Income earned in New Zealand from investments, such as interest or dividends, is taxed through:
- resident withholding tax (RWT) when the income is paid to a New Zealand resident, or
- non-resident withholding tax (NRWT) when the income is paid to someone who is not a New Zealand resident.
These taxes are deducted from investment income by the payer of the income, e.g. the bank when a bank pays interest, before the investor receives it. The payer of the income then pays the tax to Inland Revenue each month as a lump sum. Tax and income information for individual taxpayers isn’t provided to Inland Revenue until after the end of the tax year (by 31 May) or not at all for some tax types.
Investment income is also taxed through the:
- portfolio investment entity (PIE) and
- approved issuer levy (AIL) schemes.
Distributions from Māori authorities are also subject to RWT. Dividends and Māori authority distributions may have tax credits attached. These credits represent tax paid by the company or Māori authority and reduce the income tax liability of the recipient of the dividend or distribution.