Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Agents

HD 21: Companies

You could also call this:

“Rules for companies paying dividends to non-residents”

If you own a company in New Zealand, you need to know about some rules for paying money to people who don’t live in the country. These rules are about dividends, which are a share of the company’s profits.

Your company becomes an agent for people who don’t live in New Zealand (called absentees) when you pay them dividends. This happens if they own shares in your company or if they have a special kind of loan called a debenture.

There’s another rule that can change how some debentures are treated. You can find more information about this in section FA 2.

It’s important to know that there are some exceptions to these rules. You can find these exceptions in section RF 2(3) and (4). These exceptions are about something called “non-resident passive income” and they take priority over the rules we just talked about.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517436.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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HD 20B: General partners and partners carrying on with or managing business involving absentees, or

“Partners responsible for tax on income of non-resident partners”

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HD 22: Banking companies, or

“Rules for businesses paying interest on deposits from non-residents”

Part H Taxation of certain entities
Agents

HD 21Companies

  1. A company incorporated in New Zealand is an agent of an absentee to whom it pays or credits dividends as a shareholder, or as a holder of a debenture to which section FA 2 (Recharacterisation of certain debentures) applies.

  2. Section RF 2(3) and (4) (Non-resident passive income) overrides this section.

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