Hacker News Reader

Comment by agentile | Hacker News Reader

A while back I was going through the immigration process for NZ with an immigration lawyer and had all the points necessary and was moving on to the interview phase.

My wife and I ultimately decided to stop as she became pregnant and didn't want to be as far away from family. That and the flight/quarantine times that would be imposed for our dogs. Another big issue was taxes.

To my knowledge NZ and USA are two countries that will try to tax you wherever you live until you die unless you renounce citizenship. So dealing with being double taxed on income from NZ and USA was a big deal as well.

Whenever I read these articles, it does sound so appealing. My sister has lived there for many years and the quality of life just seems so much better.

View on HN

So, New Zealand does not tax their citizens abroad wherever they live. They do tax their residents abroad wherever they live. New Zealand has an extremely broad definition of resident - anyone with a permanent place of abode (read: permanent home) in New Zealand regardless of how long they have been out of the country.

The US and New Zealand do have a tax treaty which ought to settle any issues of double taxation.

The other commonwealth countries (such as Canada) have similarly broad or vague wording in order to catch as many tax payers as possible. The US is large enough that all the weird situations which can happen, will happen and on a regular basis so the rules tend to be much more black and white.

> To my knowledge NZ and USA are two countries that will try to tax you wherever you live until you die unless you renounce citizenship.

US yes, NZ no. The US is practically the only country in the world to do that actually. And they WILL hit you with an extra "exit" tax if you try and renounce your citizenship too.

NZ yes.

My ex's family went and worked in Australia for a year or two. They boarded the plane, came back to New Zealand, and got a letter from the IRD demanding payment of taxes for the time they worked in Australia. Her father shot back that "They did not use any services from" NZ at all. The IRD responded that the services were available, and if they didn't pay their tax bill they were ready to initiate prosecution.

In general, that is not the law, nor is that common IRD practice, as the many, many, many kiwis who spend time in Australia could tell you.

At a guess, your ex's family managed to stay resident in NZ (or the IRD may have incorrectly believed them to be so), or they spent too much time in NZ, or didn't spend enough time in the US, or the IRD just screwed up the paperwork, etc.

But the law is quite clear, and is explained in detail on the IRD's website: http://www.ird.govt.nz/international/residency/dta/double-ta...

Did they fall foul of having "A permanent place of abode" in New Zealand? It seems that the IRD will consider you a resident in NZ as long as you maintain a house there, regardless of how long you stay away.

Only if the reason for dropping is tax avoidance.

That's simply untrue. Did you actually read that somewhere? Because the actual tax makes no such distinctions.

There are two things: one is the one time dropping citizenship fee. The other is the IRS taxing you for an additional decade if they think you dropped to avoid taxes.

I don't think that's true about NZ tax http://www.ird.govt.nz/income-tax-individual/filing-your-ret...

I have heard that USA does that though

Yes, I may have that wrong. At the time I was a contractor so the fear was the following situation per "If you're a New Zealand resident, you're taxed on your worldwide income."

If we wanted to eventually become residents of NZ, which we did, and I was obtaining income in the US, NZ and US would both tax me for that income.

It seemed, however, less likely that NZ would approve me for immigration if I was not intending to contribute my talents to a company within NZ, so in that case, if I obtained a job in NZ, I would be taxed in NZ, and US would again tax me as well for that income due to US citizenship.

> NZ and US would both tax me for that income.

Yes, the US will tax US citizens on worldwide income, but not if you are paying taxes in another country and earning less than $100,000 USD per year: https://en.wikipedia.org/wiki/Foreign_earned_income_exclusio...

It's totally fine to live in New Zealand and work as a contractor for companies in other countries. I think it might actually be better, since you're bringing money into the country.

> NZ and US would both tax me for that income.

Declaring your income does not mean that both will tax you.

yes there is a tax treaty, you can write off tax you pay in one country in the other - so no double taxation - remember NZ income taxes are lower than US ones (especially when you include social security and state taxes)

NZ doesn't, but the US definitely does which is infuriating when you're considering moving to a country with a top rate of 33% and no capital gains tax! Also, there is a tax treaty between the two countries to prevent double taxation and the US exempts up to ~$100k of foreign-earned income I believe, but if you're a high earner or make serious profit on property and/or stocks you could find yourself writing a big check to the IRS to make up the difference (not to mention the hassle of filing taxes each year).

Yeah, it's a pain. I left NZ right when my salary was crossing the foreign earned income exemption limit. I never had to invoke the tax treaty and don't even believe TurboTax has an option for that. Would have needed to hire a tax consultant most likely.

Ah, that is right, it was a while back that I researched it, and that was indeed the issue, that the double taxation would happen over $100k.

If you can fit all your income into the foreign earned income tax credit the biggest tax problem IMO is that the tax years don't line up.

You would find that NZ has a very user-friendly tax system. For the most part there is no need for a tax return for a private citizen in FTE.

Reply on news.ycombinator.com