Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Employee or contractor income

CE 1F: Treatment of amounts derived by cross-border employees

You could also call this:

“How tax works for people working across different countries”

This section talks about how money is treated when you work across countries. It applies when your boss pays you for work you do in New Zealand, even if they pay you after you’ve left.

If you’re still on your boss’s payroll system in another country, the money you earn is counted 20 days after they pay you. This happens when your boss chooses to report your income information in a special way.

If tax isn’t taken out of your pay, or if not enough is taken out, you might have to handle the tax stuff yourself. You can pay the tax as one big payment if you need to.

There’s a special 60-day period for bosses or workers to fix any tax problems. This happens in certain situations, like if you’re a New Zealander working overseas and get an unexpected payment, or if you’re in New Zealand and work more than expected.

The 60 days start from when the problem happens or when the boss could have seen it coming.

If you’re handling your own tax stuff, you might be treated like the boss for this 60-day rule.

This section also explains what a “cross-border employee” means. It’s either someone from overseas working in New Zealand, or a New Zealander working overseas. It includes people sent to work in another country or those working for someone who doesn’t live in New Zealand.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS849878.

Topics:
Money and consumer rights > Taxes
Work and jobs > Worker rights
Immigration and citizenship > Visas
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Part C Income
Employee or contractor income

CE 1FTreatment of amounts derived by cross-border employees

  1. This section applies in certain circumstances when an employer pays a PAYE income payment to a cross-border employee who provides services in New Zealand. For this purpose, the payment may include an amount paid to the person after they have left New Zealand that is a payment for services provided by the person while they were in New Zealand.

  2. When the employee remains on the employer’s payroll system in a country or territory outside New Zealand, the PAYE income payment is treated as derived by them on the 20th day after payment when the employer chooses to deliver their employment income information under section 23J(3) of the Tax Administration Act 1994.

  3. When an amount of tax is not withheld or when payment is insufficient as described in section RD 21, RD 62B, or RD 71B, as applicable, and the employee must undertake the relevant tax obligations in relation to employment, they must do so as if an employer, and, for this purpose, may pay the initial amount of tax for the payment as a lump sum.

  4. Subsection (3C) applies when the employer or other person that the PAYE rules apply to under section RD 2(2) has taken reasonable measures to manage their employment-related tax obligations, and—

  5. the employee is a New Zealand resident working outside New Zealand for a period, and during that period the employee receives an unexpected PAYE income payment:
    1. the employee is present in New Zealand for a period during which they—
      1. have breached a threshold under section CW 19 (Amounts derived during short-term visits):
        1. have breached a threshold set out in a double tax agreement:
          1. have received an unexpected PAYE income payment in the period.

          2. The employer or other person that the PAYE rules apply to has a 60-day period within which they must make a reasonable effort to meet or correct their tax obligations relating to the PAYE income payments, employer superannuation cash contributions, or fringe benefits made or provided to the employee for the time the employee was in New Zealand.

          3. The 60-day period referred to in subsection (3C) starts to run from the earlier of—

          4. the date of the breach or the payment, as applicable:
            1. the date on which the employer could reasonably foresee that a breach or a payment, as applicable, will occur.

              1. When the employee has undertaken to meet their employment-related tax obligations under subsection (3) for the period during which they are in New Zealand, the employee may be treated as the employer for the purposes of subsection (3C), making the grace period available to the employee.

              2. For the purposes of this section and sections CE 1(3B), RA 15(4B), RD 62B, RD 65, and RD 71B, and sections 23IB, 120B, and 141ED of the Tax Administration Act 1994, a cross-border employee—

              3. means—
                1. for a person providing a service in New Zealand, an employee of a non-resident employer:
                  1. for a person providing a service outside New Zealand, a resident employee; and
                  2. includes a secondee or a person who provides a service for or on behalf of a person who is not resident in New Zealand.

                    Notes
                    • Section CE 1F: inserted, on , by section 17 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3B) heading: inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3B): inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3C) heading: inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3C): inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3D) heading: inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3D): inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3E) heading: inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F(3E): inserted, on , by section 18(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section CE 1F list of defined terms double tax agreement: inserted, on , by section 18(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).