New Zealands Temporary Tax Exemption on Foreign Income

Well yesterday I finally bit the bullet and paid my tax owing for the 2008 and it hurt my bank account a lot. So this morning I was just reading up about tax havens D) and I came across the interesting tax incentive that the NZ government offers, and I just wanted to see if any accountants on these forums could help shed some light on the topic for me. Here's the details of what I read:

Temporary tax exemption for foreign income - Working In New Zealand

So my question relates to some of my income sources, and whether they'd be exempt.

So I run a few different websites which collect a significant amount of advertising revenues each month. I also earn a significant amount of commission payments from sales and leads that are generated by sites that I run and own as well as commission payments from companies which have hired me as a consultant for their companies and have paid me via a commission structure.

So I'm wondering how the accountants think the foreign income from my advertising sales and my commission payments would be classified under the NZ foreign income tax exemption?

 

"...So this morning I was just reading up about tax havens ( ) and I came across the interesting tax incentive that the NZ government offers..."

If you are looking for a tax 'havens'...there is a few better places than N.Z, Vanuatu etc...

 

Oh I have looked into lots of different tax havens over the last few months, once I graduate at the end of this semester I seriously begin to start sizing up the option, at the moment Hong Kong is looking attractive, though Singapore, Dubai and Vanuatu are all still very much in the equation...

I just thought the NZ tax exemption was very interesting and NZ would definitely make for a very easy relocation for the sake of tax advantages, Id be surprised if a lot of new retirees weren't taking advantage...

 

Australia has very nice incentives for foreigners to work and invest here.

Similar to NZ, we exempt foreign source income of workers holding special temporary visas even though according to our usual rules they would be classed a tax residents and taxed on worldwide source.

Also, it is almost impossible for non-residents to derive a capital gain here unless they have an interest in land.

And don't forget the generous withholding tax rates for residents of tax treaty countries on their dividends, interest and royalties.

NZ is mainly a CGT tax haven, since they don't even have it for their own residents - but Australia is not far off.

Imputation is one of the few breaks we have, and Ken Henry is talking about removing this because it is "complicated" and is a disincentive for non-residents who don't get them.

So keep paying your taxes, there is not many of us taxpayers left to fund the Government handouts !!

Cheers,

Rob

 

Turns out the UK has a very similar tax exemption as NZ with foreign income earned by non-domicile residents of the UK not being subject to tax, not to mention that there are many UK controlled tax havens (Isle of Man, Guernsey, etc). Also apparently the state of Delaware has very low corporate tax rates, so all you have to do to take advantage is incorporate your company in the state of Delaware. Apparently something like 60% of Fortune 500 companies in the US have done exactly this...

So it seem quite rich that the G20 is cracking down on "tax havens" when it would appear that most countries have their own tax havens embedded within their own systems.

Unfortunately for Australia I have no intention of being left holding the bag...

 

Australia has complex anti-avoidance provisions to prevent its very valuable source of revenue (i.e. tax residents) from escaping the net.

e.g. Controlled Foreign Corporations, Foreign Investment Fund, Transferor Trusts can all deem income has been derived by the taxpayer even if they have not actually received it. Main exceptions are if you are carrying on an active business.

I love this sticky spider web of tax that seems to magically disappear with a mere change of tax residency.

I wonder if the number of stateless corporations exceeds the "stateless individuals" for tax purposes ?

Cheers,

Rob

 

This is the way I'm heading - relocating to a more tax friendly country, especially when it comes to foreign income - and it would appear that there are quite a few to choose from.

 

As a final parting shot from the ATO, changing residence is a CGT event.

All your CGT assets other than real estate will be examined for any unrealised net capital gains.

Just leave your wallet at the door as you leave !!

Cheers,

Rob

 

Lucky for me I'm mostly in cash at the moment, so nothing to pay... but don't worry I went to my accountant's today to do my BAS and I walked out feeling very violated. My tax bill was so insane I insisted he do the sums again...



Unfortunately for me it would appear that he is pretty good at maths and I have two very big bills to pay.

 

Mostly cash ... sounds like you have a CGT bill.

If you had been a non-resident investing here, you most likely would not have suffered.

Your main sin is trying to provide for yourself and not be a burden on the State. In which case the State becomes a burden on you.

I think the Government's current tactic to attract new residents is to hand out free money. Word will soon get round the people trafficking organisations, better build some new harbour infrastructure to cope with new boat arrivals !!

Cheers,

Rob

 

I definitely have some CGT to pay this year, but being young and the last 18 months not yielding a lot of gains I haven't made that many gains that can be heavily taxed.

LOL

... I know, I know, but I'm trying to repent through relocation!



At this end of this financial year I'm going to add up all the tax I have paid, including things like income tax, stamp duty, GST, rates, cgt, etc - I reckon I'm going to have paid well over $60,000 - $70,000 in tax this financial year alone! That way when anyone asks why I left I'll thousands upon thousands of reasons.

I can't wait until Kruddy racks up a massive government debt that needs to be paid off thorough higher tax rates coupled with a fancy new carbon emission tax! Soon people won't be able to fart in public without paying tax on their emissions...

The only thing that brings a small smile to my face is that we don't live in the US...Obama has already told the US people (or at least those that will still have jobs) that their taxes will be going up 5% in 2010! let the exodus begin...

That might actually work out well for Australia, as the boat people are probably more in tune with the idea of working hard to get ahead or even staying afloat, so they may actually be willing to work hard and pay taxes. Where as most Australians are now well and truly comfortable in their unsustainable welfare state and are too busy consuming and expecting handouts in exchange for votes to bother with working.

Australia has a lot of great things going for it, but I think it is very much stuck in a western system of business and governance - and I think the real flow of human capital over the next couple of decades will be towards Asia.

 

Don't forget to come back and visit us occassionally.

Just not too often, and definitely not for more than 183 days in a tax year otherwise you might be deemed a Tax Resident - unless you have one of those nice temporary visitor work visas.

How much is a one-way first class flight to Vanuatu ? ... about $900 I bet !!

Cheers,

Rob

 

IF my relocation does eventuate, you can rest assured that I love Australia way to much to not holiday here fairly often...

Not sure, but probably quite a bit cheaper than what they are to Hong Kong, which would be where I'd likely head to.

 

That cracks me up...

Maybe we can even trade our emissions!!!

lol