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Income Tax Act 2007

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

RE 17: Replacement payments under share-lending arrangements

You could also call this:

“How to calculate tax on payments replacing share income in lending arrangements”

When you make a payment that replaces income from shares in a share-lending arrangement, you need to calculate the tax on this payment. This is called a replacement payment.

To work out the tax, you use a special formula. The formula takes into account the tax rate, the amount of the payment, and any credits that are attached to it.

The tax rate used in the formula is set by the government. The payment amount doesn’t include any extra credits that might be attached to it. There are two types of credits that can reduce the tax: an imputation credit attached to the payment, and a credit shown on a transfer notice.

You can find more details about the tax rate in schedule 1, part D, clause 5. Information about imputation credits is in section OB 64.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520258.

Topics:
Money and consumer rights > Taxes
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“How to calculate tax on dividend payments when acting as an RWT proxy”

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

RE 17Replacement payments under share-lending arrangements

  1. This section applies when a person makes a payment of resident passive income that consists of a replacement payment under a share-lending arrangement.

  2. The amount of tax for the payment is calculated using the formula—

    (tax rate × payment ÷ (1 − tax rate)) − credit attached − credit transferred.

    Where:

    • In the formula,—

    • 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):
      1. payment is the amount of the replacement payment excluding an imputation credit attached under section OB 64 (Replacement payments):
        1. credit attached is the amount of an imputation credit attached to the replacement payment under section OB 64:
          1. credit transferred is the amount of an imputation credit shown in a credit transfer notice relating to the replacement payment.

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              Notes
              • Section RE 17(2) formula: replaced, on , by section 270(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
              • Section RE 17(3)(a) tax rate: amended, on , by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
              • Section RE 17(3)(d): amended, on , by section 270(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
              • Section RE 17(3)(e): repealed, on , by section 270(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
              • Section RE 17 list of defined terms FDP credit: repealed, on , by section 270(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).