Singapore Expats

Hello there,

my wife is a New Zealander and has a property in Wellington.

She has been working in SG for 3 years now.

In the last 3 years she has been paying off her mortgage back in NZ. According to her tax advisor, she has now been landed with a $20k NZD tax bill.

Is she liable to pay NZ tax on income she earns here in SG?

Can you recommend anyone she can talk to you regarding this?

Many thanks

The devil could be in the details but generally this would be strange as both NZ and SG got an agreement on avoiding the double taxation since 1973.
http://taxpolicy.ird.govt.nz/tax-treaties/singapore

Is the Wellington property being rented out?

Yes, Wellington property is being rented out. Its fair enough for NZ tax man to tax her on rental income on that, but not on SG income. Does that sound right?

Fair? I think you could help your wife better if you get confirmed what is really this 20k about. A tax? Tax for what? Or is it a fine for not paying taxes?

I'm a UK landlord, but I have not lived in the UK for c5 years. However I am still liable for UK taxes (and tax returns!) on net rental income deriving from UK property that is above my annual tax free allowance.

I could go on, but the simplest thing for you might be to find an NZ internet forum for landlording, and put your status/questions there. Here is a UK forum that has been of immense use to me over the years, in fact why not pose your question there* and see if anyone can help, they are a genuinely helpful bunch.

http://boards.fool.co.uk/property-inves ... d=12618450

* Not as mad as it might sound, a lot of the principles in Commonwealth law follows UK law, and the forum is large enough it probably has some Antipodeans on it anyway.

IT sounds to me as though she has really been trapped. The problem as I read it is that she is being retaxed at NZ tax rates for Singapore income that was taxed at lower rates .... i.e. NZ is taking the difference. That's allowable in dual tax treaties - IF the NZ person is resident for tax purposes in NZ - is she? Does she know how to become none tax resident? Owning a 'home' - as opposed to a rental is one sure way to remain NZ resident for taxes. I'm not a NZ Taxman - only oilfield trash with a 25 yo biz degree from an Aussie ag. school so you need to find someone conversant with the NZ Tax Legislation ASAP. However - check her residency, and check the treaty.

JR8 wrote:Here is a UK forum that has been of immense use to me over the years, in fact why not pose your question there* and see if anyone can help, they are a genuinely helpful bunch.

http://boards.fool.co.uk/property-inves ... d=12618450

Hey JR, many thanks for posting that link; it does indeed look like a very helpful forum (rather like this esteemed place, what what?). As a UK landlord I've had my fair share of 'issues' over the years and I wish I'd known about it before.

Anyway, back to the NZ question (which I can't really help with unfortunately)...

OK, if its just the rental income you are being taxed on, no problem, but, the New Zealand IRD also considers that you should continue to pay NZ tax if you have an "enduring relationship with New Zealand" even if you have been working overseas for a significant period of time. In terms of taxation agreements, the tax you pay in Singapore is offset against the substantially larger NZ tax bill. In one of the cases that actually came to court, a gentleman had been working in Fiji for eight years, but it was still considered a tax resident in New Zealand. The only other country that has a similar point of view is the US: if you are a US citizen (or greencard holder) you are taxed in the US no matter where you are in the world. They do give you a tax free allowance of (I think) the first $75,000. NZ gives no such concession.

Things that would probably make the New Zealand IRD consider that you have an enduring relationship with New Zealand are:

1. Spending more than 40 days in NZ in any year
2. Owning property in New Zealand that you have ready access to. For example. its OK to have a rental property as an investment, but, if there is a room in that property that you can use whenever you are in NZ, then that gives evidence that you have that enduring relationship. If you own a holiday property in NZ, that can also be assumed to be the basis of an enduring relationship
3. Working overseas on assignment for a NZ company
4. Allied with 3, having a job to come back to, or if you are on leave of absence or sabbatical.
5. Having items in storage in New Zealand: this is evidence that you intend to come back some time.
5. Having dependents in New Zealand

If you ask me this is all kind of dumb, because it forces New Zealanders who are going overseas to sever all ties if they are moving to a low tax regime. You would have thought they would encourage NZ'ers overseas to keep up their ties, and keep up their relationship.

What you are supposed to do when you leave NZ is fill out a questionnaire on the IRD website, and they will then tell you in a couple of weeks what your tax status is. We were alerted to this by our accountant in NZ, so we sorted out our affairs accordingly, filled out the form and got the right response from the IRD. We do still have a property in NZ that we rent out on a long term basis, which apparently is OK.

If the assessment you received is only in respect to income on your rental property, then its a pretty straightforward situation. If its to do with your Singapore income, then you are going to need some professional advice to address the situation. I am happy to pass on our accountant's details if you would like them

^^^ Woof!

If you're as well informed as you appear, that is a quality reply.

nzmarkj wrote: The only other country that has a similar point of view is the US: if you are a US citizen (or greencard holder) you are taxed in the US no matter where you are in the world. They do give you a tax free allowance of (I think) the first $75,000. NZ gives no such concession.

USD$92,000 (adjusted up slightly every year). North Korea and Russia also have similar rules. (Some company, eh?)

It does sound like at least for NZ, it is easier to get out of. All you have to do is prove you don't have an enduring relationship. For the US, you must give up your green card or renounce your citizenship. Renouncing your citizenship can in some cases lead to a one-time tax bill on all of your net assets as income valued as if you were to liquidate them at that time. Google for "Eduardo Saverin US tax" for plenty of recent coverage on this; he is one of the Facebook founders who gave up his US Citizenship and there was drama over whether it was just to avoid US taxes.

zzm9980 wrote:

nzmarkj wrote: The only other country that has a similar point of view is the US: if you are a US citizen (or greencard holder) you are taxed in the US no matter where you are in the world. They do give you a tax free allowance of (I think) the first $75,000. NZ gives no such concession.

USD$92,000 (adjusted up slightly every year). North Korea and Russia also have similar rules. (Some company, eh?)

It does sound like at least for NZ, it is easier to get out of. All you have to do is prove you don't have an enduring relationship. For the US, you must give up your green card or renounce your citizenship. Renouncing your citizenship can in some cases lead to a one-time tax bill on all of your net assets as income valued as if you were to liquidate them at that time. Google for "Eduardo Saverin US tax" for plenty of recent coverage on this; he is one of the Facebook founders who gave up his US Citizenship and there was drama over whether it was just to avoid US taxes.

At one time I was entitled to a Green Card but I passed it up because the prospect of having to file to the IRS every year for life (whether I lived there or not) was enough to put me off.

JR8 wrote:^^^ Woof!

If you're as well informed as you appear, that is a quality reply.

+1