If you're a New Zealand tax resident, you'll pay resident withholding tax (RWT) on interest and dividends you earn from New Zealand bank accounts and investments. Your payer (bank or fund manager) deducts resident withholding tax from your interest or dividend payment before they pay you.

When you open an account

Under new rules from 1 April 2020, if you have not given your IRD number to your interest payer, tax will be deducted from your interest payments at 45%.

Companies

You must notify your interest payer that you're a company.

If you've given your interest payer your IRD number and company status, you may use either the 28% or 33% rate. If you do not choose a resident withholding tax rate, tax will be deducted from your interest payments at 28%.

There are two exceptions:

Trustees are not required to notify their company status and may use the 17.5%, 30% or 33% rate. If you are a trustee of a testamentary trust, you may use the 10.5%, 17.5%, 30% or 33% rate.

Māori authorities are not required to notify their company status and may use the 17.5%, 30% or 33% rate.

All others

If you've given your interest payer your IRD number, you may use the 10.5%, 17.5%, 30% or 33% rate. This is the amount of tax to be deducted during the year. It should match your income tax rate.

If the resident withholding tax rate you choose does not match your income tax rate you may receive an end of year tax bill. If you do not choose a resident withholding tax rate, tax will be deducted from your interest payments at 33%.

Your total taxable income Resident withholding tax (RWT) rate Up to $14,000 10.5% $14,001 to $48,000 17.5% $48,001 to $70,000 30% Over $70,000 33%

If your circumstances change

Check if the change affects your tax rate. If it does, you need to tell your payer. Using the wrong rate may mean you receive an end of year tax bill.

Find investment income updates in myIR

From 1 April 2020, details of all investment income paid to you (and tax withheld on it) will be reported to us more regularly. Financial institutions that pay investment income now need to report to us the month after they’ve paid you. You may notice more investment income updates in your myIR account as a result.

Investment income across joint accounts

From 1 April, income reported for joint investments will be split equally between the account holders who have provided valid IRD numbers to their payer.

If you need to, you can change the split of income and set a rate for a future split to make sure the income is directed correctly in the future. You can change this allocation through myIR or by contacting us. Alternatively, you can amend this when we complete your income tax assessment at the end of the year or when you file your income tax return.

If you have a joint account you can only use one RWT rate. So you'll need to decide which is the most appropriate rate. For example, if you both earn over $70,000, choosing the 33% rate will avoid an end of year tax bill. If one account holder earns over $48,000 and the other less than $48,000, choosing the 30% rate will avoid the higher earner having an end of year tax bill.

If a resident and a non-resident hold a joint account, resident withholding tax must be deducted from all interest paid on the account. The non-resident may claim a refund by completing either an IR3NR tax return or a New Zealand non-resident withholding tax refund request - IR386 form.

At the end of the tax year

At the end of the tax year we work out if you’ve paid the right amount of tax. We ask you to check your income tax assessment and tell us about any changes. We might ask you to give us more information about your income, including your interest and dividends.

Imputation credits

A New Zealand company or unit trust may attach 'imputation credits' to dividends. These imputation credits represent income tax the company has already paid.