Question on Taxes for New Zealand PRV working overseas

[teaLover]

Hi everyone,

I would like to ask about taxes in the case of a NZ Permanent Resident visa (PRV) holder working in another country e.g. Singapore for a full year, in which NZ has a tax treaty.

If I were to be away from NZ for more than 325 days in a 12 month period, do I pay taxes for my overseas salary to both Singapore and New Zealand? or to just the country that I work in?

[batgirl1001]

You need to fill in a tax form and return it to IRD to determine your tax status. If you have remain outside of NZ for a continuous period of time of 12 months and more, you will be a non-resident for tax purposes. Since NZ and Singapore have a DTA, you will not be taxed by both countries on your income, only the country of your residence will tax you on your income. Your worldwide income however (should it not be in Singapore or any country which has a DTA with NZ) can be charged by IRD. For example if you work in Vietnam for a short period of time, your income will still be taxed by IRD. IRD will only tax you on your income in NZ for example if you have property for rental, or have a bank account in which your interest will be taxed. But this would be at the non-residential withholding tax rate which is 10%.

[teaLover]

Hi Batgirl1001,

Many thanks for your response. I appreciate it very much.

Since NZ has a DTA with Singapore, is there a minimum duration one has to satisfy in terms of Singapore employment for tax to be imposed only by Singapore e.g. 8 months of work in Singapore?

In the above case, does DTA over-rule the regulation of needing to remain outside of NZ for a continuous period of 12 months and more to be a non-resident for tax purposes? Hence, the latter requirement is no longer needed.

[chrisl34]

Hi Batgirl1001,

Many thanks for your response. I appreciate it very much.

Since NZ has a DTA with Singapore, is there a minimum duration one has to satisfy in terms of Singapore employment for tax to be imposed only by Singapore e.g. 8 months of work in Singapore?

In the above case, does DTA over-rule the regulation of needing to remain outside of NZ for a continuous period of 12 months and more to be a non-resident for tax purposes? Hence, the latter requirement is no longer needed.

You don't need to fill in a form and return it to the IRD. NZ tax residence is not determined by the IRD, but by applying the law to your facts. In fact, I recommend clients do not complete such a form as any IRD decision arising from that form is binding unless you commence the formal tax dispute process. Also you can be out of NZ for more than 325 days but still remain a NZ tax resident under the primary test of residence (called the permanent place of abode test). There is a Tax Treaty with Singapore but before you can apply it you need to determine whether you are a NZ tax resident (under NZ tax law) and also whether you are a Singaporean tax resident (under Singapore tax law).

The advice given to date is incorrect and incomplete. Also, the NZ tax rate on interest derived by a non-resident from a NZ bank can be as low as 2%.

This is a complicated area, and I strongly recommend you take tax advice in both NZ and Singapore.

[batgirl1001]

As long as you reside for 183 days and more in Singapore, you will be a tax resident in Singapore and will need to pay tax on all income earned or derived from Singapore. The current tax resident rate will apply to you. Check with IRAS on this as it depends on the total income you earned during a FY to which tax rate is applicable to you. I certainly wouldn't know your current situation in NZ as only IRD can determine it and if you choose to remain a tax resident of NZ, or cannot get a non-tax residency in NZ, then you may be liable to pay income tax on your income despite a DTA with Singapore. To get a clearer picture of your tax obligations, finding out from IRD or your accountant would be advisable. The reason pointed out about primary residence is that NZ IRD can deny NRWT status on you if they can come up with reasons such as you having bank accounts, assets, property, family and ties etc to NZ. Hence it is harder for you to prove non-residency status if that is your intention.

[teaLover]

Thank you so much for the advice. I appreciate it very much.