Most people assume that everything in New Zealand is taxed.
But that’s not quite true.
There are several types of income that are completely tax-free under current New Zealand law.
And many don’t even realise it.
Here are nine common examples that could apply to you.
1. Capital Gains on Property
Often tax-free, but you need to know the exceptions.
New Zealand doesn’t have a general capital gains tax, so profits from selling property are often untaxed. However, you may still be caught by the bright-line test, intention test, or other land sale rules.
If you’re unsure whether your sale will be taxed, check out our guide on common property tax mistakes and how to avoid them. Points 5 and 6 are especially relevant.
2. Capital Gains on Shares
Usually not taxed if you didn’t buy them with the intent to trade.
If you sell company shares or your own business and didn’t buy them with the intent to trade, those gains are generally not taxable. It’s one of the most overlooked forms of tax-free income, especially for business owners building long-term value.
3. Becoming a Non-tax resident
Non-residents are taxed only on New Zealand-sourced income, and not on their overseas income.
If you move overseas and meet the residency tests, your foreign income may no longer be taxable in New Zealand. Generally, you need to meet the 325-day rule and have no permanent place of abode in NZ, though other criteria also apply.
4. Transitional Tax Residency
A four-year exemption on overseas income when you move or return to New Zealand.
If you move (or return) to New Zealand after living overseas, you may qualify for a four-year transitional tax exemption. This can allow you to receive most types of overseas income (like rental income) for up to four years without paying New Zealand tax on it.
I personally benefited from this when I moved to New Zealand from Dubai many years ago. It’s one of the most generous tax breaks available to new migrants and returning Kiwis, yet many people don’t even know it exists.
5. Gifts and Inheritances
Gifts and inheritances are not taxable income.
Cash gifts or inherited property aren’t taxed as income. However, if you later sell an inherited property, the normal tax rules can still apply. Keep records of how you acquired the asset in case IRD ever asks.
6. Employer Reimbursements
Genuine business expense reimbursements are not income.
If your employer reimburses you for legitimate work expenses (such as business travel, professional subscriptions or home office costs), those payments are not taxable income. They’re simply a refund of money you spent on the employer’s behalf.
7. Selling Personal-Use Items
Private sales are generally tax free if there was no intent to resell for profit.
Selling your old car, furniture, or other personal belongings don’t trigger tax, provided you didn’t buy them with the intention of reselling for profit. That’s why Trade Me sales of used items are usually tax-free.
8. Children’s Income Under $2,340
Small amounts of casual income for kids can be tax-free.
If your child earns pocket money from mowing lawns, babysitting, or casual jobs, that income can be tax-free up to $2,340 per year. Beyond that amount, normal tax rules apply, but it’s still a great way to teach kids about earning and saving.
9. Hobby Income
If it’s just for fun, it’s not taxable. If it looks business, tax applies.
Hobby income isn’t taxed. Once your activity becomes regular, organised, or profit driven, IRD may treat it as a business. Keep records to show it’s genuinely a hobby if asked.
What to Watch Out For
The line between “tax-free” and “taxable” can shift quickly depending on your intent, frequency, or circumstances.
What starts out as hobby income or a one-off property sale can easily cross into taxable territory if the activity becomes regular, organised, or profit-driven.
Understanding where you stand helps you plan smarter, stay compliant, and avoid paying more tax than you legally need to.
Paying zero tax sounds great, but it’s not about dodging IRD.
It’s about knowing the rules so you can use them legally and confidently.
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