Approved issuer levy: Approved issuer levy (AIL) glossary
Approved issuer levy (AIL) glossary
| Approved issuer | Non-resident passive income |
| Approved issuer levy (AIL) | Non-resident withholding tax (NRWT) |
| Associated persons | Redemption payment |
| Fixed establishment | Registered security |
| Interest | Resident |
| Leviable value | Variable principal debt instrument |
Approved issuer
A borrower who has approval from us to use the approved issuer levy scheme. This allows you or a person on your behalf, to pay interest to a non-resident without having to deduct non-resident withholding tax.
Approved issuer levy (AIL)
A payment calculated at the rate of 2% of the leviable value of the registered security. This is the amount of interest paid for the security, or any redemption payment on a bond issued at a discount.
Associated persons
The following are associated persons:
- any relative to the fourth degree* by blood, marriage, civil union or adoption
-
any two or more companies where a group of persons have:
- 50% or more of the voting interests, or
- 50% or more of the market value interests, or
- control of both companies by any other means
- any company and any individual who holds at least 25% of the capital of the company, either individually or with a spouse and/or children, or a trustee for the spouse or children
- a partnership and a partner or any person who is an associated person of any partner.
The associated persons rules have recently been amended and have the following application dates:
Transactions involving land
- for a person and persons associated to a person involved in a building business for land on which improvements are begun on or after 6 October 2009
- for other persons and associated persons for land acquired on or after 6 October 2009.
Transactions other than land
The changes to the other provisions apply to transactions occurring in 2010-11 and later income years.
Information about the amended rules will be available on the Policy Advice Division's Special Reports section from 21 October 2009.
* To work this out draw a family tree - each link between names is a degree of relationship. Count backward from one person to a common ancestor, then forward to the other person. A first cousin or a great aunt are examples of relatives to the fourth degree.
Fixed establishment
A place of business from which a substantial business is carried out, such as a retail shop, hotel, factory or farm. A property let for rent is generally seen as an investment rather than a business.
Interest
Any amount paid or credited for money lent. This covers redemption payments.
Leviable value
- the amount of interest paid on a registered security
- any redemption payment on a bond issued out at a discount. Redemption payments are included in the definition of interest for NRWT purposes.
Non-resident passive income, formerly Non-resident withholding income (NRWI)
Interest, dividends and royalties which a non-resident has received or is considered to have received from New Zealand.
Non-resident withholding tax (NRWT)
A tax deducted from non-resident passive income. Anyone who pays non-resident passive income must deduct NRWT and pay it to us each month. The rate of NRWT to deduct depends on the type of income and where the recipient is resident. For more information about NRWT, see our NRWT section.
Redemption payment
The additional amount paid on the commercial bill when the total amount paid is more than the amount originally borrowed.
Registered security
Any transaction involving money lent to an approved issuer that is:
- registered by us, or
- one of a class of transactions registered by us.
Resident
A person is a tax resident if they:
- have an "enduring relationship" with New Zealand, or
- have been present in New Zealand for more than 183 days in any 12-month period, or
- are away from New Zealand in the service of the New Zealand Government.
A person who has been a New Zealand tax resident will become a non-resident if they:
- no longer have an "enduring relationship" with New Zealand, and
- are away from New Zealand for more than 325 days in any 12-month period.
A company is a resident in New Zealand if:
- it is incorporated in New Zealand, or
- its directors exercise control in New Zealand, or
- it has its centre of management in New Zealand, or
- it has its head office in New Zealand.
| Note | |
|---|---|
| The rules for tax residency are not the same as citizenship or usual residency criteria. For more details on enduring relationship and tax residency read our booklet New Zealand tax residence (IR292). | |
Variable principal debt instrument
A financial arrangement where one party can ask the other party:
- to borrow additional money, or
- to return all the amounts borrowed if the other party's rights and obligations are shown in a foreign currency.
Date published: 21 Feb 2012
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