Tax Residence and Source of Income Issues for Professor Ken Molony

Background of Professor Ken Molony

FactsNew Zealand Cancer Research Institute (NZCRI) has recruited Professor Ken Molony from Spain to conduct research as an employee under an eight-month employment contract based on New Zealand Law effective from 1 October 2020 to 30 June 2021. Professor Molony’s salary for the contract is set at $220,000. The salary is paid fortnightly into a non-interest-bearing bank account accessible in New Zealand and Spain. The New Zealand Government had issued a work visa to Professor Molony to enter New Zealand. Professor Molony’s wife manages a law firm in Spain and, with two school-aged children, continued to live in the family home in Spain. He arrived in New Zealand on 28 September 2020 and will leave New Zealand on 4 July 2021. He departed to Spain on 21 December2020 and returned to New Zealand on 3 January 2021 to celebrate Christmas with his family. While living in New Zealand, Professor Molony rented a furnished apartment and paid one-year membership of the City Fitness Gym. He also purchased an electric scooter to travel around the city. While living in New Zealand, Professor Molony purchased shares in a United States company and received a USD 800 dividend in February 2021. While in New Zealand, Professor Molony continues to receive royalty income from Spain as an author of several books. The royalties are paid by a Spain publishing house that does not get a deduction in New Zealand for the royalty payments. New Zealand has a double tax agreement with Spain. RequiredNZCRI has engaged you as a tax accountant and asks you to identify any tax residence and source of income issues relevant to Professor Moloney. Support your answer with references to the Income Tax Act 2007; Interpretation Statement IS 16/03 and appropriate case law. Ignore any pay as you earn (PAYE) tax withholding issues.