Tax bill tough on migrants?

Press, 9 November 1988, Page 42

Tax bill tough on migrants?

PA Wellington The Income Tax Amendment Bill (No. 6) could inhibit immigration and also temporary secondment of overseas staff to New Zealand by overseas companies, says the national accounting firm, Touche Ross and Company. A tax partner, Mr John Dodds, believes the bill’s residence provisions for individuals are far too wide. “Once a person has been physically present in New Z e a I a n d for more than 183

days in any 12 month period that person will be treated as a resident for New Zealand income-tax purposes from day one, with potentially serious consequences,” he said. Residents are subject to New Zealand tax on world income and can also be subject to the controlled foreign corporation and foreign investment fund legislation. Unlike the previous residence test, there will be no let-off because the individual has retained a permanent place of abode in his or her home country. “Since the new provisions are to be retrospective to April 1, 1988, a person seconded to New Zealand by his or her overseas employer

could already be subject to the new rules, without having had the ability to be aware of them until at least July, 1988, when the Consultative Committee’s recommendations were published,” Mr Dodd said. For example, a person seconded to New Zealand for two years from April 15 will already have been in New Zealand for more than 183 days. If the person has rented a home, and has some investments, in his or her home country, then he or she will suddenly find that New Zealand income tax is payable on the net rental income, together with interest and dividends, whether remitted to New Zealand or not.