Non-resident passive income

A variable-rate PIE that derives dividends from New Zealand-based companies can treat certain dividends as non-resident passive income and deduct non-resident withholding tax (NRWT).

Requirements to treat a particular dividend as liable for NRWT

There are four requirements to be able to treat a particular dividend as liable for NRWT:

• it only applies to the unimputed portion of a New Zeaalnd dividend
• a payment of an amount that represents some or all of that unimputed dividend is made to a notified foreign investor
• the payment must be made within the time the PIE is required to file a PIE return which includes that dividend in
• the variable rate PIE choose to treat the amount paid as liable to NRWT.

This allows the variable-rate PIE to provide the notified foreign investor with a tax credit that they should be allowed to claim in their country of residence. PIE tax generally can't be claimed in foreign countries as it is not similar in nature to income tax paid by the investor.

Income not included in returns and certificates

Income treated as non-resident passive income is not included in the variable-rate PIEs assessable income and does not appear in any of the PIE returns and the investor certificate.

The amount treated as non-resident passive income is not excluded income of the investor.

Register and account for NRWT

The PIE will need to register and account for NRWT using the normal NRWT process.

Date published: 30 Aug 2011

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