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Non-resident withholding tax (NRWT) Tāke mō ngā huamoni me ngā pānga ki tauiwi

Approved issuer levy (AIL) glossary

The following is a list of words and terms on this page:
Approved issuer Non-resident passive income
Approved issuer levy (AIL) NRWT (non-resident withholding tax)
Associated persons Redemption payment
Bonds (qualifying) Registered security
Fixed establishment Resident
Interest Variable principal debt instrument
Leviable value Zero rating (AIL)

 Approved issuer

A borrower who has elected to be an approved issuer and has registered as an approved issuer with us. This allows you or a person on your behalf, to pay interest to a non-resident without having to deduct non-resident withholding tax.

 Approved issuer levy (AIL)

A payment calculated at the rate of 2% of the leviable value of the registered security. This is the amount of interest paid for the security, or any redemption payment on a bond issued at a discount.

 Associated persons

The following are associated persons:

  • any relative to the fourth degree (see "Note" below) by blood, marriage, civil union or adoption
  • any two or more companies where a group of persons have:
    • 50% or more of the voting interests, or
    • 50% or more of the market value interests, or
    • control of both companies by any other means
  • any company and any individual who holds at least 25% of the capital of the company, either individually or with a spouse and/or children, or a trustee for the spouse or children
  • a partnership and a partner or any person who is an associated person of any partner.

To work this out draw a family tree. Each link between names is a degree of relationship. Count backward from one person to a common ancestor, then forward to the other person. A first cousin or a great-aunt are examples of relatives to the fourth degree.

Separate associated person rules apply where a bank or other businesses operating in the financial sector, similar to a bank, borrows from an associated person.

The associated persons rules have recently been amended and have the following application dates:

Transactions involving land

  • for a person and persons associated to a person involved in a building business for land on which improvements are begun on or after 6 October 2009
  • for other persons and associated persons for land acquired on or after 6 October 2009.

Transactions other than land

The changes to the other provisions apply to transactions occurring in 2010-11 and later income years.

You can find out more about the amended rules in Tax Information Bulletin Vol 21 No 8, October/November 2009, Part II New legislation.

Bonds (qualifying)

Where a bond issue meets certain requirements instead of paying AIL at 2%, a zero rate applies.

Criteria for qualifying

To qualify for the zero rate on interest payments the security must:

  • be denoted in NZ dollars, and
  • offered to the public in terms of the Securities Act 78 (refer to section 3), and
  • not be issued as a private placement, and
  • is not an asset backed security, and
  • the activities of the registrar and paying agent are conducted through a fixed establishment in NZ, and
  • the security is listed on the stock exchange or satisfies a widely held test.

Widely held test

To meet the widely held test a security must:

  • be held by 100 separate persons who the issuer could reasonably assume are not associated at thetime the test applies, and
  • no person or group of associated persons are to hold a 10% or greater interest at the time of applying the test.

 Fixed establishment

A place of business from which a substantial business is carried out, such as a retail shop, hotel, factory or farm. A property let for rent is generally seen as an investment rather than a business.


Any amount paid or credited for money lent. This covers redemption payments.

 Leviable value

  • the amount of interest paid on a registered security
  • any redemption payment on a bond issued out at a discount. Redemption payments are included in the definition of interest for NRWT purposes.

 Non-resident passive income, formerly non-resident withholding income (NRWI)

Interest, dividends and royalties which a non-resident has received or is considered to have received from New Zealand.

  NRWT(non-resident withholding tax)

A tax deducted from non-resident passive income. Anyone who pays non-resident passive income must deduct NRWT and pay it to us each month. The rate of NRWT to deduct depends on the type of income and where the recipient is resident.

Find out more about NRWT

 Redemption payment

The additional amount paid on the commercial bill when the total amount paid is more than the amount originally borrowed.

 Registered security

Any transaction involving money lent to an approved issuer that is:

  • registered by us, or
  • one of a class of transactions registered by us.


A person is a tax resident if they:

  • have an "enduring relationship" with New Zealand, or
  • have been present in New Zealand for more than 183 days in any 12-month period, or
  • are away from New Zealand in the service of the New Zealand Government.

A person who has been a New Zealand tax resident will become a non-resident if they:

  • no longer have an "enduring relationship" with New Zealand, and
  • are away from New Zealand for more than 325 days in any 12-month period.

A company is a resident in New Zealand if:

  • it is incorporated in New Zealand, or
  • its directors exercise control in New Zealand, or
  • it has its centre of management in New Zealand, or
  • it has its head office in New Zealand.
The rules for tax residency are not the same as citizenship or usual residency criteria. You can find out more abuot enduring relationship and tax residency our booklet New Zealand tax residence (IR292).

 Variable principal debt instrument

A financial arrangement where one party can ask the other party:

  • to borrow additional money, or
  • to return all the amounts borrowed if the other party's rights and obligations are shown in a foreign currency.

Zero rating (AIL)

Where a bond issue meets the qualifying criteria, instead of paying AIL at 2%, a zero rate can apply.