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Income Tax Act 2007

General collection rules - Withholding tax on resident passive income (RWT)

RE 5: No withholding obligation in certain circumstances

You could also call this:

“When you don't need to deduct resident withholding tax”

When you pay money to someone else or receive money for someone else, you don’t always have to take out resident withholding tax (RWT). Here are some times when you don’t need to:

If the person you’re paying or receiving money for has RWT-exempt status, you don’t need to take out RWT. You can check if they have this status in section RE 27.

You also don’t need to take out RWT for some types of dividends mentioned in section RE 14C.

If you’re receiving money for someone who is a transitional resident, you might not need to take out RWT. This applies if:

  1. They tell you they’re a transitional resident for a certain time.
  2. They say that money from a specific source during this time is exempt income under section CW 27.
  3. You get the payment from that source during that time.
  4. You have no good reason to think the payment isn’t exempt under section CW 27.

Remember, these rules are part of the general collection rules in the Income Tax Act 2007.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520202.

Topics:
Money and consumer rights > Taxes
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RE 4: Persons who have withholding obligations, or

“Who must withhold tax on certain payments”

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“When it's unfair to expect someone to withhold tax from a payment”

Part R General collection rules
Withholding tax on resident passive income (RWT)

RE 5No withholding obligation in certain circumstances

  1. This section applies when a person (person A)—

  2. pays an amount to another person (person B); or
    1. receives a payment while acting as agent or bare trustee for person B.

      1. For the purposes of determining whether person A is required under section RE 4 to withhold RWT, the payment is treated as not consisting of resident passive income if person A has established that person B has RWT-exempt status under section RE 27.

      2. Section RE 4 does not apply in relation to a dividend referred to in section RE 14C.

      3. If person A receives an amount of resident passive income while acting as agent or bare trustee for person B, they are not required to withhold RWT in relation to the amount when—

      4. person B notifies person A that—
        1. they are a transitional resident for a period; and
          1. an amount paid during the period from a particular source is exempt income of person B under section CW 27 (Certain income derived by transitional resident); and
          2. person A receives the payment during the period from the particular source; and
            1. person A has no reasonable grounds for believing that the payment is not exempt income of person B under section CW 27.

              Compare
              Notes
              • Section RE 5(2): amended, on , by section 220(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RE 5(2B) heading: inserted, on (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 220(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RE 5(2B): inserted, on (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 220(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RE 5 list of defined terms dividend: inserted, on (with effect on 1 April 2017), by section 220(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RE 5 list of defined terms RWT-exempt status: inserted, on , by section 220(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RE 5 list of defined terms RWT exemption certificate: repealed, on , by section 220(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).