- Patrick Maflin
CASE STUDY B – PERMANENT PLACE OF ABODE (ARRIVING IN NEW ZEALAND)
Commodore James Norrington and his fiancé, Elizabeth Swan, are UK citizens and live and work in the UK. They have two school-aged children.
In 2008, James and Elizabeth purchase a holiday home in New Zealand. From 2008 to 2012, James and Elizabeth holiday in New Zealand for two to three months a year, staying at the holiday home. From 2013, Elizabeth and the children relocate to New Zealand to look after Elizabeth’s sick mother. Elizabeth lives at the holiday home, and the children stay there during school holidays (as they attend a boarding school).
Elizabeth’s mother passes away in 2014, but Elizabeth decides to stay in New Zealand indefinitely, as she prefers the tranquillity and climate. James rearranges his work commitments and spends four months a year in New Zealand during 2014 and 2015. From 2016 James retires from his UK position and relocates to New Zealand.
When will James be treated as having obtained a permanent place of abode in New Zealand?
The Income Tax Act 2007 does not define what constitutes a “permanent place of abode”. However, case law provides guidance on what is a permanent place of abode. In C of IR v Diamond  NZCA 613, the court of appeal stated that a permanent place of abode means a home. A person must have a dwelling in New Zealand available for them to live in, and the person must have links with that dwelling in order for that dwelling to be considered a home.
Commodore Norrington will be treated as having had a “place of abode” since 2008, when he and Elizabeth acquired the holiday home. However, the holiday home was not Commodore Norrington’s permanent place of abode at that time, as he did not habitually reside there on a permanent basis. The fact that Elizabeth and their children moved to New Zealand in 2013 does not mean that the holiday home became Commodore Norrington’s permanent place of abode just because his family lived there. It was only in 2014, after Commodore Norrington rearranged his work commitments so he could visit New Zealand more frequently, that the holiday home became his permanent place of abode. From that time, the nature and quality of Commodore Norrington’s use of the holiday home changed, even though he was still based in the UK until 2016.
In the light of above, Commodore Norrington should be treated as having acquired a permanent place of abode in New Zealand in 2014.