NEW ZEALAND Law and Practice Contributed by: Greg Ambler and Elizabeth Heaney, Tompkins Wake
To determine the treatment of a will, will makers com- monly declare their domicile in their will, which may require further evidence at the point probate is applied for. 2.2 Income Tax Residency The Income Tax Act 2007 (s YD 4) provides that a New Zealand resident is liable for tax on all their world- wide income. A non-resident is liable for New Zealand income tax only on income which is derived from New Zealand. An individual is tax resident in New Zealand if they meet any of the following tests: • they have a permanent place of abode in New Zea- land, even if they also maintain one overseas; or • they are physically present in New Zealand for more than 183 days in any 12 month period; or • they are working overseas for the New Zealand government. The permanent place of abode test is the primary basis for establishing New Zealand tax residence. If a person has an enduring relationship with New Zea- land, which is assessed through factors such as their presence, use and availability of a dwelling, intentions, family and social connections, employment and busi- ness ties, and location of personal property, then they may be considered tax resident even if they also main- tain homes or ties overseas. The day-count test only applies if no permanent place of abode exists, meaning that a person becomes resi- dent after spending more than 183 days in New Zea- land in any 12‑month period, and ceases to be resi- dent only after being absent for more than 325 days in a 12‑month period. Any part-day spent in New Zea- land counts as a full day. A transitional resident is exempt from New Zealand income tax on most foreign-sourced income for up to 48 months after becoming a New Zealand tax resident. The exemption does not apply to foreign- sourced employment income earned while the person is a transitional resident or to income from supplying services. To qualify, a person must be an individual who has become NZ resident (under the permanent
place of abode test or the 183 day rule), must not have been NZ resident for at least the previous ten years, must not have previously been a transitional resident in that period, and must not have ceased transitional residence after that time. Transitional residence can be declined by an irrevocable election. Where a per- son is tax resident in more than one country at once, double tax agreements determine which country has taxing rights, preventing double taxation. 3. Intestacy and Forced Heirship Laws 3.1 Intestate Succession The Administration Act 1969 sets out the order of inheritance upon intestacy. When a person dies intes- tate in New Zealand, Section 77 of this Act prescribes a clear hierarchy of beneficiaries. A surviving partner generally takes priority, with children, parents, siblings and then extended family inheriting in descending order if closer relatives are absent. If no eligible rela- tives exist, the estate ultimately passes to the Crown. In more detail, as follows. • If an intestate person is survived by a spouse, civil union partner or de facto partner and has no children or surviving parents, the surviving partner inherits the entire estate outright. • Where an intestate is survived by a spouse, civil union partner, or de facto partner and has surviving children, the partner receives all personal chat- tels, a statutory legacy (currently NZD155,000 plus interest), and one third of the remaining estate. The children then take the remaining two-thirds on statutory trusts, and if none of those children attain an absolutely vested interest, then the estate is treated as if there were no issue. • Where an intestate leaves no children but has surviving parent(s), the surviving spouse, civil union partner or de facto partner receives all personal chattels, the statutory legacy with inter- est, and two-thirds of the remaining estate, while the remaining one-third is held for the deceased’s parent(s). • If an intestate dies without a spouse, civil union partner or de facto partner, the children (issue) inherit the entire estate on statutory trusts. If there
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