New Zealand tax changes may affect overseas property investors
Migrants buying homes in New Zealand may also be considered tax residents under the proposals, according to a report in the Herald newspaper. At present, residents are taxed if they live in New Zealand for six months of the year, or have a permanent place of abode. Under the changes, factors such as bank accounts and family ties will be given greater weight in determining if someone has a permanent place of abode.
University of Auckland professor Craig Elliffe said "significant" numbers would be affected including migrants who had remained "outside the system". "They may be recent migrants who might only come and spend a month here or less, but if they have access to the property they will be considered a resident."
One important change could affect landlords departed from New Zealand, but still considered to have access to the house. They would be taxed as residents even if their property was rented out. This might mean that long-term expats with rental properties would also pay tax on the income they make overseas.
Murray Sarelius, a tax partner at KPMG, said high earners were aware of the proposed changes. "I have been in contact with a group of expats in Qatar over the changes. They are ... watching it with concern." Mr Sarelius said there was uncertainty over whether the taxes would be introduced retrospectively, or only apply to people leaving from today.
An Inland Revenue spokesman said guidelines would be published for "fly-in fly-out" workers once the new interpretation was finalised. There were no restrictions on foreign ownership of houses, and some believed that offshore owners, particularly from Asia, were contributing to Auckland's house price boom. Revenue Minister Peter Dunne said the proposed changes brought tax policy into line with more workers moving between countries.
