Shareholder Information
Tax Frequently Asked Questions
As a non-New Zealand resident shareholder, I note that non-resident withholding tax (NRWT) has been deducted on my dividend income, why is this?
NRWT is deducted from New Zealand income received by non-residents. It is charged at different rates depending on which country the non-resident is resident of; for example, dividends paid to Australian residents are taxed at 15%.
However, Infratil may use imputation credits to compensate non-resident shareholders for any NRWT payable. This is achieved by paying non-resident shareholders supplementary dividends. Supplementary dividends are intended to compensate non-resident shareholders for tax deducted in respect of both the initial dividend, and the supplementary dividend.
Some non-resident shareholders whose dividend income is taxable can claim a tax credit in their home country for the New Zealand NRWT that has been deducted. For information on whether you are able to claim a credit for New Zealand NRWT paid, please contact your taxation adviser.
Please see the New Zealand Inland Revenue Department website for more information about New Zealand NRWT: http://www.ird.govt.nz
Is there anything I can do to change the rate at which New Zealand Resident Withholding Tax (RWT) is deducted from dividends or interest paid to me?
If you provide your IRD number to the share/bond registry (Link Market Services at: PO Box 384, Ashburton), you can ask them to deduct RWT at either 19.5%, 33% or 39%. Alternatively, if you have a valid exemption certificate you should send it to the registry and it will not deduct any New Zealand RWT from your interest or dividends.
As a non-New Zealand resident bondholder, what New Zealand tax do I pay on interest received from the Bonds?
You have a choice of having New Zealand non-resident withholding tax (NRWT) deducted or, alternatively, paying a levy of 2% of the interest paid.
If you choose to have NRWT deducted, the rate of NRWT deduction will depend on whether there is a tax treaty between New Zealand and your country of residence. If there is no tax treaty, the NRWT rate on interest is 15%. Some tax treaties reduce this rate to 10%. If you contact the New Zealand Inland Revenue or your taxation adviser they will be able to advise you on the specific rates between New Zealand and the country in which you are resident.
Although the NRWT rate is higher than the levy rate, it should be noted that the 2% levy paid in New Zealand may not be able to be claimed as a tax credit if you reside in certain countries. We suggest that you ask your taxation adviser who will be able to assist you in deciding whether to adopt the levy instead of NRWT. If you do wish to pay the 2% levy, you must notify the bond registry (Link Market Services at: PO Box 384, Ashburton, New Zealand, email lmsenquiries@linkmarket services.com).
What do imputation credits mean to New Zealand resident shareholders?
Imputation credits match the New Zealand income tax paid. To avoid double taxation of dividends, imputation credits can be transsferred to shareholders to reduce or eliminate the tax shareholders have to pay on dividends.
Full imputation means providing 33 cents of imputation credits for every 67 cents of cash dividend that is received in the hand by the shareholder. At this level of imputation all resident shareholders who pay income tax at the rate of 33% or less will not have to pay any further New Zealand income tax. New Zealand resident shareholders who pay tax at 39% will be required to pay a further 6 cents for each $1.00 of gross income (i.e. to leave them with a net 61 cents of cash in the hand of the shareholder). This additional tax is required to be paid by the shareholder.
If less than 33 cents of imputation credits were provided (with every 67 cents of cash dividend), all resident shareholders that have a marginal tax rate that is higher than the imputation credits attached would also be required to pay additional New Zealand income tax.
What do imputation credits mean to non-New Zealand resident shareholders?
Whether New Zealand imputation credits reduce overseas shareholders tax liability in countries other than New Zealand depends on the tax laws of the relevant country. You should ask your taxation adviser for specific advice.
Could you give a brief summary of the New Zealand tax treatment of investors?
Capital gains on equity securitiesCapital gains on equity securities are not taxed unless an investor is in the business of dealing in the securities, or had the dominant purpose of resale for profit when the security was purchased.
Resident Withholding Tax (RWT) Applies to New Zealand Resident Investors
Except for investors that hold a valid exemption certificate issued by the IRD, RWT will be deducted at 39% if an IRD number has not been provided to the bond/share registry. As previously mentioned, investors may have RWT deducted at their marginal tax rate if an IRD number has been provided and the relevant tax rate has been provided (the rates of RWT allowed are either 19.5%, 33% or 39%).
Non-Resident Withholding Tax (NRWT) Applies to Non-New Zealand Resident Investors
NRWT is deducted on dividends at the rate of 30%, or 15% if New Zealand and the resident country of the investor have a tax treaty (such countries include Australia, Belgium, Canada, China, Denmark, Fiji, Finland, France, Germany, India, Indonesia, Ireland, Italy, Japan, Republic of Korea, Malaysia, Netherlands, Norway, Philippines, Singapore, Sweden, Switzerland, Taiwan, UK, and USA). NRWT on dividends can be reduced or eliminated to the extent of any imputation credit attached to the dividend; and where the company has paid a supplementary dividend equal to the amount of the imputation credit.
NRWT on interest varies depending on the resident country of the investor. It is usually either 10% or 15%. In certain situations NRWT on interest can be reduced to zero if a levy equal to 2% of the interest is paid.
Imputation credits
The New Zealand recipient of dividend income may offset their New Zealand income tax obligation on that income if imputation credits were attached to the dividend. Imputation credits reflect income tax paid by the company and may be attached up to the level of corporate tax paid (33%). Non-New Zealand recipients may also benefit from imputation credits as they may be used to compensate them for any NRWT deducted in the manner described above.
Go to top
Print Page
Smaller
