The Golden Ticket: Navigating Temporary Tax Residency for New Zealanders in Australia

By Daran Nair of Greenlane CA Limited

For New Zealand citizens crossing the Tasman to live and work in Australia, the financial landscape can initially seem daunting. Hidden within the complexities of Australian tax law is a significant advantage: the temporary resident tax rules. When used correctly, this status can provide substantial exemptions for foreign-sourced income and capital gains, making it tax-efficient in many cases to retain assets in New Zealand.

However, this opportunity is not without conditions. Changes to citizenship pathways and foreign investment rules mean New Zealanders need to understand exactly when temporary resident status applies, how it can be lost, and what that means for their New Zealand assets.

What is temporary resident status?

When a New Zealand citizen enters Australia on a New Zealand passport, they are generally granted a Special Category Visa (Subclass 444). This visa allows the holder to live and work in Australia indefinitely and is treated as a temporary visa for the purposes of the temporary resident tax rules.

Temporary resident status can provide important Australian tax concessions. In broad terms, a person who qualifies is generally exempt from Australian tax on most foreign-sourced income and is also generally exempt from Australian capital gains tax on non-Australian assets. These rules can make a major difference for New Zealanders who continue to hold rental properties, bank accounts, share portfolios, or other investments in New Zealand after moving to Australia.

The three requirements

To qualify as a temporary resident for Australian tax purposes, all three of the following conditions must be met at the same time.

You must hold a temporary visa

A holder of a Special Category Visa will usually satisfy this requirement. For New Zealand citizens, the visa generally begins on entry into Australia and ceases on departure, with a new visa arising on re-entry.

You must not be an Australian resident under the Social Security Act 1991

This test is separate from ordinary tax residency. Many New Zealand citizens who arrived in Australia after 26 February 2001 hold a non-protected Special Category Visa and will not be treated as Australian residents under the Social Security Act.

By contrast, some New Zealand citizens who were in Australia on or before 26 February 2001, or who meet the historical protected-status rules, may be treated as Australian residents for social security purposes. If that applies, temporary resident status is not available.

Your spouse must not be an Australian resident under the Social Security Act 1991

If you have a spouse or de facto partner, that person must also not be an Australian resident under the Social Security Act. This is an important trap. A New Zealander who partners with an Australian citizen, permanent resident, or protected SCV holder can lose temporary resident status from that point.

How Australian tax applies to New Zealand assets

The practical effect of temporary resident status is often significant.

• Foreign-sourced income is generally not taxed in Australia. This may include rent from New Zealand property, interest from New Zealand bank accounts, and dividends from New Zealand shareholdings.

• Capital gains on non-Australian assets are generally disregarded for Australian tax purposes. This can include gains on the sale of New Zealand land or New Zealand shares.

• Australian-sourced income remains taxable in Australia.

• Australian capital gains tax still applies to taxable Australian property, such as Australian real estate.

These rules mean that New Zealand assets can often remain outside the Australian tax net while temporary resident status continues.

Practical planning points

A careful approach is essential.

• Keep clear records of New Zealand assets, acquisition dates, values, and income received.

• Review your status regularly, especially if your relationship status changes or you apply for a different visa or Australian citizenship.

• Consider the timing of asset disposals. Selling a New Zealand asset while temporary resident status still applies can produce a very different Australian tax outcome from selling after that status has ended.

• Take advice before restructuring ownership of assets or moving funds, as some arrangements may produce unintended Australian tax consequences.

Where temporary resident status ends, assets that were previously outside the Australian capital gains tax rules may become relevant from that date forward. This makes the timing of status changes particularly important.

Citizenship and property law changes

Since 1 July 2023, eligible New Zealand citizens have had a direct pathway to Australian citizenship without first needing to become permanent residents. This is a major immigration development, but it also has tax consequences. Once a person becomes an Australian citizen, they no longer hold a temporary visa and temporary resident status ends.

In addition, from 1 April 2025 to 31 March 2027, temporary residents are generally banned from purchasing established residential dwellings in Australia. New dwellings and vacant land may still be available in some cases, usually subject to foreign investment approval requirements.

New Zealand tax position

The New Zealand position should also be considered separately. Moving to Australia does not automatically end New Zealand tax residence in every case. New Zealand residence can continue if a person still has a permanent place of abode in New Zealand or is present in New Zealand for more than the statutory day-count threshold.

As a result, some individuals may face dual-residence issues, at least for a period, and the Australia-New Zealand double tax agreement may need to be considered. This is especially important for people who retain a home, business interests, trusts, or close family connections in New Zealand.

New Zealand also has its own transitional tax residence rules for eligible returning migrants and new migrants. Those rules are separate from Australia’s temporary resident regime and should not be confused with it.

Final thoughts

For many New Zealanders moving to Australia, temporary resident status can be a valuable planning opportunity. It can allow foreign income and gains from New Zealand assets to remain outside the Australian tax base for a period, provided the eligibility criteria continue to be met.

That said, the rules are highly sensitive to personal circumstances. Visa changes, citizenship applications, relationship changes, and continuing New Zealand ties can all affect the outcome. A proper review of both Australian and New Zealand tax residence should be carried out before major decisions are made.

Contact Us

If you require any assistance or advice on this topic, please do not hesitate to contact Daran Nair at daran@glca.co.nz. We would be happy to discuss your individual circumstances and help you navigate the complexities of Temporary Tax Residency.

• Email: info@glca.co.nz

• Phone: +64 9 522 5182

• Website: www.glca.co.nz

• Address: 97 Great South Road, Greenlane, Auckland 1051

Disclaimer

This newsletter is published by Greenlane CA Limited for informational purposes only. The content provided herein is of a general nature and does not constitute professional tax, accounting, legal, or financial advice. While every effort has been made to ensure the accuracy and completeness of the information contained in this newsletter, Greenlane CA Limited makes no representations or warranties, express or implied, as to the accuracy, reliability, completeness, or currency of the information.

Readers should not act or refrain from acting based solely on the information in this newsletter without first seeking professional advice tailored to their specific circumstances. Tax laws and regulations are subject to change, and the application of these laws depends on the particular facts and circumstances of each case.

Greenlane CA Limited, its directors, employees, and agents accept no responsibility or liability for any loss, damage, cost, or expense, whether direct, indirect, consequential or otherwise, incurred by any person as a result of relying on the information contained in this newsletter, or any errors or omissions therein, howsoever caused.

For advice specific to your situation, please contact Greenlane CA Limited directly.