In a suburb as vibrant and globally connected as Ponsonby, it’s common for residents to have financial ties that stretch far beyond New Zealand.
Whether you’re a Kiwi who has long since returned from their OE, a new arrival drawn to our shores, or a long-term local with international investments, your financial world is likely bigger than you think. And, in this interconnected world, IRD is paying closer attention.
The Tax World is Getting Smaller
Gone are the days when overseas assets were 'out of sight, out of mind'. New international agreements and data-sharing technology means IRD now have a much greater visibility of taxpayers' overseas investments coupled with a much larger budget for audits and investigations. It’s crucial to understand your obligations rather than hoping for the best.
Decoding Your Digital Dollars: Cryptocurrency
If you've ventured into the world of cryptocurrency, it’s important to know that profits are generally taxable in New Zealand. The IRD considers cryptoassets to be a form of property, and any gains from selling or exchanging them are typically treated as income. IRD now has unprecedented access to crypto-transaction data from exchanges both here and overseas. We are increasingly seeing taxpayers being issued with information request letters in relation to crypto activity.
Overseas Pensions and Investments
That pension you built up in the UK on your OE, or the shares you own in a US tech company are also on the IRD’s radar. The rules for taxing foreign superannuation and pensions can be complex, and how lump sums or regular payments are treated often depends on when you became a New Zealand tax resident and when you access the funds. Similarly, most interests in foreign investment funds, overseas companies or managed funds are subject to New Zealand's Foreign Investment Fund (FIF) rules once your investment cost exceeds NZ$50,000.
Don’t forget the basics
Beyond complex investment structures, many simpler forms of overseas income are also taxable to New Zealand residents.
This includes:
· Rental income from a property you own abroad.
· Interest earned from an overseas bank account (and potentially foreign exchange gains/losses).
· Income from an overseas trust where you are a beneficiary.
A Tax Welcome for New Residents
For those newly arrived in New Zealand, there is a significant, but temporary, tax advantage. If you have not been a tax resident here for the last 10 years, you may qualify as a ‘transitional resident’. This provides a four-year exemption from New Zealand tax on most types of foreign-sourced income such as interest, dividends, and rent from overseas properties. This one-off grace period is designed to give you time to structure your financial affairs.
Burying your head in the sand is no longer a viable option. Taking a proactive approach to understanding your tax obligations is the best way to avoid a future issue. If you wish to discuss any of your tax obligations, get in touch with the team at Johnston Associates for an initial chat.
Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this article; always see your professional advisor before taking any action that you are unsure about.
JOHNSTON ASSOCIATES, Level 1, One Jervois Road, Ponsonby, T: 09 361 6701, www.johnstonassociates.co.nz
Johnston Associates: Are your overseas assets on IRD’s radar?
