RE 14Non-cash dividends other than certain share issues

1. This section applies when a person makes a payment of resident passive income that consists of a non-cash dividend other than—

2. a bonus issue in lieu:
3. a share issued under a profit distribution plan:
4. a dividend referred to in section RE 14C.

5. This section does not apply if,—

6. at the same time as making a payment of a relevant non-cash dividend the person also makes a payment of a dividend other than a non-cash dividend; and
7. they choose to apply section RE 14B; and
8. the requirements of section RE 14B are met.

9. The amount of tax for the payment that the person must pay under subsection (4) to the Commissioner is calculated using the formula—

   $(tax\; rate\; \times \; dividend\; paid\; ÷\; (1\; -\; tax\; rate))\; -\; tax\; paid\; or\; credit\; attached.$

   Where:

10. In the formula,—

11. tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
12. dividend paid is the amount of the dividend paid before the amount of tax is determined:
13. tax paid or credit attached is the total of the following amounts:
    1. if the dividend is paid in relation to shares issued by an ICA company, the amount of an imputation credit attached to the dividend:
    2. if the dividend is paid in relation to shares issued by a company not resident in New Zealand, the amount of foreign withholding tax paid or payable on the amount of dividend.

14. For the purposes of subsection (2), the person must pay to the Commissioner the amount calculated as if it were the amount of tax required to be withheld and paid under the RWT rules.