Make sure you're using the right RWT rate

• Interest income
• RWT rates for 1 April 2010 - 31 March 2011
• Dividends

Interest income

If you receive interest RWT will usually be deducted from this income by the payer and sent to us.

It is important that you choose the RWT rate appropriate to your level of taxable income. This ensures that the correct amount of tax is deducted from it. If you choose a rate that is too low, you will have a tax bill to pay at the end of the income year.

You also need to make sure your interest payer has your IRD number.

RWT rates for 1 April 2010 - 31 March 2011

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 your taxable income is...	then your RWT rate is ...	Note
$0 - $14,000	12.5%	You must have a "reasonable expectation" of earning $14,000 or less. Māori authorities can't use this rate.
$14,001 - $48,000	21%	This is the RWT default rate for existing accounts if you haven't elected a rate.
$48,001 - $70,000	33%	No change.
$70,001 and over	38%	This is the RWT default rate for new accounts if you haven't elected a rate.

* 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.

If you have...	then RWT will be deducted at ...
not chosen a rate for an existing account	the default rate of 21%.
not chosen a rate for an new account	the default rate of 38%.
not provided a valid IRD number	the no-notification rate of 38%.

Companies

RWT rates for some companies change from 1 April 2010. The maximum RWT rate decreases to 38%.

The new RWT tax rate for companies and those taxed as companies is 30%* or 33%. Note that the 30% rate is at the payer's option from 1 April 2010 but is compulsory from 1 April 2011.

If the investor company has ...	and they are ...	then RWT will be deducted at ...
not elected a rate	using a valid IRD number	the default rate of 33%*.
either provided an invalid, or no IRD number		the no-notification rate 38%.

* 30% if offered by the interest payer.

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.

Dividends

Dividends are paid to the owners of shares in a company. Dividends are taxed at a flat RWT rate of 33%

 

Date published: 14 May 2010

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