If you are a New Zealand tax resident, you are generally taxed on your worldwide income, including income earned overseas. Whether you work abroad temporarily, receive foreign investment income, or have recently arrived in NZ, understanding your obligations helps you avoid surprises at tax time.
NZ tax residents must declare all worldwide income, including overseas salary, rent, interest, and dividends. You may be able to claim a foreign tax credit for tax paid overseas, limited to the lowest of the tax paid overseas and the NZ tax on that income. New migrants and returning New Zealanders who qualify get a temporary tax exemption of about 4 years on most types of overseas income (not income from overseas employment). Declare overseas income in your IR3 and the Overseas income summary (IR1261). NZ has double tax agreements with 40+ countries including Australia, UK, USA, and China.
Are You a NZ Tax Resident?
NZ taxes residents on worldwide income. You are a NZ tax resident if:
- You have a permanent place of abode in NZ (a place where you usually live, even if you are not there all the time), OR
- You have been present in NZ for more than 183 days in any 12-month period (unless you are a non-resident visitor)
You can be a tax resident of NZ and another country simultaneously — this is where double tax agreements (DTAs) matter.
Becoming a non-resident: If you leave NZ, you become a non-resident taxpayer only if you have no permanent place of abode in NZ and you are away for more than 325 days in any 12-month period. Non-residents generally pay tax only on income from NZ sources (NZ wages, NZ rental income, NZ interest). Get advice from an accountant before assuming you are a non-resident.
What Overseas Income Is Taxable in NZ?
As a NZ tax resident, you must declare:
| Income type | Notes |
|---|---|
| Overseas salary and wages | Employment income earned while overseas |
| Overseas rental income | Rent from properties owned outside NZ |
| Overseas interest | Interest from overseas bank accounts |
| Overseas dividends | Dividends from foreign shares, or foreign investment fund (FIF) income instead if the FIF rules apply (usually for holdings over $50,000) |
| Overseas business income | Income from overseas businesses |
| Foreign trust distributions | Taxable distributions from overseas trusts (distributions of realised capital gains or payments out of the trust’s capital are not taxable) |
| Pension income from overseas | Foreign pensions are generally taxable here; withdrawals and transfers from Australian superannuation are not taxed in NZ |
The 4-Year Transitional Resident Exemption
New migrants and returning New Zealanders who became tax resident on or after 1 April 2006 and were not tax resident at any time in the 10 years before may qualify for the transitional resident exemption, and it can only be used once:
- Lasts about 4 years: it ends 4 years after the end of the month you qualify as a tax resident, or earlier if you apply for Working for Families tax credits or include the exempt income in your IR3
- Exempts most foreign-sourced income (interest, dividends, rent from overseas) from NZ tax
- Does not exempt overseas employment income (although a double tax agreement may give some relief)
- Does not exempt NZ-sourced income
This exemption is significant for people bringing overseas investment portfolios to NZ. During the exemption period, most types of overseas investment income are exempt from NZ tax, unless the exemption ends early.
You do not need to apply: the exemption applies automatically if you qualify. Including the exempt income in your IR3 ends the exemption, so only show overseas income that is not exempt.
Foreign Tax Credits
If you paid tax overseas on income that is also taxable in NZ, you may be able to claim a foreign tax credit to reduce double taxation:
- Credit is the lowest of: the tax paid overseas, the NZ tax on that income, or the amount a double tax agreement allows
- Prevents double taxation but does not create a net refund below $0
Example:
- Overseas salary: $50,000 AUD (~$55,000 NZD)
- Australian tax paid: AUD $10,000 (~NZD $11,000)
- NZ tax on $55,000 at marginal rates: ~$8,720
- Foreign tax credit: ~$8,720 (NZ tax, being the lesser amount)
- Additional NZ tax to pay: $0
If the overseas tax rate is higher than NZ’s equivalent rate, you pay no additional NZ tax (but do not receive a refund of the overseas excess).
Double Tax Agreements (DTAs)
NZ has double tax agreements with 40+ countries that determine which country has the primary right to tax income:
| Country | DTA exists? |
|---|---|
| Australia | Yes |
| United Kingdom | Yes |
| United States | Yes |
| China | Yes |
| Japan | Yes |
| Canada | Yes |
| Germany | Yes |
| Singapore | Yes |
| India | Yes |
DTAs typically reduce withholding tax rates on dividends and interest paid between the two countries, and allocate taxing rights to prevent double taxation. The specific rules depend on the DTA with each country — check ird.govt.nz/international for full treaty details.
Overseas Employment Income
If you are a NZ tax resident temporarily working overseas:
- Your overseas employment income is taxable in NZ
- Declare it in your IR3 and the Overseas income summary (IR1261)
- You may be able to claim a foreign tax credit for tax paid in the overseas country, up to the limits above
- If you were paid in a foreign currency, convert to NZD using the mid-month, end-of-month or rolling average rate (IRD publishes rates, or you can use Reserve Bank or another appropriate rate consistently)
Australian Superannuation
Some NZ residents have Australian superannuation from working in Australia:
- While growing (pre-withdrawal): foreign super interests are only taxed under the foreign investment fund (FIF) rules while they grow if they are a “FIF superannuation interest”, which generally means one you acquired while a NZ tax resident
- On withdrawal: IRD says you will not be taxed in NZ on withdrawals or transfers from an Australian superannuation (other foreign super is taxed differently)
Some Australian super balances can be transferred to a KiwiSaver scheme if both the Australian complying super fund and the KiwiSaver provider take part, and IRD treats the amount transferred in as exempt from tax.
Frequently Asked Questions
I worked in Australia for 6 months. Do I need to declare the income in NZ?
Yes, if you remained a NZ tax resident during that time (e.g., you kept your NZ home). Declare the Australian income on your NZ IR3 (with the Overseas income summary, IR1261) and claim a foreign tax credit for the Australian tax you paid, limited to the NZ tax on that income. A double tax agreement will usually allow a credit for tax paid in the other country, within the limit above.
I received dividends from US shares. What tax applies?
Under the NZ-US DTA, the standard US withholding rate on dividends is 15% (5% for a company holding at least 10% of the payer). You declare the gross dividend as income in NZ, and claim the US withholding as a foreign tax credit, up to the NZ tax on that income. Any NZ tax left after the credit (where your rate on the income is above 15%) is payable. Additionally, if your overseas shares cost NZ$50,000 or more in total, the FIF rules may apply.
I moved to NZ 2 years ago. Am I eligible for the transitional resident exemption?
If you became a NZ tax resident on or after 1 April 2006 and were not a tax resident in the 10 years before, yes: you qualify for an exemption of about 4 years on most foreign-sourced income, such as overseas interest, dividends and rent. There is nothing to elect: you qualify automatically if you are eligible. The exemption can end early, for example if you apply for Working for Families tax credits or include exempt income in your IR3, so a tax professional can help if you are unsure.