CA ANZ recently provided feedback to Inland Revenue on draft ruling PUB00348: Income Tax – monthly retirement payments from the United Nations Joint Pension Fund. The draft ruling concludes that:
- UN pensions are not exempt from taxation under New Zealand’s diplomatic privileges and immunities rules
- UN pensions will be taxable as pension income under section CF 1(g) of the Income Tax Act 2007 unless the recipient is a transitional resident or has elected to apply the FIF rules.
CA ANZ agrees with this conclusion to the extent that such payments are not emoluments received as officers or servants of the UN, or a return of capital from a trust. We recommend the draft ruling consider and specifically address:
- whether there has been an effective salary sacrifice arrangement
- if there has not been an effective salary sacrifice, whether some portion of the payments retains the characteristics of “emoluments” received as officers or servants of the UN
- the application of the trust rules and whether a portion of the payments are a return of capital from a trust.