Non-Resident Tax Guide — Tax Rules for Non-Residents in New Zealand
the non-resident taxation in New Zealand. The guide covers the tax residency tests (the "183-day test", the "permanent place of abode test"), the non-resident withholding tax (NRWT) on the interest and the dividends, the non-resident rental income tax, and the bright-line test for the non-residents.
Non-Resident Tax Residency
The non-residents are the individuals who do not meet the New Zealand tax residency tests. The "183-day test" — the individual is the NZ resident if present in NZ for 183 days or more in any 12-month period. The "permanent place of abode test" — the individual is the NZ resident if they have the permanent place of abode in NZ (regardless of the days present). The non-residents pay the tax on the NZ-sourced income only (the employment income, the rental income, the interest, the dividends). The non-residents do not have the tax-free threshold — the first dollar of the NZ-sourced income is taxed at 10.5%.
NRWT and Property Tax
The Non-Resident Withholding Tax (NRWT) applies to the interest and the dividends paid to the non-residents. The NRWT rates: the interest — 15% (or the reduced rate under the DTA, typically 10% to 15%), the dividends — 30% (or the reduced rate of 15% under the DTA for the portfolio investments). The non-resident rental income is subject to the NRWT at 30% (the "non-resident property tax" — the "non-resident withholding tax on the rental income") unless the non-resident elects to file the annual tax return. The bright-line test applies to the non-residents who sell the NZ residential land within 2 years of the acquisition (the "non-resident bright-line").