For everyone who has not paid the correct tax the government is offering a partial amnesty. This applies to lump sum withdrawals or transfers from foreign schemes from 1 January 2000 to 31 March 2014. The amounts must be included in the 2013/14 or 2014/15 tax return.
There are some cases where applying the existing law may yield a better result, however, these people will be liable for penalties and interest from the date that they did not pay the tax due (as an example, this could be from the year 2000).
The key message for those many people who have failed to correctly declare and pay tax in New Zealand, on their overseas superannuation income, is that you should deal with this now. The limited amnesty will only be available for a short time. Bearing in mind that liabilities and interest usually cause tax debts to double after the first three years (and then it gets worse after that) dealing with this now is the only option. If you have a concern about affording payment to the IRD, the correct thing to do would be to declare and then to seek a repayment arrangement. Doing nothing is likely to catch up with people given the IRD’s focus on international tax disclosure and avoidance.
If you are in a situation where double tax may apply, or if you are affected by New Zealand’s transitional tax system, please note that different considerations may also apply.
Generally the FIF rules will no longer apply (although they may continue to do so in certain circumstances where they have been consistently applied in the past).
Please talk to us in confidence if you have any questions.