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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 49
RESIDENCE
YA 1
Definions
In this Act, unless the context requires otherwise,—
…
New Zealand resident
—
(a)
means a person resident in New Zealand under—
(i)
…
(ii)
secons YD 1 to YD 3B (which relate to residence)
…
non-resident
means a person who is not a New Zealand resident
Note that a non-resident does not mean a person resident in another country – this is because it is possible to be
resident in more than one country or to not be resident any country
RESIDENCE OF NATURAL PERSONS
Secon YD provides that a natural person is resident in New Zealand if:
o
They have a permanent place of abode in New Zealand (
secon YD 1(2)
)
o
They are personally present in New Zealand for more than 183 days in total in a 12-month period (
secons YD
1(3) and (4)
)
Being personally present in New Zealand for part of a day counts as being present for the whole day
(
secon YD 1(8)
)
o
They are in the service of the New Zealand government, even if they are absent (
secon YD 1(7)
)
A natural person ceases to be resident in New Zealand if:
o
They were a resident only because they were present in New Zealand for more than 183 days total in a 12-
month period, but then subsequently became personally absent from New Zealand for more than 325 days in
total in a 12-month period (
secons YD 1(5) and (6)
)
There are also special rules for transional residence
o
If you are non-resident but come to New Zealand (e.g. because you work for an Australian company but they
send you to work for a New Zealand subsidiary), for 4 years you are treated as a transional resident and thus
don’t pay tax on worldwide income
“PERMANENT PLACE OF ABODE” TEST
YD 1
Residence of natural persons
…
(2)
Despite anything else in this secon, a natural person is a New Zealand resident if they have a permanent place of abode
in New Zealand, even if they also have a permanent place of abode elsewhere.
“Despite anything else in this secon” means that this test trumps the other tests in secon YD 1 – even if you are not
physically in New Zealand, you may sll be resident
Case law interprets what “have a permanent place of abode” means
You can have more than one permanent place of abode
There is no me limit on when you cease to have a permanent place of abode – it could be 20 years even if you spend
no me in New Zealand physically
Commissioner of Inland Revenue v Diamond
[2015] NZCA 613
o
Facts
An ex-soldier (Diamond) provided security services in Iraq – was his income subject to New Zealand
tax on the basis of the residence principle?
He was the beneficial owner of a house in New Zealand, but had never lived there and had no
intenon of ever living there – he only rented the property out
o
Judgment (Taxaon Review Authority)
The “permanent abode” test requires a two-step approach outlined in
Case Q55
:
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