NZ Transitional Resident Calculator
The transitional resident regime exempts most foreign-source income from NZ tax for about 4 years after you become NZ tax resident — provided you've not been NZ resident in the past 10 years and have never held the status before. The start and the end are worked out by two separate tests, so plug in your dates and income mix to see exactly what's exempt, when the exemption actually ends, and how much NZ tax you're saving each year.
This is the first exempt day. If you become resident through the 183-day rule, your residence is backdated to the first of those 183 days — usually your arrival day — so enter that day, not the day you reached 183. If a permanent place of abode came first, enter the day you had that home.
Optional. Unlike the start date this is not backdated — it is the day the count was actually reached, and it is one of the two events that can set the end date.
Optional — the day you had a home here you usually live in. The exemption ends 48 months after the end of the month you qualified under whichever of these two tests came first.
The exemption is a once-in-a-lifetime one. IRD: “You can only get the exemption once.” The statutory condition is that you “were not a transitional resident before the non-residence period” (s HR 8(2)(d)), and the status attaches automatically — so if you were eligible on an earlier arrival, ticking this is correct even if you never claimed a cent. IR295 puts the condition as “not have been eligible for this tax exemption before (including if you were eligible but chose to waive the exemption)”. Another 10 years away does not renew it; that is a different condition (s HR 8(2)(c)), answered by the box above.
Nothing to apply. Keep it that way while the exemption is worth more to you than the payments — IRD: "You can always apply for Working for Families once your exemption ends."
You have to choose one or the other. A household can have Working for Families (including Best Start) or the temporary tax exemption, never both, and applying cannot be undone. Which is worth more depends on your numbers: work out the payments in the Working for Families calculator and compare them with the exemption value below before you apply. IRD: “You can always apply for Working for Families once your exemption ends.” Note the block runs both ways — while you hold the exemption, a partner who cares for the children does not meet IRD’s principal-caregiver definition and cannot apply either.
Election out is irrevocable. Rare — usually done to claim foreign business losses against NZ income. Most migrants leave TR status active.
Currently transitional resident
Currently a transitional resident — first time qualifying. Qualifying foreign-source income is exempt from NZ tax through 2029-01-31 (last exempt day; worldwide income taxable from 2029-02-01).
TR window started
2025-01-15
Last exempt day
2029-01-31
Worldwide income taxable from 2029-02-01
Days remaining
870 (2.38 years)
No qualifying date entered, so the end date is counted from the month of your first resident day. That is right only if you qualified on that day — if you qualified later (183 days reached, or a permanent place of abode established after arrival), enter that date above; it can push the end date months later.
Only one regime applies to an arrival this early.
The non-resident visitor category applies to arrivals from 2026-04-01. For an earlier arrival the ordinary residence tests apply, and the transitional resident exemption below is the relevant one.
Claiming Working for Families (Best Start included) ends both of New Zealand’s temporary exemptions for new arrivals — the 4-year transitional resident exemption and the non-resident visitor category. It reaches a spouse or partner who applied for nothing, so this is a household decision, not an individual one. Work out what the exemption is worth to you before you apply; IRD is explicit that you can always apply once it ends.
Transitional resident (the 4-year temporary tax exemption)
s HR 8(5), through s HR 8(4) and (6)
The application is TREATED as a notice of election out of the exemption — s HR 8(5)(a) for the applicant and s HR 8(5)(b) for their spouse, civil union partner or de facto partner. Nothing is signed and nothing is chosen; the election happens by operation of law, and s HR 8(6) makes it irrevocable.
IR295 page 9: “If the person without the exemption applies, and we accept the application, then their partner will lose their temporary tax exemption from the date Working for Families starts.” And: “once you’ve applied for Working for Families, you cannot change your mind.”
Reaches a partner who did not apply: yes · Reversible if the claim stops: no
Non-resident visitor (s YD 1B, arrivals from 1 April 2026)
s YD 1B(2)(f), with cessation under s YD 1B(5)
Not an election at all. Having no family-scheme entitlement in the household is a STANDING CONDITION of the category: once the entitlement exists the condition stops being met, and s YD 1B(5) ends the status on the date of cessation rather than retroactively.
IRD: “If you or your partner receive Working for Families entitlement your status as a non-resident visitor and any non-resident visitor income tax exemption will end.”
Reaches a partner who did not apply: yes · Reversible if the claim stops: yes
The comparison is your household’s Working for Families entitlement against the New Zealand tax you would otherwise pay on the income the exemption covers. Neither figure is a rule of thumb — run both before you apply, because in one direction the decision is irreversible.
You qualified as a New Zealand tax resident on or after 1 April 2006.
Income Tax Act 2007, s HR 8 — IR295 (April 2026) p9
You were not a New Zealand tax resident at any time in the 10 years before you qualified as a tax resident again.
Income Tax Act 2007, s HR 8(2)(c) — IR295 (April 2026) p9; ird.govt.nz/tte
You have not been eligible for this exemption before — including if you were eligible but chose to waive it.
Income Tax Act 2007, s HR 8(2)(d) — IR295 (April 2026) p9
Neither you nor your spouse or partner is receiving Working for Families (including Best Start).
Income Tax Act 2007, s HR 8(5) — IR295 (April 2026) p9; ird.govt.nz/tte
All four must hold. The exemption is granted automatically when they do — there is nothing to apply for.
You apply for Working for Families tax credits (including Best Start), or your partner does.
The application is treated as a notice of election out by the applicant AND by their spouse, civil union partner or de facto partner (s HR 8(5)), so it ends the exemption for both of you. It cannot be undone (s HR 8(6)).
You include income that would have been covered by the exemption in your IR3.
IRD: "You cannot revoke the choice to ‘opt out’ or end the exemption but, in limited situations, we may be able to consider a request to amend that return." This calculator does not read your return, so it cannot detect this.
Not checked by this calculator — a positive result above does not rule it out.
You confirm to a foreign jurisdiction and to IRD that you have paid or will pay NZ tax on overseas income from a date inside your transitional residency period.
Commonly a side effect of a foreign residency or treaty claim. This calculator cannot see it — tell your adviser if you have made such a confirmation.
Not checked by this calculator — a positive result above does not rule it out.
You tell IRD you no longer want to be a transitional resident.
The voluntary election under s HR 8(4). Tick the "elected out" box below if you have done this; it is irrevocable (s HR 8(6)).
Enter your expected annual amounts. Leave at zero anything that doesn't apply. The calculator classifies each as exempt or taxable based on your TR status, then estimates the NZ tax saving from the exempt streams.
What the regime does
Sections HR 8 and CW 27 of the Income Tax Act 2007 carve out a 4-year window where new migrants pay no NZ tax on most foreign-source income. The intent is to ease the transition for skilled migrants who arrive with offshore investments, foreign pensions, or foreign employment that continues briefly after arrival — without giving them an indefinite tax-free zone.
The exemption is automatic — no application required. You file IR3 like any NZ tax resident, but only declare your NZ-source income and the carved-out non-exempt streams (NZ-source royalties, and any employment or personal-services income for work done while you are a transitional resident, wherever it was performed). Foreign income that's covered by the exemption is simply not declared during the TR window.
What's exempt vs. taxable
Exempt during TR (most overseas income):
- Foreign dividends from non-NZ companies
- Foreign bank interest, bond coupons, and managed-fund distributions
- Foreign rental income (less expenses) — though the deduction rules that apply once the exemption ends are a separate question, covered below
- Royalties derived offshore — on IRD's published list of temporarily exempt foreign income
- Foreign realised capital gains (NZ has no general CGT, so this is mostly redundant)
- FIF income (FDR or CV) on foreign shares — the biggest TR benefit for portfolios over $50k cost basis
- Foreign private pension / 401(k) / SIPP / Australian super distributions
- Distributions from foreign trusts (subject to anti-avoidance rules — get advice)
- Pay for employment performed overseas before you came to NZ — a bonus for pre-arrival work that lands after you arrive, for example
NOT exempt (taxable from day 1 of NZ residence):
- NZ-source salary, wages, dividends, interest, rental, business income
- Royalties with a NZ source — not because royalties are carved out, but because the exemption only ever covers a foreign-sourced amount
- Salary or wages for personal services performed IN NZ — regardless of who pays you. Remote workers continuing to "work for" their old foreign employer from NZ are taxable on that income.
- Salary, wages or personal-services income for work done while you are a transitional resident — including work physically performed overseas for a foreign employer. Section CW 27 carves out employment income "in connection with employment or service performed while the person is a transitional resident", and IRD states it plainly: "Income you earn overseas from employment or providing personal services is not exempt." Working for an overseas employer, you must show the income in your IR3 even while the exemption is running. Relief for tax paid overseas, where available, comes from the relevant double tax agreement — a separate mechanism, not this exemption, and not automatic.
Overseas rental property once the exemption ends
Two different rules get confused here. The temporary exemption decides whether your overseas rental income is taxed in NZ at all — while it runs, it is not. Once it ends, that income is taxable, and a completely separate set of rules decides what you can deduct against it. Being overseas does not exempt a property from the second set.
IRD is explicit that the residential property deduction rules — the ring-fencing rules — "apply to all your residential land including your overseas residential property". So once your overseas rental income is taxable here, you can claim deductions only up to the rental income you earn in a year. Excess deductions cannot be offset against other income such as salary or wages: you must carry them forward from year to year and deduct them when your residential property makes income. A loss-making overseas rental does not reduce the tax on your NZ pay.
Some property sits outside those rules, and that is property-specific rather than location-specific — your main home, property that comes into the mixed-use asset rules (a holiday home, for example), property that will be taxed on sale, farmland, property used mainly as business premises, employee accommodation, and property owned by a company other than a close company. You also choose a basis — portfolio or individual property — which decides whether one property's deductions can be used against another's income. Check your own property against IRD's list rather than assuming that an overseas address settles it.
Our rental income tax calculator works through rental income, deductible expenses and the resulting NZ tax for a NZ residential rental in NZ dollars, and the ring-fencing transition calculator models how excess deductions carry forward. Neither converts foreign currency, applies a foreign country's own deduction rules, or calculates foreign tax credits, so treat them as a guide to the mechanism rather than a return for an overseas property.
Working for Families or the exemption — never both
This is the trade-off most new migrants with children never hear about until it is irreversible. IRD states it flatly: "You cannot have both Working for Families and a temporary tax exemption. That means if you apply for Working for Families, you'll lose your exemption." Best Start counts. And "once you've applied for Working for Families, you cannot change your mind and reinstate your previous TTE."
The mechanism is in section HR 8(5): an application for a family tax credit is treated as a notice of election out under section HR 8(4), and section HR 8(6) makes that election irrevocable. It is not an eligibility bar that lapses — it closes the exemption period through the end limb in section HR 8(3)(b)(i), the day you are treated as nominating.
It reaches your partner automatically. Section HR 8(5) deems the application to be a notice of election "by a spouse, civil union partner, or de facto partner of the person" as well as by the applicant. So a partner who never filled in a form loses their exemption too. IR295 (April 2026, page 9) gives the outcomes: if the person who holds the exemption applies, they lose it; if the person without the exemption applies and IRD accepts the application, "their partner will lose their temporary tax exemption from the date Working for Families starts"; and where both hold it, "both of you will lose your exemption". The block is symmetric — while one of you holds the exemption, IRD says the other "will not be able to apply for Working for Families" because they do not meet the principal-caregiver definition.
Which way round is better is an arithmetic question, and it only goes one way. Estimate the payments in our Working for Families calculator and compare them against the exemption value the calculator above puts on your foreign income. A household with a large offshore portfolio and one child will usually keep the exemption; a household with modest foreign income and three children usually will not. IRD's own advice is to do this first: "If you have a temporary tax exemption and you qualify for Working for Families, we recommend you consider your options before you apply", and "You can always apply for Working for Families once your exemption ends." You can never go back the other way.
The 10-year clean-record test
To qualify, you must not have been a NZ tax resident at any point in the 10 years before becoming resident again. The window resets — if you spent 9.5 years overseas after a previous NZ stint, you don't qualify. You'd need to wait another 6 months (assuming you stay non-resident the whole time) to clear the 10-year mark.
Tax residence is fact-specific (183-day day count, 325-day non-residence count, plus the "permanent place of abode" test) — leaving NZ is easier than people assume because keeping a NZ home and intending to return can mean you've never actually broken residence even if you've been physically overseas.
This is not the same condition as the once-in-a-lifetime rule, and clearing it does not get you a second exemption. Section HR 8(2) sets both separately: paragraph (c) is the 10-year period of non-residence, and paragraph (d) requires that you "were not a transitional resident before the non-residence period". Paragraph (d) has no cure — a returning New Zealander who was eligible on a previous arrival stays barred no matter how long the next absence runs. IRD: "You can only get the exemption once." Because the status is granted automatically, waiving the benefit on that earlier arrival did not undo having held it, which is why IR295 asks whether you were previously eligible rather than whether you actually saved tax.
Tax planning during the TR window
The TR window is the right time to:
- Realise overseas capital gains — sell appreciated foreign shares and rebase before the FIF rules kick in, lock in gains tax-free.
- Take foreign-pension lump sums — the foreign superannuation withdrawal regime uses an inclusion-rate scheme that grows over time post-TR, so withdrawing during TR is the cheapest moment.
- Sell, buy, or restructure foreign investment portfolios — shift between funds without triggering NZ tax on the realisations.
- Settle pre-existing employment relationships — pay for employment performed overseas before you came to NZ, such as a bonus that lands after arrival, is on IRD's list of temporarily exempt income. The distinction is when the work was done, so keep evidence of the period the payment relates to.
It's NOT the right time to:
- Assume overseas work is covered — employment and personal-services income for work done while you are a transitional resident is taxable from day 1, whether you do it remotely from NZ or on a plane to your old office. Remote work from NZ may also create a NZ permanent establishment for the employer.
- Assume every royalty is treated alike — a royalty derived offshore is exempt for a valid exemption period, while a NZ-source royalty is taxable throughout. Where a royalty arises is a question of fact; get advice before treating one as offshore.
- Elect out for trivial reasons — election is irrevocable, and most migrants benefit from the default TR coverage.
Once your TR exemption ends, FIF starts applying to offshore holdings above the $50,000 de minimis. If you were non-resident for at least 5 years before arriving and hold pre-residence unlisted shares (e.g. startup equity), check the FIF revenue account method (RAM) guide before defaulting to FDR — RAM taxes dividends and realised gains only, deferring tax until you actually sell or receive a dividend.
Frequently asked questions
Do I need to apply for transitional resident status?
No — it's automatic if you meet the criteria. You file IR3 as a NZ tax resident; you simply don't declare exempt foreign-source income during the 4-year window. Keep records of arrival date, prior tax residency history, and the income you're treating as exempt — IRD can review years later.
When exactly does my 4-year window start?
On the first day you were a NZ tax resident — not the first of that month. Under the 183-day rule your residence is backdated to the first of those 183 days, so if you arrived on 10 March 2023 and later crossed 183 days, the exemption starts 10 March 2023. Under the permanent-place-of-abode test it starts the day you had that home. IRD treats the start date and the end date as two separate tests and says to work out the start date first.
When exactly does it end?
On the last day of the 48th month after the month you QUALIFIED as a NZ tax resident (Income Tax Act 2007 s HR 8(3)(b)(iii)) — counted from the qualifying day, which is not backdated, and taking whichever of the two residence tests you met first. IRD's own examples: Ed arrives 10 March 2023 and buys a house on 22 April 2023, so his exemption runs 10 March 2023 to 30 April 2027. Sarah arrives the same day but qualifies on the 183-day count on 17 October 2023, so hers runs 10 March 2023 to 31 October 2027 — same start, six months' difference in the end date. The end date is the last EXEMPT day: worldwide income is taxable from the day after.
Can I extend the 4-year window, or get a second one?
No to both. The duration is fixed at 48 months by statute, and the exemption is once in a lifetime. Section HR 8(2)(d) defines a transitional resident as a person who "were not a transitional resident before the non-residence period", and IRD states it plainly: "You can only get the exemption once." IR295 (April 2026, page 9): "The exemption can only be granted once in a lifetime - you cannot extend your tax exemption or renew it after its expiry date." Leaving NZ for another 10 years does NOT renew it. The 10-year rule is a different condition — s HR 8(2)(c) — and it only ever helps someone who has not held transitional resident status before. If you were eligible on an earlier arrival you are barred now, even if you waived the exemption and never saved a cent: the status attaches automatically, so there was nothing to decline.
Can I get Working for Families and the exemption at the same time?
No — a household gets one or the other. IRD: "You cannot have both Working for Families and a temporary tax exemption. That means if you apply for Working for Families, you'll lose your exemption." Best Start counts as Working for Families for this purpose. The exchange is irrevocable: "once you've applied for Working for Families, you cannot change your mind and reinstate your previous TTE." In statute the application is treated as a notice of election out under s HR 8(4) (s HR 8(5)), and s HR 8(6) makes that election irrevocable. Work out both numbers before you apply — and note you can always apply for Working for Families once the exemption ends, but you can never go the other way.
My partner applied for Working for Families, not me. Does that affect my exemption?
Yes, and it happens without you doing anything. Section HR 8(5) treats a Working for Families application as "a notice of election under subsection (4) by the person" AND as "a notice of election under subsection (4) by a spouse, civil union partner, or de facto partner of the person". IR295 (April 2026, page 9) spells out the outcome: "If the person without the exemption applies, and we accept the application, then their partner will lose their temporary tax exemption from the date Working for Families starts", and where both partners hold the exemption and one applies, "both of you will lose your exemption". The block also runs the other way: while you hold the exemption, IRD says a partner caring for the children "will not be able to apply for Working for Families" because they do not meet the principal-caregiver definition.
What happens at the end of my TR window?
Foreign-source income becomes fully taxable in NZ at marginal rates from the day after the window closes. Your foreign tax credit (where applicable under a double tax agreement) reduces NZ tax by the foreign tax paid. The biggest cliff is for FIF-affected portfolios — a $500,000 portfolio that was exempt during TR suddenly attracts 5% FDR ($25,000 of NZ-taxable deemed return) annually post-TR. If you were non-resident for at least 5 years before arriving and hold pre-residence unlisted shares, an optional method (RAM) taxing only dividends and realised gains — not unrealised value — may apply instead of FDR; see the link below.
Are royalties exempt during the exemption period?
It depends on where the royalty arises. IR295 (April 2026, page 10) lists "royalties derived offshore" among the types of foreign income temporarily exempt from tax in New Zealand, so an offshore royalty is exempt for a valid exemption period like any other qualifying foreign income. A NZ-source royalty is taxable throughout — not because royalties are singled out, but because section CW 27 only ever exempts a foreign-sourced amount, and its two carve-outs are employment or service income performed while you are a transitional resident and income from a supply of services. Neither mentions royalties. Where a royalty is sourced is a question of fact, so get advice before treating one as offshore.
I'm keeping my overseas job — is that salary exempt?
No. Section CW 27 carves out employment income "in connection with employment or service performed while the person is a transitional resident", and IRD puts it plainly: "Income you earn overseas from employment or providing personal services is not exempt." The test is when the work was done, not where — so pay for work you do while the exemption is running is taxable in NZ even if you fly out to do it and a foreign employer pays it into a foreign account. IRD also says that if you work for an overseas employer you must include the amount in your IR3, and that this is true even if you have the 4-year exemption. What IS exempt is pay for employment performed overseas BEFORE you came to NZ, such as a bonus that arrives after you land. Where the same income is taxed twice, relief comes from the applicable double tax agreement — that is a separate mechanism from this exemption, and it is not automatic.
Can I offset my overseas rental loss against my NZ salary after the exemption ends?
No, if it is residential property. IRD states that the residential property deduction rules "apply to all your residential land including your overseas residential property", and that because rental deductions can be claimed only against rental income, "you can not offset excess deductions against other income such as salary or wages". Excess deductions must be carried forward from year to year and deducted when your residential property makes income. This is separate from the temporary exemption, which only decides whether the rental income is taxed in NZ in the first place. Some property is outside the rules — your main home, mixed-use assets such as a holiday home, property that will be taxed on sale, farmland, property used mainly as business premises — so check your property against IRD's list rather than assuming an overseas address takes it out of scope.
Should I elect out of TR status?
Almost never. The election is irrevocable and only useful in narrow scenarios — typically when you have foreign business losses you want to offset against NZ income (which the exemption blocks). For 99% of migrants, default TR coverage saves substantial NZ tax with no downside.
Does my partner get separate TR status?
Yes. Each spouse / partner qualifies individually based on their own residence history. If only one of you has been NZ resident in the past 10 years, only the other gets TR.
Does TR status affect my home country tax?
No — TR is a NZ-side concession. Your home country tax obligations are governed by their rules and any double tax agreement with NZ. Australian citizens, for example, may still be taxed by Australia on overseas income for a period after leaving, depending on Australian residence rules.
Are KiwiSaver contributions affected by TR status?
No. KiwiSaver is a NZ-source retirement scheme — contributions and growth are taxed normally regardless of TR status. The TR exemption is for foreign-source income only.
Sources
Income Tax Act 2007 — section CW 27 (transitional resident exemption) and section HR 8 (definition). IRD guidance — "Tax for New Zealand tax residents" (reporting income from an overseas employer during the exemption), "Temporary tax exemption" (start and end dates, and IRD's own worked examples) and "Coming to New Zealand". IR295 Taxes and duties (April 2026) — the published list of temporarily exempt foreign income (page 10), the four eligibility conditions and the once-in-a-lifetime rule (page 9). Working for Families — IRD "New or returning residents" and "Apply for Working for Families" (the exemption is lost on application, and the loss reaches a partner). Ring-fencing — IRD "Residential rental property deductions". FIF rules — IRD FIF guide.
This calculator is for general guidance — transitional resident status, foreign trust positions, and the foreign superannuation withdrawal regime are technically complex. Get specific advice from a tax accountant for your situation.
Related NZ tax tools
Last updated April 2026.