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If you're a New Zealand tax resident, you'll pay resident withholding tax (RWT) on interest and dividends you earn from New Zealand bank accounts and investments. Your payer (bank or fund manager) deducts resident withholding tax from your interest or dividend payment before they pay you.

When you open an account

Companies

You must notify your interest payer that you're a company.

If you have not given your IRD number to your interest payer, resident withholding tax will be deducted from your interest payments at 33%. If you have given them your IRD number and company status but did not choose a resident withholding tax rate, tax will be deducted from your interest payments at 28%.

If you have given your interest payer your IRD number and company status, you may use either the 28% or 33% rate.

There are two exceptions:

  • Trustees are not required to notify their company status and may use the 17.5%, 30% or 33% rate. If you are a trustee of a testamentary trust, you may use the 10.5%, 17.5%, 30% or 33% rate.
  • Māori authorities are not required to notify their company status and may use the 17.5%, 30% or 33% rate.

All others

If you have not given your IRD number to your interest payer, or if you have given them your IRD number but did not choose a resident withholding tax rate, tax will be deducted from your interest payments at 33%.

From April 2020, if you have not given your IRD number to your interest payer, resident withholding tax will be deducted at the ‘non-declaration’ rate of 45%. If you have given your IRD number to your interest payer but have not chosen a resident withholding tax rate, tax will be deducted at the ‘default’ rate of 33%.

If you have given your interest payer your IRD number, you may use the 10.5%, 17.5%, 30% or 33% rate. This is the amount of tax to be deducted during the year. It should match your income tax rate. If the resident withholding tax rate you choose does not match your income tax rate you may receive an end of year tax bill.

Your total taxable income Resident withholding tax (RWT) rate
Up to $14,000 10.5%
$14,001 to $48,000 17.5%
$48,001 to $70,000 30%
Over $70,000 33%

If you have a joint account you can only use one IRD number, so you'll need to decide which is the most appropriate rate. For example, if you both earn over $70,000, choosing the 33% rate will avoid an end of year tax bill. If one account holder earns over $48,000 and the other less than $48,000, choosing the 30% rate will avoid the higher earner having an end of year tax bill.

If a resident and a non resident hold a joint account, resident withholding tax must be deducted from all interest paid on the account. The non resident may claim a refund by completing either an IR3NR tax return or a New Zealand non resident withholding tax refund request - IR67F form.

If your circumstances change

Check if the change affects your tax rate. If it does, you need to tell your payer. Using the wrong rate may mean you receive an end of year tax bill.

Find investment income updates in myIR

From 1 April 2020 financial institutions that pay investment income will be required to file more regularly. You may notice more investment income updates in your myIR account as more financial institutions move to monthly filing.

At the end of the tax year

At the end of the tax year we assess your tax position. We ask you to check the assessment and tell us about any changes. We might ask you to give us more information about your income, including your interest and dividends. If you need to you can change the split of income in myIR.

Under the new rules, income on joint investments will be split equally between the account holders we hold IRD numbers for. If you have provided this to your investment payer, they will pass it on to us (when they adopt the new investment income reporting rules, which are voluntary until 1 April 2020). From that date we will always receive this information, if they hold it. If you need to you can change the split of income in myIR and set a rate for a future split to make sure the income is directed correctly in the future.

What happens at the end of the tax year

Imputation credits

A New Zealand company or unit trust may attach 'imputation credits' to dividends. These imputation credits represent income tax the company has already paid.

Imputation for companies