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RF 9: When dividends fully imputed
or “Explaining how to calculate when a dividend is fully imputed”
You could also call this:

“Paying tax on non-cash dividends that aren't fully imputed”

When you receive a non-cash dividend that isn’t fully imputed, you need to pay tax on it. This is called non-resident passive income.

If the payment isn’t a taxable bonus issue, the tax amount is worked out using a special formula. This formula uses the tax rate from section RF 8 and the amount of the dividend that isn’t fully imputed.

For taxable bonus issues, there’s a different formula. It also uses the tax rate from section RF 8, but the dividend payment is calculated differently. It’s based on specific rules about bonus issues and only includes the part that isn’t fully imputed.

If the non-cash dividend is fully imputed, you don’t have to pay any tax on it.

If you owe tax under these rules, you must pay it to the Commissioner. This payment is treated as if it were withheld and paid under the usual non-resident withholding tax (NRWT) rules.

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Next up: RF 11: Dividends paid to companies associated with non-residents

or “Rules for dividends when non-residents sell shares to NZ companies they're associated with”
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Part R General collection rules
Withholding tax on non-resident passive income (NRWT)

RF 10Non-cash dividends

  1. Subsections (2) to (5) apply when a person makes a payment of non-resident passive income that consists of a non-cash dividend to the extent to which the amount is not fully imputed.

  2. The amount of tax, when the payment is not a taxable bonus issue, is calculated using the formula—

    rate A ÷ (1 − rate A) × dividend payment.

    Where:

    • In the formula in subsection (2),—

    • rate A is the rate of tax set out in section RF 8:
      1. dividend payment is the amount of the dividend paid to the extent to which the amount of the dividend is not fully imputed, as described in section RF 9(2), disregarding the amount of tax to be withheld.

            1. The amount of tax, when the payment is a taxable bonus issue, is calculated using the formula—

              rate A × dividend payment.

              Where:

              • In the formula in subsection (4),—

              • rate A is the rate of tax set out in section RF 8:
                1. dividend payment is the amount of the dividend paid calculated under section CD 7(2), CD 7B(2), or CD 8(3) (which relate to bonus issues)—
                  1. other than a dividend referred to in the item bonus issue:
                    1. to the extent to which the amount of the dividend is not fully imputed (as described in section RF 9).

                          1. When a payment of non-resident passive income consists of a non-cash dividend, the rate of NRWT payable on the amount is 0% to the extent to which the amount is fully imputed.

                          2. A person who is liable under this section for NRWT must pay the amount to the Commissioner. The amount is treated as if it were an amount withheld and paid under the NRWT rules for the purposes of this Act and the Tax Administration Act 1994.

                          3. Repealed
                          Compare
                          Notes
                          • Section RF 10(1) heading: substituted (with effect on 1 April 2008), on , by section 534(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section RF 10(1): substituted (with effect on 1 April 2008), on , by section 534(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section RF 10(2) formula: replaced, on , by section 277(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(3)(a): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 130(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                          • Section RF 10(3)(b): replaced, on , by section 277(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(3)(c): repealed, on , by section 277(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(3)(d): repealed, on , by section 277(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(4) formula: replaced, on , by section 277(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(5)(b): amended (with effect on 1 October 2012), on , by section 151(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                          • Section RF 10(5)(b)(ii): replaced, on , by section 277(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(5)(c): repealed, on , by section 277(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(5)(d): repealed, on , by section 277(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10(5)(e): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 130(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                          • Section RF 10(5B) heading: inserted (with effect on 1 April 2008), on , by section 534(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section RF 10(5B): inserted (with effect on 1 April 2008), on , by section 534(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section RF 10(7) heading: repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , pursuant to section 130(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                          • Section RF 10(7): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 130(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                          • Section RF 10 list of defined terms CTR additional dividend: repealed (with effect on 1 July 2011), on , by section 130(5) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                          • Section RF 10 list of defined terms FDP: repealed, on , by section 277(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10 list of defined terms FDP credit: repealed, on , by section 277(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                          • Section RF 10 list of defined terms fully credited for conduit tax relief: repealed (with effect on 1 July 2011), on , by section 130(5) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                          • Section RF 10 list of defined terms fully imputed: inserted (with effect on 1 April 2008), on , by section 534(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section RF 10 compare note: amended (with effect on 1 April 2008), on , by section 534(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).