Non-resident income tax return guide 2007

Transcription

1 IR 3NRG November 2006 Non-resident income tax return guide 2007 Please read page 5 of this guide to see if you are required to complete an IR 3NR. This guide is based on New Zealand tax law at the time of printing and does not take into consideration any double taxation agreements that may apply.

2 2 NON-RESIDENT INCOME TAX GUIDE Visit our website for services and information. Go to: Get it done online to file returns, register for services and access account information Work it out to calculate tax, entitlements, repayments and due dates and to convert overseas income to New Zealand currency. You can also check out our newsletters and bulletins, and have your say on items for public consultation. How to get our forms and guides You can view copies of all our forms and guides mentioned in this booklet by going to and selecting Forms and guides or you can order copies by calling INFOexpress see page 51. Use this guide with your return If you need help filling in your return, please contact our: Non-resident Centre Inland Revenue Private Bag 1932 Dunedin 9054 New Zealand Phone Fax nonres@ird.govt.nz If you misplace your return, phone us for another. Please don t use anyone else s preprinted copy.

3 3 Contents Page 2 Use this guide with your return 2 Non-residents 5 Who must send in an IR 3NR income tax return? 5 Part-year non-residents 6 Post us your IR 3NR return by 7 July Income year 7 How are non-residents taxed? 7 The front page of your IR 3NR return 9 Questions Q1 to 6 Personal information 9 Q7 Bank account number 9 Q8 New Zealand Superannuation (NZ Super) 10 Non-resident withholding income 11 Non-resident withholding tax 11 Q9 New Zealand interest 14 Q10 New Zealand dividends 18 Q11 New Zealand royalties 20 Other income 21 Q13 New Zealand income with tax deducted 21 Q14 Māori authority distributions 22 Q15 New Zealand partnership income 23 Q16 New Zealand estate or trust income 24 Q18 New Zealand rents 25 Q19 New Zealand self-employed income 27 Q20 Other New Zealand income 28 Q22 Expenses 29 Q24(i) Net losses brought forward 30 Q24(ii) Loss from a loss attributing qualifying company 31 Tax calculation 32 Q27 Tax calculation 32 Excess imputation credits brought forward 34

4 4 NON-RESIDENT INCOME TAX GUIDE Refunds and/or transfers 35 Q28 Getting a refund? 35 Transfers 36 Are you entitled to an early payment discount? 39 Provisional tax 42 Q29 Provisional tax 42 New provisional tax payers 42 Standard provisional tax payment dates 43 Non-standard balance dates 43 Payment options 44 Standard option ( S ) 44 Estimation option ( E ) 44 Q30 Return for a full year? 46 Q32 Notice of assessment and declaration 46 Paying your tax 47 Late payment 48 Your record of payment 48 Other publications 50 INFOexpress 51 You can nominate someone to act on your behalf 52 Call recording 53 Privacy Act If you have a complaint about our service 54

5 5 Non-residents We have sent you an IR 3NR as you are recorded as a non-resident for tax purposes. This generally means that you have not been personally present in New Zealand but have earned income from New Zealand sources. If you are uncertain about your residency status please refer to our booklet New Zealand tax residence (IR 292) which explains these rules. Who must send in an IR 3NR income tax return? Fill in an IR 3NR if you were a non-resident for the full year but you received income from New Zealand, such as: interest, dividends, taxable Māori authority distributions or royalties rents self-employment salary or wages earned while personally present in New Zealand directors fees for services performed in New Zealand income from an estate, trust or partnership superannuation for past services in New Zealand (this may be exempt if subject to a double taxation agreement). You will also need to file an IR 3NR if you have losses or excess imputation credits carried forward from the previous year. You probably won t have to fill in a return if your only income is from interest, dividends, or royalties, and non-resident withholding tax was deducted at the correct rate see page 12.

6 6 NON-RESIDENT INCOME TAX GUIDE Part-year non-residents If you were a non-resident for part of the year between 1 April 2006 and 31 March 2007, you have to complete an IR 3 and make a list showing your income earned as a resident and as a non-resident. Staple this list to the top of page 3 of your IR 3 return. If you need an IR 3 return and/or do not need to file an IR 3NR please contact us see page 2. Post us your IR 3NR return by 7 July 2007 If you have to fill in a return and you don t send us one, you will be charged a late filing penalty unless you get an extension of time because you have a valid reason for not filing on time. The penalty for filing your IR 3NR late depends on your income after expenses. If your income is: below $100,000 the penalty is $50 between $100,000 and $1 million (both figures inclusive) the penalty is $250 above $1 million the penalty is $500. If you need an extension of time to file your tax return, tell us your reasons before your return is due. If you get a late filing penalty before applying for an extension, the penalty will stand. If you use a tax agent who has an extension of time arrangement with Inland Revenue and the extension is withdrawn, you ll be told your return is now due.

7 7 Income year The information in this guide is based on the tax year of 1 April 2006 to 31 March If your income year is different you can still use the guide, but work out your income and expenses for your income year. If you need more information, call our Non-resident Centre see page 2. How are non-residents taxed? In an individual s annual assessment, non-resident withholding tax (NRWT) is assessed on income from interest, dividends and royalties see pages 12 and 13. All other income is added up and tax is calculated at the current tax rates. The two amounts of tax are added together. Credit is then allowed for any tax deducted by the payer of the income, such as NRWT, PAYE, resident withholding tax, dividend, Māori authority credits, withholding payment credits and tax paid by trustees.

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9 9 The front page of your IR 3NR return Questions 1 to 6 Personal information The information in Questions 1 to 6 helps us to contact you. Please make sure we have your details exactly right and if you change your address let us know so we can update our records. Fill in anything we haven t printed correctly. Postal address If you use your tax agent s postal address leave this address panel blank, even if your postal address has changed. Your agent will tell us of any change of address when updating their client list. If your address is a PO Box number, please show your box lobby if you have one. If you are unsure of your box lobby please contact New Zealand Post. Date of birth We ask for this so we don t mix up people with the same name. Question 7 Bank account number We recommend you receive any refund by direct credit to your New Zealand bank account because it is faster and safer than a cheque. Any cheque issued will need to be deposited into a bank account and there may be a delay until your bank makes your refund available. If you want a refund direct credited and your correct account number is not preprinted, write your account number in Box 7.

10 10 NON-RESIDENT INCOME TAX GUIDE Building society account holders If you want your refund to be credited to your building society account, follow these steps. Contact your building society and ask for their holding account number. Write this number in Box 7. Attach a note telling us the reference numbers your building society needs to transfer the refund to your account. Tell the building society to transfer your refund from the holding account to your own account. You will need to give them your IRD number so your refund can be matched to your account. Refund by cheque If a bank account number is shown but you want to receive any refund by cheque, you must tick Box 28I on page 6 of your return. Question 8 New Zealand Superannuation (NZ Super) If you received standard NZ Super during the year, you must include it in your return. Work and Income deducts tax from payments to you. Copy the details from your Summary of earnings (IR 544) to Question 13 of your return. For more information about the summary of earnings see page 21. NZ Super paid to you as a resident of another country is known as portable New Zealand Superannuation. Work and Income does not deduct tax from payments of portable superannuation when it is paid to you, and you do not have to include it in your return. For information about pensions, please read page 21.

11 11 Non-resident withholding income Non-resident withholding tax Non-resident withholding tax (NRWT) is deducted from New Zealand income derived by non-residents. The types of income (non-resident withholding income) and the maximum rates of NRWT are: dividends 30% interest 15% royalties 15%. Expenses cannot be claimed against non-resident withholding income. Note If you are a non-resident and have a fixed establishment in New Zealand, interest is not liable for NRWT but you do include it in your return. A fixed establishment is a fixed place where a non-resident has a business, such as a shop, farm or factory. It does not include property that produces rental income only. New Zealand has double taxation agreements with a number of countries. These agreements may allow for different rates from those listed on the chart shown on pages 12 and 13. Use the rates above if: the country you live in isn t on the chart you don t know your country of residence you have no country of residence. You do not need to send in a return if: your only New Zealand income was from interest, dividends or royalties, and NRWT has been deducted at the correct rate see the chart on pages 12 and 13.

12 12 NON-RESIDENT INCOME TAX GUIDE Non-resident withholding tax (NRWT) rates and country codes IR 290 October 2006 Non-resident withholding tax (NRWT) is deducted from non-resident withholding income paid to non-residents Non-resident withholding income is interest, dividends and royalties NRWT is deducted at the following rates: interest (15%), dividends (30%), royalties (15%) Use these rates if the country isn t on the chart below, the country of residence is not known or the non-resident is itinerant. These rates are reduced when the person lives in a country with which New Zealand has a double tax agreement (DTA). Non-resident withholding tax rates for double tax agreement countries The percentages are the rates of NRWT deductible from the gross income (no expenses can be deducted). The rates shown are for a full year unless otherwise stated. However, they are subject to change because the negotiation of new DTAs and the amendment of existing agreements is an ongoing process. Country of Interest or Interest paid to Dividends Royalties Copyright residence associated persons (cultural) royalties Australia 10%f 10%max 15%f 10%max 10%f Belgium 10%f 10%max 15%f 10%max 10%f Canada 15%f 15%max 15%f 15%max 15%f Chile from 01/01/07 10 or 15%f refer to DTA 15%max 15%f 10%max 10%f China 10%f 10%max 15%f 10%max 10%f Denmark 10%f 10%max 15%f 10%max 10%f Fiji 10%f 15%min 15%f 15%max 15%f Finland 10%f 10%max 15%f 10%max 10%f France 10%f 10%max 15%f 10%max 10%f Germany 10%f 10%max 15%f 10%max 10%f India 10%f 10%max 15%f 10%max 10%f Indonesia 10%f 10%max 15%f 15%max 15%f Ireland 10%f 10%max 15%f 10%max 10%f Italy 10%f 10%max 15%f 10%max 10%f Japan 15%f 15%min 15%f 15%min 15%f Korea, Republic of 10%f 10%max 15%f 10%max 10%f

13 13 Malaysia 15%f 15%min 15%f 15%max 15%f Netherlands 10%f 10%max 15%f 10%max 10%f Norway 10%f 10%max 15%f 10%max 10%f Philippines 15%f 15%max 15%(companies), 25%(others) 15%max 15%f Poland from 01/01/07 10%f 10%max 15%f 10%max 10%f Russian Federation 10%f 10%max 15%f 10%max 10%f Singapore 15%f 15% min 15%f 15%max 15%f Spain from 01/09/06 10%f 10% max 15%f 10%max 10%f South Africa 10%f 10% max 15%f 10%max 10%f Sweden 10%f 10%max 15%f 10%max 10%f Switzerland 10%f 10%max 15%f 10%max 10%f Taiwan 10%f 10%max 15%f 10%max 10%f Thailand (refer to DTA) 10 or 15% f 15%max 15%f 10 or 15%max 10%f United Arab Emirates 10%f 10%max 15%f 10%max 10%f United Kingdom* 10%f 10%max 15%f 10%max 10%f United States 10%f 10%max 15%f 10%max 10%f Other countries 15%f 15% min 30%f+ 15%min 15%f f This means the percentage is the final liability. As long as the income has the correct NRWT deducted at source and it is the recipient s only income received from New Zealand, they do not need to file a New Zealand tax return. min This means the rate shown is a minimum rate of tax. The net income (after deducting expenses) must be included in the non-resident s tax return, along with all other income from New Zealand. Credit is allowed for the NRWT deducted. max The tax on the income cannot exceed the rate shown. + This reduces to 15% if fully imputed, fully dividend withholding payment credited or fully conduit tax-relief credited. Associated persons are: relatives to the fourth degree of relationship a partnership and any person related to the fourth degree to any partner any company and any person holding 25% or more of its paid-up capital. Exception: For interest covered by DTAs with Fiji, Malaysia and Singapore, the definition of associated persons is limited to control of one party by another. This control can be direct or indirect and can be any kind of control. For more information about NRWT, read our Non-resident withholding tax payer s guide (IR 291). You can get a copy from or call INFOexpress on You can also contact us at the Non-resident Centre, Inland Revenue, Private Bag 1932, Dunedin 9054, phone , fax , or nonres@ird.govt.nz Some DTAs can be viewed at under International Issues. * Does not include the Isle of Man or the Channel Islands. Use the rates for Other countries.

14 14 NON-RESIDENT INCOME TAX GUIDE If you are not sending in a return, please write a note to our Non-resident Centre (see page 2) so we can record that: non-resident withholding tax has been correctly deducted you are no longer a non-resident you no longer receive any New Zealand-sourced income. This will save us from contacting you later. Remember to write your name and IRD number on the note. Question 9 New Zealand interest Did you receive any New Zealand interest between 1 April 2006 and 31 March 2007: in cash or by cheque credited or added to your account compounded and added to your investment earned by a partnership, estate or trust, or from Inland Revenue? You must show all New Zealand interest you receive. Include interest from banks, building and investment societies, credit unions, other securities and any loans you have made. Also include interest from Inland Revenue. Don t include any interest that: has had NRWT deducted at the correct rate (see the chart on pages 12 and 13) has been zero-rated under the approved issuer levy rules.

15 15 Interest on broken term deposits If you have broken a term deposit during the year, you may have negative interest to account for. This is interest you have repaid on the term deposit. This may reduce the amount of interest that you need to declare on your return. If you broke the term deposit in full, or it was business-related, you deduct the negative interest from the gross interest amount shown on your Non-resident withholding tax deduction certificate (IR 67). Deduct the allowable negative interest component using the worksheet below before entering the gross amount at Question 9B. Interest on broken term deposits worksheet Copy your gross interest from your NRWT deduction certificate to Box 1. Print any negative interest you have paid in Box 2. Subtract Box 2 from Box 1 and print the answer in Box 3. Include this amount in the total shown at Box 9B What to show in your return The interest payer will send you a statement or a Non-resident withholding tax deduction certificate (IR 67). This will show the gross interest paid and the amount of tax deducted. From each interest statement or certificate, copy the name of the payer, the amounts of tax deducted and the gross interest to the boxes at Question 9. Add up the amounts and print the totals in Boxes 9A and 9B. Don t send us your interest statements or certificates, but keep them in case we ask for them later.

16 16 NON-RESIDENT INCOME TAX GUIDE Resident withholding tax (RWT) If RWT was deducted from your interest, include it in the withholding tax column. Tell the organisation paying you interest that you are a non-resident and the country in which you are resident the payer will then deduct NRWT at the rate for that country. NRWT payable on your interest Go to the chart on pages 12 and 13 and find the NRWT rate on interest for your country of residence. Multiply that rate by the amount in Box 9B of your return and print your answer in Box 9C. The credits attached to the gross interest will be offset against the NRWT payable. Approved issuer levy (AIL) From 1 August 1991 approved issuers (financial institutions) pay interest to non-residents free of NRWT. They have to pay a levy for the right to issue securities subject to a zero rate of NRWT. The levy, known as approved issuer levy, is calculated at a rate of two cents for every dollar of interest paid for the security. Note Don t include any interest in your return that has been zero-rated under the AIL rules. Interest of $20 or less If the total interest you received for the year is $20 or less, you may not receive a certificate or statement, but you still need to show the gross interest and NRWT. Get the details from your savings book or bank statements.

17 17 More than three certificates There is space in the return for details from three interest statements or certificates. If you have more than three, add up all the NRWT and gross interest amounts from all your certificates and print the totals in Boxes 9A and 9B. Interest on joint accounts If you hold a joint account, you must show your share of the interest in your return. Interest paid by Inland Revenue Include the NRWT deducted and gross interest in Boxes 9A and 9B. If Inland Revenue increases the interest calculated for any income year as a result of a reassessment of the tax payable, the amended interest must be shown in the income year following the issuing of the amended assessment. If we reduce the interest from a previous year, you can claim the difference in the year following the reassessment.

18 18 NON-RESIDENT INCOME TAX GUIDE Question 10 New Zealand dividends If you received any New Zealand dividends between 1 April 2006 and 31 March 2007 show them at Question 10. Include dividends earned by a partnership or estate or distributed by a trust. Don t include any dividends that have had NRWT deducted at the correct rate see the chart on pages 12 and 13. Note If you received fully imputed cash dividends or fully dividend withholding payment credited dividends, the rate of NRWT is 15%. Credits attached to dividends A New Zealand company may attach several types of credits to dividends. NRWT 30% or 15% of the dividend is deducted when it is paid to you. Dividend withholding payment credits these are credits on tax payments made for dividends the company received from overseas. Imputation credits a portion of the tax paid by the company on its profits. You cannot claim imputation or franking credits from dividends paid to you while you are a non-resident. But you can claim any excess imputation credits that you received while you were resident in New Zealand as these can be offset against tax payable on other income. If you have excess imputation credits to bring forward see page 34. RWT the company deducts RWT to bring the total tax credits withheld up to 33% of the gross dividend.

19 19 What to show in your return From each dividend statement, show at Question 10: the name of the company the dividend credits (by adding up the NRWT, withholding payment credits and RWT) the gross dividend (by adding up the dividend paid, NRWT, dividend withholding payment credits and RWT). Add up the amounts and print the totals in Boxes 10A and 10B. Do not include any imputation or franking credits shown as they do not apply to you. Don t send us your dividend statements, but keep them in case we ask for them later. Resident withholding tax If your dividends have had resident withholding tax deducted, include it in Box 10A. Tell the payer you are a non-resident and the country in which you are resident. The payer will then deduct NRWT at the rate for that country. NRWT payable on your dividends Go to the chart on pages 12 and 13 and find the NRWT rate on dividends for your country of residence. Multiply that rate by the amount in Box 10B of your return and print your answer in Box 10C. The credits attached to the gross dividends will be offset against the NRWT payable. Shares instead of dividends If you received shares from a taxable bonus issue or a non-cash dividend, include them as income at Question 10. Write the amount as if you received dividends instead of shares.

20 20 NON-RESIDENT INCOME TAX GUIDE More than three statements There is space on the return for details from three dividend statements. If you have more than three dividend statements, add up all NRWT or withholding payment credits and gross dividends from all your statements and print the totals in Boxes 10A and 10B. Question 11 New Zealand royalties Did you receive any New Zealand royalties between 1 April 2006 and 31 March 2007 that were paid, credited or otherwise dealt with on your behalf? Show all royalties from New Zealand sources at Question 11, including royalties received by a partnership, estate or trust. Don t include royalties that have had NRWT deducted at the correct rate see the chart on pages 12 and 13. What to show in your return From each royalty statement, copy the total amounts of tax deducted and the gross royalties to the boxes at Question 11. Don t send us your royalty statements, but keep them in case we ask for them later. NRWT payable on your royalties Go to the chart on pages 12 and 13 and find the NRWT rate on royalties for your country of residence. Multiply that rate by the amount in Box 11B of your return and print your answer in Box 11C.

21 21 Other income Question 13 New Zealand income with tax deducted Did you receive any of these types of income from New Zealand sources between 1 April 2006 and 31 March 2007: salary or wages withholding payments accident compensation payments related to earnings standard New Zealand Superannuation, or taxable pensions, annuities or superannuation? What to show in your return In late May 2007 we will send you a Summary of earnings (IR 544) for the year 1 April 2006 to 31 March Use this to complete your return. If you had income from salary, wages, benefits, taxable pensions or withholding payments, add totals 11E and 12A from your IR 544 and print the total in Box 13A. Add totals 11B and 12B from the IR 544 and print the total in Box 13B. You don t need to attach the IR 544 to the return unless you are making changes to it. Pensions Don t include these pensions or annuities in your return: non-taxable pensions or annuities from superannuation schemes registered with the New Zealand Government Actuary (such as government superannuation) or life insurance funds the tax on these is already paid by the fund completely tax-free pensions, such as war pensions (other than veterans pensions) portable New Zealand Superannuation.

22 22 NON-RESIDENT INCOME TAX GUIDE Withholding payments If you received any withholding payments, read the notes on page 29 to see if you can claim expenses. If you are registered for GST, your gross withholding payment may include GST. Enter the GST-exclusive amount at Question 13. Question 14 Māori authority distributions There are various types of distributions that can be made from Māori authorities. You are only required to declare taxable Māori authority distributions made from gross income that Māori authorities earned during the income year or subsequent income years. Fill in Question 14 if you received any taxable Māori authority distributions between 1 April 2006 and 31 March The Māori authority that paid you the distributions sends you a Māori authority distribution statement. Credits attached to distributions The Māori authority may attach a credit to the distribution it makes to members. This credit will be classified as a Māori authority credit and is part of the tax the Māori authority has already paid on its profits, so the distributions aren t taxed twice. What to show in your return Your Māori authority distribution statement shows: the amount of the distribution made to you, including what portion is taxable and what portion is non-taxable the amount of Māori authority credit. These amounts, not including any non-taxable distributions, will need to be transferred to the relevant boxes at Question 14.

23 23 Example A Māori authority makes a pre-tax profit of $10,000. It pays tax on this $10,000 profit of $1,950 (Māori authority tax rate of 19.5%) and distributes the entire profit to its 10 members. So each member will receive $805 as a cash distribution and $195 of Māori authority credits. Each member of the authority liable to file an IR 3NR return would show the following information in Question 14: 14B $1,000 (made up of $805 + $195) 14A $195 Non-taxable distributions Any other distributions received from a Māori authority, which are not taxable in the hands of a Māori authority member, do not need to be included in the IR 3NR return. These amounts are classed as nontaxable distributions and cannot have credits attached. For more information read our Māori authorities guide (IR 487). Question 15 New Zealand partnership income If you received any partnership income between 1 April 2006 and 31 March 2007, show it at Question 15. What to show in your return Print your share of the partnership s tax credits in Box 15A. Print your share of the partnership s income in Box 15B. If your partnership income includes: interest and any withholding tax, show it at Question 9 dividends and any credits, show it at Question 10 royalties and any withholding tax, show it at Question 11.

24 24 NON-RESIDENT INCOME TAX GUIDE Expenses You may be able to claim expenses against your share of the partnership income not claimed in the partnership s return (IR 7), for example, interest on capital borrowed to purchase a share in a partnership. Claim these expenses at Question 22. Question 16 New Zealand estate or trust income If you received estate or trust income between 1 April 2006 and 31 March 2007, show it at Question 16. There are three types of estates or trusts: qualifying foreign non-qualifying. Only include the trust s distributions to you as beneficiary income. Do not include any other sort of distribution. For more information about estates and trusts see our booklet Trusts and estates income tax rules (IR 288).

25 25 What to show in your return Print your share of the tax paid by the trustees in Box 16A and the estate and trust income in Box 16B. If your estate or trust income includes: interest and any withholding tax, show it at Question 9 dividends and any credits, show it at Question 10 royalties and any withholding tax, show it at Question 11. Note There is a special rule for non-resident beneficiaries who become residents again. This rule applies if you became resident in New Zealand within five years of leaving and you received any beneficiary income or taxable distributions from a non-qualifying or foreign trust while not resident. That income is assessable on the day you became a New Zealand resident again. Contact our Non-resident Centre (see page 2) if this situation applies to you. Question 18 New Zealand rents If you received any income from rents between 1 April 2006 and 31 March 2007, show it at Question 18. Prepare a summary of the details for each rental property. You can use either: a Rental income (IR 3R) form it asks for all the information we need, or your own summary.

26 26 NON-RESIDENT INCOME TAX GUIDE If you prepare your own summary, we need the following details: the address of the property rented the number of months it was available for renting total rents before expenses rates insurance interest agents collection fees repairs and maintenance (see below) depreciation on buildings and contents total rents after expenses (this is your net rent). These details are explained fully in our booklet Rental income (IR 264). Ongoing expenses Claim ongoing expenses, such as rates, insurance and interest, in proportion to the number of months the property was available for renting. For example, if the property was available for 10 months, you can claim 10 /12ths of these expenses. Repairs and maintenance You can claim property and plant repairs and maintenance but not additions or improvements these can be depreciated. Non-resident withholding tax Where interest is claimed as an expense and is paid to an overseas lender on a mortgage over land in New Zealand, the interest must have NRWT deducted and paid to Inland Revenue unless the Malaysia or Singapore double tax agreements apply. See the Non-resident withholding tax payer s guide (IR 291) for more help.

27 27 What to show in your return Add up the net rent (rent after expenses) and print the total in Box 18. Staple the IR 3R or your summary to the top of page 3 of your tax return. Keep your receipts with your records in case we ask to see them later. Question 19 New Zealand self-employed income If you received any income from self-employment between 1 April 2006 and 31 March 2007, show it at Question 19. Prepare a summary of details You can use: your financial records the IR 3F form for agricultural businesses the IR 3B form for other businesses the IR 10 form. The IR 10 form This is a statistics form that sets out a general summary of information from your financial accounts. If you complete an IR 10, you don t need to send us your financial accounts as well. However, you still need to complete them and keep them in case we ask for them later. What to show in your return From your financial accounts, IR 3B or IR 3F, print your profit in Box 19. Staple the following to the top of page 3 of your return: your financial accounts, IR 3F or IR 3B, or a completed IR 10 form. Keep your receipts with your records in case we ask to see them later.

28 28 NON-RESIDENT INCOME TAX GUIDE Question 20 Other New Zealand income If you received any other income between 1 April 2006 and 31 March 2007, show it at Question 20. This includes: the sale of land and/or buildings the sale of shares or other property the sale or redemption of securities cash jobs, tips, payments made under the table, bartering or income from an illegal enterprise. Income from the sale of land and/or buildings The profits are taxable if you bought a property for the purpose of reselling it, or are in the business of buying and selling land and/or buildings. The profits may be taxable if you: are a builder and improved a property before selling it developed or subdivided land and sold sections had a change of zoning on your property and sold it within 10 years of buying it. Print the total profit in Box 20. Write the details of your income and expenses from these sales on a piece of paper and staple it to the top of page 3 of your return. If you re not sure if your income from the sale of land and/or buildings is taxable, please contact our Non-resident Centre see page 2. Income from the sale of shares or other property The profits are taxable if you: bought and sold shares or other property as a business bought shares or other property for the purpose of resale. Print the total profit in Box 20. Attach a note with the details of your income and expenses from these sales to the top of page 3 of your return.

29 29 If you re not sure if your income from the sale of shares or other property is taxable, please contact our Non-resident Centre see page 2. Sale or disposal of assets If you sold or disposed of a depreciated asset for more than its adjusted tax value, please read our booklets Depreciation (IR 260), General depreciation rates (IR 265) or Historic depreciation rates (IR 267). Losses from the sale of land, buildings, shares or other property If you made a loss and you can show that if you had made a profit it would have been taxable, you may be able to claim the loss as a deduction. Print the loss in Box 20. Attach a note with the details of your income and expenses from these sales to the top of page 3 of your return. If you re not sure if you can claim a deduction for a loss, please contact our Non-resident Centre see page 2. Question 22 Expenses If you had expenses against the income you earned between 1 April 2006 and 31 March 2007, the only ones you can claim here are: a fee you paid someone for completing your return expenses incurred in earning income from which withholding tax has been deducted additional expenses incurred in deriving partnership income, for example, interest on capital borrowed to purchase a share in the partnership premiums on loss of earnings insurance, provided the benefit from the insurance policy is taxable.

30 30 NON-RESIDENT INCOME TAX GUIDE What to show in your return Print the total of your expenses in Box 22. If you paid someone to complete your return, write the person s name in the panel provided. Attach a note with the details of other expenses and your name and IRD number to the top of page 3 of your return. You cannot claim expenses against: non-resident withholding income, ie interest, dividends, or royalties salary and/or wages taxable Māori authority distributions election day services casual agricultural work commissions if you are also paid a salary or retainer from the same employer. If you are registered for GST: you must deduct any GST included in any gross withholding payment income, and you cannot claim the GST portion of your expenses. Question 24(i) Net losses brought forward There are two types of net losses you can bring forward. Specified activity net losses If you are claiming specified activity net losses and need help with this question, please contact our Non-resident Centre see page 2.

31 31 Other net losses Other net losses are all those incurred from the 1991 income year onwards and those not limited before Where to find your net loss to bring forward You can find the amount of net loss you have to bring forward on the loss letter which we sent you after your 2006 notice of assessment or return acknowledgement. If you do not have a loss letter contact us and we will send it to you. What to show in your return Add up all net losses to be brought forward to 2007 and print the total in Box 24A. Print the net loss amount you can claim this year in Box 24B. Question 24(ii) Loss from a loss attributing qualifying company If you are a shareholder in a loss attributing qualifying company (LAQC), you are entitled to claim a share of any net loss the company incurred between 1 April 2006 and 31 March Show your share of any attributed loss in Box 24C. If the attributed loss included a loss from a controlled foreign company or a foreign investment fund, and you need help with this question, please contact our Non-resident Centre see page 2.

32 32 NON-RESIDENT INCOME TAX GUIDE Tax calculation Question 27 Tax calculation Use this worksheet if your taxable income is $38,000 or less If your taxable income is $38,000 or less, your tax rate is 19.5 cents in the dollar. Copy your taxable income from Box 25 of your return to Box 1. Multiply Box 1 by (19.5 cents in the dollar). Print the answer in Box 2. This is the tax on your taxable income. Copy it to Box 27B of your return. Use this worksheet if your taxable income is from $38,001 to $60,000 inclusive Your tax is $7,410 plus 33 cents for each dollar earned between $38,001 and $60,000 inclusive. Copy your taxable income from Box 25 of your return to Box Subtract Box 2 from Box 1. Print the answer in Box 3. 3 Multiply Box 3 by 0.33 (33 cents in the dollar). Print the answer in Box 5. Add Box 4 and Box 5. Print the answer in Box 6. This is the tax on your taxable income. Copy it to Box 27B of your return. Use this worksheet if your taxable income is over $60,000 Your tax is $14,670 plus 39 cents for each dollar over $60,000. Copy your taxable income from Box 25 of your return to Box Subtract Box 2 from Box 1. Print the answer in Box 3. Multiply Box 3 by 0.39 (39 cents in the dollar). Print the answer in Box 5. Add Box 4 and Box 5. Print the answer in Box 6. This is the tax on your taxable income. Copy it to Box 27B of your return. 3

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34 34 NON-RESIDENT INCOME TAX GUIDE Excess imputation credits brought forward You can bring forward any excess imputation credits that you received while you were resident in New Zealand as these can be offset against the tax payable on your other income. If you have excess imputation credits to bring forward, you can find the amount on the loss/excess imputation credits carried forward letter which we sent you after your 2006 year return acknowledgement or notice of assessment. To claim these credits, please advise us in writing by attaching a note to the front of your return.

35 35 Refunds and/or transfers Question 28 Getting a refund? If you are entitled to a refund, you may: have it direct credited to a New Zealand bank or other deposit account, such as a building society account transfer all or part of it to cover someone else s income tax debit, and receive either a cheque or direct credit refund for any balance transfer all or part of it to pay your 2008 provisional tax receive it as a cheque. All cheques are issued in New Zealand currency. If you have made payments towards your 2008 provisional tax and, after completing this return, you find that you have less or no provisional tax to pay, the overpayment can be included in the amount we refund or transfer. Print the overpaid amount in Box 28B. Direct credit Direct credit means: you get your refund faster you can withdraw your money as soon as it s credited because there s no clearance time. We pay any refund directly into your New Zealand bank account as soon as we have processed your return. Make sure your correct account number is printed at Question 7 on the front page of your return. Note If you are receiving a refund, please check the details at Question 7 are correct.

36 36 NON-RESIDENT INCOME TAX GUIDE Refunds of less than $5 If your refund is less than $5 it will be carried forward to your next tax assessment. We offset it against any amount you may owe us or add it to any future refund. If you do not want it carried forward, please let us know and we will refund it to you. Transfers If you would like your refund transferred to another account or to arrears that are being paid off by an instalment arrangement instead of being refunded, tell us when you would like your excess tax transferred (the transfer date ). The date you can choose depends on what tax has been overpaid and whose account you want the credit transferred to. Note If the transfer is to arrears being paid off by an instalment arrangement, attach a note with your return authorising the transfer and telling us: that the transfer is to arrears currently under an instalment arrangement the name and IRD number of the taxpayer to whom the transfer should be made whether the taxpayer is an associated taxpayer the tax type and period the date you would like the transfer to take place.

37 37 Associated taxpayers The following people are associated taxpayers for the purposes of transferring overpaid tax: a company in which you are a shareholder-employee a partner in the same partnership a relative (eg child, parent, spouse or partner) a trustee of a family trust of which you are a beneficiary. Transfer date You can ask for your credit to be transferred at any date as long as it is not before the relevant date set out below. Credit to be transferred to your own account or an account of an associated taxpayer The refund is from excess tax deductions (eg PAYE deductions) the day after your balance date (or 1 April if your balance date is before 31 March) If the refund is from overpaid provisional tax the day the overpaid provisional tax was paid. Credit to be transferred to an account of another person who is not associated The later of: the day you requested the transfer, or the day after your return is filed. Future transfer dates If you would like your credit transferred at a date in the future, you should attach a note to the front of your return with the details of: the amount you want transferred, and the account you want it transferred to (if it is to another person, whether they are associated), and the date you would like the credit transferred.

38 38 NON-RESIDENT INCOME TAX GUIDE If you do not tell us the date you would like your credit transferred, we will transfer it at a date we think gives you the greatest advantage. If you would like the credit transferred at a different date, you can contact us and ask for the transfer date to be changed (including if we have transferred your credit to cover a debt). Requesting transfers on your return You can ask us to transfer a refund to another account by filling out the boxes on pages 5 and 6 of your return. If you ask for a transfer on your return, we will transfer your refund at one of the following dates: transfer to your own account or an account of someone associated to you The later of: the day after your balance date (or 1 April if your balance date is before 31 March), or the due date in the destination account transfer to an account of someone not associated to you the day after your return was filed. If you would like your refund transferred at a different date to those listed above, attach a letter to your return. Include the details of the account you want the refund transferred to and the transfer date. If the transfer is going to another person, remember to tell us if they are associated to you. Note For more information about transferring overpaid tax go to or contact our Non-resident Centre see page 2.

39 39 Are you entitled to an early payment discount? The early payment discount is available for people who: are new in business, and haven t yet begun to pay provisional tax, and in the case of a standard balance date taxpayer, have made a payment or payments on or before 31 March 2007 as income tax for the period 1 April 2006 to 31 March The discount is calculated at the rate of 6.7% of either: the amount paid during the year, or 105% of your end-of-year residual income tax liability whichever is the lesser, and is credited against your end-of-year bill. To see if you qualify, work through the flowchart on pages 40 and 41. If you qualify, please apply in writing and attach a note to your return. If you have any questions about your entitlement to the discount, please contact us see page 2.

40 40 NON-RESIDENT INCOME TAX GUIDE Do you qualify for an early payment discount? Are you self-employed or in a partnership and you don t use a company or trust to run your business and most of your income is from your business not interest, dividends, rent or benefits? Yes No You don t qualify Yes No Have you made a voluntary payment of income tax for the 2007 year on or before 31 March 2007? Yes Were you liable for provisional tax during 1 April 2002 to 31 March 2007? No Have you ever paid provisional tax? Ye No Have you ever claimed the early payment discount? Ye No You qualify for an early payment discount. Please apply in writing.

41 41 Definitions Provisional tax this is tax paid in instalments during the year based on what you expect your income to be, or what it was last year. Assessable income this is income that is not exempt income or excluded income (eg a government grant to a business). Assessable income includes undeclared business income you may have earned (such as cash jobs). Year year as referred to in the diagram below means the standard tax year from 1 April to 31 March unless you have an approved different balance date, in which case your income year will end then. You don t qualify Yes Yes Did you earn assessable income from a business in a four-year period since you last paid provisional tax? For example: Year 0. You last paid provisional tax Year 1 Year 2 Year 3 Year 4 No assessable income from a business during this period Year 5. Eligible for early payment discount Did you earn assessable income from a business in a four-year period since you last claimed the early payment discount? For example: Yes No You qualify for an early payment discount. Please apply in writing. Year you claimed early payment discount Year 1 Year 2 Year 3 Year 4 Eligible for early payment discount No No assessable income from a business during this period Yes You don t qualify

42 42 NON-RESIDENT INCOME TAX GUIDE Provisional tax Question 29 Provisional tax Provisional tax is generally payable because you earned income during the year that either: wasn t taxed, or was taxed at the wrong rate. It is usually payable in three instalments during the year. If your 2007 residual income tax (RIT) (Box 34J of your return) is $2,500 or more, you will become a provisional tax payer and will be liable to pay 2008 provisional tax. For more information on provisional tax see our Provisional tax (IR 289) booklet. New provisional tax payers Some new provisional tax payers have to pay provisional tax in their first year of operation. You are a new provisional tax payer if: you stop receiving income from employment and then begin to derive gross income from a taxable activity during the year, and your RIT for the preceding four years was not more than $2,500 per year, and your RIT for the current year exceeds $35,000. The date you ceased employment determines how many provisional tax instalments you may have to pay. If you are a new provisional tax payer you must notify us. Please attach a note to the front page of your return telling us: the date you stopped receiving income from employment the date your business started.

43 43 Payment dates for new provisional tax payers Provisional tax is payable on the instalment dates that fall more than 30 days after the date you ceased employment. If you have to pay provisional tax, you must pay it in: three equal instalments if you ceased employment more than 30 days before the first instalment date two equal instalments if you ceased employment 30 days or less before the first instalment date and more than 30 days before the second instalment date, or one instalment if you ceased employment 30 days or less before the second instalment date. For the income tax year ending 31 March 2008, this means paying: three equal instalments (7 July 2007, 7 November 2007 and 7 March 2008) if you ceased employment before 7 June 2007 two equal instalments (7 November 2007 and 7 March 2008) if you ceased employment between 7 June and 7 October 2007 one instalment (7 March 2008) if you ceased employment on or after 8 October Standard provisional tax payment dates If you have a standard balance date of 31 March your payment dates are: 1 st instalment 7 July nd instalment 7 November rd instalment 7 March 2008 Non-standard balance dates If your balance date is different from 31 March your payment dates are the 7th of the month every four months after your balance date. For example, if your balance date is 30 June, your first provisional payment is due 7 October.

44 44 NON-RESIDENT INCOME TAX GUIDE Payment options You have two options for paying provisional tax the standard option or the estimation option. Standard option Under this option, your 2008 provisional tax is your 2007 RIT (where it is $2,500 or more) plus 5%. We automatically charge you provisional tax using the standard option unless you have specified that you are using the estimation option. If you think your income for 2008 will be more than your 2007 income, you can make voluntary payments over and above the amount you have to pay under the standard option. Use this worksheet to calculate your 2008 provisional tax using the standard option ( S ) Copy your RIT from Box 27H on page 3 of your return to Box 1. Multiply Box 1 by 0.05 (5%). Print your answer in Box 2. Add Box 1 and Box 2. Print your answer in Box Box 3 is your 2008 provisional tax. Copy it to Box 29B of your return and print S in Box 29A. Divide the amount in Box 3 by three to get the amount you must pay for each instalment. If you are filing your return after 7 July 2007 your instalment amounts may be different. Please read our booklet Provisional tax (IR 289). Estimation option If you are considering estimating, read the following notes carefully. Anyone can estimate provisional tax. If you expect your 2008 RIT to be lower than your 2007 RIT, estimating will keep you from paying more than you have to. If you choose to estimate you must take reasonable care when estimating the amount payable at each instalment date. For example, if your 2008 RIT is greater than your provisional tax paid, you may be liable for a shortfall penalty on the unpaid provisional tax.

45 45 Your estimate must be fair and reasonable at the time you make it, and at each instalment date. You can be charged a penalty and/or interest if you don t take reasonable care when you estimate your provisional tax. If you have chosen to pay your 2008 provisional tax using the standard option, you can still estimate your provisional tax any time up to and including your third instalment date. However, once you have chosen the estimation option you cannot change back to the standard option in that income year. You can re-estimate any number of times up to and including your third instalment date. Your last estimate becomes final at this date. Use this worksheet to calculate your 2008 provisional tax using the estimation option ( E ) Print your estimated 2008 taxable income in Box 1. Work out the tax on the amount in Box 1*. Print your answer in Box 2. Print your estimated 2008 credits, such as rebates, PAYE deductions etc, in Box Subtract Box 3 from Box 2. Print your answer in 4 Box 4. Box 4 is your 2008 provisional tax. Copy Box 4 to Box 29B of your return and print E in Box 29A. Divide the amount in Box 4 by three to get the amount you must pay for each instalment. * The following tax rates apply when calculating the tax on your estimated 2008 taxable income: income from $0 to $38,000 is taxed at 19.5 cents in the dollar income from $38,001 to $60,000 is taxed at 33 cents in the dollar income over $60,000 is taxed at 39 cents in the dollar. For more help For more information on: interest and penalties read our booklet, Taxpayer obligations, interest and penalties (IR 240) provisional tax, read our booklet, Provisional tax (IR 289).