New Zealand: transitional resident status and routes to settle

New Zealand taxes its tax residents on their worldwide income, on a progressive scale, with no general capital gains tax. Newcomers who have not been tax resident there for a long time benefit from transitional resident status: for about 4 years¹, most of their foreign-source income (interest, dividends, rents, income from foreign funds) is exempt.

• Key condition: not having been a New Zealand tax resident at any time during the from 10 years² preceding the acquisition of residence; the status can be obtained only once.
• Key limitation: employment income and personal services income received from abroad is not exempt, even during the period.
• Residence is a separate matter: it falls under Immigration New Zealand (work visa, skilled residence, Active Investor Plus).

The general resident regime

A New Zealand tax resident is taxed on all their income, whatever its source: salaries, self-employment income, pensions, dividends, interest, rents. A non-resident is taxed only on New Zealand-source income. The tax year runs from 1 April to 31 March. The scale in force since 1 April 2025 is progressive:

• 10.5%³ up to NZ$15,600⁴;
• 17.5%⁵ up to NZ$53,500⁶;
• 30%⁷ up to NZ$78,100⁸;
• 33%⁹ up to NZ$180,000¹⁰;
• 39%¹¹ above that.

In addition there is the accident insurance levy (ACC earners’ levy) on earnings: 1.75%¹² for the year from 1 April 2026 to 31 March 2027, up to a limit of up to NZ$156,641¹³ of liable income. Dividends paid to residents bear withholding tax (resident withholding tax) at a rate of 33%¹⁴; for interest, the recipient chooses their withholding rate, and the same rate applies by default if no choice is made.

The interaction between withholding on dividends and the imputation credits attached to dividends from New Zealand companies has not been re-read against an official source; nor has the treatment of foreign pensions, other than lump-sum withdrawals.

Capital gains: no general tax, but exceptions

New Zealand has no general capital gains tax. Several rules nonetheless tax certain gains as ordinary income. The best known is the bright-line test: a residential property sold within up to 2 years¹⁵ after its acquisition (sales concluded on or after 1 July 2024) generates a gain taxable at the scale rates, the main home being in principle excluded, subject to conditions. The period generally runs from settlement of the purchase to signature of the sale contract.

The other cases in which gains are taxed (purchase with the intention of resale, property or securities dealing) have not been re-read against an official source for this page. No Inland Revenue page read states in these terms that there is no general capital gains tax: the finding rests on the structure of the system and must be confirmed at validation.

Foreign investments: the FIF regime

Interests in foreign companies and funds come under the foreign investment fund (FIF) regime. Under the most common method (fair dividend rate), the resident is taxed each year on deemed income equal to 5%¹⁶ of the value of the securities at the start of the year, whether or not dividends have been paid. Individuals whose FIF interests cost less than less than NZ$50,000¹⁷ in total are exempt, and certain Australian-listed companies benefit from a specific exemption.

The 2026 Act (Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026, royal assent on 30 March 2026) added, with effect from 1 April 2025, a revenue account method: dividends are taxed when received and gains only on disposal, after a discount of 30%¹⁸. It is reserved for people who became resident on or after 1 April 2024 after at least from 5 years¹⁹ of non-residence, and does not apply during the transitional resident period: it takes over when that period ends.

The exact scope of the holdings eligible for the revenue account method and the terms of the election have been read only in the official commentary on the Act, not in an Inland Revenue guidance page; the page on FIF exemptions that was read dates from 2021.

Transitional resident status

The status is aimed at new migrants and returning New Zealanders who became tax resident on or after 1 April 2006 and who were not New Zealand tax residents at any time during the from 10 years² preceding the date residence was acquired. It can be obtained only once in a lifetime. The official page does not describe any election to be made: the status applies as soon as the conditions are met, but the person may bring it to an end.

• Exempt income: most foreign-source income, notably interest, dividends, FIF income and foreign rents. Lump-sum withdrawals from foreign pension funds have their own exemption rule, calculated over the same period.
• Income not exempt: employment income and personal services income received from abroad (salary paid by a foreign employer, consulting fees for a foreign client); a tax treaty may provide full or partial relief. New Zealand-source income is never covered.
• Start: the first day of New Zealand tax residence.
• End: the earlier of two dates, each set at 4 years¹ after the end of the month in which the person becomes resident, either through presence (more than more than 183 days²⁰ in any 12 months²¹ period) or through the establishment of a permanent place of abode. For this calculation, presence does not go back to the first day.

The official examples illustrate what is at stake: a person who arrived on 10 March 2023 and moved into a home on 22 April 2023 benefits from the status until 30 April 2027; a person who arrived the same day, with no permanent place of abode, and who meets the presence test only in October 2023, benefits from it until 31 October 2027. Buying or renting a home on a lasting basis on arrival therefore brings forward the end of the status.

Early end and end of the status

• Claiming Working for Families tax credits (including Best Start), by the person or by their partner if the partner is also a transitional resident;
• voluntary inclusion, in the IR3 return, of income that would have been exempt: this choice is irrevocable, except for an amendment accepted by Inland Revenue in limited cases;
• confirmation, to a foreign tax authority and to Inland Revenue, that New Zealand tax has been or will be paid on that income;
• notification to Inland Revenue of the waiver of the status.

From the day after the end of the period, the person is taxed on their worldwide income and reports it in their IR3. Foreign investments then fall under the FIF regime, or under the revenue account method if the person is eligible. Anyone who builds their move around the status should therefore plan, from arrival, for the reorganisation of their foreign assets before the period ends.

Most New Zealand companies are taxed at the single rate of 28%²². Māori authorities are subject to a separate rate; self-employed individuals and unincorporated organisations are taxed on the individual rate scale. Dividends paid to a resident shareholder are subject to the resident withholding tax.

A business must register for GST, the goods and services tax at a rate of 15%²³, as soon as it expects turnover above more than NZ$60,000²⁴ over 12 months²⁵; voluntary registration is possible below that threshold.

Company residence criteria (head office, effective management), treatment of foreign profits, permanent establishment, the dividend imputation mechanism, withholding on payments to non-residents, CFC rules and the minimum tax for large groups: not checked against an official source at the date of consultation.

One point of method remains: transitional resident status is personal. It does not extend to companies the person controls, and the exclusion of personal services income greatly limits the value of invoicing one's work through a foreign structure during the period.

The tax advantage and the right to reside are two separate questions: transitional resident status arises from tax residence and from the history of non-residence, not from a visa, and no visa guarantees it. Residence is a matter for Immigration New Zealand.

Active Investor Plus Visa

This investment-based resident visa has two categories. Under the Growth category, the investor maintains at least from NZ$5,000,000²⁶ of acceptable investments in New Zealand for from 36 months²⁷ and spends at least from 21 days²⁸ there as a resident visa holder during that period. Under the Balanced category, the investor maintains at least from NZ$10,000,000²⁹ for from 60 months³⁰ and spends at least from 105 days³¹ there. The partner and dependent children may be included. The listed cost starts at from NZ$27,470³².

The low presence requirements of this visa have no effect on tax classification: an investor who spends little time in the country may remain a non-resident for tax purposes, and an investor who settles there becomes resident under the ordinary criteria, with transitional resident status where applicable.

Work and skilled residence

• Accredited Employer Work Visa: full-time job offer from an accredited employer; duration of up to up to 5 years³³ for most jobs, shorter for jobs at the lowest skill levels; may lead to residence depending on the job.
• Skilled Migrant Category Resident Visa: points-based pathway, with at least from 6³⁴ points drawn from qualifications, income or professional registration; skilled employment or a job offer from an accredited employer; maximum age of up to 55 years³⁵ at the time of application.

Other pathways (entrepreneur visa, family visas, retired investor visas), exact fees for each pathway and processing times: not verified at the date of consultation.

• A person becomes tax resident either by having a permanent place of abode (a place where they habitually live in New Zealand), or by being present in the country for more than more than 183 days²⁰ in any 12 months²¹ period; in the latter case, residence is retroactive to the first of the days counted.
• A person ceases to be resident by being absent for more than more than 325 days³⁶ in any 12 months²¹ period without keeping a permanent place of abode; non-residence is then retroactive to the first day of absence.
• Since 1 April 2026, non-resident visitors arriving on or after that date who work remotely for a foreign employer and are residents of a country with a comparable tax system remain non-resident as long as they do not spend more than up to 275 days³⁷ in the country in a 18 months³⁸ period.
• The date residence is acquired determines both the start and the end of transitional resident status: it must be documented from arrival (entry dates, lease or purchase deed, contracts).
• A person who was already tax resident during the reference period, even briefly, does not meet the prior non-residence condition.
• Leaving the country of origin is assessed under its own criteria and the applicable treaty; the New Zealand exemption does not amount to an exemption in the departure state.

The purchase of homes by foreign persons is regulated by the Overseas Investment Office. A specific pathway allows holders of a qualifying investor visa (Active Investor Plus, Investor 1, Investor 2), or entities closely connected to them, to acquire an existing residential property priced above more than NZ$5,000,000³⁹, or land if the land and the construction together exceed that amount; so-called sensitive residential land is excluded.

The general rule applicable to other foreign buyers, the effective date of the pathway reserved for investors, living budget and property prices: not checked against a documented source at the date of consultation.

1. Check, before arriving, that there has been no period of New Zealand tax residence during the reference period (Inland Revenue's IR1249 flowchart helps with the calculation);
2. obtain the appropriate residence permit from Immigration New Zealand, independently of the tax question;
3. set the date residence is acquired and anticipate the effect of permanent housing on the end date;
4. list foreign income and distinguish what is exempt from what is not, in particular income from work;
5. prepare the exit from the status: FIF regime or revenue account method, possible disposals, foreign structures.

• Work performed from New Zealand for a foreign client or employer is not covered by the exemption.
• Voluntarily reporting exempt income or applying for Working for Families ends the status, with no way back.
• The status can only be obtained once: a previous stay that triggered it, even without taking advantage of it, uses it up.
• The quick resale of a home falls under the bright-line test, including during the transitional resident period, since it is New Zealand-source income.

Does transitional resident status exempt all my foreign income?

No. It covers most foreign-source income (interest, dividends, FIF income, rent), but not employment income or personal services income received from abroad; New Zealand income is always taxed.

Is a particular visa required to benefit from it?

No. The status depends on tax residence and the history of non-residence, not on the residence permit, which remains necessary in order to settle.

How long does it last?

It begins on the first day of tax residence and ends 4 years¹ after the end of the month in which the person becomes resident, whether through presence or through establishing a permanent place of abode, whichever date is earlier. It may end sooner, in particular on waiver.

What happens to my foreign investments afterwards?

They are taxed under the FIF regime, above the de minimis threshold. Migrants arriving on or after 1 April 2024 after a long period of non-residence may, subject to conditions, opt for the revenue account method, which taxes gains on disposal rather than every year.