New Zealand: Tax residence of overseas individual | KPMG | GLOBAL

New Zealand: Court determines tax residence of overseas individual

New Zealand: Tax residence of overseas individual

A decision of the Court of Appeal of New Zealand may affect individuals in New Zealand looking to move overseas, current expatriates, and those persons looking to invest or spend time in New Zealand.


Related content

The case is: Diamond v. CIR (2015) 


The individual taxpayer was a New Zealand citizen who left to work as an overseas security consultant in 2003 (and continues to live overseas). 

Inland Revenue sought to treat him as tax resident due to his ownership of a New Zealand rental property which, in the Commissioner’s view, amounted to a “permanent place of abode” in New Zealand. Inland Revenue argued that a permanent place of abode arose because the taxpayer could live in the property—regardless of whether it was his home or whether he had actually lived there previously. 

Court’s decision

The Court of Appeal found that New Zealand property owned by a person, but never lived in by that person, and further that the person does not intend to live in the property, cannot be the foundation of a “permanent place of abode.” In this case, the taxpayer was found to have an insufficient connection to New Zealand for him to have a permanent place of abode and to be a tax resident in New Zealand. He was therefore not subject to tax in New Zealand on his worldwide income. 

KPMG observation

The decision is viewed as confirming the limits of the “permanent place of abode” rule. According to tax professionals in New Zealand, Inland Revenue does not intend and will not be appealing this decision to the Supreme Court.


Read a March 2016 report [PDF 504 KB] prepared by the KPMG member firm in New Zealand: Taxpayer Wins Residence Case

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