Late in 2014, we commented on the IRD’s position on the availability of foreign tax credits for New Zealand tax residents, with respect to United States-sourced pensions.

The current situation gives rise to double taxation with respect to pension income arising from past employment which is derived by a United States citizen residing in New Zealand.

We have sought clarification from the Internal Revenue Service on the ability of United States citizens to claim a tax treaty benefit. Publication 54 clearly states that United States citizens and residents generally cannot use the treaty to reduce their United States’ tax liability.

We are currently still working on resolving this issue, that is, double taxation arising out of both countries claiming rights to tax pension income. In the case of New Zealand, without allowing a credit for United States’ tax paid on pensions derived from past employment.