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Paying investors who have certificates of exemption from RWT

Important - check for cancelled and reissued certificates

Each time you pay an investor with an exemption you should check our published lists of cancelled and reissued certificates. These are updated regularly.

You may not have to deduct or pay RWT

You don't deduct RWT from any interest or dividends you pay to taxpayers who have a valid certificate of exemption from RWT, or tell you that they are exempt under an Act other than the Income Tax Act.

Checking a certificate of exemption

People and groups who hold a certificate of exemption are called exempt recipients. They are divided into two categories - Category A and Category B.

Most certificates of exemption are issued for an unlimited period and remain valid unless they are cancelled. These certificates do not show an expiry date. Taxpayers with tax losses (Category B, number 14 ) are issued with certificates limited to one income year. These are only valid until the expiry date shown on them.

When a holder shows you a certificate of exemption, you'll need to check that the expiry date hasn't passed and that it hasn't been cancelled.

See the table below to find out what you need to check on the certificate.

For ... you ...
Category A numbers 1 - 2 don't need to see the certificate of exemption, but you must take reasonable steps to confirm the identity of the recipient.
Category A numbers 3 - 7

don't have to see the certificate of exemption but the holder must:

  • tell you that they have a certificate of exemption, and
  • give you the exemption or IRD number on the certificate, which you must record.
Category B recipients

must:

  • sight either the original certificate of exemption, or a photocopy or fax copy
  • take reasonable steps to confirm that the recipient is the person named in the certificate
  • keep a record of the exemption or IRD number shown on the certificate and a copy of the certificate.

 

Cancelling a certificate of exemption

If we cancel a person's certificate of exemption, you must deduct RWT from any further interest you pay to that person.

Find out what happens when an RWT certificate is cancelled.

Responsibility of person with cancelled certificate

The person who has had the exemption certificate cancelled must give you written notice of the cancellation within five working days of receiving the notification.