New Zealand tax residents pay tax on interest earned from bank accounts and investments in New Zealand and overseas.
Interest income
Interest is money you earn when you lend money or deposit money with a bank, financial institution or other borrower.
Examples include:
- Bank accounts
- Term deposits
- Bonds
- Loans
- Finance company investments
Resident withholding tax
If you earn interest from New Zealand, your payer will usually deduct resident withholding tax (RWT) before they pay you. The tax withheld goes towards your income tax to pay. Payers regularly report investment income and tax withheld to us.
Resident withholding tax (RWT)
Interest from overseas investments
If you get interest from overseas, such as from foreign bank accounts, bonds or other investments, you may need to:
- include the interest in your income tax return
- convert it to New Zealand dollars
- consider whether the financial arrangements or foreign investment fund rules apply.
Tax for New Zealand tax residents
Interest paid to non-residents
If you are not a New Zealand tax resident and receive interest from New Zealand investments, different tax rules apply. These may include non-resident withholding tax or approved issuer levy (AIL), depending on your circumstances.
Tax for non-resident taxpayers
Financial arrangements
You usually only need to declare the interest you receive. However, some investments such as bonds, foreign currency accounts and loans may come under the financial arrangement rules. Those rules can require income and expenditure to be calculated differently.