Are you planning on moving overseas? This exciting new opportunity, along with the stress of all that has to be done might be overwhelming. Your focus has likely centred on visas, flights and accommodation. However, have you considered what will happen to your tax residency, KiwiSaver balances, property and other ongoing obligations to New Zealand (NZ).
This is where many people discover that moving internationally is more complicated than they had thought.
Leaving New Zealand is not a single decision
Most people understandably focus on the practicalities of an overseas move; however, there are key financial decisions that need to be considered before the move and delaying them can limit your options later. The challenge is that these decisions are connected.
Before leaving NZ, there are five key areas worth considering:
- Your move: How long do you genuinely expect to be overseas?
- Your home: Will you sell, rent or retain your NZ property and other assets?
- Your tax residency: When might your NZ tax residency (TR) end, and what obligations may continue in the meantime?
- Your KiwiSaver: What options are available based on where you’re moving and how long you expect to be away?
- Your ongoing obligations: What notifications, filings or other requirements may still apply with Inland Revenue (IR)?
Understanding how these decisions fit together can help you make more informed choices before you leave. The first place to start is understanding when, and how, you actually stop being a TR.
When do you stop being a New Zealand tax resident?
Leaving NZ does not automatically stop your TR, they are two separate things. TR is how NZ tax rules apply to you, including whether obligations remain relating to worldwide income.
Generally, you can cease your NZ tax residency once you have been away for more than 325 days within a 12-month period and no longer have a permanent place of abode here. Both conditions need to be met – retaining a permanent home in NZ can mean you remain tax resident even if you’ve been absent for 325+ days.
Because TR is determined by individual circumstances, professional advice can be valuable where there is uncertainty about how the rules apply to your situation.
What happens to your home?
Deciding what happens to your family home is one of the most difficult and significant decisions you will make when moving overseas. Your decision on whether to sell, rent or keep your home will affect your TR status, cashflow, flexibility and future plans.
If you sell
If you are making a long-term or permanent move, selling your family home may be the simplest option. It can provide access to capital, remove the responsibilities of owning property from abroad and reduce the number of financial ties you maintain in NZ. Before selling, however, it’s worth understanding any tax implications that may apply to your circumstances including the bright-line test and Residential Land Withholding Tax.
If you rent it out
If you want to retain the flexibility of returning to NZ, renting out your property could be the most viable option. You will retain ownership while generating additional income, although becoming a landlord does carry additional responsibilities. The rental income will be subject to NZ tax, requiring you to file a Non-resident individual tax return (IR3NR).
If you keep it available
Some people choose to keep their home available for future use rather than selling or renting it out. While this can provide flexibility, it may also be relevant when assessing your ongoing connection to NZ. Because TR outcomes depend on individual circumstances, it is worth considering how property decisions fit into your broader plans before leaving.
There is rarely a one-size-fits-all answer. The right approach will depend on factors such as your financial position, your long-term plans and whether you expect the move to be temporary or permanent.
What happens to your KiwiSaver?
One of the most common questions people ask before moving overseas is what will happen to their KiwiSaver. The good news is that, in many cases, KiwiSaver does not require an immediate decision. Your options will depend on where you’re moving and whether the move is temporary or permanent.
What if I am only moving temporarily?
If you’re moving overseas temporarily, your KiwiSaver can generally remain in place and continue to be invested. For many people, there may be no need to make any immediate changes while they settle into life overseas.
What if I am moving to Australia?
Australia is treated differently from many other destinations. Depending on your circumstances, you may be able to transfer your KiwiSaver savings to a complying Australian superannuation fund rather than withdrawing them as cash. You may benefit from obtaining international pension transfer advice before making a decision.
What if I am moving somewhere else?
If you’re making a permanent move to a country other than Australia, different rules may apply. In some circumstances, overseas withdrawal options may become available once certain criteria have been met.
While KiwiSaver is often one of the most visible financial considerations when moving overseas, it is not always the most urgent. For many people, decisions about TR and the family home will have a greater immediate impact, making them the issues that deserve attention first.
What should you tell Inland Revenue?
Tax obligations don’t stop when you board the flight. The IR flags several things to check before leaving: your TR status, student loan, KiwiSaver, and (if relevant) Working for Families, FamilyBoost, and child support arrangements
What should I do about student loans?
One area that deserves particular attention is student loans. The IR specifically highlights student loan obligations as something people should review before moving overseas, as different rules may apply once you are no longer based in NZ.
What should I do about ongoing NZ income?
It’s also important to consider whether you will continue receiving income from NZ sources, such as rental properties, investments or business activities. These arrangements may continue to have tax implications even after you’ve left the country.
Taking the time to review any IR obligations before departure can help avoid unnecessary administration and provide greater confidence as you settle into life overseas.
Planning a Move Overseas?
Moving overseas can create exciting new opportunities, but it also involves a series of financial decisions that can have lasting consequences. Understanding how your TR, property, KiwiSaver and ongoing obligations may be affected can help you make more informed decisions before you leave NZ.
While some people have a clear plan, many are still working out whether their move will be temporary or permanent. Taking the time to consider your options early can help avoid surprises later and provide greater confidence as your plans evolve.
If you’re planning a move overseas and are unsure how the rules apply to your circumstances, seeking advice before you leave can help you understand the implications and make informed decisions for the future reach out to your local Moore Markhams Advisor.
