New Zealand Individual Tax Guide

New Zealand

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Auckland GMT +12

EY Street address:

Mail address: 2 Takutai Square P.O. Box 2146 Britomart Auckland 1140 Auckland New Zealand New Zealand

Executive contacts

Rohini Ram

James Barlow

+64 (27) 489-9917

Fax: +64 (9) 309-8137 Email: rohini.ram@nz.ey.com

+64 (27) 489-9099 Fax: +64 (9) 309-8137 Email: james.barlow@nz.ey.com

Elizabeth Wheatcroft +64 (27) 489-9084 Fax: +64 (9) 309-8137 Email: elizabeth.wheatcroft@nz.ey.com

Immigration contact

Tom Lawler

+64 (27) 603-3952 Fax: +64 (4) 817-0761 Email: tom.lawler@nz.ey.com

Wellington GMT +12

EY Street address: Mail address: Majestic Centre P.O. Box 490 100 Willis Street Wellington 6140 Wellington New Zealand New Zealand

Executive contacts

Elizabeth Wheatcroft

Emma Pennington-Foley

Immigration contact

Tom Lawler

+64 (27) 489-9084 Fax: +64 (9) 309-8137 Email: elizabeth.wheatcroft@nz.ey.com

+64 (21) 248-0327

Fax: +64 (4) 495-7400 Email: emma.pennington-foley@nz.ey.com

+64 (27) 603-3952 Fax: +64 (4) 817-0761 Email: tom.lawler@nz.ey.com

Christchurch GMT +12

EY Street address: Mail address: Level 4/93 Cambridge Terrace P.O. Box 2091 Christchurch 8013 Christchurch 8140 New Zealand New Zealand

Executive contacts

James Barlow

Tom Pritchard

+64 (27) 489-9099

Fax: +64 (9) 309-8137 Email: james.barlow@nz.ey.com

+64 (21) 220-3826 Email: tom.pritchard@nz.ey.com

Immigration contact

Tom

A. Income tax

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Fax:

Who is liable. Resident individuals are subject to income tax on worldwide income. Nonresident individuals pay tax on New Zealand-source income only.

Individuals are considered resident in New Zealand for tax pur poses if they meet either of the following conditions:

• They have a permanent place of abode in New Zealand, regard less of whether they also have a permanent place of abode outside New Zealand.

• They are physically present in New Zealand for more than 183 days in any consecutive 12-month period.

Transitional residents’ exemption. Resident individuals arriving for the first time in New Zealand after 1 April 2006, or who have been absent for at least 10 years before returning to New Zealand and have never previously claimed the transitional residents’ exemption, are considered to be transitional residents and are eligible for an exemption on certain income arising from sources outside New Zealand for the first 48 months of their residence. However, transitional residents can elect to waive the exemption.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Generally, the responsibility for determin ing the taxability of employment income paid to an employee rests with the employer. Employers are also generally responsible for reporting employment income on behalf of employees and for correctly withholding income taxes through the Pay-As-YouEarn (PAYE) withholding tax system.

For employees without tax file numbers, employment income is subject to PAYE at a rate of 45%. Unless a tax file number is obtained and the employer’s reporting is retrospectively amended to reflect the number, this rate is effectively a final liability for the employee.

Gross income includes all salaries, wages, bonuses, retirement payments and other compensation. Employer-paid items, includ ing reimbursing payments, allowances such as hardship allow ances, meal allowances and cost-of-living allowances, tuition for dependent children, per diems, and payments made on an employee’s account is generally considered gross income as a starting point. The value of employer-provided or reimbursed accommodation is also generally included in an employee’s gross income.

There are exemptions for particular employer payments and reimbursements, including for certain meals, accommodation, travel, relocations and other employment-related expenses in limited circumstances. For example, there is an exemption for employer-provided or reimbursed accommodation for up to three months after arrival as a result of a work-related relocation. Other

specific exemptions include accommodation provided for out-oftown secondments or capital projects (subject to time limits), multiple-workplace situations, certain mobile or remote work places, and some shift worker accommodation.

The provision of benefits in kind to employees is generally sub ject to New Zealand’s fringe benefit tax regime and does not form part of an employee’s gross income. Benefits subject to the fringe benefit tax regime rather than the income tax regime include the availability of a motor vehicle for private use, employees’ education expenses, medical insurance premiums, certain pension plan contributions, life insurance premiums, imputed interest on below-market rate loans, non-cash gifts or prizes, and other goods and services provided to employees.

Employers are subject to fringe benefit tax on pension or retire ment savings contributions that are not otherwise subject to with holding taxes in New Zealand.

New Zealand has a work-based retirement savings initiative called KiwiSaver. Most New Zealand registered employers must make compulsory contributions to a KiwiSaver fund or a com plying superannuation fund for all eligible employees who have elected to participate. To be eligible, employees must satisfy all of the following conditions:

• They must be New Zealand citizens or entitled to live perma nently in New Zealand.

• They must normally live in New Zealand.

• They are under 65 years old.

Employers are subject to withholding tax on all KiwiSaver con tributions.

Participating employees are also subject to minimum KiwiSaver contributions at either default or employee-elected rates, which are withheld from net (after-tax) pay.

Income from personal services (salary and wages) rendered by a nonresident in New Zealand is often not taxable if the nonresi dent is physically present in New Zealand for 92 days or less within a consecutive 12-month period, if the services are pro vided for or on behalf of a nonresident employer and if the income is taxable in the nonresident individual’s country of tax residence. This period is often extended to 183 days by double tax treaties.

Self-employment and business income. Self-employed persons, including independent contractors, are subject to tax on profits derived from any business or income-earning activity, including the sale of goods, services and commissions. Although New Zealand’s tax system does not have a dependent contractor regime, withholding taxes apply to many forms of payments made to individuals in business.

Self-employed persons and other individuals carrying on busi ness activities may be subject to New Zealand’s Goods and Services Tax regime.

A partnership must submit an income tax return setting forth the amount of profit or loss shared among the partners, but income

tax is not assessed on the partnership. Each partner must file a separate tax return for all income, including his or her share of partnership income. The rules applying to limited partnerships are similar to those applying to general partnerships, but specific provisions may restrict limited partners’ ability to claim deduc tions in any given year for their shares of the partnership’s expen diture and losses to their “partner’s basis” amounts.

Owners of certain closely held New Zealand resident companies may elect that those companies be treated as look-through com panies (LTCs). The income tax treatment of LTCs is generally similar to that for partnerships, with LTC income attributed to owners in proportion to their ownership interests and taxed at their personal tax rates. Until 31 March 2017, the owners’ ability to claim deductions for their shares of LTC expenditure and losses in any given year was limited by reference to their “own er’s basis” amounts. From 1 April 2017, this “owner’s basis” limitation no longer applies for most LTC owners, unless the LTC is in a partnership or joint venture.

Nonresident entertainers are generally subject to withholding tax at a rate of 20%. This tax may be treated as a final tax. Nonresident contractors are generally subject to withholding tax at a rate of 15% for income from contract services. This tax is neither a minimum nor a final tax and is paid on account of any annual income tax liability.

Payers may not be required to withhold tax if either of the follow ing circumstances exists:

• The contractor is eligible for total relief from tax under a double tax treaty and he or she is physically present in New Zealand for 92 days or less in any 12-month period.

• The total amount of contract payments made for the contract activities is NZD15,000 or less in any 12-month period.

Directors’ fees. Directors who are not also ordinary employees of a company are generally taxed as self-employed persons. Directors’ fees paid by New Zealand companies to nonresident individual directors are generally taxable in New Zealand. No special provisions apply other than a requirement for the payer to deduct withholding tax, generally at a rate of 33%.

Attributed income from personal services. Personal services income earned through an interposed entity, including a company or trust, may be attributed to the individuals performing the ser vices and taxed at their personal tax rates. This attribution may occur if the individual and interposed entity are associated per sons and the services are supplied to a single or limited number of clients. Attribution will not apply if both the individual and interposed entity are nonresidents.

Investment income. Dividends received from a New Zealand resident company may have imputation credits attached. The imputation credits represent tax paid by the company on the underlying profit from which the dividends are paid that is passed on to the shareholder. A resident shareholder is assessed on the combined amount of the dividend plus the imputation credits, and receives a tax credit for the amount of the imputation credits. Nonresidents are only assessed on the dividend amount

and potentially a supplementary dividend amount and do not receive a tax credit for the amount of the imputation credits.

Income earned on investments in certain unlisted portfolio invest ment entities (PIEs) may be allocated and taxed at the fund level at individual investor rates, with a maximum rate of 28% and no further tax on distribution. Listed PIE distributions may also be excluded from gross income.

Dividends (other than PIE distributions) and interest paid by New Zealand resident companies to New Zealand resident individuals are generally subject to an interim tax through a resident with holding tax (RWT) deduction.

The RWT rate on dividends is 33%, reduced by any imputation credits attached to the dividends.

Certain types of interest are exempt from RWT, including interest payable on trade debts or interest received under a hire-purchase agreement. Other items that are exempt are payments made to entities or persons holding valid certificates of exemption. These may include banks, building societies, moneylenders, and local or public authorities, and persons whose total gross income is expected to exceed NZD2 million in the next accounting year.

The rates of RWT on interest are elective rates of 10.5%, 17.5%, 30%, 33% or 39% if the interest recipients supply their tax iden tification numbers. The RWT rate on interest paid to companies is generally 28% if the recipients supply their tax identification numbers. The default RWT rate if interest recipients do not sup ply their tax identification numbers is 45% for all recipients. The recipients include the gross interest and dividends in their gross income and receive a credit for RWT.

Nonresidents are subject to withholding tax at a rate of 30% on dividends. This rate is reduced to 15% to the extent that cash dividends are fully imputed or to the extent that imputation credits are passed on through the payment of supplementary divi dends under the foreign investor tax credit regime. The rate is reduced to 0% to the extent that noncash dividends are fully imputed.

A 0% rate also applies to fully imputed cash dividends paid to nonresidents if the nonresidents have a direct voting interest of at least 10% in the paying entity or if a tax treaty would reduce the New Zealand tax rate below 15%.

Nonresidents are subject to withholding tax at a rate of 15% for interest and royalties. Certain tax treaties may reduce this rate.

Nonresident withholding tax is a final tax on dividends, cultural royalties and interest paid to non-related persons. It is a minimum tax on non-cultural royalties and on interest paid to related per sons. Nonresident withholding tax rates may be reduced under New Zealand’s double tax treaties. A 0% rate of nonresident withholding tax may apply to interest paid to unrelated nonresi dents by transitional residents (see Transitional residents’ exemp tion in section A) in relation to money borrowed while they were nonresidents, so long as the interest does not relate to carrying on a business through a fixed establishment in New Zealand.

As an alternative to nonresident withholding tax on interest, if the borrower and lender are not related persons and if the interest is paid by a person registered as an approved issuer with respect to a registered security, the interest is subject only to an approved issuer levy of 2% of the interest actually paid. The New Zealand government pays the 2% levy on interest paid on its loans from nonresidents that meet these criteria. Nonresident withholding tax and approved issuer levy may be imposed at a rate of 0% on interest paid to nonresident holders of certain widely held corporate bonds and similar securities.

The foreign investor tax credit (FITC) provisions reduce the effec tive rate of New Zealand tax imposed on dividends received by a nonresident investor from a New Zealand company. To the extent that a New Zealand company is owned by nonresident investors and imputation credits are attached to dividends paid, the com pany may claim a partial refund or credit of its New Zealand company tax liability. The company then passes on the refund or credit to the nonresident investors through supplementary divi dends. The effective rate of tax on fully imputed dividends received by nonresident investors with supplementary dividends under the FITC provisions is 28%, which effectively equates to the com pany tax rate on the company’s underlying profits and the extent of the credits passed to resident investors. However, the residents may need to pay further tax, depending on their individual mar ginal tax rates. Although the same result could be achieved for nonresident investors through a 0% rate of withholding on imputed dividends, the rather complicated FITC mechanism is intended to allow nonresident investors to claim a full tax credit in their home countries for New Zealand nonresident withhold ing tax.

The FITC provisions generally apply for dividends paid to nonresidents only if they hold less than 10% direct voting interests and if the New Zealand tax rate, after any tax treaty relief, is at least 15%.

Attributed income from controlled foreign investments. Under the controlled foreign company (CFC) regime, New Zealand residents may be taxed on passive income attributed to them that is derived by foreign entities in which they hold an interest if either of the following circumstances exists:

• Five or fewer New Zealand residents own over 50% of the for eign entity.

• New Zealand residents have de facto control of the company.

Exemptions from CFC attribution may apply if the CFC is resi dent in Australia and meets certain criteria or if the CFC’s income meets a 95% active income test.

Under the foreign investment fund (FIF) regime, New Zealand residents may be taxed on income attributed to them that is derived by foreign entities in which they hold an interest not meeting the conditions for the applicability of the CFC regime. The FIF regime may apply to interests in the following:

• Companies and unit trusts

• Foreign superannuation schemes (however, different rules apply to some schemes, effective from 1 April 2014; see Foreign superannuation scheme interests)

• Foreign life insurance policies that have an investment compo nent

Several exceptions apply, including exemptions for the following:

• Shares held in certain Australian companies listed on the Australian Stock Exchange

• Certain Australian unit trusts or superannuation schemes

• Individuals holding FIF investments that cost less than NZD50,000 in total

• Certain interests in employment-related foreign superannuation schemes and qualifying foreign private annuities

• Holdings of transitional residents

Investors who own interests of less than 10% in foreign compa nies, unit trusts, superannuation funds and life insurance policies can calculate their FIF income under the fair dividend rate method (FDR). Under the FDR method, investors are taxed on 5% of the market value of investments held at the beginning of the year and up to 5% of gains made as a result of the purchase and subsequent resale during the same tax year. Dividends and capital gains are not separately taxed under this method.

An active income exemption and approach, similar in some respects to that applying for interests in CFCs, may apply with respect to direct income interests of at least 10% in FIF compa nies and unit trusts.

Transitional residents (see Transitional residents’ exemption) are exempt from the attribution of CFC or FIF income.

Foreign superannuation scheme interests. In certain circum stances, individuals who have applied FIF treatment to foreign superannuation scheme interests in previous returns of income may continue to apply FIF treatment to those interests. Otherwise, effective from 1 April 2014, the FIF rules do not apply to inter ests in foreign superannuation schemes that were first acquired by individuals when they were nonresidents. Interests that were first acquired by individuals when they were New Zealand resi dent remain subject to the FIF rules.

In general, no New Zealand income tax liability arises on lumpsum withdrawals or transfers in the first four years of an indi vidual’s New Zealand residence. After the end of that period, the extent to which lump-sum withdrawals or transfers to Australian or New Zealand superannuation schemes are taxed in New Zealand under the “schedule method” in the new rules generally depends on how long individuals have been New Zealand resi dents. Alternatively, individuals may use a “formula method” to determine any New Zealand income tax liability for such lumpsum withdrawals or transfers from defined contribution schemes if they have sufficient information to carry out the required cal culations. Transfers between foreign superannuation schemes, other than to Australian schemes, are exempt from New Zealand income tax.

The government recognized that the pre-1 April 2014 rules were complex and taxpayers may not have dealt with lump-sum with drawals or transfers appropriately for New Zealand income tax purposes. Transitional relief provisions allowed taxpayers to pay tax (at their marginal personal income tax rates) in either their

2013-14 or their 2014-15 returns on a flat 15% of the amounts of lump-sum withdrawals or transfers between 1 January 2000 and 31 March 2014 (or on lump sums for which appropriate applica tions to withdraw or transfer were made by 31 March 2014) if those lump-sum withdrawals or transfers had not been dealt with appropriately in their previous New Zealand income tax returns. Otherwise, any reassessment of their past year treatments is based on the rules that applied for the relevant years, with poten tial penalty and interest charges for any increased income tax liabilities resulting for those previous years.

Specific rules apply to interests in certain Australian superannua tion schemes. Effective from 1 July 2013, taxpayers moving between Australia and New Zealand may elect to transfer their superannuation savings between certain Australian and New Zealand superannuation schemes without tax liabilities arising in either country at that time.

Periodic pensions and annuities arising from foreign superannuation scheme interests continue generally to be taxable in full in New Zealand on receipt by residents other than transitional resi dents (see Transitional residents’ exemption).

Trust income. Trust income is generally taxed in New Zealand if it is sourced in New Zealand or if it is derived by a beneficiary who is resident in New Zealand. Foreign-source income derived by a trustee may generally be taxed in New Zealand if a settlor of the trust (generally any person that provides some benefit to the trust) is a New Zealand resident. A beneficiary might be treated as a set tlor in certain circumstances. If the income is vested in, paid to or applied for the benefit of a beneficiary within the same income year or within six months after the end of the income year, the income is taxable to that beneficiary at their applicable marginal tax rate. Otherwise, trust income is taxable to the trustee or, if the trustee is not resident in New Zealand, then to any New Zealandresident settlor at a rate of 33%. If the income of a trust has not been fully liable to New Zealand income tax, certain distributions to New Zealand beneficiaries may be taxable to them at their personal tax rates if the trust is regarded as a “foreign trust” or at a higher rate of 45% if the trust is regarded as a “non-complying trust” even though legally they may be considered distributions of capital. Beneficiary income derived by New Zealand-resident minors (younger than 16 years of age on the trust’s balance date) is generally taxable at a rate of 33%.

Taxation of employer-provided stock options. In New Zealand, any benefit conferred under an agreement to sell or issue shares to an employee is taxable to the employee as remuneration. The benefit is calculated as the difference between the fair market value of the shares on the day they are acquired and the amount paid for the shares by the employee.

Individuals resident in New Zealand who exercise share options are subject to tax on the difference between the strike price and the fair market value of the shares on the date of exercise. The liability arises in the income year in which the 20th day after the day the options are exercised occurs.

If the employee is a transitional resident (see Transitional resi dents’ exemption) at the time the options are exercised, the value of the benefit is apportioned based on the ratio of the employee’s transitional residency period in New Zealand to the total employ ment period during the sourcing period (the sourcing period is generally from the grant date to the vesting date).

From 1 April 2018, resident individuals, including transitional residents, may apportion the value of the benefit based on the ratio of the time that the individual was a nonresident of New Zealand under New Zealand domestic tax law to the total employment period during the sourcing period.

From 1 April 2017, employers can choose to withhold tax on share options under the Pay-As-You-Earn (PAYE) system. If PAYE is withheld at the correct extra pay tax rate (up to 39%), an employee should have no further tax to pay with respect to the share-option benefit. If the employer chooses not to withhold at source, employees need to account for tax on the value of the share-option benefit themselves, either through provisional tax installments paid throughout the year, or in one lump-sum pay ment after the year-end (see Section D).

Employers are required to disclose the share-option benefits received by employees to Inland Revenue (New Zealand’s tax authority) through their payroll reporting, regardless of whether PAYE is withheld. This reporting requirement applies from 1 April 2017. Penalties may be payable by employers for under disclosure of share-option benefits.

The same principles apply to most other forms of employee-share schemes, but the taxing point and market value measurement date differs, depending on the terms of the particular scheme.

Capital gains and losses. New Zealand has no general capital gains tax, but profits from the sale of real and personal property may be subject to income tax in certain circumstances, including the following:

• The taxpayer’s business consists of dealing in that real or per sonal property.

• The taxpayer’s purpose at the time of acquisition was to sell the property at a later date.

In addition, profits on the disposal of certain residential property (other than a “main home”) acquired from 1 October 2015 may be taxable if sold within a two-year period, regardless of the taxpayer’s purpose for the acquisition. This two-year period is extended to a five-year period if the taxpayer enters into an agreement to pur chase residential property on or after 29 March 2018. The 5-year period is extended to a 10-year period if the taxpayer enters into an agreement to purchase residential property on or after 27 March 2021.

From 1 July 2016, residential land withholding tax (RLWT) applies to the sale of residential property located in New Zealand by “offshore RLWT persons” if the land was acquired on or after 1 October 2015 and is sold within a two-year period. This two-year period is extended to a five-year period if the taxpayer enters into an agreement to purchase residential property on or after 29 March

2018. The 5-year period is extended to a 10-year period if the tax payer enters into an agreement to purchase residential property on or after 27 March 2021. An “offshore RLWT person” is defined broadly for individuals and other entities, with reference to citizen ship, immigration status and physical absence throughout specific time frames for an individual vendor. RLWT is not a minimum or final tax but is deducted on account of any annual income tax lia bility. Any excess RLWT is refundable.

An accrual taxation system applies to New Zealand resident indi viduals who are parties to various types of financial arrangements, including debts and debt instruments. Under the accrual system, foreign-exchange variations related to the financial arrangements are included in calculations of income and expenditure. A cashbasis system may be adopted by taxpayers deriving income and incurring expenditure of less than NZD100,000 from financial arrangements in an income year and by taxpayers with financial arrangement assets and liabilities with a total absolute value of NZD1 million or less. For the cash basis to apply, the cumulative difference between the actual income and expenditure and the notional income and expenditure on an accrual basis must be less than NZD40,000.

The accrual taxation regime does not apply to nonresidents, unless the transaction involves a business they carry on in New Zealand, or to transitional residents if the other parties to an arrangement are nonresidents and if the arrangement is not for the purposes of a business carried on in New Zealand by any of the parties.

Deductions

Deductible expenses. Employees are not permitted deductions for employment-related expenditure, except for tax return preparation fees and premiums for loss of earnings insurance if the insur ance proceeds would be taxable. However, employers are able to reimburse employees on a tax-free basis for certain expenses that relate to the employee’s employment.

Personal deductions and allowances. Taxpayers with dependent children may be entitled to family support payments based on family size, income and other circumstances. This assistance is generally not available to nonresidents or transitional residents.

An independent earner tax credit (IETC) may apply to individual tax residents who have annual income between NZD24,000 and NZD48,000 and who do not directly or indirectly receive family support, income-tested benefits, New Zealand superannuation, certain pensions or other amounts. The IETC is a maximum of NZD520 per year and abates at 13 cents per dollar earned over NZD44,000.

Donation tax credits are available for most donations of money over NZD5 made by individuals to registered charities or school boards if receipts are provided.

Business deductions. Expenses necessary to produce gross income (other than employment income) are deductible. However, only 50% of specified business entertainment expenses incurred by self-employed individuals is deductible. Interest deductions may be limited under the thin-capitalization rules in certain circumstances if nonresidents own or control New Zealand entities or

assets or if New Zealand residents hold interests of at least 10% in CFCs or certain types of FIFs.

The deductibility of mortgage interest on residential investment property is in the process of being phased out. Different rules are expected to apply depending on when the property was pur chased and whether the property is a “new build.” Interest incurred in relation to land outside New Zealand is not likely to be affected by these changes. The relevant legislative changes are undergoing public consultation and are expected to be enacted this year, with interest incurred after 1 October 2021 expected to be affected.

Rates. The rates of tax applied to taxable income for both resident and nonresident individuals from 1 April 2021 to 31 March 2022 are set forth in the following table.

Taxable income

Tax rate Tax due Cumulative tax due NZD % NZD NZD

First 14,000 10.5 1,470 1,470

Next 34,000 17.5 5,950 7,420

Next 22,000 30 6,600 14,020

Next 110,000 33 36,300 50,320

Above 180,000 33 —

Married persons are taxed separately, not jointly, on all types of income.

For withholding tax rates, see Investment income.

Relief for losses. Business losses of individual taxpayers may be offset against the individuals’ other net income in the year in which the loss is sustained. The balance of any loss may be car ried forward and offset against future net income of the taxpayer. The use of losses may be restricted if they are derived by the following:

• Limited partners through limited partnerships

• Owners of certain LTCs

• Nonresidents deriving income subject to nonresident withholding tax as a final tax

Specific restrictions apply to losses incurred in deriving income from residential land (rental income or land disposal) from 1 April 2019.

B. Estate and gift taxes

Estate duty is not levied in New Zealand, and gift duty has been abolished.

C. Social security

New Zealand does not have a social security system requiring compulsory contributions from employees. However, under the Accident Compensation Act 2001, levies are payable by employers, employees and self-employed persons to fund the comprehensive no-fault accident compensation scheme, which covers all accidents at home and at work. The levies are payable on employment income of up to NZD130,911 for the year ending 31 March 2022. For employers and self-employed persons, the rate of the levy depends on the relevant industry classification.

For employees, the rate of the levy is 1.39% for the year ending 31 March 2022. Employers are responsible for withholding employee levies as part of the PAYE withholding tax system. New Zealand has entered into reciprocal social security agreements with Australia, Canada, Denmark, Greece, Guernsey, Ireland, Jersey, Malta, the Netherlands and the United Kingdom.

D. Tax filing and payment procedures

The tax year in New Zealand runs from 1 April to 31 March of the following calendar year. Salary and wage earners generally have tax deducted from their salaries at source under the PAYE system. Income tax on other income is generally due on 7 February (7 April if on a tax agency list) following the end of the fiscal year.

Individuals who earn income only from reported sources (for example, employment income, bank interest and dividends) in New Zealand do not generally have a return filing requirement. Instead, these individuals are generally provided with automated assessments. Individuals who have income from reported sources and from unreported sources are required to amend any auto mated assessment to reflect their unreported income correctly.

If an automated assessment results in a refund, this will be paid by electronic transfer to the individual’s nominated bank account. Assessments of tax to pay are written off if under NZD50 (tem porarily increased to NZD200 for the 2019-2020 tax year only).

An individual with unreported income may choose (or in some cases, be required) to file an income tax return. Income tax returns are due by the 7 July immediately following the end of the income year, or by the following 31 March if on a tax agency list.

Certain taxpayers must pay advance payments of provisional tax, generally in the 5th, 9th and 13th months following the beginning of their income years. These taxpayers are generally persons whose preceding year’s tax liability on income from which no tax was withheld was greater than NZD2,500 (increased to NZD5,000 if the preceding tax year was the tax year ended 31 March 2020 or a future tax year). Interest may be imposed on persons whose tax liability on income from which no tax was withheld was greater than NZD60,000 if the provisional tax paid by each installment date is less than the minimum amounts deemed due at those installment dates.

A nonresident individual must file an income tax return showing all taxable New Zealand-source income, except income subject to a final nonresident withholding tax.

From 1 October 2015, “offshore persons” must generally have a fully functional New Zealand bank account to obtain a tax identification number, which is necessary to meet their tax filing and payment obligations. Individuals without a New Zealand bank account are generally required to satisfy comprehensive due dili gence documentation requirements, including providing nota rized copies of identification documents and proof of a bank account held in a country with which New Zealand has an exchange-of-information agreement in order to satisfy the

Commissioner of Inland Revenue of the applicant’s identity and background.

E. Double tax relief and tax treaties

If a New Zealand resident derives income from a foreign jurisdic tion, foreign income tax paid on that income is allowed as a credit against income tax payable in New Zealand. The credit is limited to the amount of tax payable in New Zealand on the same foreign-source income.

New Zealand has entered into comprehensive double tax treaties with the following jurisdictions.

Australia Indonesia Samoa

Austria Ireland Singapore

Belgium Italy South Africa

Canada Japan Spain

Chile Korea (South) Sweden

China Mainland Malaysia Switzerland

Czech Republic Mexico Taiwan

Denmark Netherlands Thailand Fiji Norway Turkey

Finland Papua New United Arab France Guinea Emirates

Germany Philippines United Kingdom

Hong Kong Poland United States

India Russian Federation Vietnam

F. Temporary visas

At the time of writing, New Zealand’s borders were closed to most classes of foreign traveler and visa applications were not being processed for individuals outside of New Zealand, in response to the COVID-19 pandemic. Exceptions existed for New Zealand citizens, some classes of residents, critical health workers, other critical workers and individuals traveling within a designated quarantine-free travel zone. It is suggested that businesses and prospective travelers consult with an immigration professional prior to arranging travel.

New Zealand Electronic Travel Authority. All travelers to New Zealand, excluding those who already hold a New Zealand visa or who are a New Zealand or Australian citizen, are required to obtain a travel authorization through Immigration New Zealand’s Electronic Travel Authority (NZeTA) system before traveling to New Zealand.

Travelers are encouraged to apply as soon as travel is planned, and it is strongly suggested that they apply no later than 72 hours before travel to New Zealand. An approved NZeTA travel autho rization is valid for multiple entries into New Zealand and is generally valid, unless revoked, for up to two years. An NZeTA is not a guarantee of admission to New Zealand; it only authorizes a traveler who does not otherwise hold a New Zealand visa to board a carrier for travel to New Zealand.

Visitors’ visas. In general, all visitors to New Zealand must apply for a visa to enter the country. Some exceptions to the general rule exist. Australian citizens and individuals who hold a current

Australian permanent residence visa or a resident return visa do not need to formally apply for a New Zealand visa to enter New Zealand. United Kingdom passport holders who produce evidence of the right to reside permanently in the United Kingdom can be granted a visitor visa for up to six months on arrival in New Zealand. Individuals from certain jurisdictions (see below) who will be in New Zealand for no more than three months as a visitor do not need to apply for a visa before traveling to New Zealand. Visitors are not permitted to work in New Zealand. All visitors must provide travel tickets or evidence of onward travel arrange ments and evidence of funds to support themselves while in New Zealand. Although visa waiver citizens and permanent residents of Australia are exempt from applying for a visitor visa ahead of their travel to New Zealand, they must still apply for an NZeTA. The following is the list of the “visa-waiver” jurisdictions.

Andorra Hungary Oman Argentina Iceland Poland

Austria Ireland Portugal (e) Bahrain Israel Qatar Belgium Italy Romania Brazil Japan San Marino Brunei Korea (South) Saudi Arabia Darussalam Kuwait Seychelles Bulgaria Latvia (a) Singapore Canada Liechtenstein Slovak Republic Chile Lithuania (a) Slovenia Croatia Luxembourg Spain Cyprus Macau (d) Sweden Czech Republic Malaysia Switzerland Denmark Malta Taiwan (f) Estonia (a) Mauritius United Arab Finland Mexico Emirates France Monaco United States (g) Germany Netherlands Uruguay Greece (b) Norway Vatican City Hong Kong (c)

(a) The visa waiver does not apply to people traveling on non-citizens’ passports issued by these jurisdictions.

(b) The visa waiver applies to Greek passport holders whose passports were issued on and after 1 January 2006. (Greek passports issued before 1 January 2006 are not acceptable for travel after 1 January 2007.)

(c) The visa waiver applies to residents of Hong Kong traveling on Hong Kong Special Administrative Region or British National (Overseas) passports.

(d) The visa waiver applies to residents of Macau traveling on Macau Special Administrative Region passports.

(e) Portuguese passport holders must also have the right to live permanently in Portugal.

(f) The visa waiver applies to permanent residents of Taiwan traveling on Taiwan passports. A personal identity number printed within the visible section of the biographical page of the Taiwan passport demonstrates that the holder is a permanent resident of Taiwan.

(g) This visa waiver includes US nationals.

Business visitors’ visas. Business visitors who are from Australia, the United Kingdom or the visa-waiver countries mentioned above are not required to formally apply for business visitors’ visas before traveling to New Zealand. They are granted business visitors’ visas on arrival in New Zealand for no more than three

months only if they are undertaking one of the following activi ties:

• A representative on official trade missions recognized by the New Zealand government

• A sales representative from an overseas company

• An overseas buyer of New Zealand goods or services

• A person undertaking business consultations or negotiations in New Zealand with respect to the establishment, expansion or winding up of a business enterprise in New Zealand involving the authorized representatives of an overseas company

Business visitors must not undertake work in New Zealand regardless of where or how they are remunerated. If an individu al will be in New Zealand for periods totaling more than three months in any one year or if he or she is not undertaking one of the activities noted above, he or she must apply for a work visa.

Business visitors who are not from Australia, the United Kingdom or the visa-waiver countries mentioned above are required to formally apply for business visitors’ visas before traveling to New Zealand.

Business visitors who are from Australia, the United Kingdom or the visa waiver countries mentioned above are not required to formally apply for business visitors’ visas before travel. However, visa waiver citizens and permanent residents of Australia must still apply for an NZeTA.

Student visas. Student visas are issued to foreign nationals who intend to undertake studies in New Zealand. The duration of the visa depends on the length of the study program. In general, students are permitted to work part time while studying in New Zealand after seeking authorization from Immigration New Zealand (INZ).

Working holiday visas. Working holiday schemes are open to citi zens from the following jurisdictions who satisfy certain condi tions.

Argentina Hungary Philippines

Austria Ireland Poland Belgium Israel Portugal

Brazil Italy Singapore Canada Japan Slovak Republic

Chile Korea (South) Slovenia China Mainland Latvia Spain

Croatia Lithuania Sweden

Czech Republic Luxembourg Taiwan

Denmark Malaysia Thailand Estonia Malta Turkey

Finland Mexico United Kingdom

France Netherlands United States

Germany Norway Uruguay Hong Kong Peru Vietnam

To qualify for a visa under a working holiday scheme, an appli cant must satisfy the following conditions:

• He or she must be aged between 18 and 30 (or 35 in some cases).

• He or she may not bring children.

• He or she must hold a return ticket or sufficient funds to purchase such a ticket.

• He or she must have available funds to meet living costs while in New Zealand, as prescribed by the scheme under which the individual is applying.

• He or she must meet health and character requirements.

• He or she must hold medical and comprehensive hospitalization insurance for the length of the stay if required by the scheme under which the individual is applying.

• He or she must be the holder of a valid temporary visa if applying in New Zealand.

• He or she must not have been previously approved for a visa under a working holiday scheme.

Applicants who apply for a working holiday visa are not required to provide evidence of a job offer. If a scheme has an “ordinarily resident” requirement, the applicant’s usual place of permanent residence must be that country. This requirement is considered to be met if the applicant has not been absent from that country for more than two years immediately preceding the application. Successful applicants must not undertake permanent employ ment unless they apply for, and obtain, a work visa that allows such employment. Successful applicants may also enroll in one or more courses of training or study of up to six months’ duration in total during their visit to New Zealand.

Work visas. The New Zealand government began consultations regarding a significant overhaul of the New Zealand temporary work visa framework in September 2019. The proposed changes to the temporary work visa system would see six existing tempo rary work visas (including the Essential Skills and Talent Visa referenced below) replaced with a single Accredited Employer Work Visa (AEWV). A mandatory accreditation process would also be established for any New Zealand business intending to support a migrant worker for an AEWV temporary work visa. At the time of writing, the final details of this proposed policy change have not been announced, and no implementation date has been confirmed. It is suggested that businesses and prospec tive work visa applicants consult with an immigration professional.

All work visa applicants must meet the generic temporary entry instructions. This includes health and character requirements.

The Essential Skills instructions generally apply to applicants who have been offered full-time employment with a New Zealand employer. Applicants must provide evidence that they are suitably qualified by training and experience to perform the job offered. The employer may also be required to provide evidence that no suitably qualified New Zealanders can perform the job offered to the applicants (a labor-market test), depending on the employees offered remuneration and employment location. Work visas under the Essential Skills instructions are generally issued for a maximum of either two or three years, depending on whether the remuneration offered is above or below the current national median wage rate.

The Work to Residence (Talent Visa) instructions apply if an applicant has a job offer from an Accredited Employer. The job

offer must be for a full-time position (at least 30 hours) for 2 years or longer, the annual salary must be at least NZD79,560 and the applicant must be under the age of 56 years. Work visas under the Work to Residence (Talent Visa) instructions are valid for 30 months from the applicant’s first date of entry into New Zealand. The applicant becomes eligible to apply for a residence visa after he or she has worked for an Accredited Employer for two years and if he or she meets the residence instructions. The two other types of Work to Residence categories are Long Term Skill Shortage (for those meeting the requirements in an occupa tion listed on the current Long Term Skill Shortage List) and Arts, Culture and Sport (for those demonstrating an international reputation in a declared field of arts, culture or sports and meet ing all other requirements). The salary thresholds above are sub ject to change.

The Specific Purpose or Event instructions apply if the applicant is entering New Zealand for a specific purpose or event (for example, a short-term intercompany secondment) for which the applicant has demonstrated skills, expertise or attributes that are likely to benefit individuals and/or New Zealand and if no risk of a negative impact on opportunities for New Zealand citizens or residents exists. Under these instructions, a labor market test is not required, but the employer is required to provide either a sup port letter or a copy of the job offer or assignment agreement. Work visas under the Specific Purpose or Event instructions are generally valid for the duration of the activity in New Zealand.

Special rules exist for certain categories of applicants, including partners of New Zealand citizens and residents, partners of higher-skilled work visa holders, entertainers, athletes and pro fessional coaches.

In certain cases, applicants may not be granted a visa until they meet the necessary New Zealand registration requirements if New Zealand registration is required by law to undertake employment. Professionals are advised to contact individual pro fessional bodies for information on required registration criteria.

The processing time for a work visa varies with each application, but the process generally takes four to eight weeks from the date of filing if no medical or character issues exist. INZ generally prioritizes the processing of Work to Residence visa applications over other work visa applications.

Health and character requirements for all visa applicants. All indi viduals who enter New Zealand must meet applicable good health and character requirements. If an applicant is not from a low-tuberculosis incidence country and intends to be in New Zealand for more than six months, he or she must obtain a chest X-ray certificate from a panel radiologist. If an applicant intends to be in New Zealand for longer than 12 months, he or she must obtain full medical and chest X-ray certificates from a panel physician. The panel physician and/or panel radiologist submits electronically the medical and chest X-ray certificates directly to INZ. Once the medical and chest X-ray certificates are submitted electronically, the applicant has three months to file his or her visa application with INZ. If an applicant is applying for a temporary visa and intends to be in New Zealand for 24 months or longer, he or she must also obtain a police clearance

certificate from his or her country or countries of citizenship and any country in which he or she has lived for five years or more since the age of 17. If an applicant is applying for a residence visa, he or she must obtain a police clearance certificate from his or her country or countries of citizenship and any country in which he or she has lived for 12 months or more in the last 10 years. Police clearance certificates are only valid for filing within six months after the date of issuance.

General requirements for all temporary visitors (work and holiday) to New Zealand. An applicant coming to New Zealand to work must provide evidence of qualifications and/or work experience, and a job offer. Applicants coming for a visit must provide evi dence that they plan on leaving New Zealand and that they have funds to support themselves while in New Zealand. All appli cants must also hold a valid passport for the duration of their intended stay.

G. Entrepreneur category visa

Experienced businesspersons who wish to obtain a work visa to enter New Zealand to establish and operate a business can apply under the Entrepreneur work visa category. If certain conditions are met, the applicant can eventually obtain New Zealand resi dence under the Entrepreneur residence visa category. To apply for an Entrepreneur work visa, applicants must satisfy the follow ing requirements:

• They must have a minimum capital investment of NZD100,000.

• They must meet or exceed the pass mark on a scale that awards points for factors relating to the likely success of the proposed business and its value to New Zealand.

• They must be competent users of English.

• They must have a business plan specific to the proposed busi ness.

• They must all meet health and character requirements.

H. Investor category visa

The Investor category is open to applicants who wish to obtain residence in New Zealand through investment. Under the Investor Plus category, an applicant must invest NZD10 million or more for three years in New Zealand. No age, English lan guage, business experience or settlement funds requirements are imposed. Applicants who want to invest NZD3 million or more but less than NZD10 million can apply under the Investor 2 category if they meet the following requirements:

• They must be 65 years old or younger.

• They must have at least three years of recognized business experience.

• They must be competent users of English.

Under the Investor category, the required amounts must be invested into acceptable investments, as prescribed by INZ.

Like all visa categories, all applicants in the above categories must also meet New Zealand’s health and character requirements. Investor applicants must also be physically present in New Zealand for prescribed time periods for each of the investment years.

I. Residence visas

Residence visas and permanent residence visas are issued to foreign nationals who intend to establish permanent residence in New Zealand. Various paths and policies to gain residency are available. Some of the most common paths are through skilled employment, the Investor category or working for an Accredited Employer for at least two years. Although the holder of a resi dence visa can stay in New Zealand indefinitely, residence visas are subject to travel conditions, which allow the holder to travel in and out of New Zealand for 24 months. After 24 months, a residence visa holder can apply for a permanent residence visa by demonstrating his or her commitment to New Zealand. Permanent residence visas do not have travel conditions and allow the holder to stay and travel in and out of New Zealand indefinitely.

J. Family and personal considerations

Family members. In general, the partner or spouse of a work visa holder can apply for his or her own visa to enter New Zealand based on their relationship. If the primary applicant will be hold ing or holds a work visa that is valid for more than six months, his or her partner is eligible for an “open” work visa for the same time period as the primary applicant if the relevant partnership requirements are met. This visa allows the partner or spouse to work for any employer in New Zealand. If the primary applicant will be holding or holds a work visa that is valid for less than six months, his or her partner is eligible for a visitor visa that is valid for the same time period as the primary applicant if the relevant partnership requirements are met. A partner holding a visitor visa cannot work in New Zealand. Dependent children of a work visa holder are granted either a student or visitor visa, depending on their age, and may attend primary and secondary schools in New Zealand as domestic students. Essential Skills work visa holders whose employment is classified as lower skilled are not eligible to support dependent family.

Driver’s permits. Foreign nationals may drive legally using their home country driver’s licenses for up to 12 months. Visitors whose licenses or permits are not in English must carry an accu rate translation. Visitors holding international driver’s licenses may also drive in New Zealand for up to 12 months. Visitors without overseas or international driver’s licenses must apply for a New Zealand license before driving in New Zealand.

Foreign nationals in New Zealand must obtain New Zealand driver’s licenses within a year.

Applicants are required to pass a theoretical test and take a prac tical driving test to obtain a New Zealand driver’s license. Applicants with valid driver’s licenses from certain European Union (EU) countries, Australia, Canada, Norway, South Africa, Switzerland or the United States may be exempt from the theo retical and the practical test. In general, a physical examination is not required, but eyesight is checked.

K. Other matters

Publicly funded health entitlements. The length of a person’s visa determines whether they are entitled to publicly funded health in

New Zealand. In general, a person who holds a work visa that entitles the person to remain in New Zealand for two years or more is eligible for publicly funded health and disability services. Eligibility for all publicly funded health and disability services is determined by the Ministry of Health and not INZ.

Licensed immigration advisors. Anyone who provides immigration advice, both onshore and offshore, must be licensed or exempt from licensing. Immigration advice is defined as “using, or purporting to use, knowledge of or experience in immigration to advise, direct, assist or represent another person in regard to an immigration matter relating to New Zealand, whether directly or indirectly and whether or not for gain or reward.” The Immigration Advisers Authority regulates the provision of immigration advice. INZ no longer accepts applications from representatives of applicants, unless they are licensed or exempt.

A person who provides immigration advice who is not licensed or exempt from licensing is liable to imprisonment for a term not exceeding seven years or a fine not exceeding NZD100,000, or both.