Double Tax Agreement between Australia and New Zealand – A Guide for Taxpayers
If you are a resident of Australia or New Zealand and earn income in the other country, you may be liable for double taxation. However, the good news is that both countries have a Double Tax Agreement (DTA) in place that prevents this from happening.
The DTA is an agreement made between two countries to prevent taxpayers from being taxed twice on the same income. The agreement aims to promote cross-border trade and investment by ensuring that taxpayers do not pay more than their fair share of taxes.
The DTA between Australia and New Zealand was signed in 2009 and came into force on January 1, 2010. The agreement covers all forms of income, including employment income, business income, dividends, interest, and royalties.
Under the DTA, the taxation of income is allocated between the two countries based on where the income is sourced. For example, if you are a resident of Australia and earn income from New Zealand, the income will be taxed in New Zealand. However, if you are a resident of New Zealand and earn income from Australia, the income will be taxed in Australia.
To benefit from the DTA, you must be a resident of either Australia or New Zealand. The DTA defines a resident as someone who is subject to tax in one of the countries based on their domicile, residence, place of management, or any other criteria of a similar nature. If you are a resident of both countries, the tie-breaker rules in the DTA will determine your residency status.
If you are a resident of one of the countries and earn income in the other country, you may be eligible for a tax credit in your country of residence for the tax paid in the other country. This means that you will not be taxed twice on the same income.
The Australian Taxation Office (ATO) and the New Zealand Inland Revenue Department (IRD) are responsible for administering the DTA. If you have any questions about the DTA, you can contact these agencies for guidance.
In conclusion, the DTA between Australia and New Zealand is an important agreement that prevents double taxation for taxpayers who earn income in both countries. As a resident of either country, it is important to understand the provisions of the DTA to ensure that you pay the correct amount of tax.