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Income Tax Act 2007

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

RF 6: When amounts of tax not withheld or partly withheld

You could also call this:

“What happens when tax isn't fully deducted from payments to non-residents”

If someone doesn’t take out all the tax they should from money paid to people who don’t live in New Zealand, you need to know a few things. The person who should have taken out the tax is called a withholding agent, and the person who got the money is now treated as someone who has to file a tax return.

If you get money from outside New Zealand that’s called a dividend because of special rules, you also have to file a tax return.

The tax that wasn’t taken out becomes a debt that you owe to the government. It’s treated as if it was due when the original payment was made.

For non-cash dividends, the amount you owe is equal to the tax that should have been paid on the dividend.

The government can take steps to get the money from whoever they think should pay it, whether that’s the person who should have taken the tax out or the person who got the money.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520322.

Topics:
Money and consumer rights > Taxes
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RF 5: When amounts of tax already withheld, or

“When you don't need to deduct tax if it's already been withheld”

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RF 7: General rate for NRWT, or

“The standard tax rate for non-resident passive income is 15%”

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

RF 6When amounts of tax not withheld or partly withheld

  1. When a person is required under section RA 6(2) (Withholding and payment obligations for passive income) to withhold NRWT and does not withhold the full amount required under this Part, the person deriving the non-resident passive income is treated for this purpose as a filing taxpayer.

  2. A person who derives non-resident passive income that is a dividend under section GB 1(3) (Arrangements involving dividend stripping) is treated as a filing taxpayer.

  3. The amount of tax referred to in subsection (1) as not withheld is a debt payable by the person to the Commissioner, and is treated as having become due under section RA 10 (When obligations not met).

  4. Subsection (2) applies in relation to a non-cash dividend described in section RF 10 as if the amount equal to the amount of tax for the dividend were the amount payable.

  5. In recovering the amount, the Commissioner may take the steps the Commissioner thinks fit in relation to the person in default or liable to pay, whether or not they are the same person.

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Notes
  • Section RF 6(1B) heading: inserted (with effect on 1 April 2008), on , by section 113(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
  • Section RF 6(1B): inserted (with effect on 1 April 2008), on , by section 113(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).