Wellington, August 3 NZPA - New Zealanders leaving to work overseas for an extended period should seek professional advice before filling in Inland Revenue's residence questionnaire, or face a potential legal challenge to the department, the New Zealand Institute of Chartered Accountants (NZICA) says.

IRD uses information in its IR886 form to decide whether a person remains a New Zealand resident for tax purposes, in which case income earned overseas becomes taxable in New Zealand.

People have two months to challenge a decision, and if they need representation while overseas it could cost thousands of dollars, said NZCIA tax director Craig Macalister.

There was no statutory requirement to fill out the form, but many people were unaware of that and the fact that it may have to be challenged.

Residency hinged on the amount of time spent overseas in a year, and whether a person had a permanent abode in New Zealand.

The issue potentially affected thousands of people, including the growing number of New Zealanders travelling to the United Arab Emirates where there was no income tax system, Mr Macalister said.