• Accommodation — whether you own, lease or have access to property in New Zealand;
• Social ties — where your immediate family lives; if you have children being educated there; if you belong to any New Zealand clubs, associations or organisations;
• Economic ties — if you have bank accounts, credit cards, in- vestments, life insurance or superannuation funds here;
• Employment or business — if you run a business there; if you are employed there; if you have employment to return to; the terms of any employment contract;
• Personal property — if you have vehicles, clothing, furniture and other property or possessions kept here permanently;
• Intentions — whether you intend to live in New Zealand or to return overseas after a time;
• Benefits, pensions — whether you receive any welfare benefits;
or
• Other payments — pensions or other payments from New Zea- land agencies or organisations".
5.3 The source of your income in New Zealand
The position in New Zealand according to IR292 (2003) is "if you are a non- resident you are taxed only on income you receive from a New Zealand source. If your only income from New Zealand is interest, dividends or royal- ties, and the correct amount of non-resident withholding tax (NRWT) is deducted, you will not need to file a non-resident return".
In terms of New Zealand tax legislation the only time you will be exempted from paying tax on your earnings abroad is if you do not qualify as a "tax resi-
dent" of the country. According to IR292 (2003), you will qualify to be a tax- payer if you have an enduring relationship with the country.
"Anyone who has a 'permanent place of abode' in New Zealand is a New Zea- land tax resident. 'Permanent place of abode' means more than just the build- ing you live in; it covers all your ties and links with New Zealand. These may be social, physical, economic and personal", IR292 (2003) explains.
5.4 Treatment of foreign income
In New Zealand, domestic pensions are taxable but there are two ways to tax income from overseas private or social pension schemes, according to their Revenue publication IR257, "Overseas Private Pensions" (2002). The method you use "depends on whether your overseas private pension scheme is a qualifying foreign private annuity (QFPA) interest", the publication states.
It explains further that a QFPA interest is an investment in an overseas private pension scheme that meets all the following four criteria:
" 1 . The investment is in an overseas superannuation scheme or life assurance policy and entitles you to a pension either now or in the future;
2. The investment (including all contributions) was made:
- When you were not resident in New Zealand; or
- Within four years of the start of the income year in which you became a New Zealand tax resident; or
- From the proceeds of a superannuation fund that were transferred either in anticipation of you leaving New Zea- land or after your leaving.
3. There are restrictions on assigning future benefits (except for matrimonial transfers); and
4. There are restrictions on the investment being surrendered, charged or borrowed against."
"For a QFPA interest you simply pay tax on any pension received from the QFPA interest. This method of tax treatment is called the 'pension-received basis'. If no pension or other income is received from the scheme, there will be no taxable income. This is different from the tax treatment under the foreign investment fund (FIF) rules, where tax is payable on any increases or gains that accrued during the income year, even if you did not receive any pension or income from the interest", the publication points out.
"Some pensions will also be taxable in the country you receive them from. In this situation, you can claim a credit in your New Zealand tax return for the tax paid overseas", IR257 (2002) says. The New Zealand credit you can claim will, however, be limited to the amount of New Zealand income tax payable on the overseas private pension. You may have to produce evidence of the tax paid overseas, the publication explains.
"The case with overseas private pension schemes that are not QFPA inte- rests, is that if it does not meet the criteria for a QFPA interest, it will be taxed under the FIF rules. The FIF rules are part of New Zealand's international tax laws which are designed to make sure that New Zealand tax residents pay New Zealand income tax on their overseas investments", IR257 (2002) states.
Under the FIF rules, a person who has an investment in an overseas private pension scheme has to:
• "complete an FIF disclosure form; and
• Pay tax on FIF income calculated using the FIF rules".
The FIF rules contain various methods for calculating FIF income. There are limited exemptions from these requirements, for example, if the interest is less than NZ$50,000.
According to the New Zealand Revenue's publication, IR258 "Overseas Social Security Pensions" (2002), most overseas social security pensions are also taxable in New Zealand. "If you are a New Zealand tax resident and you receive an overseas social security pension, generally this needs to be inclu- ded in your New Zealand tax calculations. This applies regardless of whether
you receive the pension in New Zealand or whether it is put into an overseas bank account", the publication states.
"Some overseas social security pensions are subject to tax in the countries they are paid from. If yours is, you can claim a credit for the tax you've paid overseas. The credit you can claim is limited to the amount of New Zealand income tax payable on the overseas pension", IR257 (2002) advises.
5.5 The case with juristic entities
A company for tax purposes, is a resident in New Zealand if it meets any one of the following criteria as stated in their publication IR292 (2003) New Zea- land Tax Residence:
• "It is incorporated in New Zealand — A company which is incor- porated under New Zealand Companies Act legislation is resident in New Zealand";
• "Its directors exercise control in New Zealand — Those acting in their capacity as directors control the company here, whether de- cision making by directors is confined to New Zealand or not";
• "It has its centre of management in New Zealand — this is the place from where the company as a whole is managed on a day-to- day or regular basis. The focus is on the location of the company's centre of management"; and
• "It has its head office in New Zealand — the head office of a company is the office from which the business of the company is directed and carried out. The focus of the test is the physical place of administration and management which is superior to all others".
"A company often satisfies more than one, or even all of these tests. Such a company is clearly resident in New Zealand. However a company need satisfy only one of the four tests, to be resident", IR292 (2003) points out.