INDIVIDUAL TAXES SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments in the past year.
TERRITORIALITY AND RESIDENCE
A resident of New Zealand is subject to tax on worldwide income. A nonresident is subject to tax only on income from sources in New Zealand.
Residence is determined by the following tests.
1. Permanent place of abode:
Persons are deemed residents of New Zealand if they have a permanent place of abode in New Zealand, notwithstanding that they may also have a permanent place of abode outside New Zealand.
2. 183 day's presence:
Persons are deemed residents from the date of their arrival in New Zealand if they are personally present in New Zealand for a period or periods exceeding in total 183 days in any 12-month period.
Employment and self-employed income earned in New Zealand by nonresidents is taxable unless the domestic law exemption or a double taxation agreement exemption applies.
Domestic exemption/This exemption applies if all the following conditions apply.
1. The visit (or visits) of the nonresident do not exceed a period of 92 days in year.
2. The nonresident is liable for similar tax on New Zealand-source income in the country of residence.
3. The services are performed on behalf of a person who is not resident in New Zealand.
This exclusion does not apply to public entertainers, such as performing artists and professional athletes, they are subject to a maximum 20% withholding tax.
Double taxation agreement/Although the terms of treaty articles vary, generally speaking, remuneration derived by an employee from personal services performed in New Zealand is not assessable in New Zealand if the following is the case.
1. Recipient is present in New Zealand for not more than 183 days in any 12-month period.
2. Remuneration is paid by or on behalf of a nonresident employer.
and
3. Remuneration is not borne by a permanent establishment (branch) or a fixed base that the employer has or is deemed to have in New Zealand.
CROSS INCOME
Employee gross income/A resident is taxed on salary, wages, bonuses, tax reimbursements, allowances, and retirement gratuities received in cash regardless of where payment is made. Nonresidents are taxed only to the extent their employment income is earned in New Zealand (i.e., services
are performed in New Zealand), regardless of where payment is made and whether it is remitted to New Zealand. Allowances paid in cash that are no more than a reimbursement of expenses incurred within employment are not taxable. The benefit arising from the use of an employer-provided automobile, a low-interest loan or discounted goods or services is not taxable to the employee, but the value of a benefit from the provision of
shares or options, lodging or housing by an employer is taxable to the employee, other benefits provided to an employee in a nonmonetary form are generally not taxable in the employee's hands (see"Fringe benefit tax "below).
Resident individuals are subject to New Zealand tax on their overseas income. A credit is available for foreign tax paid on that income.
Capital gains and investment income/There is no capital gains tax. Gross income includes gains on the sale of real estate in circumstances prescribed in the income Tax Act and on personal property where the taxpayer acquired the property for resale or deals in such property or where a profit-making purpose or scheme can be deemed or imputed. Gains on financial instruments are taxable when realized or when the instruments are deemed to have been disposed. Above certain threshold limits, such
gains are taxable on an accrual (yield-to-maturity) basis.
New Zealand residents holding a 10% or greater interest in a controlled foreign company (CFC) include in their assessable income the taxable income (calculated under New Zealand tax rules) of the CFC multiplied by the percentage their interest in the company.
A foreign investment fund (FIF) regime applies to nonexcepted interests in foreign investment funds. Resident holders of such interests are taxed on the change in value of the interest over the income year, together with distributions received. Generally, interests in CFCs and FIFs resident in the following countries are excluded: Australia, Canada, Germany, Japan,
Norway, The United Kingdom, and the united States. No distinction is made between passive and business income.
Expenditure and depreciation incurred to gain worldwide rent are deductible from the taxpayer's total income. The common practice of the Inl
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