From 1 April 2020, the reporting requirements for investment income have changed.
Interest payers do not need to withhold tax on interest they pay if the:
- interest is on funds that do not generate taxable income
- amount of interest paid to generate taxable income is less than $5,000.
If this applies to you, the following information is required for each of the income recipients who received interest:
- their name
- their contact details
- the amount and type of interest paid to them.
If it is available, you need to provide the following information for each of the income recipients who received interest:
- their IRD number or foreign equivalent
- their date of birth.
You must provide the name of any joint owners. If held, you also need to provide the following information for any joint owners:
- IRD number
- date of birth
- contact address.
You will need to report this electronically unless you have an exemption.
This is all due when you file your income tax return.
Example: James borrows money to buy a house.
James borrowed $200,000 from his parents to buy a house and pays $12,000 of interest. James runs a taxable activity selling go-carts from his garage. The garage is 20% of the floor area of the house so $2,400 of the interest is attributed to his taxable activity.
James does not have an RWT obligation in relation to the interest as only $2,400 of it relates to his taxable activity and this is less than $5,000.
James will instead need to file the investment income information described above with his return of income for the corresponding income year.