From 1 April 2020, the reporting requirements for investment income have changed.
If you're paying royalties to non-residents, you need to withhold non-resident withholding tax (NRWT).
If you’ve withheld tax from a royalty payment you’ve made to a non-resident, then you must pass this tax on to us. It is due by the 20th of the next month after you paid the non-resident.
For reporting information, NRWT on royalty payments has a different timeframe from other types of non-resident withholding tax payments. The information below is due to us annually by 31 May each year.
If you pay royalties to non-residents, you need to send us the following information at the end of the year:
- your name, IRD number and contact address
- the total amount of royalties paid
- the total amount of tax (NRWT) withheld.
The following information is required for each of the income recipients who received royalties:
- their name
- their contact details (email, street address or mobile phone number)
- the tax rate they have provided
- the amount and type of income paid to them
- the tax (NRWT) withheld from it.
If it is available, you need to provide the following information for each of the income recipients who received royalties:
- their IRD number
- 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 details (email, street address or mobile phone number).
You will need to report this electronically unless you have an exemption.
The information is due by 31 May each year.
Options for reporting information
Although payment of NRWT withheld from royalty payments is still monthly, you have 2 options for reporting the information to us. You can either include the required information for NRWT on royalty payments in a:
- monthly return (making sure to include other NRWT information)
- end-of-year return (filing a separate return by 31 May for the whole year).
Other types of NRWT payments must also report the required information to us by the 20th of the next month after withholding the tax. If there is no tax withheld, then no return is needed for that month.
You can include all the required information for NRWT on royalty payments in the monthly return where you're reporting the other NRWT payments. This will make sure that the total amount of NRWT in the return matches the total amount of NRWT paid to us for the month.
You'll be filing more frequently than required by legislation, but it may be a simpler option from a business-process perspective.
Since the other types of NRWT payments require a monthly return, you'll need to make sure you do the following steps if you're filing NRWT on royalties only at the end of the year. This is required to ensure the payment amount for the month matches the amount in the monthly return for the other types of NRWT payments.
- File an NRWT return for the total amount from the other non-resident withholding tax payments that require monthly reporting.
- Make the NRWT payments (those requiring monthly reporting) for the period that matches the return you filed.
- Make a separate payment for the NRWT on royalties. This payment must be made against the 'March' period of the tax year. You'll also need to include the IRD number and tax type. This makes sure that we hold this amount pending the March return. You do not file a return for this payment at this point.
- By 31 May, file the annual return for the total NRWT withheld on royalty payments made during the tax year. Make sure 'March' is selected as the period. We will match this return with the payments made during the year for the 'March' period. If NRWT on any other payments has been withheld in March, then it can be combined in the same return. However, the return will need to be filed by 20 April to meet the reporting requirements for those non-resident withholding tax payments.