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Transitional Residency

Transitional residents who transfer their foreign superannuation to New Zealand are not taxed on the transferred funds as they are only taxed on foreign employment income or foreign personal services income. All other foreign income is not taxed during the transitional residency period.

Are you a transitional resident?  

On  1 April 2006 new taxation rules were introduced to assist transitional residents.  The rules help to remove tax barriers inhibiting international recruitment to NZ.  

New migrants and returning New Zealanders, who have not been tax-residents for at least 10 years, are classed as transitional tax residents and are exempted from tax for the first four years on foreign income such as dividends, interest, royalties and rental income and foreign superannuation.  No deductions or losses can be taken against exempt income.  For example; if you have a rental property in the UK and unexpected maintenance expenses resulted in a loss on that investment you cannot offset that loss against your earned income in NZ if you are a transitional tax resident.

Transitional residents and their spouses are not eligible to receive family assistance payments.

The tax exemption is for four calendar years (up to 49 months) from the date you qualify as a NZ tax resident.  It is valid from the first calendar day of the month that you qualify as a tax resident and expires at the end of the last calendar day of that month four years later.

The rules apply to an individual who is a "transitional resident" provided he or she has not been a NZ tax resident in NZ during the last ten years and provided that he or she has never been a transitional resident before.  The exemption applies to new migrants and returning NZers who arrive in NZ on or after 1-4-06 and satisfy the definition of "transitional resident".  An individual can only claim the exemption once in their lifetime.

The residency test says you are a NZ resident if you have lived for 183 days or more in New-Zealand in any 12 month period.  If you have breached the 183 days test in any 12 month period before moving you will not qualify as a transitional resident.

After your transitional residency ends you will have to pay tax on your foreign pension when you bring it to New-Zealand.  The longer you are in New-Zealand the more tax you will have to pay.  Ultimately, if you elect to receive a pension from the UK 100% of your pension will be taxed.


Lyfords is an investment management & financial services company managed and run by Alison & Richard Renfrew. The company values individual treatment, experienced advice and has a strong code of ethics across all of its services from financial advice through to retirement planning & pension transfers.

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0800 4 LYFORDS
0800 459 367
Lyfords UK Pension Transfer
174 Hutt Road, Petone
Lower Hutt 5012