Dividend Tax Guide — Imputation Credits, RWT, and Tax on Dividends in NZ
the taxation of dividends in New Zealand. The guide covers the dividend imputation system (the imputation credits), the RWT on dividends (33%), the dividend withholding tax for the non-residents, and the reporting requirements for the companies and the shareholders.
Dividend Imputation System
The New Zealand dividend imputation system ensures that the corporate profits are taxed at the shareholder's marginal rate rather than being double-taxed. The New Zealand companies pay the tax at the corporate rate of 28% and attach the imputation credits (the "IC") to the dividends paid to the shareholders. The imputation credits represent the tax paid by the company on the profits distributed as the dividends. The shareholder includes both the dividend and the imputation credits in the taxable income, and the imputation credits offset the shareholder's tax liability. The imputation credits are refundable to the New Zealand resident shareholders.
RWT and NRWT on Dividends
The Resident Withholding Tax (RWT) on the dividends is deducted at the rate of 33% of the "net dividend" (the cash dividend after the imputation credits). The shareholder can elect the RWT rate of 33% or 30% using the IR481 form. The Non-Resident Withholding Tax (NRWT) on the dividends is 30% (or the reduced rate under the relevant double tax agreement, typically 15% for the portfolio investments). The company must also provide the dividend statement showing the imputation credits, the RWT/NRWT deducted, and the "net cash dividend" paid to the shareholder.