The U.S. Department of the Treasury and the New Zealand government entered into an Intergovernmental Agreement (IGA) to implement the FATCA rules, which came into effect on July 3, 2014. FATCA rules require all global financial institutions that are not exempt, including New Zealand financial institutions, to register and report to the U.S. Internal Revenue Service (IRS) through certain financial accounts held with them. Currently, there is no social security agreement (or tabulation agreement) between the U.S. government and the New Zealand government. The agreement has several objectives, the most important of which is the possibility of a reduction in double taxation. To facilitate this objective, the two national laws, the New Zealand Income Tax Act and the United States Internal Revenue Code, each refer to the Convention. See the Second Protocol to the 1982 Agreement. The withholding tax rate for non-residents remains unchanged at 15% and could be reduced due to the double taxation agreement between these countries.
The United States is one of the few governments to tax the international income of its citizens as well as permanent residents residing abroad. However, certain provisions help to prevent possible double taxation. These include: Note that non-resident withholding tax is a lump sum of 15%, which can be reduced due to the U.S. double taxation treaty with New Zealand. New Zealand has a welfare system that must be taken care of by those who earn an income in New Zealand. Since there is no aggregation agreement between the U.S. and New Zealand, this could be an aspect of U.S. expat taxes where Americans face double taxation in New Zealand. The U.S. Social Security Administration offers U.S. expats an explanation of Social Security in New Zealand so taxpayers know exactly what they are contributing to. [1] More favourable conditions notified by the United States are now part of the Intergovernmental Agreement (IGA), as permitted by Article 7.
Those conditions form part of Section VI of Annex I to the Intergovernmental Agreement and shall enter into force on 3 July 2014. (Website updated March 23, 2015. See also Tax Information Bulletin – Volume 27 Issue 3.) There is no aggregation agreement, so this could be an area where Americans living in New Zealand could be subject to double taxation. U.S. expats can get more information about the New Zealand system from the U.S. Social Security Administration. DTAs offer more relief from double taxation than is possible under national law. All DTAs include the MAGP as a cost-effective dispute settlement mechanism. As a general rule, the MAGP only provides for the competent authorities to try to resolve the problem. However, some provisions of the MAGP are supplemented by arbitration provisions in order to avoid cases where the competent authorities cannot reach an agreement. If you are a U.S.
citizen or permanent resident, you must file U.S. tax returns with the IRS every year, regardless of the country in which you reside. In addition to the regular tax return, you may also be asked to file an information statement about your assets held in foreign bank accounts, whether professional or private. While the U.S. taxes the international income of its citizens and permanent residents residing abroad, there are special provisions to protect them from double taxation, including: Interest income – The simplest type of interest is if you have a bank account – the bank pays you a certain percentage for the privilege of holding your money. Report interest income in the tax questionnaire on the Passive Income tab > interest. Americans are considered residents of New Zealand for tax purposes if they are permanent residents of New Zealand or if they spend at least 183 days or part-time days in the country over a 12-month period. The U.S.-New Zealand tax treaty is useful in situations where an expat doesn`t know if taxes should be paid on their New Zealand tax return or on their U.S. expatriate tax return. New Zealand`s U.S.
tax treaty is relatively simple, but if you have questions about the tax treaty, you should seek tax advice from expats. The agreement contains provisions relating to the taxation of certain professional categories and income, including: The New Zealand Tax Authority is called IRD (Inland Revenue Department). The tax year in New Zealand runs from April 1 to March 31. If your only source of income is employment in New Zealand, tax will be deducted at source and you will not have to file a tax return. If you submit a return, it is due on July 7. The form is called IR3, and you can download it and learn more about it here. As shown below, the TQ offers two options, one to use the tax assessed for the foreign tax credit or simply to use the amount of tax actually paid. While you are in the QT, please click on the appropriate help link (green question mark) for more details. .