Section HR 8 — Income Tax Act 2007: Transitional residents

HR 8 Transitional residents Provisions under which transitional resident treated as non-resident (1) When a foreign-sourced amount is derived by a transitional resident, the following provisions apply to produce a result for income tax purposes that is the same as if the transitional resident were non-resident: (a) sections CD 45 , CE 2 , CQ 2 , CQ 5 , and CW 27 (which relate to income): (b) sections DN 2 and DN 6 (which relate to deductions): (c) sections EW 5 , EW 37 , EW 41 , EX 16 , EX 41 , and EX 64 (which relate to the financial arrangements rules and to the CFC and FIF rules): (d) sections HC 25 , HC 26 , and HC 30 (which relate to the trust rules): (e) sections MC 5 , MC 10 , MD 7 , and MF 5 (which relate to tax credits): (f) sections RE 2 , RE 5 and RF 12 (which relate to the RWT and NRWT rules): (g) section YD 1 (Residence of natural persons): (h) section 41 of the Tax Administration Act 1994. Meaning of transitional resident (2) A person is a transitional resident if— (a) they are resident in New Zealand through acquiring a permanent place of abode as described in section YD 1(2) or through the 183-day rule set out in section YD 1(3); and (b) for a continuous period (the non-residence period ) of at least 10 years immediately before they meet the requirements of section YD 1(2) or (3) , ignoring the rule in section YD 1(4), (Residence of natural persons) for becoming resident in New Zealand, they— (i) did not meet the requirements of that section: (ii) were not resident in New Zealand; and (c) they were not a transitional resident before the non-residence period; and (d) they have not ceased to be a transitional resident after the end of the non-residence period. Natural persons (3) A natural person who meets the requirements of subsection (2) and does not make an election under subsection (4) is a transitional resident for a period— (a) beginning from the first day of the residence required by subsection (2)(a); and (b) ending on the day that is the earlier of— (i) the day before the person stops being a New Zealand resident: (ii) the last day of the 48th month after the month in which they meet the requirements of section YD 1(2) or (3) , ignoring the rule in section YD 1(4). Choosing not to be transitional resident (4) A person who would otherwise be a transitional resident in an income year may choose by notice to the Commissioner or by notice under subsection (5) not to be a transitional resident for a period— (a) beginning on or after the start of the income year; and (b) ending immediately before the person stops meeting the requirements of subsection (2). Applying for tax credits (5) An application under section 41 of the Tax Administration Act 1994 by a person who is eligible to be a transitional resident for a tax credit under subparts MA to MF and MZ (which relate to tax credits for families) for an income year is treated for the period of the application as— (a) a notice of election under subsection (4) by the person if they have not made one; and (b) a notice of election under subsection (4) by a spouse, civil union partner, or de facto partner of the person. Election irrevocable (6) An election under subsection (4) is irrevocable. Notice of election (7) A notice under subsection (4) to stop being a transitional resident must be received by the Commissioner by— (a) the time within which the person's return of income must be filed under section 37 of the Tax Administration Act 1994; or (b) if the person or their tax agent applies for it, a further time allowed by the Commissioner. Defined in this Act: foreign-sourced amount , New Zealand resident , non-resident , notice , resident in New Zealand , tax credit , transitional resident , Compare: 2004 No 35 ss FC 22–FC 24 Section HR 8(1) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 293(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 293(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(2)(a): substituted (with effect on 1 April 2008), on 6 October 2009, by section 293(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(2)(b): amended (with effect on 1 April 2008), on 7 September 2010, by section 75(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section HR 8(2)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 293(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(3)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 293(3)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(3)(b)(ii): amended (with effect on 1 April 2008), on 7 September 2010, by section 75(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section HR 8(3)(b)(ii): amended (with effect on 1 April 2008), on 6 October 2009, by section 293(3)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(4): amended (with effect on 1 April 2008), on 6 October 2009, by section 293(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(7) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 293(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HR 8(7): added (with effect on 1 April 2008), on 6 October 2009, by section 293(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).