Resident Withholding Tax faqs

General questions and answers about Resident Withholding Tax (RWT).
General RWT faqs
> What is RWT?
> How is it deducted?
> How can I find out my current rate?
> How can I elect a different RWT rate?
> What are the RWT rates?
> Are there any restrictions on the RWT rates that can be elected?
> What is happening to Trust’s RWT rates 1 October 2010?
> Why isn’t the Company RWT rate reducing on 1 October 2010?
> Where can I get professional tax advice?
Non Resident Withholding Tax (NRWT) and Approved Issuer Levy (AIL)
> What is NRWT?
> What is AIL?
> How can a customer elect NRWT or AIL?
What is RWT?
Resident withholding tax (RWT) is a tax deducted from a New Zealand tax resident customer’s interest income before they receive it. This means that the customer should not have to pay a lump sum in respect of their interest income at the end of the year.
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How is it deducted?
RWT is deducted from the interest payment at the time of the interest payment. The amount of RWT deducted is calculated using your RWT rate at the time of the interest payment, so it is important to get it right.
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How can I find out my current rate?
You can find out your current rate by visiting your nearest Westpac branch or calling 0800 400 600. Your current rate will also be printed on your most recent annual interest and withholding tax certificate.
If you do not know your IRD number or are having trouble deciding on the appropriate RWT rate, we suggest you contact the IRD or visit their website for assistance.
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How can I elect a different RWT rate?
You can elect a different RWT rate by visiting your nearest Westpac branch or calling 0800 400 600
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What are the RWT rates?
The Government has made a number of changes to the RWT rates. The table below outlines the rates that have been applicable and the new rates going forwards.
Current RWT rates
To March 2010  01 April 2010 to 30 September 2010  From 01 October 2010   Exempt 0% 0% 0%   Minimum   12.5% 10.5%   Low 19.5% 21% 17.5%   Company 33% 30% 30%   High 33% 33% 30%   Maximum 38% 38% 33%   Non-declared 38% 38% 33%
If you have provided an IRD number but not made a RWT rate election, the Low RWT rate will apply for accounts opened before 1 April 2010. For accounts opened from 1 April 2010 onwards the Maximum rate will apply if you have provided your IRD number but do not select a rate. If no IRD number has been supplied, the Non-declared RWT rate will apply Back to top Are there any restrictions on the RWT rates that can be elected? The Minimum RWT rate can only be elected by individuals who reasonably expect that their income for the year will be $14,000 or less. Individuals can elect any other rate except the Company rate without restriction as long as their IRD number has been provided. NZ resident Companies can only elect the Company or the Maximum rates (unless they are exempt from RWT in which case their rate will be 0%). Back to top What is happening to Trust’s RWT rates 1 October 2010? Trusts are able to choose the RWT rate that is most appropriate for their situation (excluding the Company RWT rate). The rate that any particular Trust is on will be adjusted on 1 October 2010 as shown in the table under the question “What are the RWT rates?”. Back to top Why isn’t the Company rate reducing on 1 October 2010? The income tax rate for companies is reducing to 28% from the 2012 income year whereas the other income tax rate changes are occurring on 1 October 2010. The RWT rate for companies will be reduced to 28% on 1 April 2011 (the start of the standard 2012 income year for companies). Back to top Where can I get professional tax advice? Everybody has a different personal financial position. The investments that you have made or income that you earn can impact on your tax status. Therefore, we strongly recommend you seek the advice and expertise of an independent tax adviser or the IRD if you have any queries or concerns regarding your withholding tax rate or tax obligations on any of your investments. Back to top What is NRWT? Non Resident Withholding Tax (NRWT) is a tax deducted from interest income before the non resident customer receives it. The NRWT rate applicable to a customer, is dependant on the tax treaty between New Zealand and the customer’s country of residence but is usually either 10% or 15%. If you are a non resident, the appropriate rate will automatically be applied based on your country of residence as advised by you. Back to top What is AIL? Approved Issuer Levy (AIL) is an alternative to NRWT. If you are non resident and elect in writing to have AIL applied to your interest, then a levy of 2% will apply (rather than the NRWT of 10% or 15%). The disadvantage of AIL is that you may not be able to get a credit for the levy against your tax liability in your country of residence. Back to top How can a customer elect NRWT or AIL? If you are a non resident you should advise Westpac of your residence status when you are opening your account and elect NRWT or AIL at that stage. Later on, if you wish to elect AIL or your country of residence changes, you should contact Westpac. There is a standard form AIL election letter that can be supplied to you for completion if you wish to elect AIL. Back to top The information provided is general information and not tax advice. If you have any questions as to your tax position you should obtain independent tax advice. The information is based on legislation current at 31 August 2010. Taxation legislation, its interpretation and the levels and basis of taxation may change. The application of taxation laws depends upon individual circumstances. Investors and underlying investors should seek professional advice on the taxation implications of investing and should not rely solely on the information in this communication. All opinions, statements and analysis expressed are based on information current at the time of writing and from sources which Westpac believes to be authentic and reliable. Westpac issues no invitation to anyone to rely on this material and intends by this statement to exclude liability for any such opinion, statement and analysis. Westpac accepts no responsibility for the availability or content of third party websites. You can get a copy of the investment statement for any securities for which an investment statement is required from any Westpac branch in New Zealand.