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Income Tax Act 2007

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

RE 18: Payments made by RWT proxies

You could also call this:

“How to calculate tax on dividend payments when acting as an RWT proxy”

When you’re an RWT proxy for someone paying a dividend, you need to withhold some tax. To work out how much tax to withhold, you use a special formula.

The formula is: tax rate × amount paid ÷ (1 − tax rate).

In this formula, ‘tax rate’ means the basic rate that you can find in schedule 1, part D, clause 3. This schedule talks about basic tax rates for different types of income and payments.

‘Amount paid’ in the formula means how much the dividend payment is.

You use this formula to figure out the right amount of tax to hold back when you’re acting as an RWT proxy for dividend payments.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520267.

Topics:

Money and consumer rights > Taxes

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

RE 18Payments made by RWT proxies

A person who is an RWT proxy for a person paying resident passive income that consists of a dividend must withhold an amount of tax for the payment calculated using the formula—
$tax rate × amount paid ÷ (1 − tax rate).$

Where:
In the formula,—
tax rate is the basic rate set out in schedule 1, part D, clause 3 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
amount paid is the amount of the dividend paid.

Compare

2004 No 35 s NF 2(1B)

Notes

Section RE 18(2)(a) tax rate: amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 116(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section RE 18(2)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).