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Income Tax Act 2007

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

RF 12: Interest paid by approved issuers or transitional residents

You could also call this:

"Interest paid to people from outside New Zealand"

Illustration for Income Tax Act 2007

You need to know about interest paid by approved issuers or transitional residents. This rule applies to non-resident passive income that is interest paid under a registered security. The interest must meet certain conditions, such as being derived by a person not associated with the approved issuer. You should look at the conditions for interest paid by an approved issuer. The interest must be paid under a registered security and not be a payment to which section RF 12B applies. There are also rules for interest paid by a transitional resident in relation to money borrowed while non-resident. The rate of non-resident withholding tax payable on this amount is 0%. For interest to be treated as paid under a registered security, it must meet the requirements of section 86I of the Stamp and Cheque Duties Act 1971. You can find more information about this in the legislation, including links to relevant sections such as section FE 33 and section RF 3(1B).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520364.

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

RF 12Interest paid by approved issuers or transitional residents

  1. This section applies in relation to an amount of non-resident passive income that consists of—

  2. interest that—
    1. is paid by an approved issuer under a registered security; and
      1. unless the approved issuer is a member of a New Zealand banking group as described in section FE 33 (New Zealand banking group) or a limited partnership, is derived by a person not associated with the approved issuer except by being a beneficiary of a trust (a security trust) established for the main purpose of protecting and enforcing beneficiaries’ rights under the registered security; and
        1. if the approved issuer is a limited partnership that has chosen to be treated as the person making the payment under section RF 3(1B), is derived by a non-resident as a limited partner in the limited partnership and the limited partner is not associated with the borrower other than as a beneficiary of a security trust; and
          1. if the approved issuer is a limited partnership that has chosen to be treated as the person making the payment under section RF 3(1C), is derived by a person not associated with the limited partner referred to in that section other than as a beneficiary of a security trust; and
            1. is not a payment to which section RF 12B applies; and
              1. if the interest relates to related-party debt, is derived at a time when the person is not associated with the approved issuer other than as a beneficiary of a security trust or as a partner of a partnership that is a beneficiary of a security trust, and the funding provided by the lender under the related-party debt does not meet the requirements in section RF 12H(1)(a)(ii), and the lender does not meet the requirements in section RF 12H(1)(a)(iii):
              2. interest that—
                1. is paid by a transitional resident in relation to money borrowed by them while non-resident; and
                  1. is not paid in relation to a business carried on through a fixed establishment in New Zealand; and
                    1. is derived by a person not associated with the transitional resident; and
                      1. is not a payment to which section RF 12B applies.

                      2. The rate of NRWT payable on the amount is 0%.

                      3. For the purposes of the NRWT rules, an amount of interest is paid by an approved issuer under a registered security only if it is treated as paid in relation to a registered security under section 86I of the Stamp and Cheque Duties Act 1971.

                      Compare
                      Notes
                      • Section RF 12: substituted (with effect on 1 April 2008), on , by section 536(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                      • Section RF 12(1)(a)(ii): replaced, on , by section 278(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                      • Section RF 12(1)(a)(ii): amended (with effect on 1 April 2008), on , by section 128(1) (and see section 128(5) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12(1)(a)(ii): amended (with effect on 30 March 2017), on , by section 163(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                      • Section RF 12(1)(a)(iib): inserted (with effect on 1 April 2008), on , by section 128(2) (and see section 128(5) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12(1)(a)(iic): inserted (with effect on 1 April 2008), on , by section 128(2) (and see section 128(5) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12(1)(a)(iii): amended, on , by section 278(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                      • Section RF 12(1)(a)(iv): replaced (with effect on 30 March 2017), on , by section 163(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                      • Section RF 12(1)(a)(iv): amended (with effect on 1 April 2008), on , by section 128(3) (and see section 128(5) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12(3): amended (with effect on 1 April 2008), on , by section 116 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
                      • Section RF 12 list of defined terms limited partner: inserted (with effect on 1 April 2008), on , by section 128(4) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12 list of defined terms limited partnership: inserted (with effect on 1 April 2008), on , by section 128(4) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12 list of defined terms New Zealand banking group: inserted, on , by section 278(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                      • Section RF 12 list of defined terms partner: inserted (with effect on 1 April 2008), on , by section 128(4) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12 list of defined terms partnership: inserted (with effect on 1 April 2008), on , by section 128(4) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section RF 12 list of defined terms related-party debt: inserted, on , by section 278(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).