Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

RE 10: Special rule relating to payments of interest

You could also call this:

“When to deduct tax from interest payments over $5,000”

This section talks about when you need to take out some money (called RWT) from interest payments you make to others. You don’t have to take out this money if you paid $5,000 or less in interest in the year before. But, if you pay more than $5,000 in interest in the current year, you must start taking out RWT.

If you run a business, you only need to take out RWT if the interest you pay for that business is more than $5,000 in a year. This rule doesn’t apply to some special types of people or groups mentioned in section RE 27 or section 32E(2)(k) or (l) or section 32I of the Tax Administration Act 1994.

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 It might be out of date or be missing some parts.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=DLM1520220.

Topics:
Money and consumer rights > Taxes
Previous

RE 9: Agents’ or trustees’ obligations in relation to certain dividends, or

“Agents and trustees must withhold tax for certain dividends”

Next

RE 10B: Amounts withheld from distributions to holders of FIF attributing interests, or

“Tax withheld from foreign investment fund payouts can be claimed back”

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

RE 10Special rule relating to payments of interest

  1. This section applies to a person who—

  2. pays resident passive income consisting of interest; and
    1. either does not have RWT-exempt status under section RE 27 at the time of the payment or is a person described in section 32E(2)(k) or (l) of the Tax Administration Act 1994 or is a person with RWT-exempt status under section 32I of that Act; and
      1. has paid an amount of resident passive income consisting of interest that is equal to or less than $5,000 in the tax year before the tax year in which the payment is made; and
        1. would be liable to withhold RWT for the resident passive income in the absence of this section.

          1. Despite section RE 4(3), the person is required to withhold the amount of tax for the payment only if the total resident passive income consisting of interest paid by the person in the tax year in which the payment is made is more than $5,000.

          2. For the purposes of subsection (2), and despite section RE 4(3)(b), a person who pays an amount of resident passive income consisting of interest in relation to the carrying on of a taxable activity in a tax year is required to withhold RWT for the resident passive income only if the amount that relates to the taxable activity is more than $5,000 for the tax year. This subsection does not apply in relation to a person referred to in subsection (1)(b) other than a person who does not have RWT-exempt status.

          Compare
          Notes
          • Section RE 10(1)(b): replaced, on , by section 223(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section RE 10(1)(c): replaced, on , by section 223(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section RE 10(3) heading: inserted, on , by section 223(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section RE 10(3): inserted, on , by section 223(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section RE 10 list of defined terms RWT-exempt status: inserted, on , by section 223(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section RE 10 list of defined terms RWT exemption certificate: repealed, on , by section 223(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section RE 10 list of defined terms taxable activity: inserted, on , by section 223(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).