New Zealanders living and working overseas can breathe a little easier now tax authorities have agreed that renting out a house they own in New Zealand doesn't automatically make them a New Zealand taxpayer.
The Inland Revenue Department has issued an interpretation of New Zealand residency after a Taxation Review Authority decision last year appeared to massively widen the scope for kiwis to be taxed in New Zealand on income earned offshore.
A key determinant in the TRA's decision was property ownership and the existence of a permanent place of abode.
"After more than a year of uncertainty, heightened by the somewhat surprising decision from TRA, we finally have a basis on which to begin reconstructing the foundations for assessing an individual's tax residence when they leave New Zealand," said Deloitte associate tax director Mike Williams.
The combination of the TRA decision and IRD's view that "commercially rented dwelling houses constituted a permanent place of abode left many long-term non-residents with a sense of unease," said Williams.