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Income Tax Act 2007

Taxation of certain entities - Other entities

HR 8: Transitional residents

You could also call this:

“Tax benefits for new residents returning to New Zealand after a long absence”

When you become a resident in New Zealand after being away for at least 10 years, you can be a transitional resident. This means that for up to 48 months, you’re treated like a non-resident for some tax purposes.

You’re a transitional resident if you:

  • Are a person who becomes a New Zealand resident
  • Weren’t a resident for at least 10 years before that
  • Haven’t been a transitional resident before

The transitional resident period starts when you become a resident and ends when:

  • You choose to stop being a transitional resident
  • You stop being a New Zealand resident
  • 48 months have passed

If you want to stop being a transitional resident, you need to tell the tax department. You can do this when you apply for family tax credits. If you do this, your partner will also stop being a transitional resident.

You need to tell the tax department by the time you file your tax return, or you can ask for more time. Once you choose to stop being a transitional resident, you can’t change your mind.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517674.

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Part H Taxation of certain entities
Other entities

HR 8Transitional residents

  1. When a foreign-sourced amount is derived by a transitional resident, the following provisions apply to produce a result for income tax purposes that is the same as if the transitional resident were non-resident:

  2. sections CD 45, CE 2, CF 3, CQ 2, CQ 5, and CW 27 (which relate to income):
    1. sections DN 2 and DN 6 (which relate to deductions):
      1. sections EW 5, EW 37, EW 41, EX 16, EX 41, and EX 64 (which relate to the financial arrangements rules and to the CFC and FIF rules):
        1. sections HC 25, HC 26, and HC 30 (which relate to the trust rules):
          1. sections MC 5, MC 10, MD 7, and MF 5 (which relate to tax credits):
            1. sections RE 2, RE 5 and RF 12 (which relate to the RWT and NRWT rules):
              1. section YD 1 (Residence of natural persons):
                1. section 41 of the Tax Administration Act 1994.

                  1. A person is a transitional resident if—

                  2. they are a natural person; and
                    1. they are resident in New Zealand through acquiring a permanent place of abode as described in section YD 1(2) or through the 183-day rule set out in section YD 1(3); and
                      1. for a continuous period (the non-residence period) of at least 10 years immediately before they meet the requirements of section YD 1(2) or (3) for becoming resident in New Zealand, ignoring the rule in section YD 1(4), they—
                        1. did not meet the requirements of that section:
                          1. were not resident in New Zealand; and
                          2. they were not a transitional resident before the non-residence period; and
                            1. the period described in subsection (3) has not ended.

                              1. The period for a person—

                              2. begins on the first day of the residence required by subsection (2)(b); and
                                1. ends on the earliest of—
                                  1. the day they nominate under subsection (4):
                                    1. the day before the person stops being a New Zealand resident:
                                      1. the last day of the 48th month after the month in which the non-residence period ends.

                                      2. A person who would otherwise be a transitional resident in an income year may choose by notice to the Commissioner or by notice under subsection (5) not to be a transitional resident on and after a date nominated by the person, which may be on or after the start of the income year.

                                      3. An application under section 41 of the Tax Administration Act 1994 by a person who is eligible to be a transitional resident for a tax credit under subparts MA to MG and MZ (which relate to tax credits for families) for an income year is treated for the period of the application as—

                                      4. a notice of election under subsection (4) by the person if they have not made one; and
                                        1. a notice of election under subsection (4) by a spouse, civil union partner, or de facto partner of the person.

                                          1. An election under subsection (4) is irrevocable.

                                          2. A notice under subsection (4) to stop being a transitional resident must be received by the Commissioner by—

                                          3. the time within which the person's return of income must be filed under section 37 of the Tax Administration Act 1994; or
                                            1. if the person, their tax agent, or their representative applies for it, a further time allowed by the Commissioner.

                                              Compare
                                              Notes
                                              • Section HR 8(1) heading: substituted (with effect on 1 April 2008), on , by section 293(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                              • Section HR 8(1): substituted (with effect on 1 April 2008), on , by section 293(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                              • Section HR 8(1)(a): amended, on , by section 93 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                                              • Section HR 8(2) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 194(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                              • Section HR 8(2): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 194(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                              • Section HR 8(3) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 194(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                              • Section HR 8(3): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 194(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                              • Section HR 8(4) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 194(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                              • Section HR 8(4): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 194(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                              • Section HR 8(5): amended, on , by section 5 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
                                              • Section HR 8(7) heading: added (with effect on 1 April 2008), on , by section 293(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                              • Section HR 8(7): added (with effect on 1 April 2008), on , by section 293(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                              • Section HR 8(7)(b): amended, on , by section 220(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                              • Section HR 8 list of defined terms apply: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                              • Section HR 8 list of defined terms representative: inserted, on , by section 220(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).