Expatriate tax - New Zealand

Specific pre-arrival tax procedures do not exist in New Zealand. A visa or permit to work in New Zealand is required for most countries.  However, Visas may not be required if you are:

• a New Zealand citizen or hold a New Zealand residence permit; or
• an Australian citizen, or an Australian resident with a current permanent residence visa or a current resident return visa.

If you’re unsure about your employment visa status, be sure to seek advice to clarify this.

The tax year runs from 1 April to 31 March.

New Zealand operates a self-assessment regime. Taxpayers file an annual tax return and self-assess the tax liability for the year.

If an individual only receives reportable income which has been subject to correct tax withholding at source (e.g., NZ sourced salary, interest, dividends) then they may be eligible to receive an automatic tax assessment.

The filing date for an individual’s tax return is 7 July following the 31 March year-end balance date. If you use a recognised tax agent (e.g., an accounting firm or tax adviser), the filing due date may be extended to the following 31 March.

Individuals are taxed at progressive rates according to total taxable income. New Zealand does not have a joint filing regime, and individuals are required to file in their own name.

Rates for the 2025/26 income tax year are:

Total income (NZD)                                                        Marginal rate
0 to 15,600                                                                         10.5%
15,601 to 53,500                                                                17.5%
53,501 to 78,100                                                                30%
78,101 to 180,000                                                              33%
180,001 or more                                                                 39%

Income tax calculation

                                                                                                           NZ$
Base salary                                                                                 120,000
Housing allowance                                                                    50,000
Schooling costs                                                                          25,000
Gross income                                                                              195,000
Less 
Income protection insurance                                                   (4,000)
Tax return preparation fees                                                      (1,000)
Total deductions                                                                         (5,000)
Taxable income                                                                            190,000
Tax at 10.5% first 15,600                                                            1,638.00
Tax at 17.5% next 37,000                                                            6,632.50
Tax at 30% next 24,600                                                             7,380.00
Tax at 33% next 101,900                                                            33,627.00
Tax at 39%, final 10,000                                                            3,900.00
Total tax                                                                                       53,177.50
   
Note: In this example there will be an additional ACC earner levy of $2,551.59

Tax residents of New Zealand are taxed on worldwide income, whereas tax non-residents are generally taxed on New Zealand source income only. These general rules may be modified by certain domestic concessions and tax treaty provisions, depending on your individual circumstances. If you meet the transitional resident criteria, you are also generally eligible for up to 48-months of relief from New Zealand tax on foreign passive income (following the date that your tax residence is confirmed).

The 183-day test

An individual is deemed to be a New Zealand tax resident if they are present in New Zealand for more than 183 days in any 12-month period. When this test is met, the individual is treated as being a tax resident from the first of the 183 days of presence.

The permanent place of abode test

An individual is deemed to be a New Zealand tax resident if they have a “permanent place of abode” (PPOA) in New Zealand. The PPOA test generally looks at whether an individual has access to a property (whether rented or owned) in New Zealand that they have lasting connections with.

Transitional residency

While ordinarily residents are subject to tax on their worldwide income, if an individual qualifies as a transitional resident, then they will be exempt from New Zealand tax on their foreign-source income apart from any foreign employment income or any personal services income for services performed during their transitional resident exemption period. The transitional residence period runs for 48-months from the end of the month in which their residence is confirmed.

Taxable income from employment includes salaries, wages, bonuses, lump sum payments, the benefit of employer provided accommodation, and benefits arising under employment-related share purchase schemes and option schemes. Certain payments to, or on behalf of employees may qualify for tax-free treatment - for example, payments for certain categories of work-related expenditure such as business travel.

Discounted equity compensation is subject to a complex set of rules that deem a taxable employment benefit to arise at the time an employee legally owns the shares. Specific rules apply to determine when ‘acquisition date’ occurs for tax purposes. We recommend specific tax advice be sought if you hold options or unvested shares, or if are expecting to receive equity compensation.  Issues also arise for the employer.

New Zealand has very broad source rules which you need to consider carefully. Usually, employment income is deemed to be sourced in the country in which the employment services are performed. However, for New Zealand tax purposes, factors such as where the employment contract is made and where the payment is made from are relevant in determining the source of the employment income. Where a tax treaty employment article applies, the source is generally where the services are performed.

Employee fringe benefits are subject to fringe benefit tax (FBT). This is imposed on employers and not on employees. Common examples of benefits subject to FBT include the provision of motor vehicles that are available for private use (irrespective of actual use), low interest loans, health insurance, overseas superannuation contributions and discounted goods.

Depending on the length and terms of the assignment, tax relief may be available under the provisions of a double tax agreement between New Zealand and the home country. Generally, treaty relief for compensation is only available if the individual is not present in New Zealand for more than 183 days during that year and the compensation is paid and borne by an offshore, (i.e. a non-New Zealand) entity. It is important that the treaty provisions of each country be examined.

Various tax exemptions may apply in relation to expenditure incurred as part of a relocation or secondment.

Under certain circumstances expatriates will become tax residents in New Zealand as well as in their home country under prevailing domestic tax laws. As a dual tax resident, where there is a double tax treaty in place, the taxing rights of each country will be determined by reference to the treaty.

New Zealand currently has a network of 41 Double Taxation Agreements (DTA) in force with its main trading and investment partners.

Credit is available to New Zealand tax residents for foreign tax paid on foreign-sourced income. In general terms, the overseas tax credit recognised in New Zealand will be limited to the lesser of the foreign tax paid or the New Zealand tax applicable to that foreign income. Double tax treaties may limit the amount of overseas tax paid on some sources of income.

General tax deductions against employment income are limited to the cost of preparing the annual tax return and income protection insurance premiums. Deductions for other costs incurred by employees in deriving employment income are specifically prohibited. Employers may compensate employees on a tax-free basis for certain types of expenditure incurred by employees in undertaking their employment duties. Common examples of expenditure that might be reimbursed include travel and entertainment for business purposes, or business telephone costs.

Self-employed individuals are entitled to a wider range of deductions for costs incurred as part of their business activity.

New Zealand does not have a capital gains tax regime as such, although some capital receipts may be treated as taxable income. Certain accrued/unrealised gains may also be taxable. Specific taxing regimes apply to tax gains from particular property disposals, and gains arising from financial instruments such as deposits and bonds, and gains on certain foreign shareholdings, retirement schemes and life insurance investments.  Gold and crypto currencies are considered ‘revenue account property’ in New Zealand and disposal gains or losses are generally treated as ordinary taxable income or loss. Specific advice should be sought for expatriates holding investment portfolios.

In certain situations, sales of land/real estate property will be subject to income tax. An exemption will generally be available if the property has been used by a taxpayer as their main home. Specific tax advice, well in advance of any sale, should be sought to confirm the tax risks.

New Zealand does not impose inheritance tax, estate duties, gift duties or death duties. 

Passive income flows such as interest and dividends are taxable at the individual’s marginal income tax rate. Special rules may apply to foreign shareholdings where the aggregate value of these exceed NZ$50,000 or if an individual holds a shareholding of 10% or more in a company. Special rules may also apply to debt instruments held in foreign currencies.

There are no local taxes imposed on the income of individuals in New Zealand.

Property rates are levied by regional governments to cover local infrastructure, logistical and management costs.

Currently, only New Zealand citizens or permanent residents are eligible to buy properties in New Zealand. Additional concessions can apply in the case of Australian and Singaporean citizens. Special exemptions can be applied for if certain criteria are met.

New Zealand does not operate a social security payment system as such, however both employers and employees contribute to the Accident and Compensation Corporation (ACC). ACC is a no-fault Government run accident insurance scheme. ACC covers employees who have an accident (whether at work or home) and allows for both medical assistance and compensation for up to 80% of an employee’s usual earnings while they are incapacitated. The individual earner contributions are collected from the employee through New Zealand’s pay as you earn (PAYE) system. The rate and threshold for ACC is reviewed each year. For the 2025/2026 income tax year, the ACC individual earner’s levy rate is 1.67% of income, with the contribution capped at $2,551.59. 

There is no wealth tax in New Zealand.

Non-resident withholding tax (NRWT) may be payable if interest payments are being made to a foreign party (e.g., on a mortgage) where that foreign party is not a registered bank in New Zealand.

In certain situations, New Zealand tax residents may be required to provide information relating to financial accounts held by them under FATCA and CRS regimes. These rules generally apply where assets are held via trust, although may also apply to other entity types.

Primary planning opportunities exist around the transitional resident exemption. The transitional resident exemption (which can only be used once) provides significant tax planning opportunity and is intended to allow time to organise offshore investments before full New Zealand tax on worldwide income applies in year 5. Transitional residents who have offshore losses can elect out of the transitional resident exemption - however, this means they are not able to benefit from the concession in the future. Again, if you’re considering this, be sure to seek specialist advice.

Additional tax concessions are under consideration by the Government and if introduced will benefit individuals who move to New Zealand in relation to their offshore stock portfolio assets. Special additional concession is likely to be introduced for US Citizen individuals.  

We encourage expatriates to get advice in advance to ensure planning opportunities are maximized.