Confusion Arises Over New Zealand QROPS Rules

Expat Globe

Expats living in New Zealand face being hit by a crippling 33% tax rate on pension transfers into the country under new rules being proposed by the New Zealand Inland Revenue Department.

The new rules are also set to be applied retroactively.

The IRD’s David Miller told iexpat, “The extent of taxation will depend on how long the person has been in New Zealand for before they transfer. Only a portion of the transferred amount will be included in a person’s taxable income. This will begin from zero per cent being included in the early years to 100 per cent being included after 25 plus years of residence. The effective tax rate will be between zero percent and 33 percent,”

He continues. “There is uncertainty around whether, for New Zealand tax purposes, UK superannuation schemes can be classified as ‘locked-in’. If they are locked-in, distributions (including transfers) from the UK to a New Zealand QROPS are taxable under existing law.

“New Zealand’s tax rules in this area can be complex, and for some people, this may lead to the entire amount being taxable, with no allowance for their contributions.”

It is vitally important that expats living in New Zealand consult an expat focussed IFA to ensure that they are not adversely affected by the new rules.