Master prompt
First-year IRD tax filing (IR3, Working for Families, NZ-India DTAA, PIE, transitional exemption)
First NZ tax year guidance — tax-residency trigger (s.YD 1), worldwide income, 4-year transitional resident exemption, IR3 individual return, Working for Families Tax Credits, NZ-India DTAA, PIE (KiwiSaver) tax.
New ZealandSettlementIRDTaxIR3Working for FamiliesNZ India DTAAPIETransitional resident
Advise [CLIENT_NAME] on first-year NZ tax-filing obligations. NZ arrival: [ARRIVAL_DATE]. NZ income: [NZ_INCOME_SOURCES]. Indian income continuing: [INDIAN_INCOME_SOURCES]. Family for WFF: No dependents. Indian assets > NZ$50K: No. KiwiSaver status: Auto-enrolled.
§1 — NZ TAX YEAR + RESIDENCY DETERMINATION
NZ tax year: 1 April — 31 March. Returns due 7 July (or extended to 31 March of following year if registered with a NZ tax agent).
Tax residency under Income Tax Act 2007 s.YD 1 — two tests:
(a) PRESENCE TEST — physically present in NZ for more than 183 days in any 12-month period; resident from the first of those days
(b) PERMANENT PLACE OF ABODE (PPOA) TEST — a dwelling available for use as a home, even if absent
Either test triggers tax residency. The 183-day test applies retrospectively from the first day in the 12-month window.
For [CLIENT_NAME] arriving [ARRIVAL_DATE]:
• Day 1 of NZ tax residency: [ARRIVAL_DATE] (retrospectively confirmed once 184 days reached)
• Likely PPOA from [ARRIVAL_DATE] anyway if a permanent rental is secured
• Conservatively treat [ARRIVAL_DATE] as the start of NZ tax residency
§2 — INDIAN TAX RESIDENCY POSITION — DUAL-RESIDENT YEAR
Indian Income Tax Act 1961 s.6:
(a) Resident if in India 182+ days in a financial year (1 Apr - 31 Mar)
(b) OR resident if in India 60+ days that FY AND 365+ days in preceding 4 FYs
(c) Non-Resident otherwise
Effect: for the Indian FY in which [CLIENT_NAME] left (likely FY 2026-27 if [ARRIVAL_DATE] is mid-2026):
• Resident-Not-Ordinarily-Resident (RNOR) status often applies — only Indian-source income taxable for transitional period
• OR may become non-resident from the date of departure
For [CLIENT_NAME], assume the NZ-India financial-year offset means client is:
• Indian RNOR or Non-Resident for FY 2026-27 (Apr 2026 - Mar 2027)
• NZ Resident from [ARRIVAL_DATE] (within NZ tax year 1 Apr 2026 - 31 Mar 2027)
DTAA tie-breaker (NZ-India DTAA 1986, Article 4):
• Permanent home test — if NZ permanent rental secured, NZ wins
• Centre of vital interests
• Habitual abode
• Nationality
• Mutual agreement procedure
In most clean-relocation cases, treaty residency is allocated to NZ from [ARRIVAL_DATE].
§3 — TRANSITIONAL RESIDENT EXEMPTION (CRITICAL — DO NOT MISS)
Income Tax Act 2007 s.HR 8 — newly-arrived NZ tax residents qualify for a 4-year exemption on most foreign-source income, IF:
(a) Became NZ tax resident on or after 1 April 2006
(b) Was non-resident for an unbroken period of at least 10 years immediately before becoming NZ tax resident
(c) Has not previously been a transitional resident
For [CLIENT_NAME] (assumed first-time NZ tax resident with 10+ years offshore in India): TRANSITIONAL RESIDENT applies from [ARRIVAL_DATE] for 4 years (48 months).
What's EXEMPT during transitional period (most foreign-source income):
• Foreign dividends, interest, rental income, royalties, capital gains
• Foreign superannuation (but lump-sum withdrawal rules apply at end of TR period)
• Foreign trust distributions
• Foreign employment income IF paid for services rendered offshore
What's NOT exempt (still taxable in NZ even as transitional resident):
• NZ-source income (salary at Auckland Tech Co etc.)
• Foreign employment income for services rendered in NZ (e.g. continuing to work for Indian employer while physically in NZ)
Election: opt-in is AUTOMATIC unless [CLIENT_NAME] elects out. Why would you elect out?
• If foreign losses would be useful to offset NZ income
• Rare; default is to enjoy the exemption
ACTION for [CLIENT_NAME]:
• Confirm transitional-resident status in IR3 return
• For [INDIAN_INCOME_SOURCES] (rental, FD interest, mutual fund dividends): EXEMPT in NZ during transitional period
• Continue to declare in India per Indian-side rules (rental — Indian tax + TDS; FD — Indian tax; mutual funds — Indian capital gains)
• End of transitional period = 4 years after arrival, post which full worldwide income taxation kicks in
§4 — IR3 INDIVIDUAL TAX RETURN
Filing thresholds:
• Required to file IR3 if: self-employed, rental income, foreign income, partner of Working for Families recipient, beneficiary income, etc.
• Not required to file (auto-assessment) if: salary-only with PAYE, no other income, no special claims
For [CLIENT_NAME]: likely required to file IR3 given mix of NZ salary, potential self-employed consulting, and the foreign-income disclosures (even if exempt).
IR3 covers:
(a) PAYE-deducted salary income (from Auckland Tech Co etc.)
(b) Self-employment income (less expenses)
(c) Rental income (NZ-source — Indian rental EXEMPT under TR if applicable)
(d) Interest / dividends / PIE income
(e) Foreign-source income (if taxable — i.e. after transitional period OR if elected out)
(f) Working for Families details
(g) Donation tax credits (33.33% on qualifying donations up to taxable income)
(h) Independent Earner Tax Credit (IETC) — phased out as income > NZ$48K
§5 — NZ TAX RATES 2026-27 (verify current — bands may have shifted)
• 0 - 15,600: 10.5%
• 15,601 - 53,500: 17.5%
• 53,501 - 78,100: 30%
• 78,101 - 180,000: 33%
• 180,001+: 39%
Plus ACC Earner Levy 1.6% (on income up to NZ$142,283 — 2026-27 cap; verify)
Plus KiwiSaver employee contribution 3% (deducted from gross before PAYE applied? No — PAYE applied on full gross, KS deducted separately)
For [NZ_INCOME_SOURCES] = NZ$95,000 salary:
• Approximate PAYE annual: NZ$22,500 (rough)
• ACC Earner Levy: NZ$1,520
• KiwiSaver employee 3%: NZ$2,850
• Take-home approx NZ$68,000
§6 — WORKING FOR FAMILIES (WFF) TAX CREDITS (if No dependents indicates children)
Four credits, paid weekly / fortnightly / lump-sum:
(a) Family Tax Credit (FTC) — for each dependent child under 18
• Eldest child: NZ$144/week (verify 2026-27)
• Each subsequent child: NZ$117/week
• Abates by 25c per dollar of family income over NZ$42,700
(b) In-Work Tax Credit (IWTC) — for working families
• Per family: NZ$72.50/week (not per child)
• Requires: paid work 20+ hours/week (single) or 30+ hours combined (couple)
• Not receiving main benefit
• Resident in NZ + tax resident
(c) Best Start Tax Credit — for children under 3
• NZ$73/week
• First-year universal regardless of income
• Income-tested years 2-3
(d) Minimum Family Tax Credit — guarantees minimum after-tax family income (currently approx NZ$36,400/year — verify)
For No dependents = "2 children ages 6 and 9":
• Estimated WFF entitlement at family income NZ$95K + spouse NZ$0 (still in IR3 calculations): approx NZ$200-280/week depending on family income
• Significant — apply EARLY (within 1-2 months of arrival) — back-payable to date of arrival
• Apply via myIR online or IR-WFF1 form
ELIGIBILITY ANCHORS:
• Principal carer of dependent child(ren) under 18
• NZ tax resident
• Child(ren) financially dependent
• NOT receiving certain MSD benefits in lieu
KEY: WFF is administered jointly by IRD and MSD. Apply via IRD for in-work / partial-work families; via MSD if on main benefit.
§7 — NZ-INDIA DTAA 1986 (in force 1 Apr 1986, Protocol 1999) — key articles
Article 4 — Resident: tie-breaker rules in dual-residency cases (see §2)
Article 6 — Income from immovable property (rent): taxable in source state; NZ residents with Indian rental property — Indian tax (TDS at higher rate for NRIs) + NZ tax (if post-transitional-resident period)
Article 7 — Business profits: only taxable in NZ if PE in NZ; allows continued Indian-business participation
Article 10 — Dividends: source state may tax at concessional rate (15% under treaty for India-source dividends to NZ resident); pre-TDS in India, claim foreign tax credit in NZ
Article 11 — Interest: source state may tax at 10% under treaty; same FTC mechanism
Article 12 — Royalties / Fees for Technical Services: 10%
Article 13 — Capital gains: generally taxable in source state if real estate or PE; movable property (e.g. mutual funds) taxable in residence state
Article 14 — Independent personal services (now obsolete under updated treaties; under 1986 treaty still active for India-NZ)
Article 23 — Elimination of double taxation: NZ allows foreign tax credit (FTC) for Indian tax paid on Indian-source income (capped at NZ tax payable on same income)
Article 25 — Mutual Agreement Procedure (MAP): for disputes
ACTION for [CLIENT_NAME] for [INDIAN_INCOME_SOURCES]:
• During transitional resident period: NZ exempts Indian-source income; only Indian tax applies (TDS deducted at source; nil return possibly in India if income below threshold; if above, file ITR)
• Post transitional period: Indian-source income becomes NZ-taxable too, with FTC for Indian tax
• Maintain Indian Tax Residency Certificate (TRC) and Form 10F if claiming treaty rate at Indian source
§8 — INDIAN FILING POST-DEPARTURE
For Indian FY 2026-27 (Apr 2026 - Mar 2027) — [CLIENT_NAME] is non-resident or RNOR:
(a) File ITR-2 in India by 31 Jul 2027 (extended to 31 Oct usually)
(b) Declare Indian-source income only (rental, FD interest, mutual fund dividends, salary up to departure date if any)
(c) Foreign income (NZ salary) NOT taxable in India for non-resident
(d) Tax computation per Indian slab rates; LTCG / STCG on Indian shares per Indian rules
(e) TDS already deducted at NRO bank rates (30%+) — claim refund if total tax computed is less
(f) Use NRE / FCNR for repatriable funds; NRO for non-repatriable (taxable in India)
§9 — PIE TAX (Portfolio Investment Entity) — KiwiSaver
KiwiSaver funds and most NZ managed funds are PIEs. Income from PIE is taxed at the investor's Prescribed Investor Rate (PIR):
• PIR 10.5% — taxable income < NZ$14,000 OR combined income (taxable + PIE) < NZ$48,000
• PIR 17.5% — combined income NZ$48,001 - NZ$70,000
• PIR 28% — combined income > NZ$70,000
PIR is a FINAL TAX — no need to declare PIE income on IR3 if correct PIR is set. If wrong (lower) PIR set, taxpayer must declare and pay top-up.
For [CLIENT_NAME] at NZ$95K salary + 3% KS contribution = NZ$2,850/year into KiwiSaver:
• PIR: 28% (combined income > NZ$70K)
• Confirm PIR with KiwiSaver provider in Auto-enrolled — common error: providers default to 28% which is correct for higher-income earners but over-taxes lower earners
ACTION:
• Notify KiwiSaver provider of correct PIR within 6 weeks of first contribution OR each year if PIR changes
• Wrong PIR (too low) — IRD will issue top-up assessment
• Wrong PIR (too high) — IRD will refund
§10 — DISCLOSURE OF FOREIGN ASSETS — IF No = YES
While transitional residents are EXEMPT from tax on foreign income, IRD has informational reporting:
(a) Foreign-source income disclosure on IR3 — even if exempt under TR, may still need to disclose for transparency
(b) NZ does NOT have an equivalent of FBAR / FATCA Form 8938 for residents
(c) Foreign Investment Funds (FIF) regime — Indian mutual funds, Indian shares held by NZ tax resident WITHOUT FIF exemption — taxed under FIF (5% Fair Dividend Rate or comparative value)
• TR exempt during 4-year window
• Post-TR: FIF rules apply
• De minimis: cost of FIF interests < NZ$50,000 — exempt from FIF
• Indian listed company shares often qualify for FIF (some excepted under treaty)
For No:
• Chandigarh flat: real-estate is NOT a FIF; income (rental) taxable per Article 6 (post-TR)
• Indian FDs: bank interest — Article 11 (post-TR)
• Indian mutual funds: FIF post-TR if > NZ$50K cost; declare on IR3
CRA-equivalent: NZ has IRD; not as aggressive as US FATCA. Honest disclosure protects against later audit.
§11 — FOREIGN-EARNED-INCOME EXCLUSION (NOT A NZ CONCEPT)
Important: NZ does NOT have a US-style FEIE. The NZ approach is transitional-resident exemption + DTAA-based FTCs. Don't import US tax concepts.
§12 — SELF-EMPLOYMENT / SIDE-INCOME (if [NZ_INCOME_SOURCES] includes consulting)
(a) Register as a sole trader (no formal registration; just file IR3 with self-employed schedule)
(b) GST registration required only if turnover > NZ$60,000/year (verify)
(c) Below threshold: voluntary GST registration possible (allows GST refunds on expenses) but adds compliance
(d) Expenses deductible: home office, vehicle (proportion), professional indemnity insurance, software, training, ACC self-employed levy
(e) ACC: self-employed pay CoverPlus or CoverPlus Extra — recommend CoverPlus Extra to fix earnings declared
(f) Provisional tax: if first year residual tax > NZ$5,000, provisional tax applies year 2; pay in 3 instalments
§13 — TIMELINE FOR [CLIENT_NAME] — FIRST YEAR
Within 2 weeks of [ARRIVAL_DATE]: IRD number applied for (covered in separate prompt nz-settlement-first-week-checklist)
Within 1 month: Apply for Working for Families if No dependents indicates children
Within 6 weeks of first KiwiSaver contribution: confirm correct PIR with provider
Mid-NZ-tax-year (October-December): mid-year review with NZ-registered tax agent / Chartered Accountant
By 31 March (end of NZ tax year): receive Summary of Income from IRD for PAYE-only earners; full IR3 obligation reviewed
By 7 July (without agent) OR 31 March following year (with agent): file IR3
In parallel:
• Indian ITR-2 for FY of departure (and following non-resident years) — by 31 July (or extended date) of each Indian assessment year
• Maintain Indian TRC + Form 10F for treaty rate claims at Indian source
§14 — CHOOSING A TAX AGENT
NZ-registered tax agents — Chartered Accountants ANZ members (CA ANZ); look for those experienced with NZ-India clients. Auckland Indian-diaspora-friendly accounting firms commonly visible at gurdwara / mandir / community events. Indicative fees:
(a) IR3 PAYE-only with WFF: NZ$300-500 per year
(b) IR3 with self-employment + simple foreign income disclosure: NZ$700-1,500
(c) IR3 + IFB / rental property: NZ$1,200-2,500
(d) Indian-side ITR filing: typically a separate India-based CA via reciprocal arrangements; NZ$200-500 equivalent
Tax-agent registration extends filing deadline from 7 July to 31 March of following year.
§15 — RED-FLAG CHECKLIST
□ Transitional resident status claimed correctly on first IR3
□ Indian-source income disclosed (even if exempt under TR)
□ KiwiSaver PIR set correctly
□ FIF exemption claimed if applicable (Indian mutual fund cost < NZ$50K)
□ WFF applied for promptly (back-payable but only to application date if late)
□ Indian rental income — Indian TDS deducted at NRI rates (typically higher) — claim DTAA treaty rate via Form 15CB / 15CA at remittance
□ Indian bank accounts — NRO/NRE conversion done; TDS rates on NRO interest 30% + surcharge
□ AML watchpoints — transfers > NZ$10,000 trigger bank source-of-funds enquiries
□ Estate planning — NZ has no inheritance tax, India has none either, but cross-border wills complicated; consider both NZ and Indian wills (separately drafted)
□ NZ does have a Trusts Act 2019 — Indian trust structures don't translate cleanly; specialist advice needed for any HUF or family trust
□ End-of-transitional period (4 years from [ARRIVAL_DATE]) — set diary reminder; planning needed for cessation of TR exemption
End with: "DRAFT tax advisory — for IAA-licensed immigration adviser awareness only; tax advice sits OUTSIDE IAA s.6 immigration-advice scope. REFER [CLIENT_NAME] to a NZ-registered tax agent (Chartered Accountants ANZ member) with NZ-India experience for the IR3 filing, transitional-resident election, WFF application, and PIE / FIF analysis. Parallel referral to an Indian Chartered Accountant for the Indian ITR-2 and DTAA Form 10F at Indian-source income. Verify all current rates / thresholds against IRD published schedules — tax bands and ACC levy caps adjust annually. The 4-year transitional-resident clock is critical; diary [ARRIVAL_DATE] + 4 years for end-of-TR planning."Unlock the vault to see the full prompt