A recent case before the Taxation Review Authority (“the Authority”) has held that a security contractor who had left New Zealand four years earlier to live and work overseas continued to be a New Zealand tax resident. On the basis of the decision the Authority therefore found the contractor was liable for a shortfall in penalty in each of the four years he had been overseas.
The Authority held that when evaluating whether or not a person is a New Zealand tax resident a number of factors must be taken into account including;
- Place of “abode”;
- Intention to be away permanently;
- Employment;
- Other ties with New Zealand, including family, investments, time spent in New Zealand; and
- Connections outside New Zealand.
In looking at whether New Zealand was his place of abode the Authority examined the fact that the contractor had an investment property in New Zealand, which he had never actually lived in but which was tenanted out. The Authority found that even though it was investment property and was tenanted out, this did not outweigh the fact that it was available to the contractor as a dwelling and therefore found that he did indeed have a place of abode in New Zealand.
The Authority also found that his continuing relationship with his children and ex-wife were significant factors as well as noting that he continued to pay a large sum of his income to New Zealand in child support payments and that these factors added weight to the argument that he had a permanent place of abode in New Zealand.
In all of these circumstances it was held that the contractor continued to “…have a strong and enduring relationship with New Zealand” and therefore was a resident of New Zealand for tax purposes. The contractor has appealed this decision and we will keep you updated as this progresses.
This case highlights the importance of knowing and understanding the possible tax implications and liabilities you may continue to face despite residing and/or working overseas, even for a number of years. It is therefore crucial you take advice before leaving for overseas on a long term basis, or if you have lived away from New Zealand and continue to do so.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co who normally advises you, or alternatively contact:
Kirsten Maclean
(03) 477 8870 or (09) 379 0055
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.