What You Need to Know About Expat Taxes in New Zealand

Living as an Expat in New Zealand

For many Americans living abroad, New Zealand is a dream home. With breathtaking landscapes and an English-speaking population, it’s no wonder thousands of expats have flocked to this island nation. But what are New Zealand’s tax policies like for US citizens?

Here’s what you need to know.

New Zealand at a Glance 

What Are Expat Taxes like for Americans Living in New Zealand?

When discussing expat taxes, it’s always worth mentioning the continuing US tax obligations. Every US citizen is required to file an annual US tax return regardless of where they live in the world.

Beyond this, Americans living in New Zealand may also owe certain taxes to their new host country. Let’s take a look at the details of expat taxes in New Zealand.

Who Has to File Taxes in New Zealand? 

New Zealand expat tax policies vary based on your residency status. Tax residents are taxed on their worldwide income, while non-residents are taxed only on income that comes from a New Zealand source.

New Zealand also has a third category: transitional residents. Transitional residents are exempt from taxation on most forms of non-New Zealand income. (More on this below.)

However, residents and non-residents who receive all their income from traditional employment are generally not required to file a tax return. This is because employment income is taxed at the source through employer withholdings.

Typically, you will only need to file a New Zealand tax return if you receive non-employment income, such as:

• Foreign income (as a resident of New Zealand)
• Self-employment or business income
• Rental income
• Royalties
• Estate, trust, or partnership income

Who Qualifies as a Tax Resident in New Zealand? 

You will be considered residents for tax purposes if you meet either of the following qualifications:

• You are present in New Zealand for more than 183 days in any 12-month period (these days do not have to be consecutive)
• You have a “permanent place of abode” in New Zealand

The details of a permanent place of abode can be complicated. The New Zealand tax authority will consider your living situation, family or business ties to New Zealand, and more when determining if your New Zealand home qualifies as a permanent place of abode.

Then there is the third category of transitional residency. This applies to individuals who have only recently become residents. As soon as an expat meets either of the standards for listed residency above, they are considered transitional residents. They are thus entitled to a 48-month exemption from resident taxation, allowing them to be taxed on only their New Zealand-source income for the first four years of their residency at non-resident rates

What Is the Income Tax Rate in New Zealand? 

Income Tax

The income tax rate for US citizens living in New Zealand will depend on your residency status.

Residents are taxed at progressive rates, shown below. (All amounts given in NZD.)

NZ Income Tax Rate

Non-Resident Tax Rate in New Zealand

Non-residents, on the other hand, are taxed at the same rate as residents.

New Zealand Taxation on Foreign Income

The New Zealand taxation of worldwide income is dependent on your residency status.

• Resident – taxed on worldwide income, minus foreign tax credits to protect residents from double taxation
• Non-resident – only taxed on New Zealand-sourced income; foreign-sourced income is not taxable
• Transitional resident – taxable on worldwide income and New Zealand personal income unless within the 48-month exemption period

What Is the Deadline for Tax Returns in New Zealand? 

Unlike the US, the New Zealand tax year does not align with the calendar year. Instead, New Zealand’s tax year starts on April 1 and runs to March 31. For expats who are required to file an annual tax return, the due date is July 7.

If you owe a tax debt of more than 2,500 NZD, you must pay it in three installments over the course of the tax year. The due dates for these payments are:

• August 28
• January 15
• May 7

What Other Types of Taxation Does New Zealand Have?

In addition to the annual income tax, New Zealand also imposes several other forms of taxation. These include:

• Goods and Services Tax (17.5% on all applicable goods and services)
• Corporate Tax (28% of profits for qualifying businesses)
• Fringe Benefit Tax (typically 49.25% of all non-salary benefits provided by an employer)
• Excise Duty on certain products, such as alcohol, tobacco, and some fuels

New Zealand has no official capital gains tax, though certain capital gains are taxed through separate tax regimes. If you are claiming gains, we recommend consulting a tax professional to determine your liability.

Essential Tax Forms for US Expats in New Zealand 

As a US expat living in New Zealand, it is important to understand your tax obligations and ensure that you are complying with both US and New Zealand tax laws. The primary tax forms that US expats in New Zealand will need to complete are Form 1040 and Form 2555. 

Form 1040 is the standard tax form for US citizens and residents, and it must be filed by US expats regardless of where they live. Form 2555, on the other hand, is used to claim the foreign earned income exclusion, which allows expats to exclude a portion of their income from US taxes. 

It is also worth noting that US expats in New Zealand may be eligible for certain tax benefits and deductions, such as the foreign tax credit, which can help to reduce their overall tax burden. 

Credits & Deductions Available to Expats Living in New Zealand 

US expats living in New Zealand may be eligible for certain tax credits and deductions that can help reduce their overall tax liability. The foreign tax credit is one such benefit, which allows expats to offset taxes paid to New Zealand against their US tax liability. 

In addition, expats may also be able to claim the foreign-earned income exclusion, which allows them to exclude a portion of their foreign-earned income from US taxes. The foreign housing exclusion can also be claimed to cover the cost of housing while living abroad. 

Expats may also be eligible for deductions, such as the standard deduction or itemized deductions, depending on their individual circumstances. Other deductions may include expenses related to self-employment, moving expenses, and charitable donations. 

Does the US Have a Tax Treaty with New Zealand? 

Yes. The US-New Zealand tax treaty defines which country an expat will owe income taxes to, reducing the risk of double taxation. Typically, whichever country considers you a resident for tax purposes will receive your income tax debt.

Does the US Have a Totalization Agreement with New Zealand?

No. The US and New Zealand do not currently have a totalization agreement in place. This means that Americans who live and work in New Zealand may be required to contribute to both nations’ social security systems.

Navigating Tax Compliance for US Expats in New Zealand

Looking for a better understanding of taxes for US citizens living in New Zealand? Contact us today to learn more about how we can help you navigate the complexities of US expat taxes in New Zealand.

Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.