If you're a New Zealand tax resident, you'll have resident withholding tax (RWT) deducted from interest and dividends you earn from New Zealand bank accounts and investments. Your payer (bank or fund manager) deducts the tax before they pay you.
Interest payments
From 1 April 2021 a new top tax rate of 39% has been introduced for individuals who earn over $180,000 a year.
The 39% rate is now available for you to use. Contact your interest payer to update to this rate if required.
Payers of interest, such as banks and other financial institutions had until 1 October 2021 to have this rate available for use. You may have a tax bill to pay if this rate applies to your income for the year ending 31 March 2022.
When you open an account
If you have not given your IRD number to your interest payer, tax will be deducted at a rate of 45% from interest paid to you.
Companies
You must notify your interest payer that you're a company.
From 1 April 2021
If you've given your interest payer your IRD number and company status, you may use either the 28%, 33% or 39% (the 39% rate is now available to use. Contact your interest payer to update to this rate if required) rate. If you do not choose a RWT rate, tax will be deducted at a rate of 28% from interest paid to you.
If the RWT rate you choose does not match your income tax rate you may receive an end of year tax bill.
There are 2 exceptions.
- Trustees are not required to notify their company status and may use the 17.5%, 30%, 33% or 39% rate. If you are a trustee of a testamentary trust, you may use the 10.5%, 17.5%, 30%, 33% or 39% rate.
- Māori authorities are not required to notify their company status and may use the 17.5%, 30%, 33% or 39% rate.
Up to 31 March 2021
If you've given your interest payer your IRD number and company status, you may use either the 28% or 33% rate. If you do not choose a RWT rate, tax will be deducted from interest paid to you at a rate of 28%.
There are 2 exceptions:
- Trustees are not required to notify their company status and may use the 17.5%, 30%, 33% or 39% 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%, 33% or 39% rate.
All others
From 1 April 2021
If you've given your interest payer your IRD number, you may use the 10.5%, 17.5%, 30%, 33% or 39% (the 39% rate is now available to use. Contact your interest payer to update to this rate if required) rate. This is the amount of tax to be deducted during the year. It should match your income tax rate.
If the RWT rate you choose does not match your income tax rate you may receive an end of year tax bill. If you do not choose a RWT rate, tax will be deducted from your interest payments at 33%.
| 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% |
| $70,000 to $180,000 | 33% |
| Over $180,000 | 39%1 |
1 Payers will make this available from 1 October 2021. Contact your interest payer to update to this rate if required. You may have a tax bill to pay if this rate applies to your income for the year ending 31 March 2022.
Up to 31 March 2021
If you've 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 RWT rate you choose does not match your income tax rate you may receive an end-of-year tax bill. If you do not choose a RWT rate, tax will be deducted from your interest payments at 33%.
| 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 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
Details of all investment income paid to you (and tax withheld on it) are reported to us. Financial institutions that pay investment income need to report to us the month after they’ve paid you. You may notice investment income updates in your myIR account as a result.
Investment income across joint accounts
Income reported for joint investments will be split equally between the account holders who have provided valid IRD numbers to their payer.
If you need to, you can change the split of income and set a rate for a future split to make sure the income is directed correctly in the future. You can change this allocation through myIR or by contacting us. Alternatively, you can amend this allocation when we complete your income tax assessment at the end of the year or when you file your income tax return.
If you have a joint account, you can only use one RWT rate. So you'll need to decide which is the most appropriate rate. For example, if you both earn over $180,000, choosing the 39% 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 - IR386 form.
At the end of the tax year
At the end of the tax year we work out if you’ve paid the right amount of tax. We ask you to check your income tax assessment and tell us about any changes. We might ask you to give us more information about your income, including your interest and dividends.
We might tell your investment Income payer (such as your bank) your correct IRD number if you have given them an incorrect IRD number. This does not remove your responsibility to let your investment Income payer know your correct IRD number.
What happens at the end of the tax year
Dividend Payments
The RWT rate for dividend payments is 33%. The company paying the dividend will deduct this RWT before making the dividend payment to you.
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. These credits may offset the RWT that is deducted from the dividend paid to you.