Two years after we alerted IRD to problems with its IR886 form and processes for determining tax residence, IRD is still using the form and telling taxpayers they ‘MUST’ complete it. We strongly recommend obtaining independent professional advice instead.

In December 2012 IRD issued a draft interpretation statement on tax residence, indicating a much higher weighting placed on retention of NZ residential property that has been previously occupied by a taxpayer. Submissions were required by 31 January 2013.

IRD’s draft is no longer available from the IRD website but we have uploaded to our website, available here.

We have submitted that IRD is inappropriately seeking to amend the implications of settled case law in the area of Permanent Place of Abode (“PPOA”).

In particular, Case Q55 (1993) 15 NZTC 5,313 “Case Q55” which is referred to some eleven separate times was decided in New Zealand’s lowest form of judiciary and, even more importantly, involved an extreme fact scenario.

We are particularly concerned that (as we have experienced previously) IRD staff will take an aggressive approach, asserting that retention of a rental property, particularly when previously or subsequently occupied by the taxpayer or an associated party, is an overwhelming indicator of having retained a ‘permanent place of abode’ – and not the more appropriate conclusion that it may indicate the potential availability of a dwelling.

Our full submission is available here.

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