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Income Tax Act 2007

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

RF 3: Obligation to withhold amounts of tax for non-resident passive income

You could also call this:

“You must deduct tax when paying overseas residents for certain types of income”

When you pay money to someone who doesn’t live in New Zealand, and it’s a type of income called ‘non-resident passive income’, you need to take out some tax from that payment. This is called ‘withholding’. You must do this when you make the payment, and then give that tax money to the Commissioner of Inland Revenue. This rule comes from section RA 6(2).

However, there’s an exception to this rule. If there’s an amount that’s treated as a dividend because of section GB 1(3), which talks about something called ‘dividend stripping’, you don’t need to withhold any tax from it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520316.

Topics:
Money and consumer rights > Taxes
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Part R General collection rules
Withholding tax on non-resident passive income (NRWT)

RF 3Obligation to withhold amounts of tax for non-resident passive income

  1. A person who makes a payment of non-resident passive income must withhold the amount of tax for the payment and pay it to the Commissioner. The obligation to withhold arises under section RA 6(2) (Withholding and payment obligations for passive income) at the time of payment.

  2. Despite subsection (1), no obligation to withhold NRWT arises in relation to an amount treated as a dividend under section GB 1(3) (Arrangements involving dividend stripping).

Compare
Notes
  • Section RF 3(1) heading: inserted (with effect on 1 April 2008), on , by section 112(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
  • Section RF 3(2) heading: added (with effect on 1 April 2008), on , by section 112(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
  • Section RF 3(2): added (with effect on 1 April 2008), on , by section 112(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
  • Section RF 3 list of defined terms amount: inserted (with effect on 1 April 2008), on , by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
  • Section RF 3 list of defined terms dividend: inserted (with effect on 1 April 2008), on , by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
  • Section RF 3 list of defined terms NRWT: inserted (with effect on 1 April 2008), on , by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).