Tax Exemption for New Residents

A generous tax break is available to migrants to New Zealand for the first four years of their residency. 

Anyone arriving in New Zealand after 1st April 2006 and who qualifies as a "Transitional Resident" will be exempt from NZ Income Tax for four calendar years on all foreign sourced income other than employment income and income from the supply of services.

This means that investments held overseas that generate income, including dividends and interest, will not have this income taxed under NZ tax laws. This would also apply to certain types of pension funds held overseas. The exemption applies form the first calendar day of the month you qualify as a New Zealand tax resident and is valid until the last calendar day of that month four years later.

A Transitional Resident is an emigrant to New Zealand or a returning New Zealander who:

1. is a New Zealand tax resident or has a permanent place of abode in New Zealand and

2. has not been resident in NZ for a continuous period of 10 years prior to moving or returning to New Zealand and

3. has not previously been a "transitional resident".

In plain English the "permanent place of abode" test is based on factors such as whether you are going to live here permanently, whether you have bought a house and how strong your association with NZ is (bank account, children at school, permanent job etc.). 

If you hold investments or assets in the UK and other overseas countries, the Transitional Resident rules can result in significant tax savings in your first four years in New Zealand. 

If you have a family please note that you cannot claim tax relief under the transitional residence rules while you are receiving Working for Families tax credits - you can however choose which one is best for you.

Check the IRD website for more information on the Transitional Residence tax exemption for migrants to New Zealand.

Don't hesitate to contact us if you have any questions about your tax position as a UK migrant to New Zealand or a Kiwi returning from the UK.