Tax this

The New Zealand Government might have been coy when it came to granting residency, but it was positively aggressive about taxing my illegal alien arse. See how well I’ve integrated? I may not have the makings of a clue what party is in power, but I can heatedly complain about the goverment and what a shower of shady cockles ministers are.

I applied for an IRD number when I opened a bank account, so that interest would be taxed at the normal deduction rate rather than the no-declaration rate 7tkuguitt67iyu6t5u75yjhyuio. (Sorry, I headbutted my keyboard when I fell asleep at the end of the sentence.) In March, I received a letter from the Inland Revenue asking me to complete and return the enclosed six page tax form. This document was one of the scariest things I’ve experienced after the Residency Application Form. It featured expressions such as ‘tax evasion’, ‘punishable offence’, ‘penalties will be applied’, and ‘you can run but you can’t hide we will hunt you down and talk at you’. It asked questions like: ‘Are you claiming net losses brought forward?’ and ‘Do you have excess imputation credits?’ and ‘Are you deceased?’

It was obvious we needed an accountant to help determine whether I was still alive – amongst other things. Husband compiled a list of chartered accountants locally and I made appointments for initial consultations with three.

Yesterday morning, we met Michelle.

“You are considered tax resident from the date of your arrival in the country. Are you earning salaries – no? In that case, you must pay tax on all foreign savings and investments.”

“Er,” I said. “As returning expats, I think you’ll find that we’re eligible for a four year tax exemption.”

“Oh no. No, no, no, no, nooo,” said Michelle. “The law was changed last year due to the high number of returning residents who didn’t work or contribute to the economy but instead leeched off the country’s infrastructure.”

“Well, that would be us,” I confirmed. “But an extremely well dressed tax consultant said this was the case in January.”

Michelle spent the next ten minutes riffling through a tax book that took up half the room. Then she summoned her senior colleague, who had never heard of such an exemption. Never ever. He returned to the adjoining room to tut and shake his head.

“Shall we continue,” suggested Michelle while I attempted to open the tax book to its index.

“Is there any point spending the next half hour filling in a form we might not need?” I asked.

“I’m certain you will have to declare income as tax residents for 2008,” she said coldly.

“Excuse me,” said Husband, who had spent the interim tapping furiously at his Nokia. There on his tiny liquid crystal display was the IRD website. It clearly stated that, as a resident returning to the country after a 10 year absence and a fresh, crunchy migrant respectively, Husband and I qualify for a 4 year tax exemption on pretty much everything outside salary earned in NZ. You don’t even have to look that hard on the site to find it.

On cue, Michelle’s colleague burst into the room having confirmed the exemption by phone with the Inland Revenue.

We probably won’t retain this accountancy firm. Unfortunately, we had no better luck consulting the other shortlisted accountants, who had never heard of this clause either. Len told us that, although we are official tax residents, we don’t have to worry about filing a return for 2008 for reasons unspecified. Mel advised us we would have to pay tax on all income for the last financial year since April 2007, before we ever arrived in New Zealand.

Are we that unusual? Ok, that’s a loaded question and largely rhetorical. But I mean to say, there must be thousands upon thousands of new migrants and returning New Zealanders. Surely?

It concerns me that, had we accepted any of this chartered advice – and why wouldn’t you? These are allegedly qualified professionals – we would have ended up gifting thousands of dollars to the Inland Revenue. Let’s face it, if we file a return on foreign income, the IRD is hardly likely to correct us: “Listen mate, good news you’re tax exempt for four years, give us a call in 2012. Aw yeh, happy days.”