If you're paying more than $5,000 a year in interest, you must register as a resident withholding tax (RWT) payer. You'll need to do this when:
- you pay the interest as part of a taxable activity, for example as a trade, profession, business, or as a non profit body or local authority
- we've issued you a certificate of exemption from resident withholding tax
- you're a non resident carrying on a taxable activity in New Zealand through a fixed establishment.
When you pay interest over the $5,000 threshold
You do not have to account for resident withholding tax on interest paid under $5,000 over the year. Once you're registered you need to account for resident withholding tax on all interest you pay. However, you do not need to account for any resident withholding tax on the interest you paid before reaching the $5,000 threshold.
Registering when you have a certificate of exemption
Banks, building societies and trustee companies who have a certificate of exemption from resident withholding tax must register as resident withholding tax payers. It does not matter how much resident passive income they pay in a year.
If you're an individual holding a certificate of exemption and your income is (or is estimated to be) more than $2 million for any year you must register as a payer if you pay out any resident passive income.
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.
We automatically register all companies as dividend resident withholding tax payers.