How much RWT to deduct
Deducting RWT from dividends
Dividends paid to the owners of shares in a company are generally taxed at a flat RWT rate of 33%. Dividends from a listed PIE are not liable for RWT.
Deducting RWT from interest
How much RWT you deduct from interest paid to investors depends on the rate chosen by the individual or company, and the date the interest is paid.
Note
RWT is deducted from interest on the day the interest is paid, regardless of when the interest was earned. So if interest is paid on or after 1 April 2010, it will be liable for RWT at the rates from 1 April 2010 (ie 21% rather than 19.5%). Interest paid on or after 1 October 2010 will be liable for the new rates (ie 17.5% rather than 21%)
We can advise you to change a persons RWT rate where it is considered inconsistent with the marginal tax rate of the interest recipient. However, if the recipient considers that they should be on another rate they can contact you to change it.
1 April 2009 - 31 March 2010
Individuals, trusts and Māori authorities
| If the investor has ... | and they are using ... | then deduct RWT at ... |
|---|---|---|
| chosen a rate | a valid IRD number | 19.5%, 33% or 39%*. |
| not chosen a rate for an account | a valid IRD number | the default rate of 19.5%. |
| either chosen or not chosen a rate | using either an invalid or no IRD number | the no-notification rate of 39%*. |
*or 38% if you offer this rate.
Companies
| If the company has ... | and they ... | then deduct RWT at ... |
|---|---|---|
| chosen a rate | are using a valid IRD number | 33% or 39%*. |
| not chosen a rate | are using a valid IRD number | 33%. |
| either chosen or not chosen a rate | have provided an invalid or no IRD number | the no-notification rate 38%. |
* or 38% if you offer this rate.
Partnerships
If the partnership's IRD number is given to the interest payer, you may choose any of the rates that would apply as if the account were held in a partner's name.
For example, if the partnership has a company as a partner, the partnership can choose the rate that applies to companies 33%.
1 April 2010 - 31 March 2011
The 2010 Budget introduced changes to the rates of RWT, which banks and other financial institutions (interest payers) are required to deduct from interest payments they make. We may advise you to use a different RWT for some interest recipients and unless they tell you another rate you need to use the rate we advise.
Individuals, trusts and Māori authorities*
New rates for RWT come into effect from 1 April 2010 and the default rate for accounts with no elected rate increases.
| If the investor has ... | and is ... | then for the period 1 April 2010 deduct RWT at ... | and from 1 October 2010 deduct RWT at ... |
|---|---|---|---|
| chosen a rate |
|
12.5%, 21%, 33%, or 38% | 10.5%, 17.5%, 30% or 33%. |
| chosen a rate |
|
21%, 33% or 38% | 17.5%, 30% or 33%. |
| not provided a valid IRD number | the no-notification rate of 38% | the no-notification rate of 33%. | |
| provided a valid IRD number but not chosen a rate, and opened a new account after 31 March 2010 | the default rate of 38% | the default rate of 33%. | |
| provided a valid IRD number but not chosen a rate and not opened a new account after 31 March 2010 | the default rate of 21% | the default rate of 17.5%. |
Māori authorities note this is the rate at which RWT is deducted from interest paid to you, not the rate you would deduct Māori authority credits from distributions made to beneficiaries. Find out more about Māori authority distributions.
Companies
There are two stages to the changes to the RWT rate for companies. From 1 October 2010, interest payments that would have had RWT deducted at 38%, will have RWT deducted at the new rate of 33%. The RWT rate deducted from interest payments made to companies will then change from 1 April 2011 as shown below
| Criteria ... | 1 April to 1 October 2010 deduct RWT at... | 1 October 2010 to 31 March 2011 deduct RWT at … | From 1 April 2011 deduct RWT at … |
|---|---|---|---|
| No IRD number | 38% | 33% | 33% |
| Default rate | 33%* | 33% | 28% |
| Elected rate 33% | 33%* | 33%* | 28% |
| Elected rate 38% | 38% | 33% | 33% |
* 30% if you offer this rate.
Partnerships
If the partnership's IRD number is given to the interest payer, you may choose any of the rates that would apply as if the account were held in a partner's name.
For example, if the partnership has a company as a partner, the partnership can choose the rate that applies to companies 28% from 1 April 2011.
From 1 April 2011
Individuals, trusts and Māori authorities
The rates for RWT do not change from the previous tax year.
| If the investor has ... | and is ... | then deduct RWT at ... |
|---|---|---|
| chosen a rate |
|
10.5%, 17.5%, 30%, or 33% |
| chosen a rate |
|
17.5%, 30% or 33% |
| not chosen a rate for an existing account | the default rate of 17.5% | |
| not chosen a rate for a new account | the default rate of 33% | |
| not provided a valid IRD number | the no-notification rate of 33% |
Companies
The default rate of RWT for companies who do not choose a RWT rate decreases from 33% to 28% from 1 April 2011.
| If the company has ... | and they are ... | then deduct RWT at ... |
|---|---|---|
| chosen a rate | using a valid IRD number | 28% or 33% |
| not chosen a rate | using a valid IRD number | the default rate of 28%. |
| either provided an invalid, or no IRD number | the no-notification rate of 33%. |
Partnerships
If the partnership's IRD number is given to the interest payer, you may choose any of the rates that would apply as if the account were held in a partner's name.
For example, if the partnership has a company as a partner, the partnership can choose the rate that applies to companies.
Date published: 27 Sep 2010
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