Top 10 Tax Misconceptions for Individuals
Posted: 28th March 2011
The IRD has published their top 10 commonly misunderstood tax
facts relating to international tax for
individuals. They are:
- New Zealand tax residents are taxed on their worldwide
income.
- A person can still be a New Zealand tax resident if he/she
leaves the country but still has a permanent place of abode in New
Zealand.
- Foreign income is taxable in New Zealand even if it's not
repatriated to New Zealand.
- Foreign income is taxable in New Zealand even if withholding
tax has been deducted
- Foreign tax credits are allowed to the extent that it cannot
exceed the tax otherwise payable on the underlying income in New
Zealand. In other words, you can get tax credits from excess
foreign tax credits.
- Not all overseas pension payments are tax-free, some overseas
pensions may be fully taxable in New Zealand.
- CFC rules and FIF rules also apply to gains on certain foreign
shareholdings, retirement schemes and life insurance
investments.
- Additional disclosures are required for controlled foreign
companies and foreign investment funds.
- Allowances that may be treated as tax-free in other countries
may not be free in New Zealand.
- The temporary tax exemption on foreign income for transitional
residents expires after 48 months and there's no entitlement to
Working for Family Tax Credits during the period of the
exemption.
If any of the above give you cause for concern, please contact
james.mcquaid@tbag.co.nz