Tax Exemption for New Zealand citizens in Australia

Certain New Zealand citizens living in Australia are in the fortunate situation of being treated as a Temporary Resident for Australian tax purposes.

The tax act broadly provides that Temporary Residents only pay tax on Australian sourced income and certain foreign income that is derived as a result of remuneration as an employee or connected with employment.  In addition, capital gains on foreign and Australian assets other than those connected with Australian real property should not be subject to Australian tax.

Temporary residents are defined as individuals who:

  1. Hold a temporary visa under the Migration Act;
  2. Are not an Australian resident under the Social Security Act; and
  3. Their spouse is not an Australian resident under the Social Security Act

The Migration Act, Social Security Act and Income Tax Acts are all complex legislation, so each case sits on its merits.

Broadly speaking, most New Zealand citizens who arrived in Australia after February 2001 using their New Zealand passport and who meet the relevant definitions in the Migration Act and Social Security Act should be deemed a Temporary Resident.

Accordingly, those individuals who have migrated to Australia, but derive investment income overseas, or who invest in non-property related assets and make a capital gain on sale should not be taxable in Australia on that income.

Mazars in Australia are specialists in providing tax advice around International Business and international tax issues and have provided advice to many New Zealand citizens on this issue.  If you require any advice on this issue, please contact your usual Mazars adviser or speak with Jamie Towers on +61 7 3218 3900.

The migration law and taxation law around temporary residents is quite complex.  This publication provides a broad summary based on our understanding of the law at the time of publication and is general advice only and should not be relied upon without seeking professional advice in relation to your own circumstances.