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Income Tax Act 2007

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

RE 10B: Amounts withheld from distributions to holders of FIF attributing interests

You could also call this:

“Tax withheld from foreign investment fund payouts can be claimed back”

This section applies when you receive a distribution from a foreign investment fund (FIF) that you have an attributing interest in. If the payer withholds some money from your distribution because they thought it was resident passive income, here’s what happens:

The withheld amount is treated as resident withholding tax (RWT). This means you can claim it as a tax credit or get a refund for it. The distribution itself is also treated as resident passive income for tax purposes.

However, if you or the payer ask for a refund of the withheld amount before 31 March following the date it was withheld, these rules don’t apply.

This section helps ensure that you’re not unfairly taxed on your foreign investments, and provides a way for you to get back any extra tax that was mistakenly withheld.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2722944.

Topics:
Money and consumer rights > Taxes
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Part R General collection rules
Withholding tax on resident passive income (RWT)

RE 10BAmounts withheld from distributions to holders of FIF attributing interests

  1. This section applies when—

  2. a distribution is made to a holder of an attributing interest in a FIF; and
    1. section CD 36 (Foreign investment fund income) or EX 59(2) (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method) applies to the distribution; and
      1. an amount is withheld by the payer from the distribution because the payer has treated the distribution as resident passive income subject to the RWT rules.

        1. The amount withheld is treated as—

        2. RWT for the purposes of this subpart and subpart LA (General rules for tax credits), and sections LB 3 (Tax credits for resident withholding tax), and RM 1 to RM 10 (which relate to refunds); and
          1. tax paid in excess for the purposes of Part 10B of the Tax Administration Act 1994.

            1. The distribution is treated as resident passive income for the purposes of the sections listed in subsection (2).

            2. Subsection (2) does not apply if the payer or the holder applies under section RM 8(4) or (5) (Overpaid RWT or NRWT), as applicable, for a refund in relation to the amount withheld before the next 31 March after the date on which the amount of tax was withheld.

            Notes
            • Section RE 10B: inserted (with effect on 1 April 2008), on , by section 107(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
            • Section RE 10B list of defined terms apply: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).