We are getting phone calls from a number of British migrants who moved to New Zealand prior to 31 March 2014 and took their British pension funds with them. Those taxpayers who have decided to try out the warmer shores of Australia and are starting to receive letters from New Zealand’s Inland Revenue Department.
There is clearly some confusion and it’s important for British migrants to realise that they will be clear of any nasty income tax surprises if they transferred their pension within four years of arriving in New Zealand.
Those that transferred their pension to New Zealand after four years of arriving in New Zealand should have been including 15% of the lump sum that was transferred from the UK in their income tax return that covered the date of the pension transfer.
Naturally, those UK migrants who have subsequently moved to Australia may be tracked down in the future.
Australia and New Zealand’s tax authorities (ATO and Inland Revenue) are continuing to leverage technology to tighten up their information sharing capability. That means that it is becoming a lot easier for Inland Revenue to pursue tax debts from New Zealand taxpayers who are now living in Australia.
Many feel that this tax treatment of UK pension schemes is unjust because tax is being levied on an amount of money that the taxpayer doesn’t have any access to.
Therefore, in order to satisfy any tax debt, they may well have to sell unrelated assets or enter into a repayment plan with Inland Revenue.
It’s always best to contact Inland Revenue before they contact you!
We can assist with voluntary disclosures and reopening earlier tax returns to include income that should have, but wasn’t, included in your New Zealand income tax return.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.