If you pay dividends or interest to New Zealand residents, these are known as resident passive income. If you make payments that are resident passive income you'll need to:
- register as a payer
- deduct resident withholding tax (RWT) from these payments
- send the deductions to us.
Resident passive income
Resident passive income means an amount paid to a New Zealand resident that is one of the following:
- a dividend
- a taxable Māori authority distribution (other than a retirement scheme contribution)
- a replacement payment paid to a person under a share lending arrangement.
Under the resident withholding tax rules, resident withholding tax usually needs to be withheld from resident passive income, although there are some exceptions.
Resident withholding tax exemptions
Some people or organisations may have a resident withholding tax exemption when:
- income is exempt from tax, including resident withholding tax, under New Zealand tax law
- income is exempt from tax because of any other New Zealand legislation
- double tax agreements allow for an exemption from tax on certain types of income.
Do not deduct resident withholding tax from someone who has a resident withholding tax exemption. Use the exemption register to check.