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Income Tax Act 2007

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

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

You could also call this:

“Rules for dividends when non-residents sell shares to NZ companies they're associated with”

This section talks about what happens when a non-resident person sells their share in a New Zealand company to another New Zealand company. Here’s what you need to know:

If you’re a non-resident and you used to own a share in a New Zealand company (let’s call it Company A), and you were associated with that company, this rule might apply to you. It comes into play if you sell your share to another New Zealand company (let’s call it Company B) that you’re associated with, and Company B hasn’t paid you the full price for the share yet.

While Company B still owes you money for the share, any dividends paid to Company B for that share are treated as if they were paid to you instead. This means that you, as the non-resident, are considered to have received the dividend when it’s paid, even though you no longer own the share.

This rule applies even if the money Company B owes you is secured in some way. It doesn’t matter how the debt is arranged - if any of the purchase price is still unpaid, this rule kicks in.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520360.

Topics:
Money and consumer rights > Taxes
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“Paying tax on non-cash dividends that aren't fully imputed”

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RF 11B: Dividends paid by companies in certain situations, or

“How non-residents are taxed on dividends from NZ companies”

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

RF 11Dividends paid to companies associated with non-residents

  1. This section applies when—

  2. a non-resident formerly held a share in a company (company A) resident in New Zealand; and
    1. while the non-resident held the share, company A was associated with the non-resident; and
      1. the non-resident has disposed of the share to another company (company B) that is resident in New Zealand and associated with the non-resident; and
        1. some or all of the price for which company B acquired the share remains after the acquisition unpaid or owing in any way to the non-resident, whether or not the amount is secured.

          1. While an amount of the price remains unpaid or owing, a dividend paid to company B in relation to the share is treated as having been paid to the non-resident and as derived as a dividend by the non-resident at the time the dividend is paid.

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          Notes
          • Section RF 11 heading: substituted, on (applying for the 2010–11 and later income years), by section 535(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section RF 11(1)(b): substituted, on (applying for the 2010–11 and later income years), by section 535(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section RF 11(1)(c): substituted, on (applying for the 2010–11 and later income years), by section 535(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section RF 11 list of defined terms control: repealed, on , by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).