RWT
What is RWT?
RWT (resident withholding tax) is the amount of tax deducted from any interest earned on investment income and usually comes from financial institutions (for example, banks, finance companies, building societies or credit unions). RWT on interest is currently deducted at 19.5%, 33%, 38% or 39%.
From 1 April 2009 the different individual tax rates and thresholds changed. For some people, the increase in the tax thresholds will affect which RWT rate they should be using. For example, if your gross income is under $48,000 or if you earn an amount between the new thresholds.
The old RWT thresholds and the new thresholds which apply from 1 April 2009 are outlined below:
| RWT thresholds from 1 April 2009 | |
|---|---|
| Income to $48,000 | 19.5% |
| $48,001 - $70,000 | 33% |
| $70,000 and over | 38%* or 39% |
*From 1 April 2009 interest payers have the option to withhold RWT at the lower top rate of 38%, check with your interest payer which option they will use. If an interest payer has elected to use the 38% option they may also use 38% as the no-notification rate.
| RWT thresholds from 1 October 2008 | |
|---|---|
| Income to $40,000 | 19.5% |
| $40,001 - $70,000 | 33% |
| $70,000 and over | 39% |
| RWT thresholds from 1 April 2008 | |
|---|---|
| Income to $38,000 | 19.5% |
| $38,001 - $60,000 | 33% |
| $60,000 and over | 39% |
If you're required to file a return or receive a personal tax summary (PTS) these will probably be sent out to you automatically. You will need to include the gross interest and RWT figures on your return or PTS. This will form part of your end of year assessment.
Note
For the 2010 tax year, if your income is from employment, interest and dividends you will be required to request a personal tax summary if you earned interest of over $200 and:
- your total income is between $48,000 - $70,000 and your interest is taxed at less than 33%, or
- your total income is over $70,000 and your interest is taxed at less than 38%.
If you're not required to file a return or receive a PTS you'll need to wait until you have all your income details for the year including your interest and RWT information. You can then use our online calculators to work out whether you're entitled to a refund or need to pay more tax.
Note
If you earned interest on your savings after 1 October 2008, and your income from all sources was less than $14,000, you may have had too much RWT deducted during the 2009 tax year. Find out if you’re entitled to a refund by using our personal tax summary calculator.
Date published: 14 May 2009
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