Expatriate tax ebook - New Zealand

What taxes?
Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options
Wealth taxes
Other specific taxes

Capital gains tax
New Zealand has not enacted capital gains tax legislation as such, although some capital receipts may be treated as taxable income. In addition certain accrued / unrealised gains may be taxable. Specific taxing regimes apply to tax gains from certain property disposals, and gains arising from financial instruments such as deposits and bonds, and gains on certain foreign shareholdings, retirement schemes and life insurance investments. One of these regimes (the foreign investment fund regime) has recently been amended with the result that more people than previously are now subject to it.

Inheritance, estate & gift taxes
New Zealand does not impose inheritance tax, estate duties or death duties. However, gift duty is imposed in respect of disposals of property for inadequate consideration. Liability to gift duty arises in respect of gifts:

• by persons domiciled in New Zealand irrespective of where the subject property is situated; or
• by persons not domiciled in New Zealand where the subject property is situated in New Zealand.
  
  

Investment income
Passive income flows such as interest and dividends are taxable at the individual’s marginal income tax rate.

Local taxes
There are no local taxes imposed on the income of individuals in New Zealand.

Real estate tax
There are no real estate taxes in New Zealand. Rates are levied by local governments to cover local infrastructure, logistical and management costs.

Social security taxes
New Zealand does not have social security taxes. However there is an extra charge on employees being Accident Compensation Corporation (ACC) levies. The ACC scheme is a no-fault, government run accident insurance scheme and is funded in part, by payroll levies imposed on employers and employees. The employee earner premium is fixed at 2% for the year to 31 March 2011, irrespective of the employee’s occupation, and inclusive of GST. For the 2010/11 tax year no levy is payable in respect of earnings exceeding NZD $110,018 per employee. The rate and threshold for ACC is reviewed each year

Stock options
The tax on the income is to be reported in the tax return for the income year in which the exercise date occurs.
The gain is taxable regardless of whether the shares are sold at that time or not.
Subsequent holding gains, if the shares are not sold at exercise, will probably not be taxable, but expert advice should be sought in such a case.
Expatriates should also seek expert advise because depending on the specific circumstances, some or all of the income may be exempt from New Zealand tax or alternatively it may be taxable but with foreign tax paid recognised as a credit on some or all of the income (subject to the usual possible limitations).

Wealth tax
There is no wealth tax in New Zealand.

Other specific taxes
New Zealand has a $25 departure tax for people leaving the country. When departing from Auckland International Airport this is included in the ticket price.

New Zealand also has a value added tax, known as goods and services tax (GST). Generally, this does not impact on individuals as employees other than that they pay it on virtually everything they purchase. The rate is currently 12.5% increasing to 15% from 1 October 2010.

Information about New Zealand:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities