Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from equity

CD 1: Dividend

You could also call this:

“How dividends are treated as income and when they're counted for tax purposes”

When you receive a dividend, it counts as income for you. This applies to any type of dividend you get.

If you get a dividend that isn’t a non-cash dividend (meaning it’s likely a cash dividend), you count it as income in the tax year when you receive it.

There’s a special rule for some companies. If a New Zealand company is treated as not living in New Zealand under a tax agreement with another country, and the dividend meets certain conditions, the income is counted in a different tax year. This special tax year is when something called the ‘DRCD deferral date’ happens. The conditions for this are explained in another part of the law about dividends within New Zealand wholly-owned groups.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512540.

Topics:
Money and consumer rights > Taxes
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Part C Income
Income from equity

CD 1Dividend

  1. A dividend derived by a person is income of the person.

  2. The income is allocated to the income year in which the person receives the dividend if the dividend is a dividend other than a non-cash dividend.

  3. Despite subsection (2), the income is allocated to the income year of the person in which the DRCD deferral date falls if the dividend—

  4. is derived by a New Zealand resident company that is treated under a double tax agreement as not being resident in New Zealand; and
    1. meets the requirements set out in section CW 10(1)(b) to (d), (5), and (6) (Dividend within New Zealand wholly-owned group).

      Compare
      Notes
      • Section CD 1(1) heading: inserted (with effect on 1 April 2020), on , by section 15(1) (and see section 15(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section CD 1(2) heading: inserted (with effect on 1 April 2020), on , by section 15(2) (and see section 15(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section CD 1(2): inserted (with effect on 1 April 2020), on , by section 15(2) (and see section 15(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section CD 1(3) heading: inserted (with effect on 30 August 2022), on , by section 10(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section CD 1(3): inserted (with effect on 30 August 2022), on , by section 10(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section CD 1 list of defined terms company: inserted (with effect on 30 August 2022), on , by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section CD 1 list of defined terms double tax agreement: inserted (with effect on 30 August 2022), on , by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section CD 1 list of defined terms DRCD deferral date: inserted (with effect on 30 August 2022), on , by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section CD 1 list of defined terms income year: inserted (with effect on 1 April 2020), on , by section 15(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section CD 1 list of defined terms New Zealand resident: inserted (with effect on 30 August 2022), on , by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section CD 1 list of defined terms non-cash dividend: inserted (with effect on 1 April 2020), on , by section 15(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section CD 1 list of defined terms resident in New Zealand: inserted (with effect on 30 August 2022), on , by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).