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Resident withholding tax (RWT) Tāke mō ngā huamoni me ngā pānga

Make sure you're using the right RWT rate - individuals, companies and partnerships

Interest income

If you receive interest RWT will usually be deducted from this income by the payer and sent to us.

Note

RWT is deducted from interest on the day the interest is paid, regardless of when the interest was earned. So if interest is paid on or after 1 April 2010, it will be liable for RWT at the rates from 1 April 2010 (eg 21% rather than 19.5%). If paid on or after 1 October 2010 it will be liable for RWT at the new rate (eg 17.5% rather than 21%).

It is important that you choose the RWT rate appropriate to your level of taxable income. This ensures that the correct amount of tax is deducted from it. If you choose a rate that is too low, you will have a tax bill to pay at the end of the income year.

Where it is identified that you are using a rate that is not consistent with your marginal tax rate we can advise your interest payer to change your rate. You will receive a letter advising you of the change. If you think you should be using a different rate, please go to your interest payer’s website for information about changing it, or contact the interest payer directly.

You also need to make sure your interest payer has your IRD number.

RWT rates for 1 April 2010 - current

The 2010 Budget introduced changes to the rates of RWT, which banks and other financial institutions (interest payers) are required to deduct from interest payments they make.

Individuals

New rates for RWT came into effect from 1 April 2010 and the default rate for accounts with no elected rate increases. These rates have been changed with effect from 1 October 2010 as follows:

If your taxable income is... then for interest paid in the period 1 April to 30 September 2010 your RWT rate is ... and for interest paid from 1 October 2010 onwards your RWT rate is ... Note
$0 - $14,000 12.5% 10.5% You must have a "reasonable expectation" of earning $14,000 or less.
$14,001 - $48,000 21% 17.5% This is the RWT default rate for existing accounts if you haven't elected a rate.
$48,001 - $70,000 33% 30%  
$70,001 and over 38% 33% This is the RWT default rate for new accounts if you haven't elected a rate.

 

If you have... then for the period 1 April to 30 September 2010 RWT will be deducted at the ... and from 1 October 2010 onwards RWT will be deducted at the ...
not provided a valid IRD number no-notification rate of 38% no-notification rate of 33%.
provided a valid IRD number but not chosen a rate and opened a new account  after 31 March 2010 default rate of 38%. default rate of 33%.
provided a valid IRD number but not chosen a rate and not opened a new account  after 31 March 2010 default rate of 21% default rate of 17.5%.

Companies

There are two stages to the changes to the RWT rate for companies. From 1 October 2010, interest payments that would have had RWT deducted at 38%, will have RWT deducted at the new rate of 33%. The RWT rate deducted from interest payments made to companies will then change from 1 April 2011 as shown below.

Criteria 1 April to 1 October 2010 deduct RWT at... 1 October 2010 to 31 March 2011 deduct RWT at From 1 April 2011 deduct RWT at
No IRD number 38% 33% 33%
Default rate 33%* 33% 28%
Elected rate 33% 33%* 33%* 28%
Elected rate 38% 38% 33% 33%

* 30% if offered by the interest payer.

Partnerships

If the partnership's IRD number is given to the interest payer, you may choose any of the rates that would apply as if the account were held in a partner's name.

For example, if the partnership has a company as a partner, the partnership can choose the rate that applies to companies.

Dividends

Dividends are paid to the owners of shares in a company. Dividends are taxed at a flat RWT rate of 33%. Dividends from a listed PIE are not liable for RWT.