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Income Tax Act 2007

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

RE 21: Basis for payment of RWT

You could also call this:

“How and when RWT is paid to the government”

When you get interest income, the person paying you might need to take out some tax. This is called Resident Withholding Tax (RWT). Here’s how they decide when to pay this tax to the government:

If they think they’ll need to take out $500 or more in tax each month for a year, they must pay this tax to the government every month.

If they think they’ll take out less than $500 in tax each month for a year, they can pay the tax to the government in two parts during the year.

But, if they end up taking out more than $500 in tax over two months, they need to pay all of that tax to the government by the 20th day of the next month.

For other types of income like dividends or Maori authority distributions, the person paying you must always pay the tax they take out to the government every month.

These rules help make sure the right amount of tax is paid at the right time.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520279.

Topics:
Money and consumer rights > Taxes
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RE 20: Paying RWT, or

"Rules for paying Resident Withholding Tax to the Commissioner"

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RE 22: When payment treated as non-resident passive income, or

"When payments to agents or trustees can be treated as income for non-residents"

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

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RE 21Basis for payment of RWT

  1. Subsections (2) to (5) apply for the purposes of section RA 6(1) (Withholding and payment obligations for passive income) to a person who is required under the RWT rules to withhold RWT for resident passive income consisting of interest.

  2. If the person estimates for a tax year that they will be required to withhold $500 or more in total for each month of the tax year, they must pay the amount of tax to the Commissioner on a monthly basis.

  3. If the person estimates for a tax year that they will be required to withhold less than $500 in total for each month of the tax year, they may pay the amount of tax to the Commissioner in 2 instalments as described in section RA 15 (Payment dates for interim and other tax payments).

  4. Subsection (5) applies when the person has withheld more than $500 in total amounts of tax for a 2 month-period from the start of 1 month in a tax year to the end of the month following that month.

  5. Despite subsections (2) and (3), the person must pay the total amount of tax to the Commissioner for the 2-month period by the 20th day of the month following the end of the period.

  6. Subsection (7) applies for the purposes of section RA 6(1) to a person who is required under the RWT rules to withhold RWT for resident passive income consisting of a dividend, a replacement payment, or a taxable Maori authority distribution.

  7. The person must pay the amount of tax to the Commissioner on a monthly basis.

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Notes
  • Section RE 21(2) heading: amended (with effect on 1 April 2008), on , by section 76(1) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
  • Section RE 21(2): amended (with effect on 1 April 2008), on , by section 76(2) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
  • Section RE 21(3) heading: amended (with effect on 1 April 2008), on , by section 76(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
  • Section RE 21(3): amended, on , by section 162 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).