Australian expats in New Zealand and the Pacific fall into a genuine gap in the tax advice market: too far offshore for a local suburban accountant to understand non-resident rules properly, but often assumed by generalist firms to be “close enough to home” that standard advice will do. It won’t. New Zealand has a comprehensive Double Tax Agreement with Australia, but most Pacific Island nations do not, and the difference changes how foreign income, superannuation, and property are taxed. A Registered Australian Tax Agent who specialises in non-resident returns, not a general practice that occasionally handles an expat file, is what this situation actually calls for.
TL;DR
- Australia has Double Tax Agreements with 46 countries, but most Pacific Island nations are excluded except Fiji, Kiribati, and PNG – New Zealand has full treaty coverage.
- Australian tax residency is assessed under four tests (resides, domicile, 183-day, Commonwealth superannuation fund), and generalist agents frequently misapply them for expats.
- Non-resident capital gains tax carries no 50% CGT discount, and property sales now attract 15% Foreign Resident CGT Withholding on the full sale price. From 1 July 2027, new legislation replaces the 50% CGT discount with cost-base indexation; residents can still use the discount for gains accrued before that date, and foreign residents generally cannot access it.
- Superannuation does not simply transfer when moving to New Zealand – it requires separate planning.
- Late lodgment penalties for non-residents run at $364 per 28-day period (capped at $1,820), plus General Interest Charge on unpaid tax.
About the Author: This article is published by ODIN Tax, a Registered Australian Tax Agent practice that has prepared non-resident tax returns for 2,300+ Australian expats across 40+ countries, led by Tax Director Pau Lam, who has spent more than a decade specialising exclusively in Australian expat tax.
Why Are New Zealand and Pacific Expats an Easy Group for Mainstream Tax Agents to Get Wrong?
Mainstream tax agents get this group wrong because New Zealand and the Pacific look deceptively simple compared to expats in London, Dubai, or Singapore. The proximity, shared time zone, and cultural familiarity create an assumption that Australian tax rules apply in a straightforward way. They don’t. Migration and residency arrangements between Australia and New Zealand are unusually close by international standards, shaped by decades of distinct visa and mobility policy between the two countries [devpolicy.org]. That closeness on the immigration side has no bearing on how the ATO assesses tax residency, and treating the two as equivalent is where errors start.
A generalist accountant who mostly handles Australian resident clients will typically apply resident tax rates, resident CGT discounts, and standard superannuation assumptions by default, because that is what 95% of their client base needs. For an expat who has genuinely left Australia, every one of those defaults can be wrong.
How Does the Australian Tax Residency Test Actually Work for Someone Living in New Zealand or the Pacific?
Australian tax residency is determined by four statutory tests: the resides test, the domicile test, the 183-day test, and the Commonwealth superannuation fund test. These rules have not changed in the past five years, though the ATO refreshed its administrative guidance in 2023 through Taxation Ruling TR 2023/1. None of the four tests reference proximity to Australia, time zone, or how frequently someone visits home for a family event, which is exactly where the New Zealand and Pacific cohort trips up.
Consider the resides test: it looks at the quality and permanence of ties in the new location (a home, employment, family, social connections), not the distance traveled to get there. The substance of ties to New Zealand or the Pacific matters; the presence of an Australian property does not automatically determine residency status. Conversely, someone island-hopping around the Pacific for consulting contracts without settling anywhere may fail every test and remain an Australian tax resident by default. The tests are about substance, not geography, and applying them correctly requires someone who runs this analysis routinely, not once a year for a single client.
What Changes for Capital Gains Tax Once Someone Becomes a Non-Resident?
Capital gains tax non-resident treatment removes a benefit most Australians take for granted: the 50% CGT discount on assets held longer than 12 months. Once someone is classified as a foreign resident for tax purposes, gains on Australian property and shares are generally taxed on the full gain, not half of it. This single rule change can add tens of thousands of dollars to a tax bill on a property sale, and it is frequently missed by agents who default to resident-style calculations.
Layered on top of this is the Foreign Resident CGT Withholding regime. From 1 January 2025, the FRCGW rate is 15% for the 2024-25 financial year onwards, and the previous $750,000 exemption threshold was removed entirely, meaning the 15% withholding now applies to every property sale by a non-resident, regardless of value. In practice, this means a purchaser’s conveyancer withholds 15% of the sale price at settlement and remits it to the ATO, whether or not the seller actually owes that much tax. Getting that withheld amount back requires lodging an accurate non-resident tax return, correctly calculating the real capital gain, and claiming the credit.
Non-Resident CGT: Quick Comparison
| Factor | Australian Tax Resident | Non-Resident (Expat) |
|---|---|---|
| 50% CGT discount | Generally available | Generally not available |
| FRCGW on property sale | Not applicable | 15% withheld at settlement on full sale price (2024-25 FY onwards) |
| Threshold for withholding | N/A | None (removed from 1 January 2025) |
Does the New Zealand Double Tax Agreement Actually Help Expats There More Than in the Pacific?
Yes, and the difference is structural, not just a matter of degree. Australia currently has Double Tax Agreements with 46 countries, and the New Zealand DTA provides comprehensive relief from double taxation along with reduced withholding rates on certain income types. Australia lacks equivalent DTAs with most Pacific Island nations, with only Fiji, Kiribati, and Papua New Guinea as exceptions. That means an Australian expat earning income in a non-treaty Pacific jurisdiction cannot rely on treaty relief to avoid being taxed twice on the same income, and instead has to work through Australia’s domestic Foreign Income Tax Offset provisions on a case-by-case basis.
This is not a minor technicality. An expat with foreign employment income in a country with a DTA with Australia has a treaty framework to reference when assessing what Australia can and cannot tax. A Pacific-based expat working in a non-treaty country has no such framework, and every foreign income item has to be assessed against domestic law alone. Building on the residency question above, this is a second layer where the New Zealand and Pacific cohort actually diverges quite sharply, despite both groups being lumped together as “nearby” expats.
What Happens to Superannuation When an Australian Moves to New Zealand?
Superannuation does not automatically follow someone across the Tasman, and this is one of the most commonly overlooked areas in expat planning. Australian superannuation generally cannot be accessed or transferred in the same way once someone has relocated to New Zealand, and planning for it is often left until retirement is much closer than it should be. This matters because superannuation strategy interacts directly with tax residency status. Superannuation arrangements may be relevant to residency testing and should be reviewed as part of a comprehensive residency assessment, rather than assumed to be irrelevant simply because someone works for a private employer.
A related but distinct question that comes up constantly is what happens to super for someone who was in Australia on a temporary visa and has since left permanently. In that scenario, the relevant mechanism is the Departing Australia Superannuation Payment. To be eligible for a DASP, the super must have accumulated on a temporary visa (excluding subclasses 405 and 410), the visa must have ceased, and the person must have left Australia without holding Australian or New Zealand citizenship or permanent residency. The application is submitted online to the ATO or the relevant super fund with passport and visa details, and a Tax File Number is optional but speeds up processing.
What Should an Australian Expat in New Zealand or the Pacific Actually Look for in a Tax Agent?
The right tax agent for this situation is not defined by location convenience but by pattern recognition. Someone who has processed hundreds of non-resident tax residency determinations will spot a domicile test problem in the first conversation; someone who handles it once a year will not. A few practical markers to look for:
- Registered Australian Tax Agent status, confirmed independently, not just claimed on a website.
- Explicit non-resident specialisation, not “we also do expats” tacked onto a domestic practice.
- Experience with FRCGW refund claims, since this requires accurately recalculating the real capital gain against the amount withheld at settlement.
- Familiarity with the DTA gap between New Zealand and most Pacific nations, since applying FITO correctly in a non-treaty jurisdiction is a different exercise entirely.
- A track record with overdue lodgments, since many expats in this corridor discover their filing obligations were missed for several years while living overseas.
ODIN Tax works exclusively in this space. The practice has prepared Australian expat tax advice and non-resident tax returns for 2,300+ clients across over 40 countries, under Tax Director Pau Lam, who has specialised in expat tax for more than a decade. Because ODIN Tax is headquartered in Hong Kong rather than a domestic Australian city, the practice is structured around expat time zones and expat problems by default, not as an add-on service line.
Frequently Asked Questions
Do I still need to lodge an Australian tax return if I live in New Zealand?
Generally yes, if you have Australian-sourced income such as rental property, dividends, or capital gains, regardless of your residency status. An Australian non-resident tax return is assessed differently to a resident return, so getting the classification right first matters.
Is New Zealand income taxed by Australia if I’m a non-resident?
If you are genuinely a non-resident for Australian tax purposes, foreign-sourced income such as New Zealand employment income is generally outside the scope of Australian tax, though the specifics depend on your individual facts and the applicable DTA provisions.
What is the penalty for not lodging an Australian tax return while overseas?
The ATO late lodgment penalty for non-residents is currently $364 per 28-day period, capped at $1,820, and any unpaid tax also accrues the General Interest Charge. Penalty rates change with the financial year.
Can I claim the CGT discount on an Australian property if I live overseas?
Generally no. Once you are classified as a foreign resident for tax purposes, the 50% CGT discount is generally not available on gains, which is a key reason capital gains tax non-resident treatment differs so significantly from resident treatment.
Does the 15% withholding apply to every property sale by an expat, even a small one?
Yes. Since 1 January 2025, the $750,000 threshold was removed, so the 15% FRCGW rate applies to all property sales by non-residents regardless of sale price.
Why doesn’t the Pacific Islands DTA gap get mentioned more often?
Because it is easy to assume all nearby countries have similar treaty coverage to New Zealand. In reality, Australia’s DTA network only extends to Fiji, Kiribati, and PNG in the Pacific, leaving most other Pacific jurisdictions without treaty relief.
Is this article personal tax advice for my situation?
No. This content is general information only and does not consider your individual circumstances. Formal tax residency determinations, CGT calculations, and lodgment strategies should be discussed directly with a Registered Australian Tax Agent.
About ODIN Tax
ODIN Tax is part of ODIN, a specialist practice built exclusively for Australian citizens and permanent residents living overseas. Rather than treating expat returns as a side service, ODIN Tax’s entire practice, from tax residency determinations to Foreign Resident CGT Withholding refund claims and overdue lodgment strategy, is built around the non-resident tax landscape. The team holds a 4.9/5 Google rating from more than 400 verified client reviews, and sits alongside Odin Mortgage within ODIN, allowing tax strategy to be coordinated with mortgage structuring for expats who own or plan to buy Australian property. This content is general information only and does not constitute personal tax advice; individual circumstances should be discussed directly with a Registered Australian Tax Agent.
If you’re an Australian expat in New Zealand or the Pacific trying to work out your residency status, an overdue lodgment, or an upcoming property sale, get in touch with the team at ODIN Tax to discuss your situation with a specialist.
