For New Zealand tax residents, the tax paid on resident passive income such as interest and dividends is RWT (resident withholding tax).
You may receive:
- interest with tax deducted and/or
- dividends with tax deducted (and/or tax credits attached).
Your bank or other financial institutions should deduct RWT from your interest due, before paying it to you.
If you have money in an interest bearing bank account you'll earn interest income on the money you keep in the account. When paying the interest, RWT will be deducted by your bank or other interest payer and sent to us.
New Zealand dividends
Dividends are a part of a company's profits that it passes on to its shareholders. Unit trusts are treated as companies for income tax purposes and unit trust distributions are treated as dividends.
Credits attached to dividends
A New Zealand company or unit trust may attach several types of credits to dividends.
"Imputation credits" are credits for part of the tax the company has already paid on its profits so the dividends aren't taxed twice.
"Payment for a foreign dividend" (formerly dividend withholding payment credits) are credits for tax the company paid on dividends it received from overseas.
There may also be RWT deducted from the dividend to bring the total tax credit up to 33%. Dividends from listed PIEs are not liable for RWT.
Date published: 27 Sep 2010