Your bank or financial institution deducts resident withholding tax (RWT).
When you have RWT exempt status you do not have to pay this tax. This means your bank or financial institution stops deducting the tax from you.
Who can apply for a resident withholding tax exemption
You can apply for an exemption from paying resident withholding tax (RWT) if you're a:
- amateur sports promoter
- Board of Trustees
- charitable estate
- community housing provider registered with the Community Housing Regulatory Authority
- community trust
- company that is a member of the Public Trust group, the Public Trustee or the Māori Trustee
- finance house or broker
- friendly society or credit union
- funeral trust
- gaming machine operator
- horse or greyhound racing club
- improvement or research promoter
- local or public authority
- local or regional promotion body
- not-for-profit organisation
- portfolio investment entity (PIE)
- public purpose Crown-controlled company
- registered bank or building society
- statutory trustee company
- tertiary education institution.
You can also apply if you:
- have earned or think you'll earn more than $2 million a year
- can prove you’ll have losses, or a resident withholding tax refund, of $500 or more
- are exempt from paying tax under an Act other than the Tax Acts.
Applying when you're on the Charities Services register
If you're a charitable organisation on the Charities Services register you do not have to apply. We'll automatically give you RWT exempt status and add you to the RWT exemption register.
Approving resident withholding tax exemption applications
We'll tell you if your application is approved. We'll also add your IRD number to the RWT exemption register.
You'll need to tell your payer (bank or fund manager) you have an exemption, and the expiry date (if applicable).
When we cancel your resident withholding tax exemption (RWT)
We may cancel your RWT exemption if you:
- gave misleading information in your application
- no longer meet the conditions it was issued under
- do not meet the $2 million target (if applicable) or give us satisfactory evidence of your income
- do not pay your income tax by the due date.
We'll tell you if you we cancel your exemption. You'll need to tell your payer within 5 working days.