If you're paying interest, dividends or royalties to people who aren't New Zealand tax residents, you'll need to register as a NRWT payer and deduct non-resident withholding tax. You need to find the NRWT rate that applies for the non-resident you are deducting it for.
|You must give the overseas address of customers with investments to banks or financial institutions so that they deduct the correct rate of tax from non-resident withholding income.|
NRWT is deducted from non-resident passive income paid to non-residents. Non-resident passive income generally includes interest, dividends and royalties. The money that you deduct is paid to us by the 20th of the month following the payment.
You can register as an NRWT payer by completing either the:
At the end of each financial year you must complete a:
These need to be filed by 31 May each year.
You can find out how to complete the IR67S in our NWRT reconciliation statement guide (IR67SG).
Or you can contact the Non-resident Centre to ask them to send you a copy of the IR67SG.
NRWT is reduced when the person lives in a country that New Zealand has a double tax agreement (DTA) with. The percentages are the rates of NRWT deductible from the gross income (expenses can't be deducted). The rates shown are for a full year unless otherwise stated. They are only intended as a quick reference guide, and you should always check the DTA for specific rules that might provide for a different rate. Where there are multiple rates, you need to refer to the relevant DTA for that country.
Use the NRWT rates of the country or territory from the "NRWT rates for DTA countries or territories table" below to complete the New Zealand NRWT withholding certificate (IR67).
|The percentage is the final liability. If the correct NRWT is deducted and this is the recipient's only income received from New Zealand, no New Zealand tax return is required.|
|The minimum rate of tax. The income (after deducting expenses) must be included in the non-resident's tax return, along with all other income from New Zealand. Credit is allowed for the NRWT deducted.|
|The amount of NRWT deducted isn't a final tax. It must be included in your return of income. However, the amount of NRWT deducted may not be reduced, as it is a minimum rate of tax under domestic law.|
Read A guide to associated persons definitions for income tax purposes (IR620). The exception is - for interest covered by DTAs with Fiji and Malaysia, the definition of associated persons is limited to control of one party by another. This control can be direct or indirect and can be any kind of control.
Select the country to find the NWRT rate.
|Korea, Republic of South Korea||Malaysia||Mexico|
|Netherlands||Norway||Papua New Guinea|
|United Arab Emirates||United Kingdom||United States of America|
Use the following rates if the:
Some exceptions may apply - see our NRWT payer's guide (IR291) for more information.
A "deferral calculation" is required for a transaction with a related party if the financial arrangement expenditure exceeds a $40,000 threshold for the previous year.
The deferral calculation is:
Accumulated payments are the total interest paid from when the financial arrangement became a related party debt until the 20th of the third month after the end of the income year. For example if the income year ends 31 March, the accumulated payments are up to 20 June.
Accumulated accruals are the total expenditure the borrower incurs while the arrangement is a related party debt until the end of the year preceding the income year.
If the calculation is less than 90%
If the calculation is less than 90% then the financial arrangement rules are used to calculate the accrued interest, ie non-resident financial arrangement income, (NRFAI). NRWT is payable on that accrued interest - the NRFAI.
Where the related party debt does not exceed the $40,000 threshold or the calculation is satisfied (90% or greater) then NRWT is payable on interest using the payments basis.
You don't need to repeat the calculation once the 90% threshold has been breached. NRWT continues to apply on an accrual basis as long as the financial arrangement is related party debt.
When you do the calculation
You do the deferral calculation in the second month after the borrower's balance date.
The accrued interest (NRFAI) is deemed to be paid on the final day of that second month.
Then the NRWT payable on the interest (NRFAI) is included in the return due on the 20th of the third month after balance date.
You can also find out more about changes to: