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Income Tax Act 2007

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

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

You could also call this:

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

When you need to pay someone money that would usually be treated as resident passive income, there are some special rules to follow. If you’re paying this money as an agent or trustee for someone else, you need to be careful.

If you have good reasons to think that the money is actually non-resident passive income for the person you’re paying, you need to do a few things. First, you should make reasonable inquiries to be sure. Then, you need to follow the rules for paying non-resident withholding tax to the Commissioner.

If you do all of this correctly, you won’t be responsible for resident withholding tax on that money. Instead, the money will be treated as if it was earned by someone who doesn’t live in New Zealand.

This helps make sure that the right kind of tax is paid on the money, depending on whether the person receiving it lives in New Zealand or not.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520281.

Topics:
Money and consumer rights > Taxes
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“How and when RWT is paid to the government”

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RE 23: When amount of tax treated as FDP credit, or

“This rule about treating tax as a foreign dividend payment credit is no longer in effect”

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

RE 22When payment treated as non-resident passive income

  1. This section applies when—

  2. a person (person A) is required to pay an amount that would be treated as resident passive income in the absence of this section to another person (person B); and
    1. person A receives resident passive income as agent or trustee for person B.

      1. If person A concludes on reasonable grounds after making reasonable inquiries that an amount is non-resident passive income derived by person B, and person A has complied with their obligations under this Act and the Tax Administration Act 1994 in relation to paying non-resident withholding tax (NRWT) to the Commissioner, they have no liability under the RWT rules in relation to the amount.

      2. For the purposes of determining person A’s liability under the RWT rules, the amount is treated as derived by a non-resident.

      Compare
      Notes
      • Section RE 22(1)(a): substituted (with effect on 1 April 2008), on , by section 110(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
      • Section RE 22 list of defined terms resident in New Zealand: repealed (with effect on 1 April 2008), on , by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).