Tax decision helps expat landlords

Rebecca Armour, head of KPMG’s international executive services tax team, said Kiwis living in other countries and renting out properties here should welcome a decision to overturn a 2013 Taxation Review Authority (TRA) decision that a New Zealander living and working overseas for more than 10 years was tax resident in New Zealand and had taken an unacceptable tax position by claiming that he was not.

At the TRA, the ownership of a New Zealand investment property was considered a sufficiently strong tie to New Zealand to establish his tax residence under New Zealand’s residence rules. This was despite the fact that the taxpayer had been living outside New Zealand for a significant period and had never lived in the investment property.

The TRA found that the rental property investment was an available dwelling and was near where the taxpayer’s  ex-wife and children lived.

In contrast, the High Court focused on the use of the investment property and his intentions in relation to that property, finding that as he had never lived there it could not be considered his home in New Zealand.