Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

RF 11BB: Certain dividends paid to dual resident companies

You could also call this:

“Dividends paid to companies living in two countries”

This section talks about what happens when a company pays a dividend to another company that lives in two countries at once. Here’s what you need to know:

The rule applies when a company pays a dividend to a company that lives in New Zealand but is treated like it doesn’t live here under a special agreement between countries. The dividend can’t be fully imputed, which means it hasn’t had all the tax paid on it yet.

For this rule to work, the company getting the dividend needs to meet some conditions. These conditions are listed in another part of the law called section CW 10(1)(b) to (d), (5), and (6). But one condition in section CW 10(1)(f) doesn’t need to be met.

Also, the company getting the dividend must become a company that’s not foreign before a certain date called the DRCD deferral date.

When it comes to how much tax needs to be paid, it’s the smaller amount of two choices:

  1. The amount of tax the paying company would usually have to withhold and pay if this rule didn’t exist.

  2. The total of all dividends paid by the receiving company while it was treated like it didn’t live in New Zealand, but only the part of those dividends that weren’t fully imputed.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS837235.

Topics:
Money and consumer rights > Taxes
Previous

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

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

Next

RF 11C: Interest paid by non-resident companies to non-residents, or

“ How interest payments from overseas companies to overseas people are taxed in New Zealand ”

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

RF 11BBCertain dividends paid to dual resident companies

  1. This section applies when a company makes a payment of non-resident passive income in the form of a dividend to a New Zealand resident company (the recipient) that is treated under a double tax agreement as not being resident in New Zealand to the extent to which the dividend is not fully imputed, if—

  2. the requirements of section CW 10(1)(b) to (d), (5), and (6) (Dividend within New Zealand wholly-owned group) are met; and
    1. the requirement of section CW 10(1)(f) is not met; and
      1. the recipient becomes a company that is not a foreign company before the DRCD deferral date.

        1. The amount of tax is the lesser of—

        2. the amount of tax that the payer would be required to withhold and pay in the absence of this section; and
          1. the sum of all dividends paid by the recipient while it was treated under the double tax agreement as not being resident in New Zealand to the extent to which those dividends were not fully imputed.

            Notes
            • Section RF 11BB: inserted (with effect on 30 August 2022), on , by section 111 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).