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Income Tax Act 2007

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

RE 30: When unincorporated bodies have RWT-exempt status

You could also call this:

“Groups without official status can be exempt from resident withholding tax in certain situations”

When an unincorporated group that does business has RWT-exempt status, there are special rules about how payments are treated. If the group makes a payment while doing business, it’s treated as if the whole group made it, not just one member. If a member gets paid for their work in the group, it’s treated as if the group got paid, not the individual.

Every member of the group is responsible for paying the RWT that the group owes, as long as they’re part of the group. If a member dies, their estate has to pay any unpaid amounts. For partnerships, joint ventures, or trusts, a member is part of the group until the Commissioner is told they’ve left.

In groups where members or a committee run the business, the president, chair, treasurer, secretary, or similar officers are all responsible for doing what’s required under the RWT rules. If they don’t do it, all members are responsible. But if one officer or member does what’s needed, that’s enough.

Changes in who’s in the group don’t affect how the RWT rules work. In this section, a ‘member’ means a partner, joint venturer, trustee, or member of a group.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520300.

Topics:
Money and consumer rights > Taxes
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RE 29: Establishing whether persons have RWT-exempt status, or

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

RE 30When unincorporated bodies have RWT-exempt status

  1. This section applies when—

  2. an unincorporated body that is carrying on a taxable activity has RWT-exempt status; and
    1. the exemption relates to the carrying on of the taxable activity.

      1. For the purposes of the RWT rules, a payment that the body makes in the course of carrying on the taxable activity is treated as a payment made by the body and not by a member of the body. This subsection overrides subsection (7).

      2. For the purposes of the RWT rules, a payment made to a member of the body in their capacity as a member and in the course of carrying on the taxable activity of the body is treated as a payment made to the body and not to the member.

      3. Each member of the body is jointly and severally liable for the RWT that the body is required to pay for as long as the member remains part of the body.

      4. For the purposes of subsection (4),—

      5. if the member is a natural person, their estate is liable after their death for an amount payable that remains unpaid:
        1. if the body is a partnership, joint venture, or the trustees of a trust, a member continues as a member until the date the Commissioner is notified of a change of membership.

          1. Subsection (7) applies to an unincorporated body other than a partnership, joint venture, or the trustees of a trust, when the business of the body is managed by the members or a committee of its members.

          2. If something is required to be done under the RWT rules by or on behalf of the body, each member holding office as president, chair, treasurer, secretary, or a similar office is jointly and severally responsible. In default, each member holding office bears the responsibility. Action taken by 1 officer or committee member is sufficient.

          3. If something is required to be done under the RWT rules by or on behalf of the body, each member is jointly and severally liable to do it. However, action taken by 1 member is sufficient. Subsection (7) overrides this subsection.

          4. A change in membership of the unincorporated body has no effect for the purposes of the RWT rules. Subsection (5)(b) overrides this subsection.

          5. In this section,—

            member means a partner, joint venturer, a trustee, or a member of a body.

            Compare
            Notes
            • Section RE 30 heading: amended, on , by section 229(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
            • Section RE 30(1)(a): amended, on , by section 229(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
            • Section RE 30(10) partnership and partner: repealed, on , by section 22(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
            • Section RE 30 list of defined terms notify: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
            • Section RE 30 list of defined terms RWT-exempt status: inserted, on , by section 229(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
            • Section RE 30 list of defined terms RWT exemption certificate: repealed, on , by section 229(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).