Trans-Tasman depreciation

Our Experts Answer:

Firstly, whenever dealing with cross boarder tax issues its wise to take advice in both jurisdictions. Your question here relates primarily to the tax outcome in Australia and your advice should come from there.

So, things you should check with the Australian agent include:

1. Whether you entered under a temporary residents exemption. If so you may be subject to CGT only on the gain made since the temporary exemption expired.

2. Australia has a different depreciation regime from NZ. The accountant there should have reworked the NZ rental statement to adjust the claim for deductions that are not available in Australia. Depreciation claimed here is unlikely to have been claimed there which should mean the NZ recovery will not be assessable in Australia.

3. Depreciation will be recoverable here in NZ and taxable here unless you have accumulated losses to offset the recovery income. Losses here are claimable even if also claimed in Australia. If you are taxed in NZ you may still also enjoy a credit in Australia for the NZ tax paid up to their own marginal tax rate. Check whether this may offer any offset against the tax assessed on your rental income and or capital gain in Australia.