Plain language law

New Zealand law explained for everyone

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 help collect tax from people outside New Zealand who earn money from New Zealand sources.”

When you make a payment of non-resident passive income, you must withhold the amount of tax for the payment and pay it to the Commissioner. This obligation to withhold arises under section RA 6(2) at the time of payment. You do this to help the government collect tax from people who do not live in New Zealand but earn income from New Zealand sources. If you are in a limited partnership and earn interest from a New Zealand source, the limited partnership can choose to be treated as the person making the payment of that non-resident passive income.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

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

Previous

RF 2C: Meaning of non-resident financial arrangement income, or

"What counts as income from borrowing money from overseas lenders"

Next

RF 4: Non-resident passive income received by agents and others, or

"Tax on overseas income received by New Zealand agents or institutions"

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. For the purposes of subsection (1), when a payment of non-resident passive income, being interest that has a New Zealand source, is derived by a non-resident as a limited partner in a limited partnership, the limited partnership may choose to be treated as the person who makes the payment of that non-resident passive income to the extent of that payment.

  3. For the purposes of subsection (1), when a person makes a payment of non-resident passive income that consists of interest as a limited partner in a limited partnership, the limited partnership may choose to be treated as the person who makes the payment of that non-resident passive income to the extent of that payment.

  4. A limited partnership is treated as having made an election under subsection (1B) or (1C) if the limited partnership withholds and pays the tax to the Commissioner under subsection (1) in relation to that payment.

  5. Despite subsection (1D), a limited partnership is also treated as having made an election under subsection (1B) if the limited partnership notifies the Commissioner before a payment of non-resident passive income referred to in that subsection is made that the limited partnership chooses to be treated as the person who makes that payment.

  6. 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(1B) heading: inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1B): inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1C) heading: inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1C): inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1D) heading: inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1D): inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1E) heading: inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3(1E): inserted (with effect on 1 April 2008), on , by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • 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 interest: inserted (with effect on 1 April 2008), on , by section 126(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3 list of defined terms limited partner: inserted (with effect on 1 April 2008), on , by section 126(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3 list of defined terms limited partnership: inserted (with effect on 1 April 2008), on , by section 126(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3 list of defined terms New Zealand: inserted (with effect on 1 April 2008), on , by section 126(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • Section RF 3 list of defined terms non-resident: inserted (with effect on 1 April 2008), on , by section 126(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
  • 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).