Home » New Zealand » Taxation » Investment Taxation for Expats in New Zealand

Investment Taxation for Expats in New Zealand

Submitted: October 2014

Taxable income in this category includes:

 

Interest

For residents, interest income from New Zealand sources is subject to withholding tax at a rate which varies at the taxpayer’s choice between 10.5%, 17.5%, 30% and 33%, provided the taxpayer’s Inland Revenue Department (IRD) number has been given to the interest payer. If no IRD number is provided, the rate is 33%. In all cases, the gross amount of interest paid must be declared on the taxpayer’s tax return.

For non-residents, interest income from New Zealand sources is subject to withholding tax at rate of 15%, unless reduced by a suitable tax treaty. Under certain circumstances it is possible for a non-resident to receive interest with no withholding tax deducted, provided that the borrower is an approved issuer under the Approved Issuer Levy scheme.

 

Rental Income

For residents, rental income worldwide is taxed as ordinary income, and must be reported on your tax return. Taxable income is calculated after the deduction of certain expenses, including management charges, legal and agents’ fees, repairs and other costs. Interest on funds borrowed to purchase (mortgages), repair or improve residential properties is also deductible. There is more information regarding deductions here. Special rules apply to rental income from mixed-use assets such as holiday homes. If you are a resident receiving rental income from a country outside New Zealand, you may be able to offset tax paid abroad against your New Zealand tax liability, and also claim certain deductions for expenses. For non-residents, only rental income that is from a New Zealand source is taxable.

 

Dividends

For residents, dividends are subject to a resident withholding tax (RWT) rate of 33%. However the final amount of tax paid on dividends from New Zealand sources depends on both the degree to which the dividends are imputed, and the annual earnings of the payee.

If a dividend is paid out of corporate earnings that have been entirely subject to company tax at 28% (fully imputed), it will have a tax credit attached to them which is worth 28 cents for every 72 cents of cash dividend paid. The tax credit makes up for the corporate tax that has already been deducted from the original company earnings from which the dividend was derived. Dividends can also be paid with partial tax credits, i.e. not the full 28 cents, or no tax credits at all.

For residents earning NZ$48,000 or less, a fully imputed dividend has more tax credits attached than can be utilised. The unused credits can be carried forward into the next tax year.  Residents earning more than NZ$48,000 have to make up the difference between their marginal tax rate and the 28% imputation rate. This will result in them paying 2% or 5% RWT on the fully imputed dividends received when they complete their annual return.

For non-residents, dividends are subject to a withholding tax which is charged at a rate of 30%.  If the dividend is sent to a country with a tax treaty the rate is generally reduced to 15%. The rate can be reduced  to 0% if a fully imputed dividend is paid by a company to a non-resident who owns a 10% voting interest in the paying company. It can also be reduced to 0% if a fully imputed dividend is paid by a company to a non-resident who owns less than a 10% voting interest in the paying company, provided the rate has already been reduced to 15% by the existence of a treaty.

 

Capital Gains

There is no capital gains tax in New Zealand. However income tax can be payable on gains made from the sale of property bought for resale, and on gains made by businesses engaged in property dealing.

 

 

 




Moving to New Zealand

If you are considering moving to New Zealand or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated New Zealand section including; details of immigration and visas, New Zealand forums, New Zealand event listings and service providers in New Zealand.

picture1

Living in New Zealand

From your safety to shoppingliving in New Zealand can yield great benefits as well as occasional drawbacks.  Find your feet and stay abreast of the latest developments affecting expats in New Zealand with relevant news and up-to-date information.

picture1

Working in New Zealand

Working in New Zealand can be rewarding as well as stressful, if you don't plan ahead and fulfill any legal requirements. Find out about visas and passports, owning and operating a company in New Zealand, and general New Zealand culture of the labour market.

picture1

 

New Zealand Expat News Headlines

New Zealand Expat Service Providers


New Zealand Expat Tools