Overseas income a hot topic for IRD
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GRA Blogs
Articles by Anthony Strevens
Back in October 2019, John Rowe wrote an article about the Automatic Exchange of Information (AEOI) whereby tax authorities in many international jurisdictions are sharing information regarding their nationals who are living abroad. In other words, if you have investments or income overseas, and especially if you file tax returns overseas, the chances are that IRD already knows or will know soon.
So why is that a problem? What business is it of the New Zealand IRD if you have offshore interests?
The reason is that if you are a tax resident of New Zealand, then you have to declare your worldwide income in New Zealand. This means that even if your overseas income never comes to New Zealand, or even if it is re-invested or if your investments don’t pay dividends or cash returns, they may still be subject to taxation in New Zealand.
In recent months I have seen a surge in letters from the IRD to clients. These letters state that IRD are aware of assets held overseas, and encourage clients to consider their tax positions over recent years and whether they might like to make a voluntary disclosure in regard to the overseas assets. Making a voluntary disclosure is beneficial, as it means the IRD will not apply some of the more punitive penalties that are within their power to levy on unsuspecting taxpayers. But it has to be done before a notice of audit is issued.
The moral of this story is that you are better to be safe than sorry, and the first step is to contact your Client Services Manager at GRA to discuss what you hold overseas and whether there is a requirement to disclose this in your New Zealand tax return. It’s better to talk to us first before you get a knock on the door from the IRD.
If you are not already a client of GRA, we would be very happy to meet with you to discuss your situation regarding overseas income. You can contact us by phoning +64 9 522 7955, emailing us on info@gra.co.nz or by filling out our online form.
Anthony Strevens
Business Advisory Director
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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