Korean Job Discussion Forums

[kiwiduncan]

I have most of my money in an ANZ Online Call Account in New Zealand. The interest is 7.75% but then I am hit by 39% Resident Withholding Tax, effectively knocking my interest down to about 4.5%.

It looks like I could have the RWT rate reduced to as low as 19.5% if I can dig out my IRD number. Alternatively, I have the option of trying to declare myself a non-resident, in which case - according to NZ's tax agreements with South Korea - I'd only have a 10% tax deducted from my interest earnings.

What approaches do other kiwis have? Are you a NZ resident or non-resident for tax purposes? If I am a non-resident, will I by hit by any other taxes or fees?

If I can save just a wee bit more on tax I can finally buy that lovely little gingham dress that Eunice has been bleating on about. Man, we'll be the talk of the stockyards.

[Cheonmunka]

[crazylemongirl]

You can also open a New Zealand dollar account at a korean bank which saves some wiring fees and dealing with the bloody IRD. From memory, the interest rates are quite good.

[Alan Partidge]

It could be better to not send anything home until you leave.

I called them to check and they said that if you don't have any assets at home, you don't have to pay any tax. Only student loans have to be paid (if you have one).

I double checked that I wouldn't be hit with some kind of tax bill when I got home and they said that as far they're concerned if I'm over here with no assets there, there's no tax to pay.

[fusionbarnone]

This is a difficult one as non-resident requires no enduring links to NZ which include open bank accounts. I asked the IRD on 3 occasions and was given 3 differing versions as to what that meant as I didn't want to have an daily interest accruing tax bill. My account told me as long as I wasn't earning an income from my property in NZ, I would not be liable for taxes.

I had 6 figures with the ANZ(they were kind enough to give me the bad news/also to see IRD if I wanted to change my status(???) and I was gonna get taxed to hell as a non-resident(how they had decided on the non-resident designation was encouraging as I still have 4 bank accounts in NZ as I'd adhered to the non-resedent for 365 rule.) Apart from a trust account setup which if "cracked" by myself at a later stage would constitute tax evasion. Although I should've consulted my accountant(he was stricken with illness) I settled for the pittance in interest and transferrred into my US account when the exchange rate hit it's highest.

Actually, having no debts, accounts in NZ, and above US70k meant I could sponsor myself for a Green Card.

Good luck with your investments. I wish I could have done things differently(read better although indirectly I made tax free profit due to transferring cash into a law firm account handling a property purchase on my behalf in the US) as I'm sure there are some real sharp investers out there.

[milkweedma]

u automatically become a New Zealand non-resident after 10 and a half months living outside of NZ regardless of any other links to NZ. Kiwibanks online call account is better at 8.2%

[mattyj]

Hi

Just reading this discussion and looking for advice from those who might know.

If you are working here for at least a year, sending money home on a regular basis, and have 2 rentals back home, 1 of which is earning a profit, the other making a loss, how does this effect your non residency and could you be in for a tax bill on your earning in korea when you return home?

Cheers

[DaffyD73]

Don't Quote me but isn't there a double tax agrrement between NZ and Korea, which means that income in each country would be handled in each country - i haven't checked the IRD site but the Double tax agreements are widly used for OECD countries.

Personally Kiwi bank was good with bouns interest, both ANZ and Kiwi needed a min of 2K for it to apply. Westpac has no min amount and two online accounts one can get bonus @8.2 with no WithD's and the other is flat @ 7.?? gives you a bit more freedom to manage money and obtain Bonus

[Cheonmunka]

[fusionbarnone]

There isn't one apart from staying abroad for a year. I was told of one kiwi who returned under one year and was hit with tax. It was something he said he'd never do again.

I had a friend complete an EPIK contract after one year and was hit with a 10k tax bill(she had a mortgage and a family in NZ and wired money each month) after returning home. She had it reduced to 5k through negotiation with the IRD. I didn't think it my business to pry as to why she was back-taxed.

However, I asked an Aussie teacher(old and wise) about this and she said it could have been due to working before the financial year whilst back in NZ(???).

Another friend worked in Japan for a year. Her father being a stickler for correct procedure told her to notify the IRD. She was ordered to pay 10k on that income.

I agree with the poster about getting the ducks in line before leaving the country.

[flyingteacher]

Here is some actual information on the topic from the ird.govt nz website. This should answer most peoples questions. Basically if you are outside NZ for more than 325 days you are fine but you cant have any income in NZ. You can have bank accounts, these just have to be paying the correct tax and does not make you a taxable citizen. Having a house rented in NZ will make you a taxable citizen and they then can tax your Korean income. Be careful and Good luck....

1. New Zealand and Korea DOES have a double taxation agreement with Korea.

2. You are a non tax resident if: non-resident if you're overseas for more than 325 days in a 12-month period, and you don't have an enduring relationship with New Zealand.

3. Non-residents are only liable for New Zealand tax on income from New Zealand sources. If your only income was from interest, dividends, royalties, or non-resident withholding tax (NRWT) and they were deducted at the correct rate, you probably won't have to file a tax return.

4. However, if you were a non-resident for the full year and received income from New Zealand, such as:

interest, dividends, or royalties (where the correct rate of tax was not deducted)
taxable Maori authority distributions
rental income
income from 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 (this may be exempt if subject to a double tax agreement)
you need to file an Income tax return non-resident individual taxpayer (IR3NR). See our Non-resident income tax return guide (IR3NRG) for more information about completing the return.

If you received rental income, you need to send in a summary of the details for each rental property on a Rental income schedule (IR3R), attached to your IR3NR return.

[mattyj]

Hi

Say you do have to pay tax back home on your korean earnings, does anyone know what the rate would be.

Cheers

[kiwiduncan]

Well, lots of information and food for thought here - thanks everyone.

So basically I don't to worry about the IRD as my loans are all paid off and I've got no rental property or other forms of income in New Zealand. My only financial connection is my ANZ Online Call Account.

Since I've been away for over 8 years I guess I really should apply for the NRWT rate or the Korean 10% rate. But - and please excuse my lack of financial acuity here - are you saying that IRD is not going to spring some kind of nasty taxes on me as soon as I remind them of my existance?

From what I can see now, there is only a risk of being taxed on our Korean incomes if we also happen to be still earning from rental properties in NZ. Is that the case?

One more question. I guess I could now turn around and reclaim some of the taxes on my interest now eh? Damn, it's going to be complicated as I've been in the UK on and off for three years too.

Cheers,

Duncan

[Cheonmunka]