Returning to live in New Zealand? Personal Superannuation issues

When you return to live inĀ  New Zealand, you need to be aware of the taxation issues relating to your personal superannuation and investment arrangements.

In 2007 the Taxation of investments changed, and as a result NZ now has a relatively complicated taxation of investments regime. One of the results of this is that if you have superannuation or other investments overseas and you return to New Zealand, you are liable to pay tax on the 'earning's' of those investments while they remain overseas. This is based on the premise that if those investments were repatriated to NZ they would be caught in the tax net. This applies to investments over $50,000NZ per person in value if owned by an individual. If owned by any other entity the tax automatically applies.

The tax regime that you need to be aware of is the FIF/FDR regime. This stands for Foreign Investment Funds/Fair Dividend Rate regime. Very simplistically this means that you have a tax liability for the estimated return that your investments would have returned using the 'FDR' rate.

Most importantly, you need to be aware that you could be a 'transitional resident'. This means that you are: a new migrant, or returning New Zealander who has not been resident for tax purposes in New Zealand for at least 10 years prior to their arrival in New Zealand.

If you are a 'transitional resident' then you are eligible for an 'exemption' as follows:

The exemption can only be granted once in a lifetime.

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.

This gives you time to work out whether to bring these investments back to NZ or leave them where they are.

For US citizens there are other taxation issues, which I have outlined below.

For more information on the taxation regime - there is a 33 page guide :-) at http://www.ird.govt.nz/resources/0/2/02c2fb804d53a00ab09dbc66f9cd2564/ir461.pdf

Other topics for you to look at if you are returning to live in New Zealand:

Insurance Issues

NZ Superannuation Issues

KiwiSaver issues

FATCA issues for US Citizens

By Carey Church


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