Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

General collection rules - Terminal tax

RB 3: Schedular income tax liability for filing taxpayers for non-resident passive income

You could also call this:

“How to calculate tax on income earned in New Zealand by non-residents”

This section explains how to calculate the tax you owe on certain types of income if you’re not living in New Zealand. It applies when you’re figuring out your final tax bill.

If you earn money from New Zealand sources without living here, it’s called non-resident passive income. For each type of this income, you calculate the tax by multiplying the amount of money you received by a specific tax rate.

The tax rates for different kinds of non-resident passive income are found in other parts of the law. These parts are called RF 7 to RF 10, and RF 12.

If you get dividends (money paid to you for owning shares in a company) that fall under this rule, you can’t use any imputation credits attached to those dividends to reduce your tax. Imputation credits are usually a way to avoid being taxed twice on the same money, but they don’t apply in this case.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519791.

Topics:

Money and consumer rights > Taxes

RB 2: Income tax liability for non-filing taxpayers for non-resident passive income, or

“Former tax rules for non-residents earning passive income from NZ”

RB 4: Using refunds to satisfy tax liabilities, or

“How Inland Revenue can use your tax refund to pay off your tax bills”

Part R General collection rules
Terminal tax

RB 3Schedular income tax liability for filing taxpayers for non-resident passive income

This section applies for the purposes of calculating a filing taxpayer’s terminal tax under section BC 8 (Satisfaction of income tax liability).
The schedular income tax liability of the filing taxpayer under section BC 7 (Income tax liability of person with schedular income) for each class of non-resident passive income that is schedular income under paragraph (f) of the definition of schedular income is equal to an amount calculated using the formula—
$amount of income × tax rate.$

Where:
In the formula, tax rate is the rate set out in sections RF 7 to RF 10, and RF 12 (which relate to the calculation of NRWT) that applies to the class of non-resident passive income.
If the taxpayer derives a dividend to which subsection (2) applies, they do not have a credit under section LE 1 (Tax credits for imputation credits) for an imputation credit attached to the dividend.

Compare

2004 No 35 ss BC 7, NG 3

Notes

Section RB 3(2): amended (with effect on 1 April 2008), on 6 October 2009, by section 497(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RB 3 list of defined terms non-filing taxpayer: repealed, on 1 April 2019, by section 246 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).