that investment (assuming you are a NZ tax resident at that stage). Therefore, if you did not need all of the funds in NZ during the first 4 years, you would be wise to leave the funds earning interest offshore in your name so no NZ tax is payable (and ideally find a country where no tax is payable in that country either!).

  7. #7
    Join Date
    Feb 2009
    Location
    Auckland
    Posts
    3,697

    Default

    Thanks Jawnbc for the confirmation, I was just about searching for this point

  8. #8
    Join Date
    Nov 2012
    Location
    New Zealand
    Posts
    34

    Default

    Quote Originally Posted by jawnbc View Post
    Mostly true. Overseas income is taxed; overseas assets are exempt for the 48 months. Just met with an accountant last week!

    As stated above in my post, all offshore income (other than income derived from personal services) is exempt from NZ tax for the first 48 months of a new migrant's time in NZ. It is incorrect to state that "overseas income is taxed", as this implies all overseas income is taxed during the 48 month period whereas only personal services income derived offshore is taxable. I am not sure what the accountant said, but I am a tax specialist and so that everyone has some certainty in this area I have copied and pasted below the relevant extract from the tax legislation (S CW 27 Income Tax Act 2007):

    "Certain income of transitional resident
    CW 27 Certain income derived by transitional resident
    Income derived by a person who is a transitional resident is exempt income if the income is a foreign-sourced amount that is none of the following:

    (a) employment income of a type described in section CE 1 (Amounts derived in connection with employment) in connection with employment or service performed while the person is a transitional resident:

    (b) income from a supply of services
    "

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •