NEW ZEALAND Law and Practice Contributed by: Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
continuing permanent place of abode, and reviewing the ongoing taxation of New Zealand-sourced income as a non-resident. An individual must ensure to file an individual tax return and to inform Inland Revenue (IRD) of plans to change their income tax status. After an individual ceases to be a New Zealand tax resident, if the individual still earns income from a New Zealand source, then they will most likely still be liable to pay tax in New Zealand and an individual tax return must still be filed. 1.5 Taxation of Real Estate Owned by Non- Residents and Non-Citizens Non-residents and non-citizens selling residential property in New Zealand within the applicable bright- line period are subject to income tax on any gain in the same way as New Zealand residents. Where the vendor is an “offshore RLWT person” (broadly, a non- New Zealand citizen, non-permanent resident, or a New Zealand citizen absent for more than 12 months), Residential Land Withholding Tax (RLWT) is withheld at settlement at the lesser of 10% of the gross sale price or 39% of the vendor’s gain (28% for a company vendor), and operates as a prepayment against the vendor’s final tax liability. Residential property may also be held through a New Zealand company with a mix of resident and non- resident shareholders, which may avoid “offshore RLWT person” status and benefits from the lower 28% corporate tax rate on rental income. Where shares in a property-owning company are sold rather than the land itself, the bright-line test, which applies to disposals of land, will not apply; however, other land taxing provisions under the Income Tax Act 2007 may still apply depending on the purpose of acquisi - tion and the nature of the shareholders’ activities, so the position should be considered carefully. The key limitations of the company structure are the added compliance costs and the fact that it does not provide the asset protection or succession planning benefits of a trust. 1.6 Stability of Tax Laws Recent and potential developments include the fol - lowing.
• A wealth tax, inheritance tax, gift tax and/or a more comprehensive capital gains tax could be intro - duced in the future, depending on government policy, though no plans are confirmed as of 2026. • Bright-line rules may be adjusted post-election, as seen historically. The bright-line period has previ - ously been extended from two years to five years in 2018 and to ten years in 2021, before being reduced back to two years by the National Party government from 1 July 2024. • The bright-line test currently taxes gains on resi - dential property (excluding the main home) at the owner’s income tax rate, with applicable periods depending on the date of acquisition: (a) two years for properties bought on or after 1 July 2024; (b) ten years for those bought between 27 March 2021 and 30 June 2024; and (c) five years for those bought between 29 March 2018 and 26 March 2021. • Exemptions apply for the main home, inherited property, and certain trust transfers with rollover relief. 1.7 Transparency and Increased Global Reporting New Zealand has taken steps to address tax avoid - ance and enhance transparency by implementing OECD-aligned Base Erosion and Profit Shifting (BEPS) measures, including strengthened transfer pricing rules, anti-hybrid provisions and limits on interest deductions. These measures are primarily directed at multinational and cross-border arrangements, but they form part of a broader policy trend towards increased scrutiny of tax planning structures. New Zealand participates in global information-shar - ing initiatives through full adoption of the Common Reporting Standard (CRS) into domestic law and a Model 1 Intergovernmental Agreement under the US FATCA regime. Under these regimes, reporting finan - cial institutions are required to identify and report cer - tain foreign account holders to Inland Revenue, which may then exchange that information automatically with relevant overseas tax authorities. New Zealand is not subject to the EU DAC6 mandatory disclosure regime, although it is otherwise an active participant in international exchange of information frameworks.
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