Currently, payers of investment income are required to:
- deduct resident withholding tax (RWT) from interest and dividends when they are paid, and
- pay the RWT to Inland Revenue on the 20th of the following month.
These payments are due on the same date that summary information showing the total investment income and the RWT withheld must also be provided to Inland Revenue.
Information on each recipient isn’t provided until:
- after the end of the tax year for interest subject to RWT or non-resident withholding tax (NRWT) and portfolio investment entity (PIE) income, and
- not at all for dividends, Māori authorities distributions and interest that is exempt or subject to AIL.
The Government proposes that payers provide more information to Inland Revenue more often so that Inland Revenue will be able to:
- more accurately pre-populate tax returns and personal tax summaries;
- more accurately determine people’s social policy entitlements during the year;
- proactively correct errors and withholding rate choices;
- prevent duplication by stopping payers and recipients of investment income from having to provide the same information; and
- allow the Government the flexibility to review the administration of the social policies that Inland Revenue administers.