Tax Rates
Changes to Resident Withholding Tax (RWT) and Portfolio Investment Entity (PIE) tax rates took effect on 1 October 2010.
You pay Resident Withholding Tax on interest you earn from bank accounts or other investments. The bank or investing organisation deducts this when they credit interest to your account.
Resident Witholding Tax
Payments of interest to NZ resident investors are subject to withholding tax based on the RWT rates.
The RWT rates for individuals that apply from 1 October 2010 are as follows:
| Old RWT Rates |
New RWT Rates |
Thresholds |
| 12.5% |
10.5% |
$0 to $14,000 |
| 21% |
17.5% |
$14,001 to $48,000 |
| 33% |
30% |
$48,000 to $70,000 |
| 38% |
33% |
$70,001 and above |
The default RWT rate for individuals who do not provide their IRD number or elect another rate will be 33%.
Individuals electing the 10.5% RWT rate need to consider if they have a reasonable expectation that their income will be $14,000 or less.
RWT rate for companies
From 1 April 2010 the RWT rate for companies will be 30%.
Prescribed Investor Rate (PIR)
If you have invested in or are considering investing in a certain type of portfolio investment entity (PIE) such as Spicers Premium Plus or KiwiSaver, then you will need to provide your IRD number and your prescribed investor rate (PIR) to the PIE.
PIR rates
| If your taxable income was: |
Your taxable income plus your PIE income / or less your loss was: |
Your PIR is: |
$14,000 or less; and
|
$48,000 or less in either of the last two years |
10.5% |
| $48,000 - $70,000 in both of the last two years |
17.5% |
$14,001 - $48,000; and
|
$0 - $70,000 in either of the last two years |
17.5% |
| $70,000 or more in both of the last two years |
28% |
| $48,000 or more in; and |
Both of the last two years |
28% |
| Non resident |
|
28% |
PIRs for non charitable trusts
There have also been changes to the PIRs that can be used by non-charitable trusts to help trustees manage their provisional tax obligations.
From 1 October 2010 non-charitable trusts can elect a 0%, 17.5% or 28%. Non charitable testamentary trusts (for example settled under a will) can elect a 10.5% PIR. If the 0%, 10.5% or 17.5% PIR is elected the trust will be required to include in its tax return the PIE allocated taxable income and tax credits.
Trusts that have elected the 10.5% or 17.5% PIR can not include any PIE allocated tax loss in their tax return.
PIRs for charitable trusts
Effective from 1 April 2009 trustees of charitable trusts must be zero rated portfolio investors.