Permanent Place of Abode (PPOA)

Permanent place of abode is one of the two tests under section YD 1 of the Income Tax Act 2007 that determine NZ tax residence. You are NZ tax resident if you have a permanent place of abode in NZ, even if you fail the 183-day day-count test.

The test was clarified by the Court of Appeal in Diamond v Commissioner of Inland Revenue [2015] NZCA 613. PPOA depends on the totality of factors:

- A dwelling — a house, apartment, or other place where you can live continuously - Continuity of use — whether you have ongoing access and your life pattern returns to it - Intention — whether you regard the dwelling as your home rather than a temporary base - Personal connections — family location, employment, social ties, vehicle registration, doctor, gym, school enrolments

Mere ownership of a NZ holiday home is not enough. In Diamond, the Court of Appeal held that even owning property in NZ doesn't establish PPOA if the person's lifestyle and ties are genuinely overseas-centred. Conversely, someone with a long-term lease, NZ employment, family in NZ, and habitual return to NZ likely has PPOA here even if physically present overseas most of the time.

The practical effect: most migrants intending to settle in NZ become NZ tax resident immediately under the PPOA test, before the 183-day day-count would have triggered. Most NZ-domiciled people working overseas remain NZ tax resident for years because they retain a NZ home and family ties — cessation of NZ residence requires deliberate severance of PPOA, not just physical absence.

The mirror image: to cease NZ tax residence, you must lose your PPOA AND be absent from NZ for more than 325 days in any 12-month period. Both conditions are required.