IR257

November 2023

Overseas pensions
and annuity
schemes
This guide contains information on the
taxation of foreign superannuation lump
sums and overseas pensions.
For information about overseas social
security pensions, read our guide
Overseas social security pensions - IR258.
2 OVERSEAS PENSIONS AND ANNUITY SCHEMES

ird.govt.nz
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You can get copies of our forms and guides at
ird.govt.nz/forms-guides

The information in this guide is based on current tax laws at the

time of printing.
ird.govt.nz 3

Contents
ird.govt.nz 2
How to get our forms and guides 2
Terms we use 4
Introduction 6
Are you a New Zealand tax resident? 6
Have you recently moved to New Zealand? 7
How we tax your foreign superannuation scheme 8
Using the FIF rules from 1 April 2014 8
Schedule and formula tax methods 11
Four-year exemption period for foreign
superannuation withdrawals 12
Calculating your assessable period 13
The schedule method 13
The formula method 16
Tax on lump-sum withdrawals and transfers made
between 1 January 2000 and 31 March 2014 17
15% option 18
KiwiSaver withdrawal facility 19
How we taxed your foreign superannuation scheme
before 1 April 2014 20
Foreign investment funds (FIF) 20
If the FIF rules didn't apply 21
How we tax your periodic pension 22
How a double tax agreement could affect your
New Zealand tax 23
No foreign tax credit available 23
Where a foreign tax credit is available 26
No tax in New Zealand 27
Australian pensions 27
Converting overseas currency amounts to New Zealand dollars 28
More help if you need it 29
Need to speak with us? 29
0800 self-service numbers 29
Privacy 30
If you have a complaint about our service 30
4 OVERSEAS PENSIONS AND ANNUITY SCHEMES

Terms we use
Annuity - a sum of money paid regularly, usually for a fixed total
annual amount.
Foreign superannuation scheme - a savings plan, sometimes
called a pension or retirement plan created outside New Zealand,
to accumulate funds for retirement. The scheme is often set up
through an employer, trade union or insurance company. On
retirement it's paid out as a lump sum, pension or both.
It doesn't include an arrangement set up under another
country's social security law to provide retirement benefits
resembling New Zealand Superannuation.
A life insurance policy is generally not classed as a foreign
superannuation scheme. Instead, you'll need to apply the foreign
investment fund (FIF) rules to work out your tax obligations for
your foreign life insurance policy. For more information about
your obligations under the FIF rules go to ird.govt.nz for A guide
to foreign investment funds and the fair dividend rate - IR461.
Foreign superannuation withdrawal - an amount received from
a foreign superannuation scheme that is not a pension or annuity.
This includes:
• a cash withdrawal
• a transfer from a foreign superannuation scheme into a
New Zealand superannuation scheme
• a transfer from a foreign superannuation scheme outside
Australia into an Australian superannuation scheme
• a withdrawal from a foreign superannuation scheme to
reinvest as an interest of another person in a superannuation
scheme. In some circumstances, it may exclude transfers
on the death of a partner or under a relationship property
agreement following a relationship split.
Grandparenting - where you have correctly applied the FIF rules
to your interest in a foreign superannuation scheme in an income
tax return lodged before 20 May 2013 and continue to do this for
all income years after 1 April 2014.
Pension - a regular payment, generally from a foreign
superannuation scheme or pension fund, when you reach
retirement age.
ird.govt.nz 5

Permanent place of abode - to have a permanent place of abode

in New Zealand there must be a place where you usually live or
could live in New Zealand, ie a house or other dwelling. If there
is somewhere in New Zealand you could live, all of your ties and
links with New Zealand need to be considered to decide whether
it's your permanent place of abode. The types of ties that are
relevant are:
• whether you make trips back to New Zealand and for how
long
• your past use of the dwelling in New Zealand
• family and social ties
• employment, economic and property ties
• whether you intend to come back to New Zealand to live
(and if you do, when).
If you have strong ties to New Zealand it's likely you have a
permanent place of abode in New Zealand, but all of your
circumstances need to be considered.
Social security pension - an income entitlement generally based
on citizenship or residence and administered or paid by the
government or state of a particular jurisdiction. For example,
the State Pension in the United Kingdom (UK) and New Zealand
Superannuation in New Zealand.
Taxable income - income you have to pay tax on.
6 OVERSEAS PENSIONS AND ANNUITY SCHEMES

Introduction
This guide explains your tax responsibilities if you have an interest
in a foreign superannuation scheme, or you receive an overseas
periodic pension. It doesn't explain your tax obligations if you
have an overseas social security pension. For more information
see our Overseas social security pensions - IR258 guide.
If you're a New Zealand tax resident, you're generally taxed only
on the payments or transfers from the scheme. In some cases you
may be taxed annually on the increase in value of your interest in
a foreign superannuation scheme.
You'll find information in this guide on:
• working out if you're a New Zealand tax resident
• whether you'll have to pay tax on the value of your
investment, on lump-sum withdrawals and transfers (known
as "foreign superannuation withdrawals"), or on the pension
payments
• how a New Zealand double tax agreement could affect your tax
• whether you can claim a tax credit in your New Zealand tax
return for tax paid overseas.

Are you a New Zealand tax resident?

If you're a New Zealand tax resident, you generally have to
include your worldwide income in your New Zealand tax return,
unless that income is exempt under our tax laws. This includes
your foreign superannuation scheme (sometimes known as an
overseas pension scheme or retirement plan).
You're a New Zealand tax resident if:
• you have a "permanent place of abode" in New Zealand, or
• you've been in New Zealand for more than 183 days in any
12-month period and not become a non-resident, or
• you're away from New Zealand in the service of the
New Zealand Government.
If you're a New Zealand tax resident, you become a non-resident
for tax purposes if:
• you no longer have a permanent place of abode in
New Zealand, and
• you're away from New Zealand for more than 325 days in
any 12-month period. These don't have to be consecutive
days and part-days are counted as full days of presence in
New Zealand.
ird.govt.nz 7

For more information on tax residency go to

ird.govt.nz/international-for-individuals for:
• the Tax Residence Interpretation Statement IS16/03, and
• the New Zealand tax residence - IR292 guide.

Have you recently moved to

New Zealand?
If you're a new migrant or a returning New Zealander you may
qualify to be a transitional resident. This means you're exempt
from paying tax on most of your overseas income for a temporary
period. You're a transitional resident if:
• you've qualified as a tax resident in New Zealand on or after
1 April 2006, and
• you're a new migrant or a returning New Zealander, who
hasn't been resident for tax purposes for at least 10 years
before arriving in New Zealand, and
• neither you nor your partner are receiving Working for
Families Tax Credits, and
• you haven't been a transitional resident at all before.
Where these conditions are met, you're a transitional resident and
the exemption starts for you on the first day you're a tax resident.
It ends 48 months after the month you meet the requirements
for being a New Zealand tax resident.
The tax exemption is automatically granted if you qualify. You
can elect not to be a transitional resident.
You can read about the four-year exemption period for foreign
superannuation withdrawals (page 12).
For more information on the temporary tax exemption for
transitional residents go to ird.govt.nz/tte
8 OVERSEAS PENSIONS AND ANNUITY SCHEMES

How we tax your foreign

superannuation scheme
From 1 April 2014, the foreign investment fund (FIF) rules
generally no longer apply to interests in foreign superannuation
schemes that are acquired while the holder isn't a New Zealand
tax resident. This includes New Zealand tax residents which
tie break towards a country New Zealand has a double tax
agreement (DTA).
For more information on the tie breaker tests of a DTA go to
ird.govt.nz for:
• the Tax Residence Interpretation Statement IS16/03, and
• the New Zealand tax residence IR292 guide.
Interests in foreign superannuation schemes are taxed when you
withdraw a lump sum or transfer your interest to a New Zealand
or Australian scheme, or when you receive a pension from the
scheme.
This section explains your tax obligations on lump-sum
withdrawals or transfers from a foreign superannuation scheme
made:
• from 1 April 2014, or
• prior to 1 April 2014 if you didn't comply with the tax rules
that applied at the time.
For more information about how we tax periodic pensions see
page 22.

Using the FIF rules from 1 April 2014

In some cases you must, or may, apply the FIF rules in relation to
your interest in the foreign superannuation scheme.
Distributions are considered under the FIF rules, so you don't pay
tax again when you receive a payment or make a transfer.
For more information about your obligations under the FIF rules
go to ird.govt.nz for A guide to foreign investment funds and
the fair dividend rate - IR461.
ird.govt.nz 9

If you're a New Zealand tax resident when you

first join the scheme
If you're a New Zealand tax resident, or treated as a New Zealand
tax resident under a DTA, when you first join a foreign
superannuation scheme, you need to consider the New Zealand
FIF rules. This is regardless of whether you acquired your rights in
the scheme before or after 1 April 2014.
If you do not have FIF income or FIF loss because your interest in
all FIFs is below the de minimis threshold of $50,000, you need to
apply the new schedule method (page 11).
For more information about your obligations under the FIF rules
and the de minimis threshold go to ird.govt.nz for A guide to
foreign investment funds and the fair dividend rate - IR461.

Grandparenting rules
If your interest in a foreign superannuation scheme was first
acquired while you were a non-tax resident and you correctly
applied the FIF rules to it in a tax return lodged before 20 May
2013, you can:
1. continue to apply the FIF rules to that interest, or
2. apply the new rules (refer to "schedule and formula tax
methods" on page 11).
You must meet the following criteria in each income year you
want to apply the FIF rules to a particular foreign superannuation
interest, for all income years from 1 April 2014:
• you must have had an attributing interest in a FIF for an
income year ending before 1 April 2014. This is the "qualifying
year". For that qualifying year:
– you must have calculated your FIF income or loss arising
from that attributing interest under one of the approved
methods, and
– included that FIF income or loss in a tax return filed with
Inland Revenue before 20 May 2013, and
• from the end of the qualifying year to the beginning of the
current year, (the "qualifying period") you must have:
– continued to hold the interest in the foreign
superannuation scheme, and
– calculated your FIF income or loss from your interest for all
income years, and
– returned it in all tax returns for income years in the
qualifying period.
10 OVERSEAS PENSIONS AND ANNUITY SCHEMES

The criteria are applied on an interest-by-interest basis, so you

may be grandparented for one interest but not another.
To remain grandparented, you must continue to return FIF
income or losses for your grandparented interest in all future
income years. If you do this, any future distributions from your
scheme won't be taxed.
If you don't correctly return FIF income or losses for an income
year during which you still hold the interest, that interest ceases
to be grandparented. Any subsequent lump-sum withdrawals
or transfers will be taxed under the new foreign superannuation
scheme tax rules as a foreign superannuation withdrawal (ie,
under the schedule method or formula method) or when you
receive a periodic pension. In this situation you won't get any
credit for the tax you've paid under the FIF rules.
ird.govt.nz 11

Schedule and formula tax

methods
In most cases you'll pay income tax when you receive a foreign
superannuation withdrawal unless you qualify for an exemption.
There are two methods available to you from 1 April 2014 to tax
this income:
• The schedule method - this is the default method. Using
this method means a certain portion of your foreign
superannuation withdrawal will be income and is based on
the number of years you've been a New Zealand tax resident.
• The formula method - this is an alternative to the schedule
method and can be used if your foreign superannuation
scheme is a defined contribution scheme and certain other
requirements are met. It taxes the actual investment gains
that have accrued to your scheme while you've been a
New Zealand tax resident.
These two methods are generally only available if you acquired
your interest in the foreign superannuation scheme while you
were a non-resident for New Zealand tax purposes. If you were a
New Zealand tax resident when you first acquired the interest see
page 8.
Calculating your assessable income using either method requires
you to calculate your assessable period (page 13).

Note
A transfer of your foreign superannuation interest from one
scheme into another non-Australian foreign superannuation
scheme isn't a foreign superannuation withdrawal and so
it's not taxed at that point. It will affect how your assessable
period is calculated.

In some circumstances, a transfer of a foreign superannuation

interest from one New Zealand tax resident (the transferor) to
another (the recipient) isn't taxed. This happens when:
• the transferor first acquired the interest while a non-resident,
and
• the transferor and recipient were married or in a relationship,
and
• the transfer occurs:
– following the death of the transferor, or
12 OVERSEAS PENSIONS AND ANNUITY SCHEMES

– under a relationship agreement resulting from a

relationship split.
This will affect how your assessable period is calculated.
Note that insurance policies generally don't fall within the
meaning of a superannuation scheme, so the schedule and
formula methods don't apply to foreign life insurance policies.
Instead, you'll need to apply the FIF rules to your foreign life
insurance policy. For more information about your obligations
under the FIF rules go to ird.govt.nz for A guide to foreign
investment funds and the fair dividend rate - IR461.

Four-year exemption period for foreign

superannuation withdrawals
The four-year exemption period is similar to the transitional
resident tax exemption and applies to foreign superannuation
withdrawals received during the period.
If you qualify for a four-year exemption period, a foreign
superannuation withdrawal received during this period is exempt
from New Zealand tax.
If you qualify for a four-year exemption period and receive a
foreign superannuation withdrawal after your exemption period:
• the schedule method ignores your years of residence during
the exemption period
• the formula method doesn't tax the gains that have accrued
to your scheme during the exemption period.
The exemption doesn't require a person to be a non-tax resident
for a minimum period. The exemption period is available to both
new migrants and returning New Zealanders.
This exemption applies if you:
• first acquired an interest in a foreign superannuation scheme
while a non-resident for New Zealand tax purposes, and
• haven't previously had this exemption.
The exemption starts on the first day you're a New Zealand tax
resident.
It finishes 48 months after the month you first meet the
requirements for being a New Zealand tax resident, by either
having a permanent place of abode or by being in New Zealand
for more than 183 days in any 12-month period. The exemption
also ends if you become a non-tax resident.
ird.govt.nz 13

The timing is the same as the transitional resident tax exemption.

You'll still qualify for this exemption if you cease to be a
transitional resident because you receive Working for Families
Tax Credits, or if you don't meet the requirements to qualify as a
transitional resident.

Calculating your assessable period

Your assessable period starts when your exemption period ends,
eg if the last day of your exemption period is 30 September,
the first day of your assessable period is 1 October. If you don't
have an exemption period, your assessable period starts on the
first day you're a New Zealand tax resident with an interest in a
foreign superannuation scheme.
Your assessable period ends when you receive your foreign
superannuation withdrawal. It doesn't include any periods of
non-tax residence.
If you transferred your interest from one foreign superannuation
scheme (scheme A) into a non-Australian foreign superannuation
scheme (scheme B), there's no tax on that transfer. If you then
transfer to a New Zealand or Australian superannuation scheme
(this means you receive a foreign superannuation withdrawal
from scheme B), your assessable period starts on the same day as
your assessable period for scheme A.
If your scheme interest came from your previous partner because
they died or as part of a relationship agreement following a
relationship split, and the transfer wasn't taxable at the time, then
your assessable period starts on the same day as their assessable
period for that interest.

The schedule method

This method uses set percentages that represent the proportion
of your foreign superannuation withdrawal which you'll need
to include as assessable income in your income tax return. The
schedule year percentages increase with the number of years
you're a tax resident in New Zealand. The rest of your foreign
superannuation withdrawal not deemed to be assessable income
is exempt from New Zealand tax, and is not included in your
income tax return.
Calculate your assessable income for the schedule method as
follows:
(superannuation withdrawal − contributions left)
× schedule year %
14 OVERSEAS PENSIONS AND ANNUITY SCHEMES

Put the amount of your foreign superannuation withdrawal in

the "superannuation withdrawal" part of the formula.

What are "contributions left"?

If the contributions you've made while you've been a
New Zealand tax resident satisfy all the following conditions, you
may be allowed a deduction for these contributions:
• You must be a New Zealand tax resident and treated as a
New Zealand tax resident under all applicable double tax
agreements when the contributions are made.
• They must be made by you, your employer, or for your
benefit.
• They are required under the rules of your foreign
superannuation scheme.
• They're subject to employer superannuation contribution tax
or fringe benefit tax if they're made by your employer.
A given contribution may only be deducted once, and only the
contributions made during the assessable period that fit the
above criteria can be deducted.
Insert the amount of contributions that satisfy all of these
requirements in the "contributions left" part of the formula.
This amount can't be greater than the amount of your foreign
superannuation withdrawal.

Calculating the "schedule years"

To get the appropriate "schedule year %" calculate the number of
income years that start in your assessable period. Then use the
table (page 15) to get the corresponding percentage. If no income
years have started in your assessable period, use the schedule
year 1 percentage.
For most people, the New Zealand income year starts on 1 April
and ends on 31 March.
If your income year is 1 April - 31 March, then your 2014 income
year covers the period 1 April 2013 - 31 March 2014.
If your income year begins on 1 April, an easy way to calculate the
correct number of years to find your schedule year percentage
is to count the number of times 1 April occurs during your
assessable period. If the result is zero, eg your assessable period
starts on 1 October and you receive your foreign superannuation
withdrawal later that month, then you'll use year 1.
ird.govt.nz 15

You can also find the correct number of years using the following
steps:
1. Work out the last day of your four-year exemption period. If
you don't have one, work out the last day you were a non-tax
resident with an interest in your scheme.
2. Take note of the income year this date falls in. This is year A.
3. Also note the income year you receive the foreign
superannuation withdrawal. This is year B.
4. Subtract year A from year B. This gives you the "year" to use
in the table below. (If the result is zero, you use year 1).
5. Now find your percentage.

Schedule year percentages

Year Percentage %
1 4.76
2 9.45
3 14.06
4 18.60
5 23.07
6 27.47
7 31.80
8 36.06
9 40.26
10 44.39
11 48.45
12 52.45
13 56.39
14 60.27
15 64.08
16 67.84
17 71.53
18 75.17
19 78.75
20 82.28
21 85.74
22 89.16
23 92.58
24 95.83
25 99.08
26+ 100
16 OVERSEAS PENSIONS AND ANNUITY SCHEMES

Example

Steve became a New Zealand tax resident on 21 February

2006. On 12 August 2018, he withdrew $25,000 from his
foreign superannuation scheme.
He made no other withdrawals, and no further contributions
were made after 21 February 2006.
Steve's four-year exemption expired on 28 February 2010,
which is in the 2010 income year (year A). The lump sum was
withdrawn in the 2019 income year (year B).
Year B (2019) − year A (2010) = 9, so the percentage to use is
40.26% - see highlighted row in the table (page 15).
Steve must include $10,065 as assessable income in his 2019
tax return ($25,000 × 40.26% = $10,065).

The formula method

This method is an alternative to the schedule method and can
only be used for foreign defined contribution schemes, if all of
these conditions have been met:
• You must have the information required to use the formula
method.
• You must not have received a distribution from the scheme
before 1 April 2014, other than a pension or an annuity.
• You haven't used the schedule method before for this scheme.
If the interest came from your previous partner after they died or
as part of a relationship agreement following a relationship split,
they must not have used the schedule method for the interest.
The formula method uses a number of formulae. Because
these are quite complex we recommend you talk with a tax
professional if you're thinking about using this option.
You’ll need to know:
• what the value of your scheme was at the beginning of your
assessable period,
• the value of previous superannuation withdrawals (if any), and
• the value of your scheme before your most recent foreign
superannuation withdrawal.
For more information and examples read the Tax
Information Bulletin Vol 26 No 4 (May 2014). Go to
ird.govt.nz/income-types
ird.govt.nz 17

Tax on lump-sum
withdrawals and transfers
made between 1 January
2000 and 31 March 2014
If you received a payment or made a withdrawal prior to 1 April
2014 and you didn't pay any tax at the time, you may need to
consider whether you have tax obligations in respect of previous
years (generally for the 2013-14 and earlier years).
If you made the withdrawal or transfer between 1 January 2000
and 31 March 2014 or applied to withdraw or transfer the
amount by 31 March 2014, and you didn't comply with the tax
laws at the time you can:
• pay tax on 15% of the withdrawn or transferred amount
using the 15% option, or
• return your income by:
– filing previous year tax returns using the tax rules that
existed at the time of the withdrawal or when you held the
interest (either ordinary tax rules or the FIF rules), or
– asking us to amend previous year tax returns using the tax
rules that existed at the time of the withdrawal or when
you held the interest (either ordinary tax rules or the FIF
rules).
If you use the tax rules that existed at the time of the withdrawal
or when you held the interest, you may need to pay penalties and
use-of-money interest.
However, if you:
• acquired your interest in a scheme while you were non-
resident, and
• didn't receive any payments or make a transfer from a foreign
superannuation scheme before 1 April 2014, and
• haven't returned any income under the FIF rules
then there's generally nothing you need to do in respect of
previous tax years.
18 OVERSEAS PENSIONS AND ANNUITY SCHEMES

15% option
This option allows you to include 15% of the lump sum
withdrawn or transferred as income in your tax return. You can
use it if you've withdrawn a lump sum from or transferred your
foreign superannuation scheme between 1 January 2000 and
31 March 2014, but didn't comply with your tax obligations at
the time.
The 15% option is also available if you made a formal request to
withdraw or transfer your funds by 31 March 2014, even if you
didn't receive the funds until after this date. If this applies to you
and you want to use this option, you have to show us that you
did everything you needed to do to withdraw or transfer your
funds by 31 March 2014. If you meet this requirement, but don't
want to use the 15% option, see the schedule and formula tax
methods (page 11).
The 15% must be returned in either your 2013-14 or 2014-15
income tax returns as overseas income. The corresponding
2013-14 or 2014-15 due dates for tax will apply.

Example

Kathryn transferred $150,000 from her foreign

superannuation scheme to a New Zealand scheme in February
2004. She didn't include this income in her IR3 return for the
2003-04 income year, and didn't pay tax on her interest under
the FIF rules.
She decides to use the 15% option for her lump-sum transfer.
She declares $22,500 (being 15% of $150,000) as income in her
IR3 return for the 2014-15 income year.
Kathryn will be liable for any penalties or use-of-money interest
applied to her 2013-14 tax return, not her 2003-04 tax return.

For further information and examples please refer to the Tax

Information Bulletin Vol 26 No 4 (May 2014).
ird.govt.nz 19

KiwiSaver withdrawal facility

If you transfer a lump sum from your foreign superannuation
scheme into a KiwiSaver scheme, this could make it difficult for
you to meet your resulting tax obligation, because KiwiSaver
schemes are locked in until retirement.
The withdrawal facility gives you the option to request a
withdrawal from your KiwiSaver scheme to meet your income
tax and student loan repayment obligations that arise from the
transfer.
The withdrawal amount is limited to the amount of tax and/or
student loan repayment obligation. This facility isn't available for
any resulting penalties and interest.
The maximum amount that you may withdraw to meet your
income tax obligation is the lesser of:
• your tax obligation resulting from the transfer of your foreign
superannuation interest into a KiwiSaver scheme, and
• your terminal tax obligation for the tax year that your foreign
superannuation income was assessed.
The maximum amount you may withdraw to meet your student
loan repayment obligation is the amount of repayment obligation
that arose from the transfer of your foreign superannuation into a
KiwiSaver scheme.
To make an application for a withdrawal you need to have
included the income resulting from the transfer in your income
tax return. You must apply within 24 months from the end of
the month that your income tax and/or student loan repayment
obligation is assessed.
Your KiwiSaver provider deals with the application and you're
required to make a statutory declaration containing details of the
tax obligation.
If you're thinking about making a withdrawal from your KiwiSaver
scheme to pay your tax obligation, contact your KiwiSaver
provider for information about this.
If you're thinking about using this withdrawal facility, remember
that making a withdrawal could trigger obligations or conditions
imposed when you transferred your foreign superannuation
interest into KiwiSaver. This may include penalties imposed on
withdrawals made within a certain period following migration
(possibly under the rules of the scheme, or under the other
country's law).
20 OVERSEAS PENSIONS AND ANNUITY SCHEMES

How we taxed your foreign

superannuation scheme
before 1 April 2014
Before 1 April 2014, your foreign superannuation scheme was
taxed either:
• on the increase in value of your investment under the foreign
investment fund (FIF) rules, or
• if the FIF rules didn't apply, on any payments (income) from
the scheme. This generally included pension payments, lump-
sum withdrawals and transfers to other schemes.
It's also possible that the temporary exemption for transitional
residents may have applied to some or all of your payments. See
page 7 for further details.
These rules can be complex and you may want to get advice from
a professional specialising in this area.
If you still hold some of your interest in the foreign superannuation
scheme see page 8.

Foreign investment funds (FIF)

Your interest in a foreign superannuation scheme was likely to
have been a FIF before 1 April 2014, unless, for example it was a
locked-in scheme (according to certain criteria), or an Australian
superannuation scheme.
The FIF rules generally didn't apply if all your overseas portfolio
interests cost less than NZ$50,000, or in the first four years after
you first became a New Zealand resident (before 1 April 2006).
If the FIF rules applied, you needed to calculate your taxable FIF
income for each year that you held the FIF interest under the FIF
rules at the time, and include it in your Individual tax return -
IR3 for those years.
When your scheme was taxed as a FIF, no other income from the
scheme was taxable in New Zealand.
For more information about FIF, go to ird.govt.nz or read our
Guide to foreign investment funds and the fair dividend rate
method - IR461.
ird.govt.nz 21

If the FIF rules didn't apply

If the FIF rules didn't apply, you needed to pay tax on any
income/payments you received from the foreign superannuation
scheme. This generally included pension payments and, in some
cases, lump-sum withdrawals and transfers from the scheme. If
there were no payments or transfers from the scheme, there was
no income to be returned for New Zealand tax purposes.
If you did receive income or payments from the scheme, you
were generally required to include the before-tax (gross) income
in your Individual tax return - IR3.
The amount of tax to pay generally depended on the legal
structure of your foreign superannuation scheme such as whether
the scheme was a company, trust, or unit trust.

Example

Christine is a new migrant and became a New Zealand tax

resident on 30 January 2002. Christine transferred $150,000
from her foreign superannuation scheme to a New Zealand
scheme in February 2004. She didn't include this income in
her IR3 return for the 2003-04 income year.
She decides to use the law that applied at the time she made
the withdrawal to calculate the tax on her lump-sum transfer.
In her situation, her interest wasn't an interest in a FIF, and
the majority of her $150,000 was a return of capital, and only
$2,000 of the amount was income. She has her 2003-04 IR3
return amended to include the $2,000.
Christine will be liable for penalties and use-of-money interest
from the 2003-04 income year.
22 OVERSEAS PENSIONS AND ANNUITY SCHEMES

How we tax your periodic

pension
Most periodic pensions received from foreign superannuation
schemes are taxed in full and you need to include the before-tax
(gross) income in your Individual tax return - IR3.
However, in a very small number of cases, your periodic pension
may be taxable in the other country which holds the taxing rights
under a double tax agreement. See pages 26 and 27 under "Where
a foreign tax credit is available" and "No tax in New Zealand".
If you receive a social security pension, please refer to the
Overseas social security pensions - IR258 guide for more
information on how this is taxed in New Zealand.
ird.govt.nz 23

How a double tax

agreement could affect your
New Zealand tax
How the payments you receive from your foreign superannuation
scheme (retirement lump sums and periodic pensions) are
treated depends on whether New Zealand has a double tax
agreement or a tax information exchange agreement with the
country where your superannuation scheme is and whether the
agreement contains an article on pension taxing rights.
Each double tax agreement and tax information exchange
agreement is different and may treat periodic pensions and
retirement lump sums differently. It's important to check
the terms of the appropriate double tax agreement or tax
information exchange agreement to make sure you pay the right
amount of tax and claim the right amount of foreign tax credits
in your New Zealand tax return.
You can find out more about New Zealand's double tax
agreements, tax information exchange agreements and the right
to tax pension income at ird.govt.nz/dta

No foreign tax credit available

If tax was paid overseas on pensions or retirement lump sums
where the tax treaty rules didn't allow this, then you should apply
to the foreign superannuation scheme administrators or to the
overseas tax authorities for a refund. You can't claim the overseas
tax paid as a foreign tax credit in your New Zealand tax return.
You should also advise the foreign superannuation scheme
administrators that you're a New Zealand tax resident and apply
to have your pension paid without them deducting tax.
24 OVERSEAS PENSIONS AND ANNUITY SCHEMES

If you're a tax resident of New Zealand and you receive UK

pension payments, you need to do the following.
• Fill out the relevant HM Revenue and Customs (HMRC)
application form "Form New Zealand - Individual". This
application form asks the UK tax authority not to tax UK
income and also to refund UK income tax deducted from
payments made.
• Send the form to us to certify you're a New Zealand tax
resident at:
Inland Revenue
PO Box 39010
Wellington Mail Centre
Lower Hutt 5045
These forms can be found at hmrc.gov.uk/cnr/nz_indiv.pdf

Example

James, a former UK citizen, retired to New Zealand and

became a New Zealand tax resident. He receives a yearly
pension of £18,000 from his former UK employer, and £3,500
tax is deducted in the UK.
Because his UK pension scheme was exempt from the FIF
rules, he converts the before-tax amount into New Zealand
dollars and declares this income in his Individual tax
return - IR3 each year. Because the pension is only taxable
in New Zealand under the tax treaty between New Zealand
and the UK, he cannot claim the UK tax paid as a foreign tax
credit in his IR3 return.
Instead, James contacts HMRC to claim a refund and apply
for an exemption so his pension will be paid free of any UK
income tax in future.

If you receive a pension from a country, other than the UK, and
require assistance to apply for a refund, contact us at the address
above.
ird.govt.nz 25

Transitional residents
If you're a transitional resident completing an application for
double tax relief (such as the HMRC form mentioned previously)
you should ensure you complete this form correctly.
In particular, transitional residents should be careful not to
elect out of the transitional residence rules by advising the
foreign jurisdiction and Inland Revenue that the pension income
received during the transitional residency has or will be subject to
New Zealand tax.
We'll generally treat this application as giving notice to Inland
Revenue that you've made an election not to be a transitional
resident if you confirm to the foreign jurisdiction and Inland
Revenue that you've paid or will pay tax in New Zealand on the
pension income from a date that falls within your transitional
residency period.
Once you've given us notice, you can't change your mind. If
you're in any doubt, contact us before you send an application
for double tax relief.
If you have any questions about transitional residency, you can
email us at [email protected]
Please don't send any taxpayer or customer information to the
email address.

Part B of the HMRC form

The HMRC form for relief referred to above asks at Part B,
Question 2:
"On what date did you become resident in New Zealand?"
Question 3:
"From what date have you paid, or will you pay, tax in
New Zealand on income that you include in this claim? (This may
differ from the date you have given in answer to Question 2.)"
Where you don't have to pay tax in New Zealand on this income,
you need to give the reason(s) on a separate sheet.
If you're using this form you must include the date you paid or
will pay tax in New Zealand on income included in this claim. For
a transitional resident the pension is generally only taxable from
the date when your transitional residency ends (or has ended),
which is of course later than the date you become resident, so
you need to enter that later date as the answer for this question.
26 OVERSEAS PENSIONS AND ANNUITY SCHEMES

This later date won't impact on the requirement for the United
Kingdom to provide relief from tax from the date you became a
New Zealand tax resident.
If you don't have to pay tax in New Zealand on the pension
income this form relates to because you are or have been a
transitional resident, you need to give details of your transitional
residency on a separate sheet attached to the form.
Contact us at the address (page 24) before you send us any
application for double tax relief if you are in any doubt.

Where a foreign tax credit is available

In a few situations, New Zealand will give a foreign tax credit for
income tax paid overseas. Generally this is where the tax treaty
gives the source country the right to tax or partially tax the
pension, or where there's no tax treaty with that country.
To find out if you can claim a foreign tax credit on your overseas
pension go to ird.govt.nz/dta
Where a foreign tax credit is available, you need to include the
before-tax (gross) income in your New Zealand tax return. You
can then claim a tax credit for the tax paid overseas.
If you're allowed to claim a tax credit in your New Zealand tax
return for the tax paid overseas, the New Zealand foreign tax
credit is limited to the lowest of the following:
• the actual tax paid overseas
• the amount of New Zealand tax you would pay on the same
income
• the rate set out in the relevant tax treaty.
New Zealand only has a partial right to tax a Russian social
security pension - only 50% of the payment before tax (and 50%
of the normally allowable foreign tax credits) should be included
in your New Zealand tax return.
You'll need to convert the tax paid on overseas income to
New Zealand currency using the same method you used for the
income (page 28).
To claim a foreign tax credit, you must give us proof of the tax
deducted, eg, an overseas tax deduction certificate.
ird.govt.nz 27

No tax in New Zealand

In a very small number of cases, New Zealand has no right to tax
pension income and the income shouldn't be included in your
New Zealand tax return. This applies, for example:
• to social security pensions from Finland, France, Germany
(Deutsche Rentenversicherung Bund), the Philippines, and
the United States of America, and/or
• war pensions from France and Germany
• war pensions (and allowances) paid under the Dutch AVBP
Scheme (Dutch (Benefit Act for Victims of Persecution
1940-1945) Scheme).
In certain circumstances some pensions paid for government
service may also be exempt from New Zealand tax.
To find out whether or not your particular pension is taxable in
New Zealand, go to ird.govt.nz/dta
For information about overseas social security pensions, read our
guide Overseas social security pensions - IR258.

Australian pensions
If you receive an Australian pension that would have been taxable
in Australia had you received it while still resident there, then
it's taxable in New Zealand and you need to include it in your
New Zealand tax return. You can't claim a foreign tax credit.
If you receive an Australian pension that wouldn't have been
taxable in Australia had you received it while still resident there,
then it's exempt in New Zealand and you don't need to include it
in your New Zealand tax return.
You also don't need to include lump sums from Australia paid:
• by a retirement benefit scheme
• as a result of retirement, invalidity, disability or death
• by way of compensation for injuries
in your New Zealand tax return. These are taxed only in Australia.
Contact the Australian Taxation Office to check if the Australian
pension you receive would normally be taxed in Australia.
28 OVERSEAS PENSIONS AND ANNUITY SCHEMES

Converting overseas
currency amounts to
New Zealand dollars
You need to convert the overseas currency amounts (taxable
income and foreign tax credit claims) into New Zealand dollars.
Pension payments made to a New Zealand bank account will
have already been converted to New Zealand dollars.
Otherwise you can do the currency conversion by:
• going to ird.govt.nz/managing-my-tax and using the latest
rates
• getting the exchange rate for the day the pension went into
your overseas bank account from any trading bank.
To convert an amount of overseas currency to New Zealand
dollars, divide the overseas amount by the rate for the month you
received it.
You must use the same conversion method for the whole year.

Example

You receive a UK payment of £2,400 in October 2010. The

exchange rate in that month was 0.4729:
£2,400 ÷ 0.4729 = NZ$5,075.07
ird.govt.nz 29

More help if you need it

Need to speak with us?
Have your IRD number ready and call us on one of these numbers.
General tax, tax credits and refunds 0800 775 247
Employer enquiries 0800 377 772
General business tax 0800 377 774
Overdue returns and payments 0800 377 771
Find out more at ird.govt.nz/contact-us

0800 self-service numbers

Our 0800 self-service numbers are open 7 days a week - except
between 5am and 6am each day. Make sure you have your IRD
number ready when you call.
For access to your account-specific information, you’ll need to be
enrolled with voice ID or have a PIN.
Order forms, guides and returns 0800 257 773
All other services 0800 257 777
When you call, confirm what you want from the options given. If
you need to talk with us, we’ll re-direct your call to someone who
can help you.
30 OVERSEAS PENSIONS AND ANNUITY SCHEMES

Privacy
Meeting your tax obligations means giving us accurate
information so we can assess your tax and entitlements under the
Acts we administer. We may charge penalties if you do not.
We may also exchange information about you with:
• some government agencies
• another country, if we have an information supply agreement
with them, and
• Statistics New Zealand (for statistical purposes only).
You can ask for the personal information we hold about you.
We’ll give the information to you and correct any errors, unless
we have a lawful reason not to. Find our full privacy policy at
ird.govt.nz/privacy

If you have a complaint about our

service
We’re committed to providing you with a quality service. If there’s
a problem, we’d like to know about it and have the chance to fix it.
If you disagree with how we’ve assessed your tax, you may need to
follow a formal disputes process.
Find out more about making a complaint, and the disputes
process, at ird.govt.nz/disputes