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Income Tax Act 2007
Income Tax Act 2007
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Income Tax Act 2007
Part R General collection rules
Subpart RA—General withholding and payment obligations
Contents
Introductory provisions
RA 1 What this Part does
This Part provides the rules to require a person to pay to the Commissioner interim and terminal payments of tax and other amounts payable under the Inland Revenue Acts. The Part provides for—
(a)
a person’s general withholding and payment obligations; and
(b)
the payment of terminal tax, see subpart RB; and
(c)
the payment of provisional tax, see subpart RC; and
(d)
the payment of the following employment-related taxes, see subpart RD:
(i)
pay-as-you-earn (PAYE):
(ii)
fringe benefit tax (FBT):
(iii)
employer’s superannuation contribution tax (ESCT); and
(e)
the payment of resident withholding tax (RWT), see subpart RE; and
(f)
the payment of non-resident withholding tax (NRWT), see subpart RF; and
(g)
[Repealed](gb)
the payment of retirement scheme contribution tax (RSCT), see subpart RH; and
(gc)
the payment of residential land withholding tax (RWLT), see subpart RL; and
(h)
the treatment of refunds by the Commissioner, see subpart RM; and
(i)
the use of intermediaries in the tax system, see subpart RP.
Defined in this Act: amount, Commissioner, employer’s superannuation contribution, ESCT, FBT, fringe benefit tax, Inland Revenue Acts, intermediary, NRWT, pay, PAYE, provisional tax, retirement scheme contribution, RSCT, RWT, tax, terminal tax
Section RA 1(g): repealed (with effect on 30 June 2009), on 6 October 2009, by section 488(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 1(gb): inserted, on 1 April 2008, by section 521(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 1(gc): inserted (with effect on 1 July 2016), on 30 March 2021, by section 128 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RA 1 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 488(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 1 list of defined terms retirement scheme contribution: inserted, on 1 April 2008, by section 521(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 1 list of defined terms RSCT: inserted, on 1 April 2008, by section 521(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RA 2 Amounts treated as income tax
The provisions of this Act and the Tax Administration Act 1994 apply in relation to an amount that a person is liable to pay under this Part as if the amount were income tax imposed under section BB 1 (Imposition of income tax).
Defined in this Act: amount, income tax, pay
Compare: 2004 No 35 ss MB 12, NC 20(1), ND 1W(2), NE 7(2), NF 13, NG 17(2), NH 3(7)
Section RA 2 compare note: amended (with effect on 1 April 2008), on 7 December 2009, by section 101(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Payment and withholding obligations
RA 3 Terminal tax obligations
A person liable under section BC 8 (Satisfaction of income tax liability) to pay an amount of terminal tax for a tax year must pay the amount to the Commissioner under subpart RB (Terminal tax) by the due date.
Defined in this Act: amount, Commissioner, pay, tax year, terminal tax
RA 4 Provisional tax obligations
A person liable to pay provisional tax must pay instalments on account of their income tax liability for a tax year to the Commissioner under subpart RC (Provisional tax) by the due dates.
Defined in this Act: Commissioner, income tax liability, pay, provisional tax, tax year
RA 5 Tax obligations for employment-related taxes
Withholding and payment obligations
(1)
A person who makes a payment or provides a benefit of 1 of the following kinds must either withhold and pay, or pay, the amount of tax for the payment or benefit to the Commissioner under subpart RD (Employment-related taxes) by the due dates:
(a)
a PAYE income payment:
(b)
a fringe benefit:
(c)
an employer’s superannuation cash contribution.
Timing for PAYE income payments
(2)
An amount of tax withheld from a PAYE income payment must be withheld at the time the person makes the payment.
Defined in this Act: amount of tax, Commissioner, employer’s superannuation cash contribution, fringe benefit, pay, PAYE income payment
Compare: 2004 No 35 ss BE 1(1), (4), (5), NC 15, ND 1, NE 3
Section RA 5(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 489(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 5(1)(c): substituted (with effect on 1 April 2008), on 6 October 2009, by section 489(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 5(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 489(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 5(2): added (with effect on 1 April 2008), on 6 October 2009, by section 489(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 5 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 489(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 5 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 489(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RA 6 Withholding and payment obligations for passive income
Resident passive income
(1)
A person who makes a payment of resident passive income must withhold and pay RWT for the payment to the Commissioner under subpart RE (Withholding tax on resident passive income (RWT)) by the due dates.
Non-resident passive income
(2)
A person who makes a payment of non-resident passive income must withhold and pay NRWT for the payment to the Commissioner under subpart RF (Withholding tax on non-resident passive income (NRWT)) by the due dates.
Foreign dividends[Repealed]
(3)
[Repealed]Timing for payments of passive income
(4)
An amount of tax withheld under subsections (1) and (2) must be withheld at the time the person makes the payment.
Certain dividends paid to dual residents
(5)
For the purposes of subsections (2) and (4) and sections OB 9, OB 30, RA 15, and RF 3 (which relate to imputation credit accounts and withholding and payment obligations), a person who makes a payment of a dividend described in section CD 1(3) (Dividend) is treated as making the payment on the DRCD deferral date.
Meaning of DRCD deferral date
(6)
For the purposes of this section and sections CD 1, OB 9, OB 30, RA 15, RF 3, and RF 11BB, the DRCD deferral date is the day that is the second anniversary of the date on which the dividend was actually paid.
Defined in this Act: Commissioner, company, dividend, DRCD deferral date, non-resident passive income, NRWT, pay, resident passive income, RWT
Compare: 2004 No 35 ss BE 1(4)–(6), NF 4, NG 11, NH 3
Section RA 6(3) heading: repealed (with effect on 30 June 2009), on 6 October 2009, pursuant to section 490(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 6(3): repealed (with effect on 30 June 2009), on 6 October 2009, by section 490(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 6(4) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 490(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 6(4): inserted (with effect on 1 April 2008), on 6 October 2009, by section 490(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 6(5) heading: inserted (with effect on 30 August 2022), on 31 March 2023, by section 99(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 6(5): inserted (with effect on 30 August 2022), on 31 March 2023, by section 99(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 6(6) heading: inserted (with effect on 30 August 2022), on 31 March 2023, by section 99(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 6(6): inserted (with effect on 30 August 2022), on 31 March 2023, by section 99(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 6 list of defined terms dividend: inserted (with effect on 30 August 2022), on 31 March 2023, by section 99(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 6 list of defined terms DRCD deferral date: inserted (with effect on 30 August 2022), on 31 March 2023, by section 99(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 6 list of defined terms FDP: repealed (with effect on 1 April 2008), on 6 October 2009, by section 490(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 6 list of defined terms foreign dividend: repealed (with effect on 1 April 2008), on 6 October 2009, by section 490(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RA 6B Withholding and payment obligations for retirement scheme contributions
A person who makes a contribution to a retirement savings scheme must withhold and pay RSCT for the contribution to the Commissioner under subpart RH (Withholding tax on retirement scheme contributions) by the due dates.
Defined in this Act: Commissioner, pay, retirement savings scheme, RSCT
Compare: 2004 No 35 s NEB 1
Section RA 6B: inserted, on 1 April 2008, by section 522 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RA 6C Withholding and payment obligations for residential land
RLWT: vendors
(1)
A person described in section RL 2 (Vendors: who must pay, and how?) must pay RLWT for a residential land purchase amount to the Commissioner under subpart RL (Residential land withholding tax) by the due date.
RLWT: associated persons
(2)
A person described in section RL 3 (Associated persons: who must pay, and how?) must withhold and pay RLWT for a residential land purchase amount to the Commissioner under subpart RL by the due date.
Defined in this Act: pay, residential land purchase amount, RLWT
Section RA 6C: inserted, on 1 July 2016, by section 46 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
RA 7 Payment of tax by public authorities
A public authority that pays an amount under this Act acts within its capacity, whether further appropriation is made or not.
Defined in this Act: amount, pay, public authority
Compare: 2004 No 35 s MH 1
RA 8 Liability of persons receiving payments or benefits
Despite sections RA 5 and RA 6, a person receiving or deriving a payment or benefit in relation to which an amount of tax must be withheld or paid may be liable under this Part for payment of the tax.
Defined in this Act: amount of tax, pay, tax
Compare: 2004 No 35 ss NC 16, NE 2A(1), (2), NF 3, NG 12
RA 9 Treatment of amounts withheld as received
Payments treated as received or derived
(1)
An amount withheld from a payment under this Part, unless a provision in this Part states otherwise,—
(a)
is treated as received—
(i)
by the person to whom the payment is made; and
(ii)
at the time the payment is made; and
(b)
is treated for the purposes of this Act as derived by the person at the same time and in the same way as they derive the payment from which the amount is withheld; and
(c)
includes a combined tax and earner-related payment.
Exclusion
(2)
Subsection (1) does not apply to a replacement payment under a share-lending arrangement.
Defined in this Act: amount, combined tax and earner-related payment, pay, replacement payment, share-lending arrangement
RA 10 When obligations not met
When this section applies
(1)
This section applies when—
(a)
a person liable to withhold an amount of tax for a PAYE income payment, a residential land purchase amount, an employer’s superannuation cash contribution, a retirement scheme contribution, a payment of resident passive income, or a payment of non-resident passive income, does not withhold and pay the amount to the Commissioner; or
(b)
a person liable to pay an amount of tax to the Commissioner for a fringe benefit does not pay the amount; or
(c)
a vendor liable to pay an amount of RLWT does not pay the amount.
Debt payable to Commissioner
(2)
The amount is a debt payable to the Commissioner.
When payable
(3)
The amount is due to be paid to the Commissioner on the relevant due date after the end date for the original liability set out in section RA 15.
Premiums and levies
(4)
The amount includes a combined tax and earner-related payment.
Defined in this Act: amount, amount of tax, combined tax and earner-related payment, Commissioner, employer’s superannuation cash contribution, fringe benefit, non-resident passive income, pay, PAYE income payment, resident passive income, residential land purchase amount, RLWT
Compare: 2004 No 35 ss NC 5(2), NC 16, NC 20(1), ND 1, ND 1W(2), NE 5, NEB 4(1), NF 3, NF 4, NF 13, NG 12, NG 13
Section RA 10(1)(a): amended, on 1 July 2016, by section 47(1) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 10(1)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 491(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 10(1)(a): amended, on 1 April 2008, by section 523(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 10(1)(b): amended, on 1 July 2016, by section 47(2) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 10(1)(c): replaced, by section 47(2) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 10 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 491(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 10 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 491(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 10 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 491(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 10 list of defined terms residential land purchase amount: inserted, on 1 July 2016, by section 47(3) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 10 list of defined terms RLWT: inserted, on 1 July 2016, by section 47(3) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 10 compare note: amended, on 1 April 2008, by section 523(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RA 11 Adjustment to correct errors: certain underpayments
When this section applies
(1)
This section applies when—
(a)
a person (the payer) is required to withhold an amount of tax for resident passive income or non-resident passive income in relation to a payment to another person (the payee); and
(b)
the payer, through an error, does not withhold some or all of the amount.
Adjustments for errors
(2)
To correct the error, the payer may make an adjustment by—
(a)
subtracting from a later payment to the payee an amount to correct the deficiency; or
(b)
recovering from the payee an amount to correct the deficiency; or
(c)
for a non-cash dividend, adjusting the amount that is subject to tax.
Timing of and limitations on adjustments
(3)
Subject to subsection (4),—
(a)
for an adjustment for an error discovered in the tax year in which it is made (year 1), the payer must, if it is reasonably practical to do so, make the adjustment under subsection (2) by the next regular reporting date for the delivery of investment income information relating to the payee:
(b)
for an adjustment for an error discovered in a tax year following that in which the error is made (year 2), the payer may make an adjustment under subsection (2) by the next regular reporting date in year 2 but only to the extent to which the total adjustments made by the payer in year 2 relating to year 1 are no more than the greater of—
(i)
$2,000; or
(ii)
5% of the payer’s withholding liability for RWT or NRWT, as applicable, for the tax year in which the first payment is made to the payee.
Requirements when recovering amounts from payees
(4)
For the purposes of subsection (2)(b), the recovery action must be taken in the same tax year in which the error is made.
When adjustments made
(5)
An adjustment under this section is treated as made on the due date for the amount of tax referred to in subsection (1)(a).
Notifying Commissioner of adjustments
(6)
The payer must notify the Commissioner of an adjustment made under subsection (3)(b) at the time it is made, including in their notification—
(a)
the information in schedule 6, table 1, rows 1 to 7, 10, 16, and 22 of the Tax Administration Act 1994, as applicable; and
(b)
adjustments to the items referred to in schedule 6, table 1, rows 8, 9, 11, 14, 15, and 21 of that Act, as applicable.
Defined in this Act: amount, amount of tax, Commissioner, investment income information, non-cash dividend, non-resident passive income, notify, NRWT, pay, resident passive income, RWT, tax year
Section RA 11: replaced, on 1 April 2020, by section 178 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RA 12 Adjustment to correct errors: certain excess amounts
When this section applies
(1)
This section applies when—
(a)
a person (the payer) is required to withhold and pay to the Commissioner an amount of RWT or NRWT for a payment to another person (the payee); and
(b)
the payer, through an error, withholds an amount (the excess amount) that is more than the amount required under this Part.
Refunding excess amounts of resident and non-resident passive income
(2)
For a payment of resident passive income or non-resident passive income, the payer may pay the excess amount to the payee at any time before the 20th of April after the end of the tax year in which the amount is withheld if the payer has not reported to the payee under section 26C, 29, or 31 of the Tax Administration Act 1994, providing the details set out in those provisions.
Treatment of amount
(3)
For the purposes of this section, when the payer pays the excess amount under subsection (2), the amount is no longer treated as RWT or NRWT, as applicable.
Notifying payee and Commissioner of excess amounts
(4)
If the payer has not refunded the amount to the payee, the payer must notify the following of the excess amount by the date referred to in subsection (2):
(a)
the payee:
(b)
the Commissioner.
Notifying Commissioner of refunds paid
(4B)
If the payer has refunded the amount to the payee, the payer must notify the Commissioner of the payment and of the amount of the refund at the time of paying the refund.
Commissioner refunding overpayment
(5)
If the excess amount has been paid to the Commissioner, the Commissioner must refund the amount of the overpayment to—
(a)
the payee; or
(b)
the payer, if they have not subtracted the amount under subsection (6)(a) from a later payment made in relation to the payee.
Payer’s options
(6)
For the purposes of subsection (5), if the payer has refunded the excess amount to the payee and has not received a refund from the Commissioner, the payer may—
(a)
subtract the amount from an amount paid later to the Commissioner under section RE 21 or RF 13 (which relate to resident passive income and non-resident passive income), noting the action in the investment income information required under subpart 3E of the Tax Administration Act 1994; or
(b)
apply for a refund of the amount under section RM 8 (Overpaid RWT or NRWT).
Overpayment through payee’s act or omission
(7)
Despite subsections (2) and (5), if the excess amount arises from an act or omission by the payee, the payer must pay the full amount withheld to the Commissioner and is not liable to repay the excess amount to the payee or another person.
Defined in this Act: amount, amount of tax, apply, Commissioner, investment income information, non-resident passive income, notify, NRWT, pay, resident passive income, RWT, tax year
Compare: 2004 No 35 ss NF 6(2)–(4), NF 7(1), (2), NG 16A(2), (3)
Section RA 12(2) heading: replaced, on 1 April 2020, by section 179(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(2): replaced, on 1 April 2020, by section 179(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(3): amended, on 1 April 2020, by section 179(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(4) heading: replaced, on 1 April 2020, by section 179(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(4): replaced, on 1 April 2020, by section 179(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(4B) heading: inserted, on 1 April 2020, by section 179(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(4B): inserted, on 1 April 2020, by section 179(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(6): amended, on 1 April 2020, by section 179(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12(6)(a): amended, on 1 April 2020, by section 179(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RA 12 list of defined terms dividend: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms dividend treated as interest: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms interest: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms investment income information: inserted, on 1 April 2020, by section 179(6)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms Maori authority: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms notice: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms notify: inserted, on 1 April 2020, by section 179(6)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms RWT withholding certificate: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms shareholder dividend statement: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 12 list of defined terms taxable Maori authority distribution: repealed, on 1 April 2020, by section 179(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Payment dates
RA 13 Payment dates for terminal tax
When payment due
(1)
A person must pay their terminal tax for a tax year by—
(a)
the 7th day of the month in schedule 3, part A, column G or H (Payment of provisional tax and terminal tax) for the person’s corresponding income year, unless paragraph (b) applies; and
(b)
the 15th day of January, if January is the month in schedule 3, part A, column G or H, for the person’s corresponding income year.
Columns G and H
(2)
For the purposes of subsection (1), the month in schedule 3, part A, column G or H, for the person’s corresponding income year is—
(a)
the month in column H, if—
(i)
the person’s return of income for the income year was linked to a tax agent as described in subsection (4); or
(ii)
[Repealed](b)
the month in column G in any other case.
First occurrence of month
(3)
For the purposes of subsection (1),—
(a)
the month in column G is the first occurrence of that month after the balance date:
(b)
the month in column H is the first occurrence of that month after the month in column G.
Linked to tax agent
(4)
For the purposes of subsection (2)(a)(i), a return of income is linked to a tax agent if the Commissioner has been notified that the return is to be filed by the tax agent who has an extension of time under section 37(4) of the Tax Administration Act 1994.
Defined in this Act: ask, Commissioner, corresponding income year, notify, pay, return of income, tax agent, tax year, terminal tax
Compare: 2004 No 35 s MC 1
Section RA 13(1)(b): amended (with effect from 1 April 2008), on 29 May 2008, by section 38(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RA 13(2)(a)(i): amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 112(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section RA 13(2)(a)(ii): repealed, on 1 April 2019, by section 245(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RA 13 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RA 13 list of defined terms income statement: repealed, on 1 April 2019, by section 245(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RA 14 Payment dates for provisional tax
A person must pay their provisional tax for a tax year under section RC 9 (Provisional tax payable in instalments) according to the relevant cycle of instalments set out in schedule 3, part A, columns A to F1 (Payment of provisional tax and terminal tax).
Defined in this Act: pay, provisional tax, tax year
Compare: 2004 No 35 s MB 8(1), (2)
Section RA 14: amended, on 1 April 2018, by section 33(1) (and see section 33(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RA 15 Payment dates for interim and other tax payments
When this section applies
(1)
This section applies when a person is required—
(a)
to withhold under section RA 5 an amount of tax for a payment and pay it to the Commissioner; or
(b)
to withhold and pay, or pay, under section RA 6 an amount to the Commissioner for a payment received or benefit provided by them; or
(c)
to withhold and pay under section RA 6B an amount of tax to the Commissioner for a retirement scheme contribution; or
(d)
to pay under section RA 6C(1) or to withhold and pay under section RA 6C(2), an amount to the Commissioner for a residential land purchase amount.
When payment due
(2)
The person must pay the amount to the Commissioner by the following dates:
(a)
when the period for which the payment is made is shorter than a month, by the 5th day after the relevant end date:
(b)
when the period for which the payment is made is a month or a period that is longer than a month but not a period referred to in paragraph (c) or (d), by the 20th day of the month after the relevant end date:
(c)
when the period for which the payment is made is a tax year or income year or both, by 31 May:
(cb)
despite subsection (3)(c), for FBT payable for the last quarter of a tax year, by 31 May:
(d)
for a close company that pays FBT on an income year basis, by terminal tax date.
Relevant end dates
(3)
In this section, an end date means 1 of the following, as applicable:
(a)
for PAYE and ESCT payable for 2 payment periods in a month under section RD 4(1)(b) or RD 65(3) (which set out the basis for payment of PAYE and ESCT),—
(i)
for the first payment period, the 15th day of the month; and
(ii)
for the second payment period, the last day of the month:
(b)
for PAYE, RWT, NRWT, RSCT, and RLWT payable monthly under section RD 4(1)(a), RE 21(2) and (7), RF 3, RF 13(3), RH 2(2), or RL 5 (which set out the basis for payment of PAYE, RWT, NRWT, RSCT, and RLWT), as applicable, the last day of a month:
(c)
for FBT payable quarterly under sections RD 58, RD 59, and RD 62 (which set out the basis for payment of FBT), the last day of a quarter:
(d)
for RWT and NRWT payable by instalment under section RE 21(3) or RF 13(2) (which set out the basis for payment of RWT and NRWT)—
(i)
for the first instalment, the last day of September; and
(ii)
for the second instalment, the last day of March.
When payment due in December
(4)
Despite subsection (2), for the purposes of this section and the payment of PAYE and ESCT to the Commissioner, if the month referred to in subsection (3)(a)(ii) is December, the payment is due by 15 January.
Discrepancies[Repealed]
(5)
[Repealed]Payment dates[Repealed]
(6)
[Repealed]Non-resident passive income
(7)
The Commissioner may extend the time for payment of NRWT.
Defined in this Act: amount of tax, assessment, close company, Commissioner, end date, ESCT, FBT, first payment period, income year, non-resident passive income, NRWT, pay, PAYE, quarter, resident passive income, residential land purchase amount, retirement scheme contribution, RLWT, RSCT, RWT, second payment period, tax year, terminal tax
Compare: 2004 No 35 ss NC 15, ND 9(2), (3), ND 10, ND 13, ND 14, NE 4, NEB 3(1), NF 4, NG 11, NH 3
Section RA 15(1)(b): amended, on 1 April 2008, by section 524(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 15(1)(c): added, on 1 April 2008, by section 524(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 15(1)(c): amended, on 1 July 2016, by section 48(1) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 15(1)(d): inserted, on 1 July 2016, by section 48(1) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 15(2)(b): substituted (with effect on 1 April 2008), on 6 October 2009, by section 492(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 15(2)(c): substituted (with effect on 1 April 2009), on 6 October 2009, by section 492(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 15(2)(cb): inserted (with effect on 1 April 2009), on 6 October 2009, by section 492(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 15(2)(d): substituted (with effect on 1 April 2008), on 6 October 2009, by section 492(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 15(3)(b): substituted, on 1 April 2008, by section 524(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 15(3)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 256(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RA 15(3)(b): amended, on 1 July 2016, by section 48(2)(a) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 15(3)(b): amended, on 1 July 2016, by section 48(2)(b) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 15(3)(c): substituted (with effect on 30 June 2009), on 6 October 2009, by section 492(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 15(4): amended, on 1 April 2020, by section 180(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 15(5) heading: repealed, on 1 April 2020, pursuant to section 180(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 15(5): repealed, on 1 April 2020, by section 180(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 15(6) heading: repealed, on 1 April 2020, pursuant to section 180(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 15(6): repealed, on 1 April 2020, by section 180(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 15 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 492(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 15 list of defined terms residential land purchase amount: inserted, on 1 July 2016, by section 48(3) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 15 list of defined terms retirement scheme contribution: inserted, on 1 April 2008, by section 524(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RA 15 list of defined terms RLWT: inserted, on 1 July 2016, by section 48(3) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RA 15 list of defined terms RSCT: inserted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RA 15 compare note: amended, on 1 April 2008, by section 524(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RA 16 Payment date when taxable activity ends
When this section applies
(1)
This section applies for a month when a registered person is required under section RA 6 to withhold and pay RWT or NRWT, and the person—
(a)
stops carrying on a taxable activity; or
(b)
no longer carries on a taxable activity in New Zealand.
Payment to Commissioner
(2)
The person must pay to the Commissioner by the 20th day of the next month the total amount of tax for all payments relating to the taxable activity to the extent to which an amount of tax remains unpaid.
Exemption continuing
(3)
This section does not apply for resident passive income if the person’s RWT-exempt status continues.
Defined in this Act: amount of tax, Commissioner, NRWT, pay, registered person, resident passive income, RWT, RWT-exempt status, taxable activity
Compare: 2004 No 35 ss NF 4(5), NG 11(4)
Section RA 16(3): amended, on 1 April 2020, by section 181(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 16 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 181(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 16 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 181(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RA 17 Payment date when RWT-exempt status ends
When this section applies
(1)
This section applies in relation to a month of a tax year when a person’s RWT-exempt status ends.
Payment to Commissioner
(2)
The person must pay to the Commissioner by the 20th day of the month following that in which the status ends the total amount of tax withheld by them to the extent to which the amount remains unpaid.
Exclusion
(3)
This section does not apply if the person continues to be required to withhold RWT through the carrying on of a taxable activity.
Defined in this Act: amount of tax, Commissioner, pay, RWT, RWT-exempt status, tax withheld, tax year, taxable activity
Compare: 2004 No 35 s NF 4(6)
Section RA 17 heading: amended, on 1 April 2020, by section 182(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 17(1): amended, on 1 April 2020, by section 182(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 17(2): amended, on 1 April 2020, by section 182(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 17 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 182(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RA 17 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 182(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RA 18 Payment date for emigrating companies
When this section applies
(1)
This section applies to an emigrating company that is treated under section FL 2 or FL 3 (which relate to the treatment of emigrating companies and their shareholders) as paying a distribution to a shareholder.
Payment
(2)
On or before the relevant date set out in subsection (3), the company must pay to the Commissioner all amounts of tax for resident passive income or non-resident passive income withheld in relation to the distribution.
Due date
(3)
The relevant date is,—
(a)
for a company that is treated under section FL 2 as paying a distribution to a shareholder, the date that is 3 months after the time of emigration:
(b)
for a company that is treated under section FL 3 as paying a distribution to a shareholder, the date that is 3 months after the earliest of the events described in subsection (1)(a) to (c) of that section occurs.
Defined in this Act: amount of tax, Commissioner, emigrating company, non-resident passive income, pay, resident passive income, shareholder, time of emigration
Compare: 2004 No 35 ss NF 4(6B), NG 11(4B)
Section RA 18(1): amended (with effect on 30 August 2022), on 31 March 2023, by section 101(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 18(2): amended (with effect on 30 August 2022), on 31 March 2023, by section 101(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 18(3) heading: inserted (with effect on 30 August 2022), on 31 March 2023, by section 101(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RA 18(3): inserted (with effect on 30 August 2022), on 31 March 2023, by section 101(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Refunds
RA 19 Refunds of excess amounts or when amounts mistakenly paid
When this section applies
(1)
This section applies for a person (the payer) and the withholding of an amount of tax that is more than the amount required to be withheld and paid under this Part (the excess amount) or an amount mistakenly paid, when—
(a)
the payer withholds and pays to the Commissioner an excess amount of RWT or NRWT:
(b)
[Repealed](c)
a PAYE intermediary pays an amount of tax for an employer through an error, or when the payment is not funded by the employer, as described in section RM 7 (Refunds to PAYE intermediaries):
(d)
the result of a calculation for FBT made by an employer under sections RD 50 to RD 53 (which relate to attributed benefits and non-attributed benefits) is negative.
Refunds
(2)
The Commissioner must refund the excess amount to the payer.
Defined in this Act: amount, amount of tax, Commissioner, employer, FBT, NRWT, pay, PAYE intermediary, RWT
Compare: 2004 No 35 ss NBA 7, ND 10(4)(a), NF 7(1), NG 16, NH 4
Section RA 19(1)(b): repealed, on 1 April 2017, by section 257(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RA 19 list of defined terms FDP: repealed, on 1 April 2017, by section 257(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Amalgamations
RA 20 Amalgamation of companies
Amalgamated company’s obligation
(1)
If an amalgamating company ends its existence on a resident’s restricted amalgamation, an unsatisfied obligation that the amalgamating company has at the time of the amalgamation to withhold and pay an amount of tax to the Commissioner under this Part is treated as an obligation of the amalgamated company.
Thresholds for close companies
(2)
For the purpose of determining whether the threshold under section RD 60 (Close company option) has been met, the amalgamated company is treated as paying the gross amounts of tax withheld under section RA 5(1)(a) and (c) by the amalgamating company in the income year before that in which the amalgamation takes place.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, amount of tax, close company, Commissioner, gross, income year, pay, resident’s restricted amalgamation
Compare: 2004 No 35 ss NC 15(7), ND 13(8), ND 14(8), NEB 3(2), NH 4(8)
Section RA 20(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 493(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20(2): added (with effect on 1 April 2008), on 6 October 2009, by section 493(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms amalgamation: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms close company: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms gross: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms income year: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 compare note: amended, on 1 April 2008, by section 525 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Regulations
RA 21 Regulations
PAYE income payments
(1)
The Governor-General may make regulations by Order in Council to—
(a)
declare a particular payment, or particular class of payments, to be included in, or excluded from, the definition of—
(i)
salary or wages; or
(ii)
extra pay; or
(iii)
schedular payment:
(b)
provide further rules in relation to schedular payments as set out in subsection (2):
(c)
provide that the regulations do not apply to a particular person, or class or persons, on notification from the Commissioner.
Schedular payments
(2)
For the purposes of subsection (1)(b), regulations may be made under this Act or the Tax Administration Act 1994 in relation to schedular payments for the following purposes:
(a)
to set the amount of tax for a particular schedular payment or particular class of schedular payment:
(b)
to provide that the Commissioner may, if a person asks, set the rate of tax for a schedular payment to the person:
(c)
to provide that the amount of tax for a particular schedular payment, class of schedular payment, or schedular payments under a particular threshold is the person’s income tax liability in relation to the relevant kind of income:
(d)
to provide that an amount of tax must be withheld and paid despite any assignment or charge.
Employment-related loans
(3)
The Governor-General may make regulations by Order in Council to declare the rate of interest applying to employment-related loans.
Application to quarters
(4)
When regulations referred to in subsection (3) are made, they apply to quarters starting from a date at least 1 month following the date the regulations were made. Regulations that reduce the rate of interest from the prescribed rate of interest at the time, if made at least 1 month before the quarter ends, may apply for that quarter.
Secondary legislation
(5)
Regulations under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount of tax, ask, employment-related loan, extra pay, income, income tax liability, interest, notify, pay, prescribed rate of interest, quarter, salary or wages, schedular payment, tax
Compare: 2004 No 35 ss NC 21, ND 1F
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section RA 21(4): amended (with effect on 1 April 2008), on 6 October 2009, by section 494(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 21(5) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section RA 21(5): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section RA 21 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Application of other provisions
RA 22 Limits on application of other provisions for purposes of PAYE rules
Amounts not separated
(1)
For an amount of tax not withheld and paid to the Commissioner, the provisions listed in subsection (2) do not require—
(a)
the separate identification of the amounts of a combined tax and earner-related payment that are attributable to—
(i)
an amount of tax for a PAYE income payment that an employer or PAYE intermediary is required to make under the PAYE rules:
(ii)
an amount that an employer must subtract under the sections referred to in subsection (2)(b) to (d):
(b)
the bringing of separate proceedings or separate treatment for the collection, recovery, or imposition of penalties in relation to an amount of a combined tax and earner-related payment.
Provisions
(2)
The sections referred to in subsection (1) are—
(a)
sections 143, 143A, and 156 to 165 of the Tax Administration Act 1994:
(b)
section 115 of the Accident Rehabilitation and Compensation Insurance Act 1992:
(c)
section 285 of the Accident Insurance Act 1998:
(d)
section 221 of the Accident Compensation Act 2001.
Defined in this Act: amount, amount of tax, combined tax and earner-related payment, Commissioner, employer, pay, PAYE income payment, PAYE intermediary, PAYE rules
Compare: 2004 No 35 s NC 20
Section RA 22(2)(d): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
RA 23 Application of other provisions for purposes of ESCT rules and NRWT rules
References
(1)
For the purposes of the ESCT rules and the NRWT rules, sections 167 and 169 of the Tax Administration Act 1994 apply, modified as necessary, as if—
(a)
a reference to an amount of tax withheld were a reference to ESCT or NRWT, as applicable:
(b)
a reference to an employer were a reference to a person required to withhold and pay ESCT or NRWT, as applicable:
(c)
a reference to the PAYE rules were a reference to the ESCT rules or the NRWT rules.
Exclusion[Repealed]
(2)
[Repealed]Defined in this Act: amount of tax, employer, ESCT, ESCT rules, NRWT, NRWT rules, pay, PAYE rules, tax withheld
Compare: 2004 No 35 ss NE 7, NG 17(1)
Section RA 23(2) heading: repealed (with effect on 1 April 2008), on 6 October 2009, pursuant to section 495(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 23(2): repealed (with effect on 1 April 2008), on 6 October 2009, by section 495(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 23 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 495(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RA 24 Application of other provisions for purposes of RSCT rules
For the purposes of the RSCT rules, sections 170(2), 171, and 172 of the Tax Administration Act 1994, modified as necessary, apply as if—
(a)
a reference to an amount of tax withheld were a reference to RSCT:
(b)
a reference to the RWT rules were a reference to the RSCT rules.
Defined in this Act: amount of tax, RSCT rules, RWT rules
Compare: 2004 No 35 s NEB 7(1)
Section RA 24: added, on 1 April 2008, by section 526 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Subpart RB—Terminal tax
Contents
RB 1 Payment of terminal tax
A person must pay their terminal tax for a tax year on the due date set out in section RA 13 (Payment dates for terminal tax).
Defined in this Act: pay, tax year, terminal tax
Compare: 2004 No 35 s MC 1
Section RB 1: amended (with effect on 1 April 2008), on 6 October 2009, by section 496(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RB 2 Income tax liability for non-filing taxpayers for non-resident passive income
[Repealed]Section RB 2: repealed, on 30 March 2017, by section 258 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RB 3 Schedular income tax liability for filing taxpayers for non-resident passive income
When this section applies
(1)
This section applies for the purposes of calculating a filing taxpayer’s terminal tax under section BC 8 (Satisfaction of income tax liability).
Calculating amount of liability
(2)
The schedular income tax liability of the filing taxpayer under section BC 7 (Income tax liability of person with schedular income) for each class of non-resident passive income that is schedular income under paragraph (f) of the definition of schedular income is equal to an amount calculated using the formula—
amount of income × tax rate.
Definition of item in formula
(3)
In the formula, tax rate is the rate set out in sections RF 7 to RF 10, and RF 12 (which relate to the calculation of NRWT) that applies to the class of non-resident passive income.
No imputation credits
(4)
If the taxpayer derives a dividend to which subsection (2) applies, they do not have a credit under section LE 1 (Tax credits for imputation credits) for an imputation credit attached to the dividend.
Defined in this Act: amount, dividend, filing taxpayer, imputation credit, non-resident passive income, NRWT, schedular income, schedular income tax liability, terminal tax
Compare: 2004 No 35 ss BC 7, NG 3
Section RB 3(2): amended (with effect on 1 April 2008), on 6 October 2009, by section 497(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RB 3 list of defined terms non-filing taxpayer: repealed, on 1 April 2019, by section 246 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RB 4 Using refunds to satisfy tax liabilities
If a person is entitled to a refund of an amount of tax from the Commissioner, the amount may be applied under section RM 10 (Using refund to satisfy tax liability) to satisfy a liability that the person has under the Inland Revenue Acts.
Defined in this Act: amount of tax, Commissioner, Inland Revenue Acts
Compare: 2004 No 35 s MD 1(3), (3A)
Subpart RC—Provisional tax
Contents
Introductory provisions
RC 1 What this subpart does
When this subpart applies
(1)
Sections RC 3 to RC 39 apply, for the purposes of the provisional tax rules, to provide—
(a)
the circumstances in which a person has a provisional tax obligation:
(b)
a person’s provisional tax liability for a tax year, and the methods for calculating the amount payable for the tax year:
(c)
the number of instalments of provisional tax and the instalment dates for a corresponding income year:
(d)
how the amount of an instalment of provisional tax is determined:
(e)
the payment of provisional tax in a transitional year:
Instalment dates
(2)
In this subpart, a reference to an instalment classified by the alphanumeric designations A to F1 is a reference to a date in the table in schedule 3, part A (Payment of provisional tax and terminal tax) on which an instalment of provisional tax is payable for an income year corresponding to a tax year.
Defined in this Act: amount, corresponding income year, income year, instalment date, pay, provisional tax, provisional tax rules, shortfall penalty, tax year, transitional year
Compare: 2004 No 35 s MB 1
Section RC 1(2): amended, on 1 April 2018, by section 34(1) (and see section 34(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RC 2 Provisional tax rules and their application
Meaning
(1)
The provisional tax rules means—
(a)
this subpart; and
(b)
section LB 2 (Tax credits for provisional tax payments); and
(c)
sections 124S to 124W and 124ZF, 119, 120KB to 120N, 120OE, 139B and 139C, 173P to 173R of the Tax Administration Act 1994.
Application
(2)
The provisional tax rules apply to a person who is required or who chooses to pay provisional tax.
Defined in this Act: provisional tax, provisional tax rules
Compare: 2004 No 35 s OB 1 “provisional tax rules”
Section RC 2(1)(c): amended, on 18 March 2019, by section 293 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RC 3 Who is required to pay provisional tax?
Threshold or election
(1)
A person who is liable to pay provisional tax for a tax year is—
(a)
a person whose residual income tax for the tax year is more than $5,000; or
(b)
a person who chooses under section RC 4 to pay provisional tax.
Exclusions
(2)
Despite subsection (1), the following persons do not pay provisional tax:
(a)
a company that does not have a fixed establishment in New Zealand and is not treated as resident in New Zealand:
(b)
[Repealed](c)
a non-resident contractor who has not been given an exemption by the Commissioner for the tax year:
(d)
a multi-rate PIE that does not choose to calculate and pay tax using the provisional tax calculation option under section HM 44 (Provisional tax calculation option).
No obligation
(3)
A person has no obligation to pay provisional tax for a tax year if their residual income tax for the preceding tax year is $5,000 or less.
Defined in this Act: Commissioner, company, fixed establishment, multi-rate PIE, New Zealand, non-resident, non-resident contractor, pay, provisional tax, resident in New Zealand, residual income tax, tax year
Compare: 2004 No 35 ss MB 2, OB 1 “provisional taxpayer”
Section RC 3(1)(a): amended, on 1 April 2020, by section 21(1) (and see section 21(3) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 3(2)(b): repealed, on 1 April 2019, by section 247 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 3(2)(c): amended, on 1 April 2019, by section 183(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RC 3(2)(d): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 498(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 3(3): amended, on 1 April 2020, by section 21(2) (and see section 21(3) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 3 list of defined terms exemption certificate: repealed, on 1 April 2019, by section 183(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RC 3 list of defined terms multi-rate PIE: inserted, on 1 April 2010, by section 498(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 3 list of defined terms portfolio tax rate entity: repealed, on 1 April 2010, by section 498(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RC 4 Choosing to pay provisional tax
Election
(1)
A person, when first providing a return of income for a tax year, may choose to pay provisional tax for the tax year if—
(a)
they have paid provisional tax of more than $5,000 on or before—
(i)
the date of instalment F for the corresponding income year; or
(ii)
the final instalment date in a transitional year; and
(b)
they have, on the day on which the first payment of provisional tax is made for the tax year, a reasonable expectation that they are liable to pay provisional tax for the tax year, other than by this election.
Exclusion
(2)
This section does not apply to a person described in section RC 3(2).
Defined in this Act: corresponding income year, final instalment, instalment date, pay, provisional tax, return of income, tax year, transitional year
Compare: 2004 No 35 s MB 3
Section RC 4(1)(a): amended, on 1 April 2020, by section 22(1) (and see section 22(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Calculating provisional tax liability
RC 5 Methods for calculating provisional tax liability
Choice of method
(1)
A person liable to pay provisional tax must calculate the amount payable for a tax year using 1 of the methods described in subsections (2) to (7).
Standard method: 5% uplift
(2)
Under the standard method, the amount of provisional tax payable for the tax year is, for the purpose of determining the amount of any particular instalment of provisional tax payable under section RC 9, 105% of the person’s residual income tax for the preceding tax year, determined under section RC 6. Subsection (3) overrides this subsection.
Standard method: 10% uplift
(3)
Despite subsection (2), the amount of provisional tax payable for the tax year is, for the purpose of determining the amount of any particular instalment of provisional tax payable under section RC 9, 110% of the person’s residual income tax for the tax year before the preceding tax year if—
(a)
they are required to provide a return of income for the preceding tax year; and
(b)
the return is not due on or before the relevant instalment date through the application of section 37 of the Tax Administration Act 1994, or an extension granted under that section; and
(c)
they have not provided the return on or before the relevant instalment date; and
(d)
the relevant instalment date is not the date of instalment F for the corresponding income year.
Non-working days
(3B)
For the purposes of subsection (3)(c), if the relevant instalment date falls on a day that is not a working day, a return for the preceding tax year provided on the first working day after that instalment date is deemed to have been provided on the instalment date.
Relationships and modification of standard method
(4)
Subsections (5) to (7) override subsection (3). Sections RC 10(5), RZ 3 (Standard method: 2010–11 to 2012–13 income years) and RZ 5D (Standard method or GST method: transition for Maori authorities) modify subsections (2) and (3).
Truncation
(4B)
An amount calculated under subsection (2) or (3) is truncated to whole dollars, for example $10.98 equals $10.
Estimation method
(5)
The person may estimate their provisional tax liability for the tax year under section RC 7.
AIM method
(5B)
A person must use the AIM method under section RC 7B to determine their provisional tax liability for the tax year (the current tax year), other than a transitional year, if the person—
(a)
has chosen to either—
(i)
use the AIM method for the current tax year on or before their first instalment date under the AIM method; or
(ii)
change part-year to use the AIM method for their remaining instalment dates under the AIM method for the current tax year, and they use either the standard method or GST ratio method at the beginning of the current tax year and, before changing to use the AIM method, they met all of their provisional tax obligations under the relevant method, from the beginning of the current tax year; and
(b)
has an AIM-capable accounting system that is up-to-date for relevant tax law for the corresponding income year and for determinations under section 91AAX of the Tax Administration Act 1994 for the corresponding income year; and
(c)
has—
(i)
annual gross income of $5,000,000 or less for the tax year before the current tax year:
(ii)
annual gross income of $5,000,000 or less for the first tax year for which the person used the AIM method, and the Commissioner has approved under section 15Z of the Tax Administration Act 1994 the person’s continued use of an AIM-capable accounting system for tax years in which the person has annual gross income of more than $5,000,000:
(iii)
a large business AIM-capable system; and
(d)
has not been liable, in 1 of the last 4 tax years before the current tax year, for a shortfall penalty in relation to their use of the AIM method and an approved AIM provider’s AIM-capable accounting system; and
(e)
has not returned tax liabilities using the AIM method with the sole purpose or effect of consistently, year-on-year, reducing their tax liabilities below the amounts of reasonably accurate assessments; and
(f)
is not a member of a class of taxpayers that the Commissioner has determined, under section 91AAY of the Tax Administration Act 1994, must not use the AIM method; and
(g)
for the current tax year, has not failed more than twice to give the Commissioner information in the prescribed form, as provided by section 45 of the Tax Administration Act 1994.
AIM method: exception
(5C)
A person who does not meet the requirements of subsection (5B) can not use the AIM method for the current tax year. If they can not use the AIM method for the current year because part-way through the corresponding income year the person stops meeting the requirements of subsection (5B), the person is treated as using the estimation method for the whole of the current tax year.
GST ratio method
(6)
A person who is eligible under section RC 16 and not excluded by section RC 17 may choose to use a goods and services tax (GST) ratio under section RC 8 to determine their provisional tax liability for the tax year.
Commissioner’s determination
(7)
If the Commissioner determines a person’s provisional tax liability under section 119 of the Tax Administration Act 1994, the amount or liability is that last determined by the Commissioner and notified to the person at least 30 days before the instalment date. The 30-day requirement does not apply in a case to which section 119(1)(d) of that Act applies (which relates to an estimate of residual income tax that is not fair and reasonable).
Life insurance business
(8)
A person who carries on a business of providing life insurance and who is liable for income tax under the rules for life insurers, must at the time they determine their provisional tax liability provide the Commissioner with details of the calculation of that liability. In particular, they must detail the extent to which the amount of provisional tax relates to the policyholder base.
Defined in this Act: AIM-capable accounting system, amount, annual gross income, business, Commissioner, corresponding income year, GST ratio, income tax, instalment date, large business AIM-capable system, life insurance, notify, pay, policyholder base, provisional tax, residual income tax, return of income, shortfall penalty, tax year, taxpayer, transitional year
Compare: 2004 No 35 s MB 4
Section RC 5(2): replaced (with effect on 1 October 2007), on 31 March 2023, by section 102(1) (and see section 102(7) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(3): amended (with effect on 1 October 2007), on 31 March 2023, by section 102(2) (and see section 102(7) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(3)(b): amended (with effect on 1 April 2017), on 31 March 2023, by section 102(3) (and see section 102(8) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(3)(c): amended (with effect on 1 April 2017), on 31 March 2023, by section 102(4) (and see section 102(8) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(3)(d): amended (with effect on 1 April 2017), on 31 March 2023, by section 102(5) (and see section 102(8) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(3B) heading: inserted (with effect on 1 April 2017), on 31 March 2023, by section 102(6) (and see section 102(8) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(3B): inserted (with effect on 1 April 2017), on 31 March 2023, by section 102(6) (and see section 102(8) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RC 5(4): amended (with effect on 1 April 2019), on 23 March 2020, by section 169(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 5(4): amended (with effect on 1 October 2010), on 21 December 2010, by section 121 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RC 5(4): amended, on 1 October 2010, by section 25 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RC 5(4): amended, on 1 October 2008, by section 39 of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RC 5(4B) heading: inserted (with effect on 1 April 2017), on 23 March 2020, by section 169(2) (and see section 169(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 5(4B): inserted (with effect on 1 April 2017), on 23 March 2020, by section 169(2) (and see section 169(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 5(5B) heading: inserted, on 1 April 2018, by section 35(1) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 5(5B): inserted, on 1 April 2018, by section 35(1) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 5(5B)(a): replaced, on 1 April 2019, by section 248(1) (and see section 248(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 5(5C) heading: inserted, on 1 April 2018, by section 35(1) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 5(5C): inserted, on 1 April 2018, by section 35(1) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 5(8): amended (with effect on 2 November 2012), on 30 March 2021, by section 129(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RC 5 list of defined terms AIM-capable accounting system: inserted, on 1 April 2018, by section 35(2) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3)
Section RC 5 list of defined terms annual gross income: inserted, on 1 April 2018, by section 35(2) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3)
Section RC 5 list of defined terms large business AIM-capable system: inserted, on 1 April 2018, by section 35(2) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3)
Section RC 5 list of defined terms life insurance rules: repealed (with effect on 2 November 2012), on 30 March 2021, by section 129(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RC 5 list of defined terms shortfall penalty: inserted, on 1 April 2018, by section 35(2) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3)
Section RC 5 list of defined terms taxpayer: inserted, on 1 April 2018, by section 35(2) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3)
Section RC 5 list of defined terms transitional year: inserted, on 1 April 2018, by section 35(2) (and see section 35(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3)
RC 6 Standard method
When this section applies
(1)
This section applies to a person liable to pay provisional tax for the purposes of section RC 5(2) and (3) and the calculation of the amount of provisional tax payable for a tax year under the standard method.
Assessment for preceding tax year
(2)
The person’s residual income tax for a tax year is based on their assessment for the preceding tax year unless the Commissioner has sent out a notice of assessment for the tax year at least 30 days before the relevant instalment date, in which case the amount of residual income tax is based on the Commissioner’s assessment for the preceding tax year.
Commissioner’s assessment for preceding tax year
(3)
The person’s residual income tax is based on the Commissioner’s assessment for the preceding tax year, whenever the assessment is made, if—
(a)
they are required under sections 33 and 37 of the Tax Administration Act 1994 to provide a return of income for the preceding tax year but have failed to do so by the relevant instalment date; or
(b)
they are not required under sections 33 and 37 of that Act to provide a return by the relevant instalment date, and subsections (2) and (4) do not apply.
Residual income tax for preceding tax year
(4)
The amount of provisional tax payable for a tax year is the amount of the person’s residual income tax for the preceding tax year if—
(a)
they are not required to provide a return of income for the preceding tax year; or
(b)
their residual income tax for the tax year before the preceding tax year was $5,000 or less, and they were not required to provide, and have not provided, a return of income for the tax year by the date of instalment F for the corresponding income year.
Later increased assessment
(5)
If the Commissioner’s assessment of a person’s income tax liability occurs after the payment date for an instalment of provisional tax and would result in an increase in the person’s residual income tax for the preceding tax year, the residual income tax is treated for the purposes of the provisional tax rules as if it had not been increased.
Transitional years and consolidated groups
(6)
A person’s residual income tax in a transitional year is calculated under section RC 20. For consolidated groups, the calculation is made under section RC 29.
Defined in this Act: amount, assessment, Commissioner, consolidated group, corresponding income year, income tax liability, instalment date, notice, pay, provisional tax, provisional tax rules, residual income tax, return of income, tax year, transitional year
Compare: 2004 No 35 s MB 5
Section RC 6(4)(b): amended, on 1 April 2020, by section 23(1) (and see section 23(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
RC 7 Estimation method
When this section applies
(1)
This section applies to a person who is liable to pay provisional tax under section RC 5(5) and to the calculation of the amount of their provisional tax payable for a tax year under the estimation method.
Fair and reasonable estimate
(2)
On or before an instalment date, the person may make a fair and reasonable estimate of their residual income tax for the tax year by informing the Commissioner of the estimate. The amount of provisional tax payable for a tax year is the amount of the estimated residual income tax.
Revising estimates
(3)
On or before an instalment date, the person may choose to revise an estimate made under subsection (2). The amount last estimated is the amount taken into account under section RC 5(5).
Exception for person making election under section IZ 8
(3B)
A person, including a person who otherwise does not use the estimation method in the tax year, who makes an election under section IZ 8 (Election to use net loss for 2019–20 or 2020–21 year as tax loss in preceding year), and a shareholder-employee of such a person, may make or revise an estimate made under subsection (2), for the tax year corresponding to the income year referred to in section IZ 8 as the taxable income year, before the earlier of the date on which the person files the return of income for the tax year and the date on which the return is due.
Reasonable care in making and maintaining assessment
(4)
A person who makes an estimate under subsection (2) must take reasonable care in making it, and must revise the estimate for the tax year if, at some time in the tax year, the amount estimated is no longer fair and reasonable.
Estimation higher than provisional tax payable
(5)
If a person’s estimate is more than the provisional tax that is payable for the tax year, they are treated as having taken reasonable care in making the estimate.
Changing calculation method from GST ratio
(6)
If, under section RC 18(5), a person changes the way they determine the amount of provisional tax after the date of an instalment, they must estimate their residual income tax for their corresponding income year, and must pay provisional tax on whichever of the following instalment dates for the income year occur after 30 days from their last ratio instalment date:
(a)
C and F for changes to a 6-monthly GST taxable period:
(b)
B, D, and F for other changes.
Disaster relief[Repealed]
(7)
[Repealed]Defined in this Act: amount, Commissioner, corresponding income year, GST ratio, income year, inform, instalment date, pay, provisional tax, ratio instalment date, residual income tax, return, return of income, shareholder-employee, tax year
Compare: 2004 No 35 s MB 6
Section RC 7(3): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 221(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 7(3B) heading: inserted (with effect on 15 April 2020), on 30 April 2020, by section 13(1) (and see section 13(3) for application) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RC 7(3B): inserted (with effect on 15 April 2020), on 30 April 2020, by section 13(1) (and see section 13(3) for application) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RC 7(6): substituted, on 1 April 2008, by section 527 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 7(7) heading: repealed, on 6 October 2009, pursuant to section 499(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 7(7): repealed, on 6 October 2009, by section 499(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 7 list of defined terms income year: inserted (with effect on 15 April 2020), on 30 April 2020, by section 13(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RC 7 list of defined terms inform: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 7 list of defined terms qualifying event: repealed, on 6 October 2009, by section 499(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 7 list of defined terms return: inserted (with effect on 15 April 2020), on 30 April 2020, by section 13(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RC 7 list of defined terms return of income: inserted (with effect on 15 April 2020), on 30 April 2020, by section 13(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RC 7 list of defined terms self-assessed adverse event: repealed, on 6 October 2009, by section 499(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 7 list of defined terms shareholder-employee: inserted (with effect on 15 April 2020), on 30 April 2020, by section 13(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
RC 7B AIM method
When this section applies
(1)
This section applies to—
(a)
a person who meets the requirements of section RC 5(5B); and
(b)
the calculation of the amount of provisional tax payable for a tax year, other than a transitional year, under the AIM method.
AIM method
(2)
A person must use an AIM-capable accounting system for the calculation of provisional tax payable for a tax year.
Meaning of AIM-capable accounting system
(3)
AIM-capable accounting system means a double-entry accounting system that is an approved AIM provider’s product, and uses a core software package from an approved AIM provider, if the system has the following features:
(a)
a core software accounting package and connected packages that provide the ability to—
(i)
generate and keep comprehensive financial accounts, including accounting income and expenditure, ledger accounts, trial balances, bank account reconciliations, and journals, on an on-demand basis, in accordance with good accounting and tax practice; and
(ii)
calculate tax liabilities for the tax year using tax adjustments for the financial accounts, in accordance with a determination under section 91AAX of the Tax Administration Act 1994(a section 91AAX determination), and using tax rates under a section 91AAX determination; and
(iii)
for amounts for which there is no tax adjustment under a section 91AAX determination, calculate tax liabilities for the tax year using tax rates under a section 91AAX determination, and using tax adjustments for the financial accounts that result in reasonably accurate assessments of tax liabilities for a person; and
(iv)
recalculate all financial accounts and tax liabilities, if retrospective adjustments are required for the year to date; and
(v)
produce reports and other information as required by the Commissioner, in formats prescribed by the Commissioner; and
(b)
electronic communication facilities for—
(i)
giving information in the form prescribed by the Commissioner; and
(ii)
sending and receiving messages and notifications; and
(c)
help documentation for end-users and their tax agents on the use of the package, with ongoing support provided by the approved AIM provider on the use of the package.
Defined in this Act: AIM-capable accounting system, approved AIM provider, Commissioner, person, provisional tax, tax agent, tax year
Section RC 7B: inserted, on 1 April 2018, by section 36(1) (and see section 36(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RC 8 GST ratio method
Using GST ratio
(1)
A person liable to pay provisional tax who meets the requirements of section RC 16 and is not excluded by section RC 17 may choose to use a GST ratio to determine the amount of provisional tax payable for a tax year.
Meaning of GST ratio
(2)
The person’s GST ratio is the percentage figure that is obtained by dividing their residual income tax for the preceding tax year by their total taxable supplies for the corresponding income year. The amount of residual income tax and the amount of total taxable supplies are called base amounts for the purposes of this section.
When amounts based on tax year before preceding tax year
(3)
If a base amount for the preceding tax year or corresponding income year is not known, the GST ratio is the percentage based on the assessment for the tax year and corresponding income year that are just before the preceding tax year and corresponding income year.
When no assessment for tax year before preceding tax year
(3B)
Subsection (3) does not apply and the GST ratio is the percentage based on the assessments of the base amounts for the year that is 2 years before the preceding tax year if—
(a)
for the year before the preceding tax year—
(i)
an assessment of a base amount has not been made and the absence of an assessment arises because of an extension of time for filing a return for the year, or a period in the year:
(ii)
an assessment of a base amount is the subject of a dispute or challenge under the Tax Administration Act 1994:
(iii)
the year is a transitional year; and
(b)
for the year that is 2 years before the preceding tax year—
(i)
the base amounts have been assessed; and
(ii)
the circumstances in paragraph (a)(ii) and (iii) do not exist.
Commissioner’s calculation
(4)
The Commissioner must calculate a person’s GST ratio, informing them by—
(a)
including the percentage figure on the person’s preprinted GST return form; or
(b)
[Repealed](c)
some other means.
Adjustment to GST ratio
(5)
The Commissioner must adjust a person’s GST ratio if a base amount is revised through, among other reasons,—
(a)
an assessment or an amended assessment of the person’s income tax return for the preceding tax year; or
(b)
a change in the value of the total taxable supplies for the corresponding income year; or
(c)
the disposal of an asset to which section RC 19 applies.
New GST ratio
(6)
When subsection (5) applies, the Commissioner must inform the person of the new GST ratio. The new ratio applies in relation to the relevant instalment dates that occur 30 days after the date on which the person is informed.
Transitional years
(7)
If a person has paid instalments of provisional tax in a transitional year, for the tax year that follows the transitional year, for the purposes of this section and section RC 11, they must—
(a)
ignore the transitional year when determining their residual income tax or total taxable supplies; and
(b)
base their determination of residual income tax and total taxable supplies on the tax year preceding the transitional year.
When no assessment for tax year before preceding tax year
(7B)
Subsection (7) does not apply and the GST ratio is the percentage based on the assessments of the base amounts for the year that is 2 years before the transitional year if—
(a)
for the year before the transitional year—
(i)
an assessment of a base amount has not been made and the absence of an assessment arises because of an extension of time for filing a return for the year, or a period in the year:
(ii)
an assessment of a base amount is the subject of a dispute or challenge under the Tax Administration Act 1994:
(iii)
the year is a transitional year; and
(b)
for the year that is 2 years before the transitional year—
(i)
the base amounts have been assessed; and
(ii)
the circumstances in paragraph (a)(ii) and (iii) do not exist.
Total taxable supplies
(8)
In subsections (2), (5), and (7), and in sections RC 11, RC 19, and RC 31, total taxable supplies, for a person and a period, means the amount that is the total value of taxable supplies by the person for the period. The amount includes the GST charged on the supplies.
Modification
(9)
Sections RZ 4 (GST ratio method: 2010–11 to 2013–14 income years) and RZ 5D (Standard method or GST method: transition for Maori authorities) modify this section.
Defined in this Act: amount, assessment, base amount, Commissioner, corresponding income year, GST, GST ratio, income tax, inform, instalment date, pay, provisional tax, residual income tax, return, tax year, taxable supply, total taxable supplies, transitional year
Compare: 2004 No 35 s MB 7
Section RC 8(3B) heading: inserted, on 1 April 2008, by section 528(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 8(3B): inserted, on 1 April 2008, by section 528(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 8(4)(b): repealed, on 2 June 2016, by section 51(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 8(7B) heading: inserted, on 1 April 2008, by section 528(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 8(7B): inserted, on 1 April 2008, by section 528(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 8(9): amended (with effect on 1 October 2010), on 21 December 2010, by section 122 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RC 8(9): amended, on 1 October 2010, by section 26 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RC 8(9): amended, on 1 October 2008, by section 40 of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RC 8 list of defined terms inform: inserted, on 2 June 2016, by section 51(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Instalments of provisional tax
RC 9 Provisional tax payable in instalments
Who this section applies to
(1)
This section applies to a person who is liable to pay provisional tax.
General principle
(2)
For a person liable to pay provisional tax using the standard and estimation methods, the amount of the provisional tax liability must be spread evenly over the applicable number of instalments, so that equal amounts are paid on each instalment date. If the full amount is not divisible into exactly equal instalments, the final instalment carries the difference.
Provisional tax payable in 3 instalments
(3)
A person pays provisional tax in 3 instalments on the interest instalment dates for the tax year in the months set out in schedule 3, part A, columns B, D, and F (Payment of provisional tax and terminal tax) for the person’s corresponding income year. The amount of each instalment is calculated under section RC 10. Subsection (4) overrides this subsection.
Exclusions
(4)
Subsection (3) does not apply—
(a)
to a person liable to pay provisional tax who—
(i)
pays GST on a 6-monthly basis; or
(ii)
uses a GST ratio to determine the amount of provisional tax payable, or who changes their calculation method under section RC 18(5); or
(iii)
changes the cycle of their taxable periods under section 15C of the Goods and Services Tax Act 1985:
(b)
to a person with an initial provisional tax liability who—
(i)
pays GST on a 6-monthly basis; or
(ii)
pays GST on a monthly or 2-monthly basis, and starts a taxable activity within 30 days before the date of instalment B in their corresponding income year:
(bb)
to a person that uses the AIM method for the tax year:
(c)
to a person liable to pay provisional tax who has not provided a return of income for the preceding tax year, and whose residual income tax for the tax year before the preceding tax year was $5,000 or less:
(d)
in a transitional year.
AIM method
(4B)
A person liable to pay provisional tax who uses the AIM method for the current tax year must pay provisional tax—
(a)
if the person is not registered for GST, or has a 6-month taxable period under section 15 of the Goods and Services Tax Act 1985, on the 6 instalment dates in the months set out in schedule 3, part A, columns A, B, C, D, E, and F for their balance date. The amount of each instalment is provided by section RC 10B; or
(b)
if the person has a 2-month taxable period under section 15 of the Goods and Services Tax Act 1985, on the group of 6 instalment dates in the months set out in either schedule 3, part A, columns A, B, C, D, E, and F or in schedule 3, part A, columns A1, B1, C1, D1, E1, and F1 that corresponds to the due dates for their GST returns. The amount of each instalment is provided by section RC 10B; or
(c)
if the person has a 1-month taxable period under section 15 of the Goods and Services Tax Act 1985, on the 12 instalment dates in the months set out in schedule 3, part A, columns A to F1 for their corresponding income year. The amount of each instalment is provided by section RC 10B.
Part-year change into AIM
(4C)
A person who chooses to change to the AIM method under section RC 5(5B)(a)(ii) must use the relevant remaining instalment dates for them under the AIM method. The amount of each relevant instalment is calculated under section RC 10B.
Provisional tax when GST paid on 6-monthly basis
(5)
A person liable to pay provisional tax who pays GST on a 6-monthly basis must pay provisional tax on the 2 interest instalment dates for the tax year in the months set out in schedule 3, part A, columns C and F for their corresponding income year. This subsection applies to a person with an initial provisional tax liability other than 1 who pays GST on a 6-monthly basis and starts a taxable activity within 30 days before the date of instalment C.
Provisional tax determined using GST ratio
(6)
A person liable to pay provisional tax who uses a GST ratio to determine the amount of provisional tax payable for a tax year, must pay provisional tax on the 6 ratio instalment dates in the months set out in schedule 3, part A, columns A, B, C, D, E, and F for their corresponding income year. The amount of each instalment is calculated under section RC 11.
Changing calculation method
(7)
A person who is unable or who decides not to use a GST ratio, changing their calculation method under section RC 18, must pay the provisional tax payable for the tax year on the relevant instalment dates under the replacement method. The amount of each instalment is calculated under section RC 10.
Changing cycle of taxable periods
(8)
A person who changes the cycle of their taxable periods under section 15C of the Goods and Services Tax Act 1985 must pay provisional tax for the tax year on the instalment dates set out in section RC 27 after the change in taxable period takes effect. The amount of each instalment is calculated under section RC 10.
Persons with initial provisional tax liability
(9)
A person with an initial provisional tax liability who starts a taxable activity in a tax year is liable to pay interest calculated under section 120KC of the Tax Administration Act 1994 as if they were liable to pay provisional tax for the tax year—
(a)
in 3 instalments under subsection (3) if they start a taxable activity at some time in the period that starts at the beginning of the corresponding income year and ends 30 days before the date of instalment B:
(b)
in 2 instalments—
(i)
in a case to which section RC 13 applies; or
(ii)
if they pay GST on a 6-monthly basis and start a taxable activity at some time in the period that starts at the beginning of the corresponding income year and ends 30 days before the date of instalment C:
(c)
in 1 instalment in a case to which section RC 14 applies.
Extension of time for return
(10)
A person who has not provided a return of income for a preceding tax year and whose residual income tax for the tax year before the preceding tax year was $5,000 or less must pay provisional tax for the tax year on the instalment dates set out in section RC 13 or RC 14, as applicable.
Transitional years
(11)
In a transitional year, provisional tax is payable as set out in section RC 21 and schedule 3, part B. The amount of each instalment is calculated under sections RC 22 to RC 24.
Voluntary payments
(12)
A person liable to pay provisional tax may pay an instalment under section RC 12 at any time.
Truncation
(13)
An instalment calculated under this section is truncated to whole dollars, for example $10.98 equals $10.
Defined in this Act: amount, corresponding income year, final instalment, GST, GST ratio, initial provisional tax liability, instalment date, interest instalment date, pay, provisional tax, ratio instalment date, residual income tax, return of income, tax year, taxable activity, taxable period, transitional year
Compare: 2004 No 35 s MB 8
Section RC 9(4)(bb): inserted, on 1 April 2018, by section 37(1) (and see section 37(4) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 9(4)(c): amended, on 1 April 2020, by section 24(1) (and see section 24(3) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 9(4B) heading: inserted, on 1 April 2018, by section 37(2) (and see section 37(4) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 9(4B): inserted, on 1 April 2018, by section 37(2) (and see section 37(4) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 9(4C) heading: inserted, on 1 April 2019, by section 249(1) (and see section 249(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 9(4C): inserted, on 1 April 2019, by section 249(1) (and see section 249(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 9(6): amended, on 1 April 2018, by section 37(3) (and see section 37(4) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 9(7): amended, on 1 April 2008, by section 529(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 9(9): amended, on 1 April 2020, by section 170(1) (and see section 170(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 9(9): amended, on 1 April 2008, by section 529(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 9(9)(b)(ii): substituted, on 1 April 2008, by section 529(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 9(10): amended, on 1 April 2020, by section 24(2) (and see section 24(3) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 9(13) heading: inserted (with effect on 1 April 2017), on 23 March 2020, by section 170(2) (and see section 170(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 9(13): inserted (with effect on 1 April 2017), on 23 March 2020, by section 170(2) (and see section 170(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Table R1: Summary of instalment dates and calculation methods for provisional tax
| Categories: ordinary | Variables | Method | Instalments | Instalment dates | Calculation | Interest, penalties |
|---|---|---|---|---|---|---|
| Standard RC 5(2), (3) | RC 6 | 3: RC 9(3) | B, D, F | RC 10 | 120KBB, 120KE(1), (2) | |
| Estimation RC 5(5) | RC 7 | 3: RC 9(3) | B, D, F | RC 10 | 120KB | |
| AIM | 2 month | RC 7B | 6: RC 9(4B)(a) and (b) | A, B, C, D, E, and F, or A1, B1, C1, D1, E1, F1 | RC 10B | 120KBC |
| RC 5(5B) | 1 month | RC 7B | 12: RC 9(4B)(c) | A to F1 | RC 10B | 120KBC |
| GST ratio RC 5(6) | 1 month | RC 8 | 6: RC 9(6) | A, B, C, D, E, and F | RC 11 | 120KE(3), 139C |
| 2 month | RC 8 | 6: RC 9(6) | A, B, C, D, E, and F | RC 11 | 120KE(3), 139C | |
| GST 6-month RC 9(4) | standard | RC 6 | 2: RC 9(5) | C and F | RC 11 | 120KE(1) |
| estimation | RC 7 | 2: RC 9(5) | C and F | RC 11 | 120KB | |
| Categories: exceptional | ||||||
| Persons with initial provisional tax liability | RC 6 or RC 7 | RC 9(9), RC 13(3), RC 14(2) | D and F, or F as required | RC 10 (RC 13(4)), RC 10 (RC 14(3)) | 120KC | |
| Transitional years | RC 20 | RC 22 (RC 9(11)) | B, D, F, or C, F as required | RC 22– RC 24 | 120KC | |
| Changing taxable period, or starting and stopping GST registration | RC 27, 15C, 15E (GST Act) | RC 27 (RC 9(8)) | B, D, F, or C, F as required | RC 26, RC 27 | 120KD | |
| Changing calculation method | RC 18 | RC 7(6), RC 9(7) | B, D, F, or C, F as required | RC 18 | 120KE(5) –(7) | |
| Voluntary payments | RC 12 | 120E |
| Note: references in the last column are to sections of the Tax Administration Act 1994. |
Table R1: amended, on 1 April 2018, by section 38(1) (and see section 38(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Table R1: amended, on 1 April 2018, by section 38(2) (and see section 38(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Table R1: amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 85(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RC 10 Calculating amount of instalment under standard and estimation methods
When this section applies
(1)
This section applies for the purposes of—
(a)
section RC 5(2), (3), and (5) (which relates to the calculation of a provisional tax liability); and
(b)
section RC 9(3) and (5) (which relates to payment of instalments); and
(c)
sections RC 13 and RC 14 (which relate to persons with an initial provisional tax liability and those with an extension of time for providing a return); and
(d)
sections RC 26 and RC 27 (which relate to changes in taxable periods).
Calculation
(2)
The amount of an instalment of provisional tax is calculated using the formula—
(residual income tax × instalment number ÷ total instalments)
− provisional tax.
Definition of items in formula
(3)
In the formula,—
(a)
residual income tax is a person’s residual income tax, as applicable—
(i)
for the preceding tax year, uplifted by 5% (modified as applicable by sections RZ 5 (Calculating amounts under standard method: 2010–11 to 2012–13 income years) and RZ 5D (Standard method or GST method: transition for Maori authorities); or
(ii)
for the tax year before the preceding tax year, uplifted by 10% (modified as applicable by sections RZ 5 and RZ 5D); or
(iii)
the amount estimated by them:
(b)
instalment number is the number of the instalment for the tax year, whether first, second, or third:
(c)
total instalments is the total number of instalments for the tax year:
(d)
provisional tax is the amount of a person’s provisional tax liabilities for the tax year to date.
Instalment amounts after change in balance date or taxable period
(4)
If a change occurs to the balance date or cycle of a person’s taxable periods, the calculation of the amount of an instalment is made under this section, applying the updated figures to the items in the formula.
Some standard method taxpayers
(5)
A person who uses the standard method may, despite subsection (2), choose that the amount of their final instalment of provisional tax of a tax year is calculated using the following formula, if their expected RIT under subsection (6)(a) is $60,000 or more—
expected RIT − tax.
Definition of items in formula
(6)
In the formula,—
(a)
expected RIT is the person’s expectation of their residual income tax for the tax year:
(b)
tax is the amount of a person’s provisional tax liabilities for the tax year to date.
Truncation
(7)
An instalment calculated under this section is truncated to whole dollars, for example $10.98 equals $10.
Defined in this Act: amount, balance date, initial provisional tax liability, pay, provisional tax, residual income tax, return of income, tax year, taxable period
Compare: 2004 No 35 s MB 9
Section RC 10(1)(b): amended, on 1 April 2008, by section 530 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 10(3)(a)(i): amended (with effect on 1 October 2010), on 21 December 2010, by section 123(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RC 10(3)(a)(i): amended, on 1 October 2010, by section 27(a) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RC 10(3)(a)(i): amended, on 1 October 2008, by section 41(a) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RC 10(3)(a)(ii): amended (with effect on 1 October 2010), on 21 December 2010, by section 123(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RC 10(3)(a)(ii): amended, on 1 October 2010, by section 27(b) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RC 10(3)(a)(ii): amended, on 1 October 2008, by section 41(b) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RC 10(5) heading: inserted (with effect on 1 April 2019), on 23 March 2020, by section 171(1) (and see section 171(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 10(5): inserted (with effect on 1 April 2019), on 23 March 2020, by section 171(1) (and see section 171(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 10(6) heading: inserted (with effect on 1 April 2019), on 23 March 2020, by section 171(1) (and see section 171(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 10(6): inserted (with effect on 1 April 2019), on 23 March 2020, by section 171(1) (and see section 171(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 10(7) heading: inserted (with effect on 1 April 2017), on 23 March 2020, by section 171(2) (and see section 171(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 10(7): inserted (with effect on 1 April 2017), on 23 March 2020, by section 171(2) (and see section 171(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
RC 10B Calculating amount of instalment for periods using AIM method
Calculating amount for full-year AIM method
(1)
For a person who uses the AIM method, the amount of provisional tax payable on an instalment date for a tax year is the amount calculated using an AIM-capable accounting system for the 2-monthly or monthly period given by schedule 3, part AB (Payment of provisional tax and terminal tax) for the applicable instalment date.
Calculating amount when part-year change into AIM method
(2)
For a person who chooses to change to the AIM method under section RC 5(5B)(a)(ii), the amount of provisional tax payable on a remaining instalment date for a tax year is given by subsection (1), except for the first remaining instalment date. Subsection (3) provides the calculation for the first remaining instalment date.
Calculating when part-year change into AIM method: first remaining instalment
(3)
For the purposes of subsection (2), the amount of provisional tax payable for the first remaining instalment date is the total amount, year to date including the firstRD remaining instalment date, that would have been payable if the person had used the AIM method from the beginning of the tax year, less the amount of provisional tax the person has paid, before the change, under the relevant non-AIM method for the tax year.
Defined in this Act: AIM-capable accounting system, instalment date, person, provisional tax
Section RC 10B: inserted, on 1 April 2018, by section 39(1) (and see section 39(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RC 10B(1) heading: inserted, on 1 April 2019, by section 250(1) (and see section 250(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 10B(2) heading: inserted, on 1 April 2019, by section 250(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 10B(2): inserted, on 1 April 2019, by section 250(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 10B(3) heading: inserted, on 1 April 2019, by section 250(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RC 10B(3): inserted, on 1 April 2019, by section 250(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RC 11 Calculating amount of instalment using GST ratio
Calculation
(1)
For a person who uses a GST ratio, the amount of provisional tax payable on an instalment date for a tax year is calculated using the formula—
GST ratio for tax year × total taxable supplies.
Definition of item in formula
(2)
In the formula, total taxable supplies is the amount of the person’s total taxable supplies in the taxable period that matches the instalment period.
Taxable supplies when person pays on monthly basis
(3)
For the purposes of subsection (1), a person who pays GST on a 1-month cycle under section 15 of the Goods and Services Tax Act 1985 must apply the GST ratio to the sum of their taxable supplies in the current taxable period and the preceding taxable period, that is, the taxable supplies in the 2-month period matching the instalment period.
Modification
(4)
Sections RZ 4 (GST ratio method: 2010–11 to 2013–14 income years) and RZ 5D (Standard method or GST method: transition for Maori authorities) modify this section.
Defined in this Act: amount, GST, GST ratio, instalment date, pay, provisional tax, tax year, taxable period, taxable supply, total taxable supplies
Compare: 2004 No 35 s MB 10
Section RC 11(4): amended (with effect on 1 October 2010), on 21 December 2010, by section 124 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RC 11(4): amended, on 1 October 2010, by section 28 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RC 11(4): amended, on 1 October 2008, by section 42 of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
RC 12 Voluntary payments
A person who is liable to pay provisional tax may at any time make a voluntary payment of an amount of provisional tax that—
(a)
relates to their income tax liability for a tax year in which they are not liable for provisional tax; or
(b)
is more than the provisional tax payable by them for the tax year; or
(c)
is more than the income tax payable by them for the tax year.
Defined in this Act: amount, income tax, income tax liability, pay, provisional tax, tax year
Compare: 2004 No 35 s MB 12
RC 13 Paying 2 instalments for tax year
Who this section applies to
(1)
This section applies for a tax year to—
(a)
a person with an initial provisional tax liability whose first business day occurs in the period that starts 30 days before the date of instalment B and ends 30 days before the date of instalment D; or
(b)
a person liable to pay provisional tax whose return of income for the preceding tax year is provided in the period that starts on the date of instalment B and ends on the date of instalment D if—
(i)
they were required to provide a return for the preceding tax year but, under section 37 of the Tax Administration Act 1994 or an extension under that section, are not required to provide the return by the date of instalment B; and
(ii)
their residual income tax for the tax year before the preceding tax year was $5,000 or less.
Exclusion
(2)
Despite subsection (1), this section does not apply to a person liable to pay provisional tax who pays GST on a 6-monthly basis.
When instalments are payable
(3)
The instalments are payable on the date of instalments D and F for the person’s corresponding income year.
Formula for amount of instalment
(4)
The amount of each instalment is calculated under section RC 10.
Defined in this Act: amount, corresponding income year, first business day, GST, initial provisional tax liability, pay, provisional tax, residual income tax, return of income, tax year
Compare: 2004 No 35 s MB 13
Section RC 13(1)(b)(ii): amended, on 1 April 2020, by section 25(1) (and see section 25(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 13(3): amended, on 1 April 2020, by section 172(1) (and see section 172(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
RC 14 Paying 1 instalment for tax year
Who this section applies to
(1)
This section applies for a tax year to—
(a)
a person with an initial provisional tax liability whose first business day occurs in the period that starts 30 days before the date of instalment D and ends at the end of the corresponding income year:
(b)
a person liable to pay provisional tax whose return of income for the preceding tax year is not provided on or before the date of instalment D if—
(i)
they were required to provide a return for the preceding tax year but, under section 37 of the Tax Administration Act 1994 or an extension under that section, are not required to provide the return by the date of instalment D; and
(ii)
their residual income tax for the tax year before the preceding tax year was $5,000 or less:
(c)
a person who pays GST on a 6-monthly basis if—
(i)
their first business day occurs in the period that starts 30 days before the date of instalment C and ends at the end of the corresponding income year; or
(ii)
they meet the requirements of paragraph (b)(i) and (ii) as if the reference to instalment D in paragraph (b)(i) were a reference to instalment C.
When instalment payable
(2)
The instalment is payable on the date of instalment F for the person’s corresponding income year.
Amount of instalment
(3)
The amount of the instalment is calculated under section RC 10.
Defined in this Act: amount, corresponding income year, first business day, GST, initial provisional tax liability, pay, provisional tax, residual income tax, return of income, tax year
Compare: 2004 No 35 s MB 14
Section RC 14(1)(b)(ii): amended, on 1 April 2020, by section 26(1) (and see section 26(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 14(2): amended, on 1 April 2020, by section 173(1) (and see section 173(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Requirements for using GST ratio
RC 15 Choosing to use GST ratio
A person who meets the requirements of section RC 16(2) and (3) for a tax year may choose to use a GST ratio for the corresponding income year if they inform the Commissioner of their election before the start of the income year.
Defined in this Act: Commissioner, corresponding income year, GST ratio, inform, tax year
Compare: 2004 No 35 s MB 16
Section RC 15 list of defined terms inform: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RC 16 Who may use GST ratio?
General eligibility
(1)
A person liable to pay provisional tax may choose to use a GST ratio to determine under section RC 5(6) the amount of provisional tax payable for a tax year only if they meet all the requirements of subsections (2) and (3) in relation to the same entity.
Requirements for preceding tax year
(2)
For the purposes of determining their eligibility for a tax year, the person must meet the following requirements in the preceding tax year and corresponding income year:
(a)
their residual income tax, as calculated, was more than $5,000 but no more than $150,000; and
(b)
they were a registered person for the whole income year, and provided a return under the Goods and Services Tax Act 1985 for an entity whose taxable activity did not begin operations in that tax year; and
(c)
the ratio of their residual income tax to total taxable supplies, as calculated under section RC 11 and expressed as a percentage, is between zero and 100%.
Requirement for current year
(3)
For the tax year in which the person uses a GST ratio, they must be liable to file a return under the Goods and Services Tax Act 1985 for a 2-month or a 1-month period under section 15(1)(b) and (c) of that Act.
When election applies
(4)
A person’s election under section RC 15 to use a GST ratio applies for the tax year for which the election is made and in later tax years, unless the person changes their calculation method under section RC 18.
References to preceding tax year
(5)
In this section, a reference to a preceding tax year includes a reference to a tax year earlier than the preceding tax year if that earlier tax year is used for the purposes of calculating a GST ratio.
Defined in this Act: amount, GST ratio, pay, provisional tax, registered person, residual income tax, tax year, taxable activity, total taxable supplies
Compare: 2004 No 35 s MB 15(1)–(4), (11)
Section RC 16(2): amended, on 1 April 2008, by section 531(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 16(2)(a): amended, on 1 April 2020, by section 27(1) (and see section 27(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RC 16(2)(b): amended, on 1 April 2008, by section 531(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 16(5): amended, on 1 April 2008, by section 531(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RC 17 When GST ratio must not be used
Requirement to discontinue use of GST ratio
(1)
Despite section RC 16, a person must stop using a GST ratio for a tax year and must apply section RC 18(4) or (5) if—
(a)
their GST registration ends under section 52 of the Goods and Services Tax Act 1985 in the tax year; or
(b)
they no longer qualify under section RC 16(2) as a result of an amended assessment of their income tax liability or their GST liability for the preceding tax year; or
(bb)
their residual income tax, as disclosed in a return of income filed in the tax year, means they no longer meet the requirements of section RC 16(2); or
(c)
they no longer qualify under section RC 16(3) as a result of a change in their taxable period.
No GST return
(2)
A person must not use, or must stop using, a GST ratio for a tax year if they—
(a)
are liable to provide a return under the Goods and Services Tax Act 1985 for a period in their corresponding income year; and
(b)
do not file the return within 60 days after the due date for filing the return.
Instalments following default
(3)
A person who is required by subsection (2) to stop using a GST ratio must pay the provisional tax instalments required under section RC 18 for an instalment period beginning on or after the due date for filing the return referred to in subsection (2) that is not the subject of notification under subsection (4).
Further use of GST ratio
(4)
Despite subsections (2) and (3), a person may use a GST ratio for an instalment period referred to in subsection (3) if—
(a)
they ask the Commissioner; and
(b)
the Commissioner considers—
(i)
the failure to file the return is caused by an event or circumstance beyond the person’s control; and
(ii)
the event or circumstance provides reasonable justification or excuse for the failure; and
(iii)
the person remedied the failure as soon as practicable; and
(c)
the Commissioner notifies the person that they may use the GST ratio for the instalment period.
Standard required
(5)
For the purposes of subsection (4)(b), the Commissioner must use the same approach that would be used to justify the remission of a penalty under section 183A of the Tax Administration Act 1994.
Later default
(6)
Notification under subsection (4) does not apply to an instalment period if—
(a)
the person fails to file a return due after the date of the notice unless the failure is anticipated and referred to in the notice; and
(b)
the instalment period begins on or after the due date of the return described in paragraph (a).
Defined in this Act: ask, assessment, Commissioner, corresponding income year, GST ratio, income tax liability, notice, notify, pay, provisional tax, residual income tax, return of income, tax year, taxable period
Compare: 2004 No 35 s MB 15(5)–(10)
Section RC 17(1)(bb): inserted, on 1 April 2016 (applying for the 2016–17 and later income years), by section 222(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 17(4)(a): replaced, on 2 June 2016, by section 52(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 17 list of defined terms ask: inserted, on 2 June 2016, by section 52(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 17 list of defined terms notice: inserted, on 2 June 2016, by section 52(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 17 list of defined terms residual income tax: inserted, on 1 April 2016, by section 222(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 17 list of defined terms return of income: inserted, on 1 April 2016, by section 222(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RC 18 Changing calculation method
When this section applies
(1)
This section applies if, after having chosen to use a GST ratio for a tax year, a person liable to pay provisional tax either—
(a)
chooses another way to calculate the amount of provisional tax payable for the tax year; or
(b)
is required under section RC 17(1) or (2) to stop using a GST ratio for the corresponding income year.
Informing Commissioner of decision to change
(2)
The person must inform the Commissioner of their decision under subsection (1)(a). Subsection (4) or (5) then applies for the remaining instalments of provisional tax for the tax year.
Date on which use of GST ratio stopped
(3)
For the purposes of subsection (1)(b), the date on which the person stops using a GST ratio is, as applicable,—
(a)
the date their GST registration ends; or
(b)
the date of the amended assessment of their income tax liability or GST liability for the preceding tax year; or
(bb)
the date the person’s return of income referred to in section RC 17(1)(bb) is received by the Commissioner; or
(c)
the effective date of a change in taxable period; or
(d)
the last day of the period in which a return is liable to be provided under the Goods and Services Tax Act 1985.
Changing method before date of instalment A
(4)
If the person is unable or decides not to use a GST ratio before the date of instalment A, and section RC 3(3) does not apply, they may choose to determine the amount of provisional tax payable under section RC 5(2), (3) or (5). The person is treated as never having chosen to use the GST ratio method and, for the purposes of section 120KE(5) of the Tax Administration Act 1994, as never having changed the way they determine an amount of provisional tax under this section.
Changing method after instalment date
(5)
If the person is unable or decides not to use the GST ratio after an instalment date, and section RC 3(3) does not apply, they must determine the amount of provisional tax payable on instalment for the remainder of the income year under section RC 5(5) using the estimation method. The person must inform the Commissioner of the estimate.
Date of application when method changed
(6)
If the person changes their calculation method under subsection (4) or (5), and the change is not required by section RC 17(1)(bb), the date on which the change applies may be a future date agreed between the person and the Commissioner.
Other consequences of changing method
(7)
For the purposes of this section,—
(a)
the number of instalments and the instalment dates remaining for an income year depend on—
(i)
the requirements of the method chosen by the person when they stop using the GST ratio; and
(ii)
the cycle of taxable periods chosen by the person, being either a monthly or 2-monthly basis:
(b)
a person may change from using a GST ratio to a 6-monthly cycle of taxable periods only if—
(i)
the requirements of section 15C of the Goods and Services Tax Act 1985 are met; and
(ii)
their 6-month taxable period is aligned with their balance date under section 15B of the Goods and Services Tax Act 1985:
(c)
section 120KE(5) to (7) of the Tax Administration Act 1994 applies in deciding whether use of money interest is payable in relation to instalments under the new method.
Defined in this Act: amount, assessment, balance date, Commissioner, corresponding income year, GST ratio, income tax liability, income year, inform, instalment date, pay, provisional tax, return of income, tax year, taxable period
Compare: 2004 No 35 s MB 17
Section RC 18(2): amended, on 2 June 2016, by section 53(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 18(2): amended, on 1 April 2008, by section 533(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 18(3)(bb): inserted, on 1 April 2016 (applying for the 2016–17 and later income years), by section 223(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 18(4): amended, on 1 April 2016 (applying for the 2016–17 and later income years), by section 223(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 18(4): amended, on 1 April 2008, by section 533(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 18(5): amended, on 2 June 2016, by section 53(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 18(5): amended, on 1 April 2016 (applying for the 2016–17 and later income years), by section 223(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 18(6): amended, on 1 April 2016 (applying for the 2016–17 and later income years), by section 223(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RC 18 list of defined terms inform: inserted, on 2 June 2016, by section 53(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 18 list of defined terms return of income: inserted, on 1 April 2016, by section 223(5) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RC 19 Disposal of assets
When this section applies
(1)
This section applies if, as part of the taxable activity of an entity referred to in section RC 16(2) and (3), a person who is liable to pay provisional tax, disposes of an asset—
(a)
that is not revenue account property; and
(b)
the value of the supply of which is not less than the greater of—
(i)
an amount equal to 5% of the total taxable supplies of the business for the previous 12 months; or
(ii)
$1,000.
Adjustment to GST ratio for current and next income year
(2)
The person may choose to take the disposal of the asset into account in adjusting their taxable supplies for the relevant taxable period and income year, by subtracting the value, including GST, of the asset from—
(a)
the total taxable supplies for a taxable period for the purposes of the formula in section RC 11(1), in proportion to the output tax which is attributed under section 20(4) of the Goods and Services Tax Act 1985 to that taxable period for the supply of the asset:
(b)
the base amount of total taxable supplies for the corresponding income year under section RC 8(2), in proportion to the output tax which is attributed under section 20(4) of that Act to a taxable period in that income year for the supply of the asset.
Informing Commissioner
(3)
For the purposes of subsection (2), the person must inform the Commissioner of both the disposal of the asset and the value of its supply.
Rounding percentages
(4)
In the determination of the value of the supply of the asset under subsection (1)(b)(i), the amount must be rounded to a whole percentage number.
Defined in this Act: amount, base amount, business, Commissioner, GST, GST ratio, income year, inform, pay, provisional tax, revenue account property, taxable activity, taxable period, taxable supply, total taxable supplies
Compare: 2004 No 35 s MB 18
Section RC 19(2): substituted, on 1 April 2008, by section 534 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 19(2)(a): amended, on 29 March 2018 (with effect on 1 April 2008), by section 184 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RC 19(3): amended, on 2 June 2016, by section 54(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 19 list of defined terms inform: inserted, on 2 June 2016, by section 54(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Transitional years
RC 20 Calculating residual income tax in transitional years
Calculation for transitional year
(1)
This section applies for the purposes of section RC 5(2) and (3) and the calculation of a person’s residual income tax for a tax year if—
(a)
the preceding tax year is a transitional year:
(b)
the tax year before the preceding tax year is a transitional year.
Amount increased or decreased
(2)
The amount of residual income tax for the transitional year must be increased or decreased by the amount calculated under subsection (3) to reflect the amount that would apply in a 12-month period.
Formula
(3)
The amount of residual income tax is calculated using the formula—
residual income tax × days in current tax year ÷ days in transitional year.
Definition of items in formula
(4)
In the formula,—
(a)
residual income tax is a person’s residual income tax, as applicable—
(i)
for the preceding tax year, uplifted by 5%; or
(ii)
for the tax year before the preceding tax year, uplifted by 10%; or
(iii)
the amount estimated by them:
(b)
days in current tax year is the number of days in the current tax year:
(c)
days in transitional year is the number of days in the person’s transitional year.
Truncation
(5)
An amount of residual income tax calculated under this section is truncated to whole dollars, for example $10.98 equals $10.
Defined in this Act: amount, residual income tax, tax year, transitional year
Compare: 2004 No 35 s MB 19
Section RC 20(5) heading: inserted (with effect on 1 April 2017), on 23 March 2020, by section 174(1) (and see section 174(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 20(5): inserted (with effect on 1 April 2017), on 23 March 2020, by section 174(1) (and see section 174(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
RC 21 Paying provisional tax in transitional years
Total amount payable
(1)
A person liable to pay provisional tax in a transitional year must pay the sum of all instalments of provisional tax payable for the transitional year, both interim instalments under subsection (2) and a final instalment under subsection (3).
When instalments payable
(2)
The person must pay an instalment other than a final instalment on—
(a)
the 28th day of the months set out in schedule 3, part B (Payment of provisional tax and terminal tax) unless paragraph (b) or (c) applies:
(b)
15 January, when the month set out in schedule 3, part B is December and the year is a transitional year:
(c)
7 May, when the month set out in schedule 3, part B is April and the year is a transitional year.
When final instalment payable
(3)
The person must pay the final instalment on—
(a)
the 28th day of the month following the final month in the transitional year; or
(b)
the 15th day of January, when November is the final month; or
(c)
7 May, when March is the final month and the year is a transitional year.
Modifications to instalment dates
(4)
For the purposes of subsection (2), provisional tax is not payable on—
(a)
the date of instalment B, if section RC 13 would have applied if the year were not a transitional year; or
(b)
the dates of instalments B and D, if section RC 14(1)(a) and (b) would have applied if the year were not a transitional year; or
(c)
the dates of instalments B, D, and F, if the person liable to pay provisional tax is a person with an initial provisional tax liability whose first business day occurs within 30 days of the date of instalment F; or
(d)
the date of instalment C, if section RC 14(1)(c) would have applied if the year were not a transitional year; or
(e)
the dates of instalments C and F, if the person liable to pay provisional tax is a person with an initial provisional tax liability who pays GST on a 6-monthly basis whose first business day occurs after the day that is 30 days before the date of instalment F.
Counting months in transitional years
(5)
In this section, and in sections RC 22 to RC 25, and in schedule 3, part B, the number of months in a transitional year is determined as follows:
(a)
the first month in a person’s transitional year is the first whole month in the transitional year:
(b)
the final month in a person’s transitional year is the month in which their new balance date under section 39 of the Tax Administration Act 1994 occurs:
(c)
each month falling between the first and final months must be included in determining the length of the transitional year.
Defined in this Act: balance date, final instalment, first business day, GST, initial provisional tax liability, pay, provisional tax, transitional year, year
Compare: 2004 No 35 s MB 20
Section RC 21(2)(a): substituted, on 1 April 2008, by section 535(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 21(2)(b): substituted, on 1 April 2008, by section 535(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 21(2)(c): added, on 1 April 2008, by section 535(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 21(3)(b): amended, on 1 April 2008, by section 535(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 21(3)(c): added, on 1 April 2008, by section 535(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RC 22 Calculating instalments in transitional years: standard method
When this section applies
(1)
This section applies to a person liable to pay provisional tax using the standard method in relation to instalments of provisional tax payable in a transitional year under section RC 21.
Instalment other than final instalment
(2)
For an instalment date other than the date of the final instalment, the person must pay an amount calculated using the formula—
(person’s provisional tax × instalments payable
÷ total instalments) − tax previously payable.
Definition of items in formula
(3)
In the formula in subsection (2),—
(a)
person’s provisional tax is the person’s provisional tax liability under section RC 5(2) or (3):
(b)
instalments payable is the number of instalments that the person has in the transitional year on or before the instalment date:
(c)
total instalments is whichever of the following applies:
(i)
3, for a person who pays on instalment dates B, D, and F; or
(ii)
2, for a person who pays on instalment dates C and F:
(d)
tax previously payable is the amount for the transitional year of the person’s provisional tax payable before the instalment date.
Final instalment
(4)
For the final instalment, the person must pay an amount calculated using the formula—
(person’s provisional tax × transitional year days
÷ preceding year days) − tax previously payable.
Definition of items in formula
(5)
In the formula in subsection (4),—
(a)
person’s provisional tax is the person’s provisional tax liability under section RC 5(2) or (3):
(b)
transitional year days is the number of days in the person’s transitional year:
(c)
preceding year days is the number of days in the person’s preceding tax year:
(d)
tax previously payable is the amount of provisional tax for a tax year calculated on the basis of the person’s transitional year that is payable before the instalment date.
Defined in this Act: amount, instalment date, final instalment, pay, provisional tax, tax year, transitional year
Compare: 2004 No 35 s MB 21
RC 23 Calculating instalments in transitional years: estimation method
When this section applies
(1)
This section applies to a person liable to pay provisional tax using the estimation method in relation to instalments of provisional tax payable in a transitional year under section RC 21.
Instalment other than final instalment
(2)
For an instalment date other than the date of the final instalment, the person must pay an amount calculated using the formula—
(tax estimate × instalments payable
÷ transitional months) − tax previously payable.
Definition of items in formula
(3)
In the formula,—
(a)
tax estimate is the person’s provisional tax liability last estimated by the person under section RC 5(5):
(b)
instalments payable is either—
(i)
4 multiplied by the number of instalments in the person’s transitional year payable on or before the instalment date, for a person who pays on the equivalent of instalment dates B, D, and F; or
(ii)
6 multiplied by the number of instalments in the person’s transitional year payable on or before the instalment date, for a person who pays on the equivalent of instalment dates C and F:
(c)
transitional months is the number of months in the person’s transitional year:
(d)
tax previously payable is the amount of provisional tax for a tax year calculated on the basis of the person’s transitional year that is payable before the instalment date.
Final instalment
(4)
For the final instalment, the person must pay the amount calculated under section RC 5(5) less the amount of any instalment previously payable.
Defined in this Act: amount, final instalment, instalment date, pay, provisional tax, tax year, transitional year
Compare: 2004 No 35 s MB 22
RC 24 Calculating instalments in transitional years: GST ratio method
What this section applies to
(1)
This section applies to a person liable to pay provisional tax using a GST ratio in relation to instalments of provisional tax payable in a transitional year.
Adjustment if required
(2)
For a period or part period before the start of the new income year, the person must apply the GST ratio under section RC 11 on whichever dates of instalments A, B, C, D, E, and F for their corresponding income year occur in the transitional year.
Defined in this Act: corresponding income year, GST ratio, income year, pay, provisional tax, transitional year
Compare: 2004 No 35 s MB 23
Section RC 24(2): amended, on 1 April 2018, by section 40(1) (and see section 40(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RC 25 Consequences of change in balance date
Continuing frequency
(1)
This section applies to a person liable to pay provisional tax who changes their balance date.
Continuing to use instalment dates to new balance date
(2)
The person must continue to use the instalment dates that applied before the change in balance date was approved until the new balance date is reached.
How amounts determined
(3)
Sections RC 20 to RC 24 and schedule 3, part B (Payment of provisional tax and terminal tax) apply for the person’s transitional year to determine the amount and payment date of the instalments.
Estimation method
(4)
In a transitional year, if the person uses the estimation method, they must,—
(a)
before the date on which the Commissioner notifies a change in balance date, estimate the residual income tax as if no change in balance date is or will be approved; and
(b)
after the date on which the Commissioner notifies a change in balance date, re-estimate the residual income tax.
GST ratio method
(5)
Subsection (6) applies if the person uses a GST ratio to determine the provisional tax payable for a tax year, and in changing their balance date, moves from—
(a)
a set of instalment dates in even-numbered months to a set of instalment dates in odd-numbered months; or
(b)
a set of instalment dates in odd-numbered months to a set of instalment dates in even-numbered months.
Adjustment to liability
(6)
The person must—
(a)
adjust their provisional tax liability for the part-period of 1 month before the start of the new income year; and
(b)
pay the instalment of provisional tax for the part-period as their final taxable period—
(i)
28 days after the end of the part period, unless subparagraph (ii) or (iii) applies; or
(ii)
by 15 January if the part-period falls in November; or
(iii)
by 7 May if the part period falls in March.
Aligning taxable periods
(7)
For a registered person, if a change in balance date means that their taxable period is not aligned with the balance date, an adjustment must be made to their taxable period under section 15B(3) or 15C of the Goods and Services Tax Act 1985.
Defined in this Act: amount, balance date, Commissioner, GST ratio, income year, instalment date, notify, pay, provisional tax, registered person, residual income tax, tax year, taxable period, transitional year
Compare: 2004 No 35 s MB 24
Section RC 25(6): substituted, on 1 April 2008, by section 536 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
When persons start or stop paying GST, or change taxable periods
RC 26 Registering for GST or cancelling registration
When this section applies
(1)
This section applies if a person who uses the standard or estimation method to determine the amount of provisional tax payable for a tax year—
(a)
applies to the Commissioner to become a registered person under section 51 of the Goods and Services Tax Act 1985; or
(b)
is treated as registered under section 51B of that Act; or
(c)
asks the Commissioner to cancel their GST registration, or has their GST registration cancelled under section 52 of that Act.
Starting or ending GST registration: monthly or 2-monthly basis
(2)
For a person liable to pay provisional tax who becomes registered for GST paying on a monthly or 2-monthly basis, or who cancels or has their GST registration cancelled having paid on that basis, the instalments of provisional tax payable by them for the tax year are unaffected.
Starting GST registration: 6-monthly basis
(3)
A person liable to pay provisional tax who becomes registered for GST paying on a 6-monthly basis must pay their instalments of provisional tax on whichever dates of instalments C and F for their corresponding income year coincide with the cycle of their taxable periods after they become a registered person.
Ending GST registration: 6-monthly basis
(4)
A person liable to pay provisional tax who pays GST on a 6-monthly basis and cancels their GST registration or has their registration cancelled, must pay their instalments of provisional tax on whichever dates of instalments B, D, and F for their corresponding income year occur after 30 days from the date of cancellation.
Date of cancellation
(5)
For the purposes of subsection (4) and the provisional tax rules, the date of cancellation is the later of the date on which—
(a)
the cancellation of GST registration is notified:
(b)
the person’s liability under section 52 of the Goods and Services Tax Act 1985 stops.
Formula for amount of instalment
(6)
The amount of each instalment is calculated under section RC 10.
Defined in this Act: amount, apply, ask, Commissioner, corresponding income year, GST, notify, pay, provisional tax, provisional tax rules, registered person, tax year, taxable period
Compare: 2004 No 35 s MB 25
Section RC 26(5): substituted, on 1 April 2008, by section 537 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RC 26 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 26 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RC 26 list of defined terms notify: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RC 27 Payment of provisional tax instalments when GST cycle changed
When subsection (2) applies
(1)
Subsection (2) applies in a tax year to a person liable to pay provisional tax who—
(a)
uses the standard or estimation method to determine the amount of provisional tax payable; and
(b)
has been paying GST on a monthly or 2-monthly basis; and
(c)
changes to a 6-monthly basis under section 15C(1) of the Goods and Services Tax Act 1985.
Changing to 6-monthly basis
(2)
The person must pay their instalments of provisional tax on whichever dates of instalments C and F for their corresponding income year occur after the change in taxable period takes effect.
When subsection (4) applies
(3)
Subsection (4) applies in a tax year to a person liable to pay provisional tax who—
(a)
uses the standard or estimation method to determine the amount of provisional tax payable; and
(b)
has been paying GST on a 6-monthly basis; and
(c)
changes to a monthly or 2-monthly basis under section 15C(2) or (3) of the Goods and Services Tax Act 1985.
Changing to monthly or 2-monthly basis
(4)
The person must pay their instalments of provisional tax on whichever dates of instalments B, D, and F for the person’s corresponding income year occur after the change in taxable period takes effect.
Interest instalment dates in new cycle
(5)
If an instalment of provisional tax that falls on an instalment date in the new cycle is payable in relation to a period in the person’s original cycle that was, under that original cycle, an interest instalment date, it remains an interest instalment date in the new cycle. However, if the instalment falls on an instalment date other than an interest instalment date, the change does not affect the nature of the instalment.
Formula for amount of instalment
(6)
The amount of each instalment is calculated under section RC 10.
Defined in this Act: amount, corresponding income year, GST, instalment date, interest instalment date, pay, provisional tax, tax year, taxable period
Compare: 2004 No 35 s MB 27
Treatment of groups of companies and amalgamated companies
RC 28 Provisional tax rules and consolidated groups
Single company
(1)
The provisional tax rules apply, modified as necessary, to a consolidated group of companies as if it were a single company.
Joint and several liability
(2)
Each company in a consolidated group in a tax year is jointly and severally liable for the amount of provisional tax payable by the consolidated group to be credited against the income tax liability of the group for the tax year. The liability of a group company for income tax for the tax year is substituted by that joint and several liability to the extent to which the liability arises while the company is part of the consolidated group.
Relationship with section FM 4
(3)
Section FM 4(3) to (5) (Limiting joint and several liability of group companies) overrides this section.
Defined in this Act: amount, company, consolidated group, income tax, income tax liability, pay, provisional tax, provisional tax rules, tax year
Compare: 2004 No 35 s MB 29
RC 29 Residual income tax of consolidated groups
When this section applies
(1)
This section applies for the purposes of the provisional tax rules if a company is part of a consolidated group of companies in a tax year but was not part of the group for some or all of the preceding tax year, or some or all of the tax year before the preceding tax year, as applicable.
Increased residual income tax
(2)
The residual income tax of the consolidated group for the preceding tax year, or for the tax year before the preceding tax year, as applicable is treated as increased by an amount equal to the residual income tax of the company for the preceding tax year, or for the tax year before the preceding tax year, as applicable. If the company is part of the group for part of the current tax year, the amount of residual income tax is increased as a proportion on the basis of the part of the tax year during which the company is part of the group.
Instalments after company joins group
(3)
If the company is part of a group for part of the tax year, this section applies only to instalments of provisional tax payable after the date on which the company becomes part of the group.
Defined in this Act: amount, company, consolidated group, pay, provisional tax, provisional tax rules, residual income tax, tax year
Compare: 2004 No 35 s MB 30
Section RC 29(1): amended, on 1 April 2020, by section 175(1) (and see section 175(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 29(2): amended, on 1 April 2020, by section 175(2) (and see section 175(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
RC 30 Consolidated groups using estimation method
When subsection (2) applies
(1)
Subsection (2) applies for the purposes of the provisional tax rules if a company is part of a consolidated group of companies for some or all of a tax year but is not part of the group for some or all of the following tax year.
Estimation before final instalment date
(2)
The company must estimate its residual income tax on or before the date of instalment F for the following income year that corresponds to the tax year, and the company is treated as a person to which section RC 7 applies for the purposes of its estimate.
When company part of another consolidated group
(3)
The consolidated group, in the case of a company that is part of another consolidated group, must make an estimate of residual income tax on or before the date of instalment F for the following income year that corresponds to the tax year, and the consolidated group is treated as a person to which section RC 7 applies for the purposes of its estimate.
When company no longer part of group
(4)
If a company stops being part of the consolidated group in the following tax year, the company’s estimate applies only to instalments of provisional tax payable after the date on which it stopped being part of the group.
Defined in this Act: company, consolidated group, corresponding income year, pay, provisional tax, provisional tax rules, residual income tax, tax year
Compare: 2004 No 35 s MB 31
RC 31 Consolidated groups using GST ratio method
Sections RC 8, RC 9(6), RC 11, and RC 15 to RC 19 apply to a consolidated group of companies with the following modifications:
(a)
if a consolidated group that is eligible to use, or is using, a GST ratio for a tax year is joined by a company, the following subparagraphs apply:
(i)
if the company joins at the start of the tax year and, as a result, the threshold in section RC 16(2)(a) is exceeded, the group is no longer eligible to use a GST ratio:
(ii)
if the company joins at the start of the tax year, and the group, allowing for the inclusion of the company, is eligible under section RC 16(1), the group may use a GST ratio, subject to the recalculation of the ratio under paragraph (c):
(iii)
if the company joins at some time in the tax year, the group may continue to use a GST ratio for the tax year, as recalculated under paragraph (c), provided the requirements for eligibility other than the threshold in section RC 16(2)(a) are met:
(b)
if a consolidated group that does not determine provisional tax payable for a tax year using a GST ratio, is joined by a company that is using a GST ratio for the tax year, the group may not start using a GST ratio for this purpose for the tax year:
(c)
for the purposes of paragraph (a),—
(i)
the group must recalculate the GST ratio applying for a tax year to include the residual income tax of the company for the preceding tax year and the total taxable supplies of the company for the corresponding income year, applying section RC 8(3) if required; and
(ii)
the recalculated GST ratio applies to provisional tax payments made for the corresponding income year on or after the date on which the company joins the group:
(d)
sections RC 17(3) and RC 18(4) or (5), as applicable, apply to a company that leaves a consolidated group at some time in a tax year.
Defined in this Act: company, consolidated group, corresponding income year, GST ratio, pay, provisional tax, residual income tax, tax year, total taxable supplies
Compare: 2004 No 35 s MB 32
RC 32 Wholly-owned groups of companies
When this section applies
(1)
This section applies for the purposes of the provisional tax rules and Part 7 of the Tax Administration Act 1994 in relation to a company (company A) that is in a tax year part of a wholly-owned group of companies that includes another company (company B). Sections RM 13 to RM 17 (which relate to refunds) override this section.
Company A transferring overpayment to company B
(2)
If, for a tax year, company A has paid an amount that is more than the provisional tax payable for the tax year, the company may transfer some or all of the overpayment to company B to the extent to which the amount of provisional tax paid by company B is less than their residual income tax for the tax year. Company A must notify the Commissioner under subsection (4).
When transfer made
(3)
Company A may transfer an amount under subsection (2) on or after the later of—
(a)
the day on which company A overpays the provisional tax; or
(b)
the day on which the first instalment of provisional tax for the tax year becomes payable by company B.
Notice
(4)
A notice under subsection (2) must—
(a)
name company B, and the amount to be transferred; and
(b)
state the date on which the overpayment is treated as transferred to company B; and
(c)
be given to the Commissioner within—
(i)
the time for providing a return of income for the tax year for company B; or
(ii)
an extension of time allowed by the Commissioner.
When transfer made, and how transfer treated
(5)
For the purposes of this section,—
(a)
a transfer under subsection (2) is treated as made on the date stated in the notice; and
(b)
provisional tax transferred by company A to company B is treated as provisional tax paid by company B and not by company A.
Defined in this Act: amount, Commissioner, company, notice, notify, pay, provisional tax, provisional tax rules, residual income tax, return of income, tax year, wholly-owned group of companies
Compare: 2004 No 35 s MB 33
RC 33 Amalgamated companies: calculating residual income tax
When this section applies
(1)
This section applies for a tax year when an amalgamating company ends its existence on an amalgamation.
Residual income tax for preceding tax year
(2)
The residual income tax of the amalgamated company for the preceding tax year, or for the tax year before the preceding tax year, as applicable is the amount that would have been the residual income tax of the amalgamated company for the preceding tax year, or for the tax year before the preceding tax year, as applicable if the amalgamating company and the amalgamated company had been 1 company.
Exclusion
(3)
Subsection (2) does not apply for the purposes of the provisional tax rules in relation to instalments of provisional tax payable before the amalgamation.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, amount, pay, provisional tax, provisional tax rules, residual income tax, tax year
Compare: 2004 No 35 s MB 34
Section RC 33(2): amended, on 1 April 2020, by section 176(1) (and see section 176(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Attribution rule for income from personal services
RC 34 Attribution rule for income from personal services
When this section applies
(1)
This section applies for the purposes of the provisional tax rules and Part 7 of the Tax Administration Act 1994 for provisional tax paid for income from personal services to which section GB 27 (Attribution rule for income from personal services) may apply. The references in this section to working person and associated entity reflect the terminology used in section GB 27.
Associated entity transferring amount to working person
(2)
If, in a tax year, the associated entity pays an amount of tax that is more than the provisional tax payable for the tax year, the entity may transfer some or all of the overpayment to the working person to the extent to which the amount of provisional tax paid by the person is less than their residual income tax for the tax year.
Working person transferring amount to associated entity
(3)
If, in a tax year, the working person pays an amount of tax that is more than the provisional tax payable for the tax year, they may transfer some or all of the overpayment to the associated entity to the extent to which the amount of provisional tax paid by the entity is less than their residual income tax for the tax year.
When transfer made
(4)
The associated entity and the working person may transfer an amount under subsection (2) or (3), as applicable, on or after the later of—
(a)
the day on which the overpayment of provisional tax is paid by the entity or person, as applicable:
(b)
the day on which the instalment of provisional tax payable for the tax year becomes payable by—
(i)
the person, if the entity is making the transfer; or
(ii)
the entity, if the person is making the transfer.
Notice
(5)
The Commissioner must be notified of a transfer under subsection (2) or (3) in a notice that—
(a)
names the person to whom a transfer is made, and the amount to be transferred; and
(b)
states the date on which the overpayment is treated as transferred to the associated entity or working person, as applicable; and
(c)
is provided within the time for filing a return of income for the tax year for the person to whom the transfer is made, or an extended time allowed by the Commissioner.
When transfer made and how transfer treated
(6)
For the purposes of this section,—
(a)
a transfer under subsection (2) or (3) is treated as made on the day stated in the notice; and
(b)
provisional tax transferred by the associated entity to the working person for a tax year is treated as provisional tax paid by the working person and not by the associated entity; and
(c)
provisional tax transferred by the working person to the associated entity is treated as provisional tax paid by the associated entity and not by the working person.
Defined in this Act: amount, amount of tax, associated person, Commissioner, income, notice, notify, pay, provisional tax, provisional tax rules, residual income tax, return of income, tax year
Compare: 2004 No 35 s MB 35
Section RC 34(1) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(2) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(2): substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(3) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(3): substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(4) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(4): substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(5) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(5): substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(6) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34(6): substituted (with effect on 1 April 2008), on 6 October 2009, by section 500(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34 list of defined terms amount of tax: inserted (with effect on 1 April 2008), on 6 October 2009, by section 500(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RC 34 list of defined terms associated person: inserted (with effect on 1 April 2008), on 6 October 2009, by section 500(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Credits
RC 35 Further income tax credited to provisional tax liability
When this section applies
(1)
This section applies for the purposes of sections RC 9 to RC 11 if, under sections OB 65 to OB 69 (which relate to further income tax for ICA companies), a company applies an amount of further income tax to pay an instalment of provisional tax for which the company becomes liable after the date of payment of the further income tax.
Amount treated as provisional tax
(2)
The instalment is satisfied to the extent of the amount of further income tax. The amount is treated as provisional tax paid on the date on which the instalment was payable.
Order
(3)
The Commissioner must credit the amount of the further income tax in payment successively of—
(a)
the instalment of provisional tax that is first payable after the date of payment of the further income tax; and
(b)
to the extent of the amount of further income tax, to later instalments in the order in which they are payable.
Defined in this Act: amount, Commissioner, company, further income tax, ICA company, pay, provisional tax
Compare: 2004 No 35 s MB 37
RC 35B Treatment of overpaid provisional tax instalments calculated using AIM method
When this section applies
(1)
This section applies for the purposes of sections RC 5(5B), RC 7B, RC 9(4B), RC 10B, and RM 6B (Refunds for overpaid AIM method instalments) when—
(a)
a company uses the AIM method to calculate and pay a provisional tax liability; and
(b)
the amount of an instalment of provisional tax is overpaid.
Overpaid amounts credited to shareholders
(2)
The company may ask the Commissioner to credit the overpaid amount to the account of a shareholder-employee of the company, treating the amount as—
(a)
a payment of tax for the shareholder-employee:
(b)
a refund of income tax paid to the company for the purposes of section OB 32 (ICA refund of tax or transfer from account).
Maximum amount
(3)
The amount that may be credited under subsection (2) must be no more than the least of the following:
(a)
an amount chosen by the company; and
(b)
the amount of the shareholder’s residual income tax for the relevant tax year less the amount of any tax credit that the shareholder has under section LB 2 (Tax credits for provisional tax payments) for the tax year, treating a negative amount as zero; and
(c)
the amount of the company’s tax credit under section LB 2 for the relevant tax year less the amount of the company’s residual income tax for the tax year, treating a negative amount as zero.
Defined in this Act: amount, Commissioner, company, income tax, pay, provisional tax, residual income tax, shareholder, shareholder-employee, tax credit
Section RC 35B: inserted, on 1 April 2018, by section 185(1) (and see section 185(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RC 35B(2): amended (with effect on 1 April 2019), on 23 March 2020, by section 177(1) (and see section 177(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 35B(2)(a): replaced (with effect on 1 April 2019), on 23 March 2020, by section 177(2) (and see section 177(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RC 35B(2)(b): amended, on 30 March 2022, by section 150 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RC 35B list of defined terms shareholder-employee: inserted (with effect on 1 April 2019), on 23 March 2020, by section 177(3) (and see section 177(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Disaster relief[Repealed]
Heading: repealed, on 27 February 2014, by section 131 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
RC 36 Persons affected by adverse events
[Repealed]Section RC 36: repealed, on 6 October 2009, by section 501 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Early-payment discounts
RC 37 Availability of early-payment discounts
Sections RC 38 and RC 39 apply for an income year to a small-business person who has no obligation to pay provisional tax under section RC 3(3) and, for earlier income years,—
(a)
has never been liable to pay provisional tax and either—
(i)
has never received an early-payment discount; or
(ii)
has not derived assessable income from a business in a period of 4 income years starting after the latest income year for which they received an early-payment discount; or
(b)
has not derived assessable income from a business in a period of 4 income years starting after the latest income year for which they were liable to pay provisional tax.
Defined in this Act: assessable income, business, early-payment discount, income year, pay, provisional tax, small-business person
Compare: 2004 No 35 s MBB 2(1)(a), (d)
Section RC 37: amended, on 1 April 2020, by section 178(1) (and see section 178(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
RC 38 Crediting income tax with early-payment discount
When this section applies
(1)
This section applies when a small-business person—
(a)
pays income tax on or before their balance date for the income year; and
(b)
during the period from the balance date for the income year to their terminal tax date for the income year, has a credit in their tax account with the Commissioner that is greater than or equal to the lesser of—
(i)
the total amount paid under paragraph (a):
(ii)
the amount that would be their terminal tax for the income year in the absence of this section; and
(c)
files a return of income for the tax year corresponding to the income year; and
(d)
applies for an early-payment discount on or before the last date for filing a return of income under section 37(5) of the Tax Administration Act 1994.
Crediting early-payment discount
(2)
The Commissioner must credit the tax account of the small-business person with an early-payment discount calculated under subsection (3).
Amount of early-payment discount
(3)
The amount of the early-payment discount is found by multiplying the discount rate under subsection (4) by the lesser of—
(a)
the total amount paid under subsection (1)(a):
(b)
105% of the small-business person’s residual income tax for the income year.
Discount rate
(4)
The discount rate is—
(a)
the rate that is 2% greater than the Commissioner’s paying rate set by an Order in Council under section 120H of the Tax Administration Act 1994, if no rate is set under paragraph (b):
(b)
the rate set by the Governor-General by Order in Council.
Secondary legislation
(5)
An Order in Council under subsection (4)(b) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount, apply, balance date, Commissioner, corresponding income year, early-payment discount, income, income tax, income year, pay, residual income tax, return of income, small-business person, tax account with the Commissioner, tax year, terminal tax
Compare: 2004 No 35 s MBB 2(1)(b), (c), (2)–(4)
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section RC 38(4)(a): amended, on 1 April 2022, by section 151(1) (and see section 151(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RC 38(5) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section RC 38(5): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section RC 38 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RC 39 Credit treated as payment of income tax
A credit of an early-payment discount under section RC 38 is treated as a payment made by a small-business person on the day after the last day of the income year referred to in section RC 38 as income tax for the income year.
Defined in this Act: early-payment discount, income tax, income year, pay, small-business person
Compare: 2004 No 35 s MBB 3
RC 40 Some definitions
In this subpart,—
early-payment discount means a discount of income tax under sections RC 38 and RC 39
small-business person means a person who—
(a)
conducts a business on their own account, acting alone or as a partner in a partnership or as the owner of a look-through company; and
(b)
does not use a company or a trust in the conduct of the business; and
(c)
derives income that is mainly from the business, and does not consist of interest, dividends, royalties, rent, or beneficiary income.
Defined in this Act: beneficiary income, business, company, dividend, income, income tax, interest, royalty
Compare: 2004 No 35 s MBB 4
Section RC 40 small-business person paragraph (a): amended (with effect on 1 April 2019), on 30 March 2022, by section 152(1) (and see section 152(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Subpart RD—Employment-related taxes
Contents
Introductory provision
RD 1 What this subpart does
This subpart establishes and measures an employer’s liability under—
(a)
the PAYE rules by—
(i)
listing the types of payments to which the rules apply:
(ii)
calculating the amounts of tax that must be withheld and paid to the Commissioner under the rules:
(iii)
providing for certain adjustments to the amounts:
(iv)
providing some rules related to the payment of the amounts:
(b)
the FBT rules by—
(i)
calculating the value of the benefit provided:
(ii)
attributing certain fringe benefits to employees:
(iii)
setting out the taxable value of certain fringe benefits:
(iv)
providing options for the payment of FBT to the Commissioner:
(c)
the ESCT rules and RSCT rules by setting out the payments to which the rules apply and calculating the amounts of tax that must be withheld and paid to the Commissioner under the rules.
Defined in this Act: amount of tax, Commissioner, employee, employer, ESCT rules, FBT, FBT rules, fringe benefit, fringe benefit tax, pay, PAYE rules, RSCT rules
Section RD 1(c): amended, on 1 April 2008, by section 538 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 1 list of defined terms RSCT rules: inserted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
PAYE rules and PAYE income payments
Introductory provisions
RD 2 PAYE rules and their application
Meaning
(1)
The PAYE rules means—
(a)
section BC 1 (Non-filing and filing taxpayers); and
(b)
sections LA 6, LB 1, and LD 4 (which relate to tax credits); and
(c)
(d)
sections RP 2 to RP 16 (which relate to PAYE intermediaries); and
(e)
subparts 3C and 3D, sections 22AA, 124H to 124K, 124O to 124Q, 133, Part 9, sections 167 to 169, and schedules 4 and 5 of the Tax Administration Act 1994.
Application
(2)
The PAYE rules apply to a person who makes or is required to make a PAYE income payment and, in certain circumstances, to the person to whom the PAYE income payment is made.
Deceased employers
(3)
The executor or administrator of a deceased employer must complete any uncompleted PAYE obligations of the employer.
Defined in this Act: employer, PAYE income payment, PAYE rules
Compare: 2004 No 35 ss NC 15(4), OB 1 “PAYE rules”
Section RD 2(1)(b): substituted, on 6 January 2010, by section 502 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 2(1)(e): replaced, on 1 April 2019, by section 251(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 2(1)(e): amended, on 1 April 2020, by section 251(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RD 3 PAYE income payments
Meaning generally
(1)
The PAYE rules apply to a PAYE income payment which—
(a)
means—
(i)
a payment of salary or wages, see section RD 5; or
(ii)
extra pay, see section RD 7; or
(iii)
a schedular payment, see section RD 8:
(b)
does not include—
(i)
an amount attributed under section GB 29 (Attribution rule: calculation):
(ii)
an amount paid to a shareholder-employee in the circumstances set out in section RD 3B or RD 3C:
(iii)
an amount paid or benefit provided, by a person (the claimant), who receives a personal service rehabilitation payment from which an amount of tax has been withheld at a rate specified in section RD 10B.
When subsections (3) and (4) apply: close companies and some others[Repealed]
(2)
[Repealed]Income in current tax year[Repealed]
(3)
[Repealed]Income in later tax years[Repealed]
(4)
[Repealed]If questions arise
(5)
If a question arises whether the PAYE rules apply to all or part of a PAYE income payment, other than an amount referred to in section RD 3B or RD 3C, the Commissioner must determine the matter.
Defined in this Act: amount, annual gross income, Commissioner, employee, extra pay, income, income year, pay, pay period, PAYE income payment, PAYE rules, salary or wages, schedular payment, shareholder-employee, tax year
Compare: 2004 No 35 ss NC 1(2), OB 2
Section RD 3(1)(b)(ii): amended, on 30 March 2017, by section 260(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(1)(b)(iii): replaced, on 1 April 2017, by section 86 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 3(2) heading: amended (with effect on 1 April 2008), on 30 March 2017, by section 259(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(2) heading: repealed, on 30 March 2017, pursuant to section 260(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(2): amended (with effect on 1 April 2008), on 30 March 2017, by section 259(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(2): repealed, on 30 March 2017, by section 260(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(3) heading: repealed, on 30 March 2017, pursuant to section 260(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(3): amended (with effect on 1 April 2008), on 30 March 2017, by section 259(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(3): repealed, on 30 March 2017, by section 260(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(4) heading: repealed, on 30 March 2017, pursuant to section 260(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(4): amended (with effect on 1 April 2008), on 30 March 2017, by section 259(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(4): repealed, on 30 March 2017, by section 260(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(5) heading: replaced, on 30 March 2017, by section 260(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3(5): replaced, on 30 March 2017, by section 260(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3 list of defined terms close company: repealed (with effect on 1 April 2008), on 30 March 2017, by section 259(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RD 3B Shareholders who are employees, for some companies: income other than PAYE
When this section applies
(1)
This section applies for an income year for a person who is a shareholder and an employee of a company that is not a look-through company and is a close company or has 25 or fewer shareholders if the person elects to apply this section and—
(a)
the person does not derive as an employee payments of salary or wages of a regular amount for regular pay periods of 1 month or less throughout the income year:
(ab)
the person derives less than 66% of their annual gross income as an employee from payments of salary or wages of a regular amount for regular pay periods throughout the income year:
(b)
an amount is paid as income that may later be allocated to the person as an employee for the income year.
When this section does not apply[Repealed]
(2)
[Repealed]Income other than PAYE
(3)
All amounts paid to the person in the income year and in later income years in their capacity as employee of the company are treated as income other than from a PAYE income payment.
Defined in this Act: amount, annual gross income, close company, employee, income, income year, pay, pay period, PAYE income payment, salary or wages, shareholder
Section RD 3B: inserted, on 30 March 2017, by section 261 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3B(1): amended, on 29 March 2018 (with effect on 30 March 2017), by section 187(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 3B(1)(a): replaced, on 29 March 2018 (with effect on 30 March 2017), by section 187(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 3B(1)(ab): inserted, on 29 March 2018 (with effect on 30 March 2017), by section 187(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 3B(2) heading: repealed, on 29 March 2018 (with effect on 30 March 2017), pursuant to section 187(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5)
Section RD 3B(2): repealed, on 29 March 2018 (with effect on 30 March 2017), by section 187(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 3C Shareholders who are employees, for some companies: PAYE and income other than PAYE
When this section applies
(1)
This section applies for an income year for a person who is a shareholder and an employee of a company that is not a look-through company and is a close company or has 25 or fewer shareholders if the person elects to apply this section and—
(a)
the person derives as an employee payments of salary or wages of a regular amount for regular pay periods; but
(b)
an amount is paid as income that may later be allocated to the person as an employee for the income year.
When this section does not apply[Repealed]
(2)
[Repealed]PAYE
(3)
All amounts described in subsection (1)(a) paid to the person in the income year and in later income years in their capacity as employee of the company are PAYE income payments.
Income other than PAYE
(4)
All amounts described in subsection (1)(b) paid to the person in the income year and in later income years in their capacity as employee of the company are treated as income other than from a PAYE income payment.
Defined in this Act: amount, close company, employee, income, income year, pay, pay period, PAYE income payment, salary or wages, shareholder
Section RD 3C: inserted, on 30 March 2017, by section 261 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 3C(1): amended, on 29 March 2018 (with effect on 30 March 2017), by section 188(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 3C(2) heading: repealed, on 29 March 2018 (with effect on 30 March 2017), pursuant to section 188(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 3C(2): repealed, on 29 March 2018 (with effect on 30 March 2017), by section 188(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 4 Payment of amounts of tax to Commissioner
Payments monthly or twice-monthly
(1)
An employer or PAYE intermediary who withholds an amount of tax for a PAYE income payment must pay the amount to the Commissioner as follows:
(a)
on a monthly basis, if they are an employer to whom subsection (2) applies:
(b)
for 2 payment periods in a month, if paragraph (a) does not apply.
Monthly payments
(2)
For the purposes of subsection (1)(a), an employer must pay the amount of tax withheld by the 20th day of the month following the month in which the PAYE income payment is made if they are—
(a)
an employer who—
(i)
is not a new employer; and
(ii)
has, for the preceding tax year, gross amounts of tax of less than $500,000 withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes):
(b)
a new employer who has, for the current tax year, gross amounts of tax withheld under section RA 5(1)(a) and (c) that total less than $500,000.
Twice-monthly payments
(3)
An employer to whom subsection (1)(b) applies must pay the amount of tax withheld to the Commissioner by the dates referred to in section RA 15(2) (Payment dates for interim and other tax payments).
Liability when amount not withheld
(4)
If some or all of the amount of tax for a PAYE income payment is not withheld under subsection (1), the employee in relation to whom the payment is required to have been made must pay to the Commissioner under section RD 21 an amount equal to the amount of tax by the 20th day of the month following the month in which the PAYE income payment was made.
Amounts aggregated for threshold purposes
(5)
For the purposes of determining whether a threshold referred to in subsection (2)(a)(ii) and (b) is reached, if the employer ends their business and starts a new business, or operates 2 or more businesses at the same time, all amounts of tax withheld must be aggregated.
Persons treated as single employers
(6)
For the purposes of this section, the following are treated as 1 employer:
(a)
2 or more companies if they are part of a group of companies at a time in the relevant tax year:
(b)
all partners in a partnership:
(c)
all persons in whom property has become vested, or to whom the control of property has passed in the case of—
(i)
an estate of a deceased person; or
(ii)
a trustee of a trust; or
(iii)
a company in liquidation; or
(iv)
an assigned estate; or
(v)
another fiduciary relationship.
Threshold changes by Order in Council
(7)
The Governor-General may, on the recommendation of the Minister of Revenue, make an Order in Council amending the threshold amount referred to in subsection (2). Before making the recommendation, the Minister must undertake consultation on the proposed amendment that is appropriate and reasonable for the purposes of this section.
(8)
An Order in Council under subsection (7) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount, amount of tax, business, Commissioner, company, employee, employer, gross, group of companies, partner, partnership, pay, PAYE income payment, PAYE intermediary, payment period, tax year, trustee
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section RD 4: replaced, on 1 April 2019, by section 189 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 4(8): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Types of PAYE income payments
RD 5 Salary or wages
Meaning
(1)
Salary or wages—
(a)
means a payment of salary, wages, or allowances made to a person in connection with their employment; and
(b)
includes—
(i)
a bonus, commission, gratuity, overtime pay, or other pay of any kind; and
(ii)
a payment described in subsections (2) to (10); and
(iii)
an accident compensation earnings-related payment; and
(iiib)
a payment of earnings compensation under the Compensation for Live Organ Donors Act 2016; and
(iv)
[Repealed](c)
does not include—
(i)
an amount of exempt income:
(ii)
an extra pay:
(iii)
a schedular payment:
(iv)
an amount of income described in section RD 3B(3):
(ivb)
an amount of income described in section RD 3C(4):
(v)
an employer’s superannuation contribution other than a contribution referred to in subsection (9):
(vi)
a payment excluded by regulations made under this Act.
(d)
[Repealed]Employees’ expenditure on account
(2)
A payment of expenditure on account of an employee is included in their salary or wages.
Payments to working partners
(3)
A payment to a working partner under section DC 4 (Payments to working partners) is included in their salary or wages.
Payments to working owners
(3B)
A payment to a working owner under section DC 3B (Payments to working owners) is included in their salary or wages.
Payments to past employees
(4)
A periodic payment of a pension, allowance, or annuity made to a person or their spouse, civil union partner, de facto partner, child, or dependant in connection with the past employment of the person is included in their salary or wages.
Payments to Governor-General, members of Parliament, and other office holders
(5)
A payment to a person is included in salary or wages of the person if it is made as—
(a)
salary to the Governor-General:
(b)
salary or allowances to a member of Parliament:
(c)
salary or principal allowances to a judicial officer referred to in section 12B of the Remuneration Authority Act 1977:
(d)
salary or allowances to a member of the Employment Relations Authority.
Sum payable after office of Governor-General becomes vacant
(5B)
A payment to a person made under section 7 of the Governor-General Act 2010 is included in the salary and wages of that person.
Certain benefits and grants
(6)
A payment of the following benefits or grants is included in salary or wages
(a)
a gratuitous payment as described in paragraph (a) of the definition of pension in section CF 1(2) (Benefits, pensions, compensation, and government grants):
(b)
a main benefit:
(bb)
a veteran’s pension, other than a veteran’s pension paid under section 182 of the Veterans’ Support Act 2014:
(bc)
New Zealand superannuation, other than New Zealand superannuation paid under section 26(2)(b) of the New Zealand Superannuation and Retirement Income Act 2001:
(bd)
a retirement lump sum paid under Part 5, subpart 7 of the Veterans’ Support Act 2014:
(be)
weekly income compensation paid under Part 3, subpart 4 of the Veterans’ Support Act 2014:
(bf)
weekly compensation paid under Part 4, subpart 5 of the Veterans’ Support Act 2014:
(bg)
(bh)
the amount of an honorarium that is paid by Fire and Emergency New Zealand to a volunteer as defined in section CW 62B(4) (Voluntary activities):
(c)
a basic grant and independent circumstances grant made under regulations made under section 645 of the Education and Training Act 2020 or an enactment substituted for that section.
Parental leave and preterm baby payments
(7)
A parental leave payment or preterm baby payment made under Part 7A of the Parental Leave and Employment Protection Act 1987 is included in salary or wages.
Accommodation benefits
(8)
A benefit treated as income under section CE 1(1)(bb) (Amounts derived in connection with employment) is included in salary or wages.
Cash contributions
(9)
An amount of an employer’s superannuation cash contribution that an employee chooses to have treated as salary or wages under section RD 68 is included in salary or wages.
Unrepaid PAYE income overpayments
(10)
An unrepaid PAYE income overpayment that is treated as salary or wages under section RD 8B(2)(a) is included in salary or wages.
Defined in this Act: accident compensation earnings-related payment, accommodation, amount, de facto partner, employee, employer’s superannuation cash contribution, employer’s superannuation contribution, employment, exempt income, expenditure on account of an employee, extra pay, income, main benefit, New Zealand superannuation, pay, salary or wages, schedular payment, unrepaid PAYE income overpayment, veteran’s pension
Compare: 2004 No 35 s OB 1 “salary or wages”
Section RD 5(1)(b)(ii): amended, on 1 April 2019, by section 252(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 5(1)(b)(iiib): inserted, on 5 December 2017, by section 30 of the Compensation for Live Organ Donors Act 2016 (2016 No 96).
Section RD 5(1)(b)(iv): repealed (with effect on 7 December 2014), on 31 March 2015, by section 14(1) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section RD 5(1)(c)(iv): replaced (with effect on 30 March 2017), on 30 March 2022, by section 153 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 5(1)(c)(ivb): inserted (with effect on 30 March 2017), on 30 March 2022, by section 153 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 5(1)(c)(v): amended (with effect on 1 April 2008), on 21 December 2010 (applying for the 2008–09 and later income years), by section 126(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 5(1)(c)(v): substituted (with effect on 1 April 2008), on 6 October 2009, by section 504(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5(1)(c)(vi): amended, on 1 April 2012, by section 8(1) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 5(1)(c)(vi): amended, on 1 April 2008, by section 133 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section RD 5(1)(d): repealed, on 1 April 2012, by section 8(2) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 5(3B) heading: inserted, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 126(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 5(3B): inserted, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 126(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 5(5) heading: replaced, on 30 March 2017, by section 262 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 5(5): replaced, on 30 March 2017, by section 262 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 5(5B) heading: inserted (with effect on 1 April 2013), on 27 February 2014, by section 123(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section RD 5(5B): inserted, on 23 November 2010, by section 24(3) of the Governor-General Act 2010 (2010 No 122).
Section RD 5(6)(a): substituted (with effect on 1 April 2008), on 6 October 2009, by section 504(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5(6)(b): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 5(6)(bb): inserted, on 5 January 2010, by section 102 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 5(6)(bb): amended, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
Section RD 5(6)(bc): inserted, on 5 January 2010, by section 102 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 5(6)(bd): replaced (with effect on 7 December 2014), on 31 March 2015, by section 14(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section RD 5(6)(be): inserted, on 31 March 2015, by section 14(3) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section RD 5(6)(bf): inserted, on 31 March 2015, by section 14(3) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section RD 5(6)(bg): inserted, on 31 March 2015, by section 14(3) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section RD 5(6)(bh): replaced (with effect on 1 April 2019), on 23 March 2020, by section 179 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RD 5(6)(c): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 122(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RD 5(6)(c): amended, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section RD 5(7) heading: replaced, on 1 April 2016, by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
Section RD 5(7): amended, on 1 April 2016, by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
Section RD 5(8) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 504(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5(8): added (with effect on 1 April 2008), on 6 October 2009, by section 504(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5(8): amended, on 1 April 2015, by section 138 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RD 5(9) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 504(6) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5(9): added (with effect on 1 April 2008), on 6 October 2009, by section 504(6) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5(10) heading: inserted, on 1 April 2019, by section 252(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 5(10): inserted, on 1 April 2019, by section 252(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 5 list of defined terms accommodation: inserted (with effect on 1 April 2008), on 6 October 2009, by section 504(7) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5 list of defined terms employee: inserted (with effect on 1 April 2008), on 27 February 2014, by section 123(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section RD 5 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 504(8) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 5 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 5 list of defined terms living alone payment: repealed, on 2 September 2013 (applying for the 2011–12 tax year and later tax years), by section 16(1) of the Social Assistance (Living Alone Payments) Amendment Act 2013 (2013 No 11).
Section RD 5 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 5 list of defined terms unrepaid PAYE income overpayment: inserted, on 1 April 2019, by section 252(4) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RD 6 Certain benefits and payments
When this section applies
(1)
This section applies when an employee receives—
(a)
a benefit treated as income under section CE 1(1)(bb) (Amounts derived in connection with employment); or
(b)
another benefit in kind that is included in their salary or wages; or
(c)
1 or more of the following payments:
(i)
a superannuation payment:
(ii)
a pension:
(iii)
a retiring or other allowance:
(iv)
an annuity; or
(d)
a benefit under section CE 1(1)(d) (Amounts derived in connection with employment) in relation to which the employer has made an election under section RD 7B; or
(e)
a payment made to them as a person on a shadow payroll.
Value or amount included in salary or wages
(2)
For the purposes of subsection (1)(a) to (c), the value of the benefit or amount of the payment is treated as—
(a)
accruing from day to day; and
(b)
included in the employee’s salary or wages for the pay period or, as applicable, as part of their salary or wages for the pay period.
When non-cash benefit treated as paid
(3)
If the employee receives the benefit otherwise than in cash, the value is treated as paid—
(a)
for a benefit referred to in subsection (1)(d), on the ESS deferral date on which the employee is treated as deriving the benefit under section CE 2(8) (Benefits under employee share schemes); or
(ab)
[Repealed](b)
for a benefit referred to in subsection (1)(a) to (c) that constitutes the only salary or wages of the employee, on the last day of the pay period:
(c)
for a benefit that paragraphs (a) and (b) do not apply to, when the last amount of salary or wages for the pay period is paid.
Employees on shadow payrolls
(4)
For the purposes of the PAYE rules, a payment referred to in subsection (1)(e) is treated as paid to the employee—
(a)
on the day that the amount is paid by the non-resident employer, that is the payday for the purposes of sections 23E to 23H and 23J(2) of the Tax Administration Act 1994:
(b)
on the 20th day after the amount is paid by the non-resident employer, that is the 20th day referred to in section 23J(3) of that Act.
Meaning of payment to person on shadow payroll
(5)
For the purposes of this section, a payment made to a person on a shadow payroll is a PAYE income payment paid by a non-resident employer to a person who undertakes employment services in New Zealand but who remains on the employer’s payroll system in a country or territory outside New Zealand.
Defined in this Act: accommodation, amount, employee, employer, employment, employment income information, ESS deferral date, New Zealand, non-resident, pay, pay period, PAYE income payment, salary or wages, share purchase agreement
Compare: 2004 No 35 s NC 4
Section RD 6(1)(d): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 55(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 6(1)(d): amended, on 1 April 2019, by section 191(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(1)(d): amended, on 29 September 2018, by section 190(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(1)(e): inserted, on 1 April 2019, by section 191(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(2): amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 55(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 6(3)(a): replaced, on 1 April 2019, by section 191(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(3)(ab): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 55(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 6(3)(ab): repealed, on 1 April 2017 (applying for the 2017–18 and later income years), by section 87(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 6(3)(b): replaced, on 1 April 2017 (applying for the 2017–18 and later income years), by section 87(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 6(3)(c): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 87(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 6(4) heading: inserted, on 1 April 2019, by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(4): inserted, on 1 April 2019, by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(5) heading: inserted, on 1 April 2019, by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6(5): inserted, on 1 April 2019, by section 191(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms accommodation: inserted (with effect on 1 April 2008), on 6 October 2009, by section 505(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 6 list of defined terms amount: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 55(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 6 list of defined terms employer: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 55(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 6 list of defined terms employment income information: inserted, on 1 April 2019, by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms ESS deferral date: inserted, on 1 April 2019, by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms New Zealand: inserted, on 1 April 2019, by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms non-resident: inserted, on 1 April 2019, by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms PAYE income payment: inserted, on 1 April 2019, by section 191(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms PAYE income payment form period: repealed, on 1 April 2019, by section 191(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 6 list of defined terms share purchase agreement: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 55(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 7 Extra pay
Meaning
(1)
An extra pay—
(a)
means a payment that—
(i)
is made to a person in connection with their employment; and
(ii)
is not a payment regularly included in salary or wages payable to the person for a pay period; and
(iii)
is not overtime pay; and
(iv)
is made in 1 lump sum or in 2 or more instalments; and
(b)
includes a payment of the kind described in paragraph (a) made—
(i)
as a bonus, gratuity, or share of profits; or
(ii)
as a redundancy payment; or
(iii)
when the person retires from employment; or
(iv)
as a result of a retrospective increase in salary or wages, but only to the extent to which it accrues from the start of the increase until the start of the first pay period in which the increase is included in salary or wages; and
(bb)
includes a benefit under section CE 1(1)(d) (Amounts derived in connection with employment) in relation to which the employer has made an election under section RD 7B to withhold an amount of tax; and
(c)
includes an amount of income that a person derives under section CE 9 (Restrictive covenants) or CE 10 (Exit inducements) if the income is derived in connection with an employment relationship between the person and the person who paid the amount; and
(cb)
includes an unrepaid PAYE income overpayment that is treated as all or part of an amount of extra pay under section RD 8B(2)(b); and
(d)
does not include a payment of exempt income.
Limit on retrospective increase in salary or wages[Repealed]
(2)
[Repealed]Remedial payments for certain entitlements
(3)
A remedial payment made in relation to 1 or more of a person’s entitlements under the Holidays Act 2003, an employment agreement, or both, is treated as an extra pay if—
(a)
the payment is made to a person in connection with their employment; and
(b)
but for this subsection, the payment would be a payment of salary or wages or an extra pay, or a combination of both; and
(c)
the payment is made to the person to meet all or part of a shortfall in 1 or more previous payments to the person who has an entitlement under the Holidays Act 2003, or an employment agreement, or both.
Exclusion
(4)
A payment made to a person to address some or all of a failure to pay the person any salary or wages for a pay period is excluded from a remedial payment under subsection (3). If more than 1 payment is made to the person to address the failure, this subsection applies to exclude only the first of these payments.
Meaning of employment agreement
(5)
For the purposes of subsection (3), an employment agreement has the meaning given by section 5 of the Employment Relations Act 2000 except that—
(a)
it includes an individual employment contract continued in force by section 242(1) of that Act; and
(b)
it excludes a contract for services described in paragraph (b) of the definition.
Defined in this Act: amount, amount of tax, employment, exempt income, income, pay, pay period, salary or wages, unrepaid PAYE income overpayment
Compare: 2004 No 35 s OB 1 “extra pay”
Section RD 7(1)(b)(iv): replaced, on 1 April 2018, by section 193(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(1)(bb): inserted, on 1 April 2017, by section 56(1) (and see section 56(3)) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 7(1)(bb): amended, on 29 September 2018, by section 192 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(1)(cb): inserted, on 1 April 2019, by section 253(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 7(2) heading: repealed, on 1 April 2018, pursuant to section 193(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(2): repealed, on 1 April 2018, by section 193(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(3) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 194(1) (and see section 194(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(3): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 194(1) (and see section 194(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(4) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 194(1) (and see section 194(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(4): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 194(1) (and see section 194(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(5) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 194(1) (and see section 194(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7(5): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 194(1) (and see section 194(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 7 list of defined terms amount of tax: inserted, on 1 April 2017, by section 56(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 7 list of defined terms unrepaid PAYE income overpayment: inserted, on 1 April 2019, by section 253(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RD 7B Treatment of employee share schemes
When this section applies
(1)
This section applies for employees or a former employee in relation to benefits under an employee share scheme, if—
(a)
an employer has irrevocably chosen to withhold and pay tax for a benefit for an employee under the scheme in accordance with subsection (3); or
(b)
an employer chooses to withhold and pay tax for a benefit for an employee under the scheme in accordance with subsection (4).
Irrevocable obligation
(2)
An employer who has made an irrevocable election described in subsections (1)(a) and (3) must comply with subsection (4)(a) to (c) for—
(a)
the relevant benefit and employee under the scheme:
(b)
benefits offered or provided to the employee in replacement of the relevant benefit.
Irrevocable obligation: form
(3)
For the purposes of subsection (1)(a), an employer has irrevocably chosen to withhold and pay tax for a benefit for an employee, if it is a term of the offer of the benefit, or of the scheme under which the benefit is provided, that the employer must withhold and pay tax under this section.
Withholding and paying
(4)
For the purposes of subsection (1)(b), an employer chooses to withhold and pay tax for some benefits for some employees by—
(a)
calculating the amounts of tax that must be withheld for the relevant benefits and employees, and paying the amounts to the Commissioner as described in section RD 4(1); and
(b)
including the amounts in the employer’s employment income information under subpart 3C of the Tax Administration Act 1994, treating the relevant ESS deferral date as the relevant payday; and
(c)
making the disclosure referred to in paragraph (b) within the time required under section RD 6(3)(a).
Defined in this Act: amount, amount of tax, Commissioner, employee, employee share scheme, employment income information, ESS deferral date, pay, payday, tax
Section RD 7B: replaced (with effect on 1 April 2019), on 26 June 2019, by section 74(1) (and see section 74(2) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
RD 8 Schedular payments
Meaning
(1)
A schedular payment—
(a)
means—
(i)
a payment of a class set out in schedule 4 (Standard rates of tax for schedular payments); and
(ii)
in relation to a sale, the net amount paid after subtracting from the purchase price all commission, insurance, freight, classing charges and other expenses incurred by the seller in connection with the sale; and
(ab)
includes an unrepaid PAYE income overpayment that is treated as all or part of a schedular payment under section RD 8B(2)(c); and
(b)
does not include—
(i)
salary or wages; or
(ii)
an extra pay; or
(iii)
a payment for services provided by a public authority, a local authority, a Maori authority, or a company, other than a non-resident contractor, a non-resident entertainer, a company in relation to a payment described in schedule 4, part J or part W, or an agricultural, horticultural, or viticultural company; or
(iv)
an exempt payment referred to in section 24H and schedule 5, part C, clause 6 of the Tax Administration Act 1994 applies; or
(v)
a payment for services provided by a non-resident contractor who has full relief from tax under a double tax agreement, and is present in New Zealand for 92 or fewer days in a 12-month period; or
(vi)
a contract payment for a contract activity or service of a non-resident contractor when the total amount paid for those activities to the contractor or another person on their behalf is $15,000 or less in a 12-month period.
Protected payments
(2)
The fact that a schedular payment may be protected against assignment or charge does not override a person’s obligation to withhold the amount of tax for the payment.
Determination of expenditure incurred
(3)
The Commissioner may determine from time to time the amount or proportion of expenditure that a person incurs in deriving a particular schedular payment or class of schedular payments.
Defined in this Act: agricultural, horticultural, or viticultural company, amount, amount of tax, Commissioner, company, contract activity or service, contract payment, double tax agreement, extra pay, local authority, Maori authority, New Zealand, non-resident contractor, non-resident entertainer, pay, public authority, salary or wages, schedular payment, unrepaid PAYE income overpayment
Compare: 2004 No 35 s NC 21(f)–(h), Income Tax (Withholding Payments) Regulations 1979, regulations 2, 4, 6–8
Section RD 8(1)(a)(i): amended, on 1 April 2017, by section 89(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 8(1)(ab): inserted, on 1 April 2019, by section 254(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 8(1)(b)(iii): amended, on 1 April 2017, by section 89(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 8(1)(b)(iv): replaced, on 1 April 2019, by section 197(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 8(1)(b)(v): amended (with effect on 1 April 2008), on 6 October 2009, by section 506 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 8 list of defined terms exemption certificate: repealed, on 1 April 2019, by section 197(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 8 list of defined terms unrepaid PAYE income overpayment: inserted, on 1 April 2019, by section 254(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RD 8B Treatment of PAYE-related overpayments
When this section applies
(1)
This section applies when an employer pays an amount (a PAYE-related overpayment) to an employee and—
(a)
the amount is paid—
(i)
in error, to the extent to which the employee is not beneficially entitled to the amount; or
(ii)
as an advance payment, to the extent to which the employee does not become beneficially entitled to the amount; and
(b)
the amount is, at the time of payment, treated by the employer as all or part of—
(i)
a payment of salary or wages; or
(ii)
an extra pay; or
(iii)
a schedular payment.
Treatment of amount
(2)
To the extent to which the amount is an unrepaid PAYE income overpayment, the amount is treated as follows:
(a)
as salary or wages, if the amount is treated as described in subsection (1)(b)(i):
(b)
as all or part of an amount of extra pay, as applicable, if the amount is treated as described in subsection (1)(b)(ii):
(c)
as all or part of a schedular payment, as applicable, if the amount is treated as described in subsection (1)(b)(iii).
Meaning of unrepaid PAYE income overpayment
(3)
An unrepaid PAYE income overpayment—
(a)
means an amount that—
(i)
is a PAYE-related overpayment; and
(ii)
has not been repaid to the employer; and
(iii)
is not repayable to the employer by the employee under an agreement between them; and
(iv)
is not recoverable under section 248 of the Accident Compensation Act 2001; and
(b)
does not include an amount of exempt income.
Amounts repayable under breached repayment agreements
(4)
For the purposes of subsection (3)(a)(iii), an amount that is repayable to the employer by the employee under an agreement (the agreement) between them is treated as an amount that is not repayable to the employer by the employee under an agreement between them if—
(a)
the employee breaches the agreement and does not remedy the breach within 2 months:
(b)
the employer considers that the employee will not comply with the agreement in the future.
Exclusions
(5)
An amount referred to in subsection (1) does not include—
(a)
an amount that is income of the employee under section CB 32 (Property obtained by theft):
(b)
an amount that is an overpayment of a benefit or grant referred to in section RD 5(6)(a) to (c):
(c)
an employer’s superannuation contribution other than an overpayment of an amount of an employer’s superannuation cash contribution that an employee chooses to have treated as salary or wages under section RD 68 (Choosing to have amount treated as salary or wages).
Employers who use PAYE intermediaries
(6)
In this section, employer includes a PAYE intermediary.
Defined in this Act: amount, employee, employer, exempt income, extra pay, pay, PAYE intermediary, PAYE-related overpayment, salary or wages, schedular payment, unrepaid PAYE income overpayment
Section RD 8B: inserted, on 1 April 2019, by section 255 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Calculating amounts of tax
RD 9 Maximum amount
When a person calculates an amount of tax for a PAYE income payment, they must use the maximum rate under schedule 2 (Basic tax rates for PAYE income payments) at the time for the payment and the person receiving the payment, unless this Act states otherwise.
Defined in this Act: amount of tax, pay, PAYE income payment
Compare: 2004 No 35 s NC 6(1A), (3)
RD 10 Amounts of tax for PAYE income payments
PAYE income payments other than schedular payments
(1)
The amount of tax for a PAYE income payment that a person must withhold and pay to the Commissioner under section RA 5 (Tax obligations for employment-related taxes) is the relevant amount under schedule 2 (Basic tax rates for PAYE income payments). Subsections (2), (2B), (2C), (2D), and (3) and sections RD 12 to RD 20 override this subsection.
Choosing rate for extra pay
(2)
An employee who notifies their employer of their tax code may choose to have the amount of tax for an extra pay fixed as follows:
(a)
for an employee whose taxable income for the income year is expected to be not more than $48,000, the rate set out in schedule 2, part B, table 1, row 3; or
(b)
for an employee whose taxable income for the income year is expected to be not more than $70,000, the rate set out in schedule 2, part B, table 1, row 4; or
(c)
for an employee whose taxable income for the income year is expected to be not more than $180,000, the rate set out in schedule 2, part B, table 1, row 5; or
(d)
for other employees, the rate set out in schedule 2, part B, table 1, row 6.
Relationship with section RD 17
(2B)
Despite subsection (2), a person must not choose a rate set out in schedule 2, part B, table 1 that is lower than the rate that would apply to the amount of extra pay under section RD 17.
Rates for extra pays: non-resident seasonal workers
(2C)
The amount of tax for an extra pay that is paid to a non-resident seasonal worker is calculated at the rate set out in schedule 2, part B, table 1, row 1 (Basic tax rates for PAYE income payments). This rate applies for both a worker who has notified their employer under section 24C of the Tax Administration Act 1994 of their tax code under schedule 2, part A, clause 8, and a worker to whom schedule 5, part B, clause 3 of that Act applies. This subsection overrides subsection (2).
Rates for extra pays: non-notified tax codes
(2D)
The amount of tax for an extra pay that is paid to an employee who has not notified their employer of their tax code is calculated at the rate set out in schedule 2, part B, table 1, row 7.
Schedular payments
(3)
The amount of tax for a schedular payment is determined—
(a)
under section RD 10B; and
(b)
on the basis of the gross amount of the payment, other than GST, whether—
(i)
some or all of the payment is income; and
(ii)
the full income tax liability lies with the person receiving the payment, or lies partly with an employee or subcontractor of the person.
Tax tables
(4)
The Commissioner may provide tables for the calculation of an amount of tax for a PAYE income payment that may incorporate other relevant information.
Defined in this Act: amount, amount of tax, Commissioner, employee, employer, extra pay, gross, income, income tax liability, income year, non-resident seasonal worker, notify, pay, PAYE income payment, schedular payment, tax code, taxable income
Compare: 2004 No 35 ss NC 6, NC 8(1A), Income Tax (Withholding Payments) Regulations 1979, regulation 3
Section RD 10(1): amended, on 29 March 2018, by section 198(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2): replaced, on 1 April 2021, by section 5(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 10(2B) heading: inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 103(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 10(2B): inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 103(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 10(2C) heading: inserted, on 29 March 2018, by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2C): inserted, on 29 March 2018, by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2C): amended, on 1 April 2021, by section 5(2) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 10(2C): amended, on 1 April 2019, by section 198(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2C): amended, on 1 April 2019, by section 198(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2D) heading: inserted, on 29 March 2018, by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2D): inserted, on 29 March 2018, by section 198(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10(2D): amended, on 1 April 2021, by section 5(3) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 10(3)(a): replaced, on 1 April 2017, by section 90 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 10(3)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 27 February 2014, by section 124(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section RD 10 list of defined terms non-resident seasonal worker: inserted, on 29 March 2018, by section 198(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 10B Amounts of tax for schedular payments
When this section applies
(1)
This section applies to determine the amount of tax for a schedular payment for the purposes of section RD 10(3)(a).
Basic rates
(2)
When the person making the schedular payment has been notified under section 24I of the Tax Administration Act 1994 of the payee’s name and tax file number, the person must withhold an amount of tax for the payment at—
(a)
the payee’s elected rate, for a payee, other than a payee referred to in paragraph (b), who chooses a tax rate under section 24F(3) of that Act:
(b)
the special tax rate set by the Commissioner, for a payee who has been provided with a special tax rate under section 24G of that Act:
(c)
in other cases, the applicable tax rate set out in schedule 4 (Standard rates of tax for schedular payments).
Rates set by Commissioner
(3)
Despite subsection (2), if the person making the schedular payment has been notified of a rate under section 24F(4) of that Act, the person must use that rate in relation to the payment, subtracting the amount notified or the amount equal to the percentage prescribed, as applicable, and paying the amount to the Commissioner.
Default rates
(4)
When the person making the schedular payment has not been notified of the payee’s name and tax file number under section 24I, the person must withhold an amount of tax for the payment that is—
(a)
for a payee that is a company that is non-resident, 20% of the amount of the payment:
(b)
in all other cases, 45% of the amount of the payment.
Non-resident entertainer rate
(5)
Despite subsections (2), (3), and (4), the tax rate, if the payee is a non-resident entertainer, is 0.20.
Defined in this Act: amount, amount of tax, Commissioner, company, non-resident contractor, non-resident entertainer, notify, pay, schedular payment, tax, tax file number
Section RD 10B: inserted, on 1 April 2017, by section 91 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 10B(2) heading: replaced, on 1 April 2019, by section 199(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B(2): replaced, on 1 April 2019, by section 199(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B(3) heading: replaced, on 1 April 2019, by section 199(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B(3): replaced, on 1 April 2019, by section 199(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B(4) heading: replaced, on 1 April 2019, by section 199(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B(4): replaced, on 1 April 2019, by section 199(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B list of defined terms amount: inserted, on 1 April 2019, by section 199(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 10B list of defined terms Commissioner: inserted, on 1 April 2019, by section 199(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 10C Calculating amounts of tax following changes to rates or thresholds
When a change occurs to a rate or threshold in this Act or the Tax Administration Act 1994 affecting the amount of tax for a PAYE income payment, the calculation of the amount of tax must be made using the rate applying on the day on which the PAYE income payment is paid or is otherwise under this Act treated as paid.
Defined in this Act: amount of tax, pay, PAYE income payment
Section RD 10C: inserted, on 1 April 2018, by section 200 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 11 Amount of tax in certain circumstances
Special circumstances
(1)
Despite sections RD 2 to RD 10, the Commissioner may, in special circumstances, reduce the amount of tax for a PAYE income payment to an employee or a class of employees. The PAYE rules then apply as if amended.
When schedule or regulations inapplicable
(2)
If the amount of tax for a PAYE income payment cannot be determined under schedule 2 (Basic tax rates for PAYE income payments) or under regulations made under this Act because of the size of the PAYE income payment, or the number of the employee’s dependants, or for any other reason, the amount of tax for the payment must be determined by the Commissioner, taking into account the factors considered in fixing the amount of tax for other similar payments.
Main benefits, New Zealand superannuation, and veteran’s pension
(3)
Despite section RD 10(1), the amount of tax for a PAYE income payment that is a payment of any of the following benefits must be determined by the Commissioner in consultation with the chief executive of the administering department:
(a)
a main benefit:
(b)
New Zealand superannuation:
(c)
a veteran’s pension.
Education allowances
(3B)
Despite section RD 10(1), the amount of tax for a PAYE income payment that is a payment of an allowance under regulations made under section 645 of the Education and Training Act 2020 must be determined by the Commissioner in consultation with the Secretary for Education.
When Commissioner makes determination under section RD 8(3)
(4)
If the Commissioner makes a determination under section RD 8(3) in relation to the amount or proportion of expenditure that a person incurs in deriving a schedular payment, the basis for calculating the amount of tax for the schedular payment is the reduced amount found after subtracting the amount or proportion of expenditure determined by the Commissioner from the amount of the payment. This subsection overrides section RD 10(3).
Defined in this Act: amount, amount of tax, chief executive of the administering department, Commissioner, employee, main benefit, PAYE income payment, PAYE rules, schedular payment
Compare: 2004 No 35 ss NC 6(1C), (1D), NC 13, Income Tax (Withholding Payments) Regulations 1979, regulation 6(3)
Section RD 11 heading: replaced, on 9 November 2020, by section 45(1) of the New Zealand Superannuation and Veteran’s Pension Legislation Amendment Act 2020 (2020 No 36).
Section RD 11(3) heading: replaced, on 9 November 2020, by section 45(2) of the New Zealand Superannuation and Veteran’s Pension Legislation Amendment Act 2020 (2020 No 36).
Section RD 11(3) heading: amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 11(3): replaced, on 9 November 2020, by section 45(2) of the New Zealand Superannuation and Veteran’s Pension Legislation Amendment Act 2020 (2020 No 36).
Section RD 11(3)(a): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 11(3B) heading: inserted, on 9 November 2020, by section 45(2) of the New Zealand Superannuation and Veteran’s Pension Legislation Amendment Act 2020 (2020 No 36).
Section RD 11(3B): inserted, on 9 November 2020, by section 45(2) of the New Zealand Superannuation and Veteran’s Pension Legislation Amendment Act 2020 (2020 No 36).
Section RD 11(4) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 507(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 11(4): added (with effect on 1 April 2008), on 6 October 2009, by section 507(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 11 list of defined terms amount: inserted (with effect on 1 April 2008), on 6 October 2009, by section 507(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 11 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 11 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 11 list of defined terms schedular payment: added (with effect on 1 April 2008), on 6 October 2009, by section 507(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 11 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 507(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Adjustments for certain PAYE income payments
RD 12 Multiple payments of salary or wages
When this section applies
(1)
This section applies when an employee receives more than 1 payment of salary or wages from their employer in a week or part of a week. The employment may relate to 1 or more employment situations with that employer.
What this section does not apply to
(2)
This section does not apply to salary or wages from employment as a casual agricultural employee, election-day worker, or non-resident seasonal worker.
Treatment as 1 payment
(3)
The total amount of tax for all payments of salary or wages is the amount that would be required to be withheld if all the payments were treated as 1 payment made by the employer for the week.
Defined in this Act: amount of tax, casual agricultural employee, election-day worker, employee, employer, employment, non-resident seasonal worker, pay, salary or wages
Section RD 12: replaced, on 1 April 2019, by section 201 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 13 Advance payments
When this section applies
(1)
This section applies when an employee receives from their employer—
(a)
an advance payment of salary or wages referred to in section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes):
(b)
an amount of holiday pay that is paid—
(i)
in a lump sum before the employee takes their holiday; and
(ii)
when the employee’s employment is continuing.
Employers’ elections
(2)
The employer may choose to treat the amount as—
(a)
an extra pay; or
(b)
a lump sum paid and spread over the pay period or periods to which it relates.
Choosing to treat amounts as lump sum payments
(3)
Subsections (4) and (5) apply when an employer chooses under subsection (2)(b) to treat the amount as a lump sum.
Calculating amounts of tax for lump sum payments
(4)
The amount of tax for the lump sum payment is determined by—
(a)
apportioning the lump sum to the pay period or pay periods to which it relates based on the employee’s usual hours of work; and
(b)
calculating the amount of tax for each portion of the lump sum, treating the portion as if it were the only payment of salary or wages paid by the employer to the employee for the particular pay period; and
(c)
adding together the amounts of tax for each portion.
Calculating amounts of tax for salary or wages
(5)
The amount of tax for a payment of salary or wages for a pay period referred to in subsection (4)(a) that is made after the payment of the lump sum is found by—
(a)
adding together—
(i)
the amount of the payment of salary or wages for the pay period; and
(ii)
the portion of the lump sum that relates to the pay period as determined under subsection (4)(a); and
(b)
calculating the amount of tax that must be withheld for the total amount referred to in paragraph (a), treating that amount as if it were a single payment of salary or wages paid by the employer to the employee for the pay period; and
(c)
subtracting the amount of tax for the portion of the lump sum that relates to the pay period as described in subsection (4)(b).
Defined in this Act: amount, amount of tax, employee, employer, employment, extra pay, pay, pay period, salary or wages
Section RD 13: replaced, on 1 April 2018, by section 202 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 13B Adjustments for payroll donations
When this section applies
(1)
This section applies when an employee makes a payroll donation for a pay period for which they have a tax credit under section LD 4 (Tax credits for payroll donations).
Subtracting amount of tax credit
(2)
The employer or PAYE intermediary must subtract the amount of the tax credit from the amount of tax for the employee’s PAYE income payment for the pay period and include in their employment income information the items described in schedule 4, table 1, row 5(a) of the Tax Administration Act 1994.
Defined in this Act: employee, employer, employment income information, pay period, PAYE income payment, PAYE intermediary, payroll donation, tax credit
Section RD 13B: inserted, on 6 January 2010, by section 510 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 13B(2): amended, on 1 April 2019, by section 203(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 13B list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 203(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 13B list of defined terms employment income information: inserted, on 1 April 2019, by section 203(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 14 Changes to tax rates for salary or wages
[Repealed]Section RD 14: repealed, on 1 April 2018, by section 204 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 15 Payments of salary or wages in pay periods
Payment for part of period
(1)
If an employee who is in regular full-time employment is paid salary or wages for part of a pay period, the payment is treated as a payment for a full pay period.
Payment on production basis
(2)
If an employee who is paid on a production basis for work performed as a piece worker or out-worker is paid salary or wages, the payment is treated as payment for the period that runs from the date the work starts to the date of its completion.
Payments in several sums
(3)
If a PAYE income payment for a pay period is paid in 2 or more separate sums, those sums must be added together to determine the amount of tax for the payment.
When impractical to make payments at same time
(4)
Despite subsection (3), if it is impractical for an employer to pay an employee overtime pay and other salary or wages for a pay period at the same time, the employer may add the amount of the overtime pay of the employee to their salary or wages for a later pay period, but not their overtime pay if, for both pay periods,—
(a)
the amounts of the employee’s salary or wages are more or less the same; and
(b)
the amounts of tax withheld from the employee’s salary or wages are the same; and
(c)
the employee has the same tax code.
Periods not coinciding
(5)
For the purposes of subsection (4), if overtime pay is paid for a particular period that is the same length as a pay period but does not coincide with a pay period, it may be treated as overtime pay for the pay period in which the particular period ends.
Defined in this Act: amount of tax, employee, employer, employment, pay, pay period, PAYE income payment, salary or wages, tax code, tax withheld
Compare: 2004 No 35 s NC 2(2)–(4)
RD 16 Payments to private domestic workers
When this section applies
(1)
This section applies to a person who is employed as a private domestic worker by another person and—
(a)
the employer is the occupier, or 1 of the occupiers, of a house or premises used exclusively for residential purposes; and
(b)
the employment—
(i)
is for the performance of work in or about the house or premises, or a garden or grounds belonging to the house or premises; and
(ii)
is not for a business carried on by the employer, or an occupation or calling of the employer; and
(iii)
is not regular full-time employment.
No amount of tax withheld
(2)
No amount of tax is required to be withheld for a PAYE income payment relating to the person’s employment as a private domestic worker when sections RA 8 (Liability of persons receiving payments or benefits) and RD 4(4) apply.
Defined in this Act: amount of tax, business, employer, employment, PAYE income payment, private domestic worker
Compare: 2004 No 35 s NC 2(1)
Section RD 16(2): amended, on 1 April 2019, by section 205 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 17 Payment of extra pay with other PAYE income payments
When this section applies
(1)
This section applies when a person pays an amount of extra pay to an employee who also receives a PAYE income payment from the person, regardless of whether the extra pay is paid with or separately from a PAYE income payment. The amount of tax for the extra pay is based on the sum of—
(a)
the amount of the extra pay; and
(b)
the annualised value of all PAYE income payments made to the employee in the period that starts 4 weeks before the date of the payment of the extra pay and ends on the date of that payment.
Calculating annualised value
(1B)
For the purposes of calculating the amount that is the annualised value referred to in subsection (1)(b), the amount of the extra pay referred to in subsection (1)(a) and of extra pays paid to the employee in the period referred to in subsection (1)(b) is excluded.
Exclusion: non-resident seasonal workers and non-notified tax codes
(1C)
This section does not apply to—
(a)
a non-resident seasonal worker—
(i)
who has notified their employer of their tax code, for which see section RD 10(2C):
(ii)
to whom schedule 5, part B, clause 3 of the Tax Administration Act 1994 applies:
(b)
an employee who has a non-notified tax code referred to in schedule 2, part A, clause 3.
Rates applying
(2)
For the sum of the amounts referred to in subsection (1) listed in the following paragraphs, the amount of tax for the extra pay that must be withheld is the amount determined using the basic amounts of tax for PAYE income payments set out in the relevant row of schedule 2, part B, table 1 (Basic tax rates for PAYE income payments):
(a)
if the sum of the amounts is $14,000 or less, the amount determined by applying row 2:
(b)
if the sum of the amounts is more than $14,000 but not more than $48,000, the amount determined by applying row 3:
(c)
if the sum of the amounts is more than $48,000 but not more than $70,000, the amount determined by applying row 4:
(d)
if the sum of the amounts is more than $70,000 but not more than $180,000, the amount determined by applying row 5:
(e)
if the sum of the amounts is more than $180,000, the amount determined by applying row 6.
When secondary tax codes apply
(3)
Despite subsection (2), if the person pays an amount of extra pay to an employee in relation to which the employee has notified the person that a secondary code under schedule 5, part A, clause 4, rows 3 to 6B of the Tax Administration Act 1994 applies, the rate under schedule 2, part B, table 1 applying to the extra pay is determined using the formula—
extra pay + annualised amount + low threshold amount.
Definition of items in formula
(4)
In the formula,—
(a)
extra pay is the amount of the employee’s extra pay:
(b)
annualised amount is the amount given by subsections (1)(b) and (1B):
(c)
low threshold amount is, as applicable,—
(i)
for secondary code SB, $0:
(ii)
for secondary code S, $14,001:
(iii)
for secondary code SH, $48,001:
(iv)
for secondary code ST, $70,001:
(v)
for secondary code SA, $180,001.
Defined in this Act: amount, amount of tax, employee, extra pay, non-resident seasonal worker, notify, pay, PAYE income payment, tax code
Compare: 2004 No 35 s NC 2(5)
Section RD 17(1) heading: substituted (with effect on 1 April 2008), on 7 December 2009, by section 104(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(1): substituted (with effect on 1 April 2008), on 7 December 2009, by section 104(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(1B) heading: inserted (with effect on 1 April 2008), on 7 December 2009, by section 104(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(1B): inserted (with effect on 1 April 2008), on 7 December 2009, by section 104(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(1B): amended (with effect on 1 April 2008), on 18 March 2019, by section 256(1) (and see section 256(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 17(1C) heading: inserted, on 29 March 2018, by section 206(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 17(1C): replaced, on 1 April 2019, by section 206(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 17(2) heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 104(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(2): replaced, on 1 April 2021, by section 6(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 17(3) heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 104(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(3): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 104(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(3): amended, on 1 April 2021, by section 6(2) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 17(3): amended, on 1 April 2019, by section 206(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 17(4) heading: added, on 1 April 2010 (applying for the 2010–11 and later income years), by section 104(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(4): added, on 1 April 2010 (applying for the 2010–11 and later income years), by section 104(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RD 17(4)(c)(iv): amended, on 1 April 2021, by section 6(3) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 17(4)(c)(v): inserted, on 1 April 2021, by section 6(4) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 17 list of defined terms non-resident seasonal worker: inserted, on 29 March 2018, by section 206(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 17 list of defined terms notify: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 17 list of defined terms tax code: inserted, on 29 March 2018, by section 206(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 18 Schedular payments without notification
[Repealed]Section RD 18: repealed, on 1 April 2017, by section 92 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RD 19 Schedular payments to non-resident entertainers
When this section applies
(1)
This section applies when a non-resident entertainer derives income from an activity or performance connected with any of the activities or performances described in the definition of non-resident entertainer.
Amounts withheld[Repealed]
(2)
[Repealed]Amounts not withheld
(3)
If the entertainer has received a schedular payment from which no amount of tax has been withheld, the entertainer must pay the amount of tax to the Commissioner by the 20th day of the month following that in which the payment was made, or by the date of their departure from New Zealand if that is earlier.
Defined in this Act: amount, amount of tax, Commissioner, income, income tax liability, New Zealand, non-resident entertainer, pay, schedular payment, tax year
Compare: Income Tax (Withholding Payments) Regulations 1979, regulations 10, 11
Section RD 19(2) heading: repealed (with effect on 1 April 2008), on 6 October 2009, pursuant to section 513 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 19(2): repealed (with effect on 1 April 2008), on 6 October 2009, by section 513 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RD 20 Schedular payments to subcontractors
When this section applies
(1)
This section applies when a contractor is paid a schedular payment for services provided under a contract, and a subcontractor has provided services under the contract.
Obligation to retain amount
(2)
The PAYE rules apply to the contractor in relation to a payment made to the subcontractor in relation to the work carried out under the contract.
Defined in this Act: pay, PAYE rules, schedular payment
Compare: Income Tax (Withholding Payments) Regulations 1979, regulation 12
Paying amounts of tax
RD 21 When amounts of tax not withheld or payment insufficient
Employees’ obligations
(1)
If, for any reason, some or all of the amount of tax for a PAYE income payment is not withheld at the time it is paid to an employee, the employee must—
(a)
provide the relevant employment income information under section 23I of the Tax Administration Act 1994 to the Commissioner; and
(b)
pay the amount of the deficiency.
When person exempt or not liable to pay
(2)
Subsection (1)(b) does not apply if the employee is exempt from paying the amount or is not liable for the amount of tax.
When payment less than amount of tax
(3)
If the amount of money included in a PAYE income payment is less than the amount of tax for the payment, the employee must pay the amount of the deficiency to their employer or PAYE intermediary. If the employee does not pay the amount of the deficiency to their employer or PAYE intermediary, they must pay the amount to the Commissioner under section RD 4(4).
Defined in this Act: amount, amount of tax, Commissioner, employee, employer, employment income information, pay, PAYE intermediary, PAYE income payment
Compare: 2004 No 35 s NC 5
Section RD 21(1)(a): replaced, on 1 April 2019, by section 207(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 21(3): amended, on 1 April 2019, by section 207(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 21(3): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 263(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 21 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 207(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 21 list of defined terms employment income information: inserted, on 1 April 2019, by section 207(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 22 Providing employment income information to Commissioner
Employment income information
(1)
An employer or PAYE intermediary who withholds an amount of tax for a PAYE income payment must provide the relevant employment income information to the Commissioner under sections 23E to 23H and 23J of the Tax Administration Act 1994 by the dates set out in those provisions.
Tailored tax code or rates of tax
(2)
Subsection (1) also applies to require an employer or PAYE intermediary to deliver employment income information in relation to an employee who has—
(a)
a tailored tax code of zero provided by the Commissioner under section 24D of the Tax Administration Act 1994:
(b)
a special tax rate of zero provided by the Commissioner under section 24G of that Act.
Benefits under employee share schemes
(3)
For a benefit that an employee or former employee of an employer receives under an employee share scheme, the employer or PAYE intermediary must provide the relevant employment income information to the Commissioner under sections 23E to 23H of that Act as modified by section 23K of that Act.
Exception
(4)
Subsection (3) does not apply—
(a)
when the employee share scheme beneficiary is a former employee for whom the employer has not chosen under section RD 7B to withhold an amount of tax:
(b)
to a benefit under an exempt ESS.
Defined in this Act: amount of tax, Commissioner, employee share scheme, employee share scheme beneficiary, employer, employment income information, exempt ESS, pay, PAYE income payment, PAYE intermediary
Section RD 22: replaced, on 1 April 2019, by section 208 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 22(1): amended, on 1 April 2019, by section 257(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 22(2) heading: amended, on 1 April 2019, by section 257(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 22(2)(a): amended, on 1 April 2019, by section 257(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RD 23 Bonds given by employers of certain non-resident employees
When this section applies
(1)
This section applies if it cannot reasonably be determined at the time an employer or PAYE intermediary is required to withhold the amount of tax for a PAYE income payment whether the payment will be exempt income of an employee under either section CW 19 (Amounts derived during short-term visits) or a double tax agreement.
Providing bond
(2)
The employer or PAYE intermediary may apply to the Commissioner to be released from their obligation to withhold the amount by providing a bond or other security for the amount that would be required to be withheld but for this section.
Consequences of acceptance of bond
(3)
If the Commissioner accepts the bond or security referred to in subsection (2),—
(a)
the employer or PAYE intermediary must not withhold the amount of tax for a PAYE income payment to the employee; and
(b)
information concerning the employee must not be included in employment income information; and
(c)
a non-notified tax code under section 24E of the Tax Administration Act 1994 must not be used in relation to the PAYE income payment.
When subsection (3) no longer applies
(4)
If the employee later becomes liable to pay income tax because of an event provided for in an arrangement made under section BH 1 (Double tax agreements) or CW 19, the application of subsection (3) ends, and the employer or PAYE intermediary must withhold the amount of tax for a PAYE income payment made to the employee.
Employee’s liability
(5)
If the Commissioner considers that the employee is liable for income tax in relation to a PAYE income payment from which no amount of tax is withheld because of the application of subsection (3), the Commissioner must notify the employer or PAYE intermediary, as applicable. The employer or intermediary must then account for and pay the total amount of tax for all PAYE income payments that would have been due, or a lesser amount as the Commissioner determines.
Treatment of amount paid under subsection (5)
(6)
An amount paid to the Commissioner under subsection (5) is treated as the amount of tax for a PAYE income payment made on the date of the Commissioner’s notice. Section 120U of the Tax Administration Act 1994 overrides this subsection.
Defined in this Act: amount, amount of tax, apply, arrangement, Commissioner, double tax agreement, employee, employer, employment income information, exempt income, income tax, notice, notify, pay, PAYE income payment, PAYE intermediary
Compare: 2004 No 35 s NC 18
Section RD 23(3)(b): amended, on 1 April 2019, by section 209(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 23(3)(c): amended, on 1 April 2019, by section 209(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 23(4): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RD 23 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 23 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 209(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 23 list of defined terms employment income information: inserted, on 1 April 2019, by section 209(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 23 list of defined terms notice: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 24 Exemptions for non-resident contractors
When this section applies
(1)
This section applies when—
(a)
a non-resident contractor derives an amount from a contract activity or service that is not assessable income, whether because of a double tax agreement or for another reason; or
(b)
the contractor provides a bond or other security for the payment of any income tax payable on an amount derived by them from a contract activity or service; or
(c)
the contractor has in the period of 24 months before the date of the application referred to in subsection (2) paid all income tax payable by them and complied with their obligations under the Inland Revenue Acts, and the Commissioner is satisfied that the contractor will continue to do this.
Exemptions
(2)
The non-resident contractor may apply to the Commissioner to provide them with an exemption under section 24H of the Tax Administration Act 1994 for a contract payment made to them or another person acting on their behalf in relation to a contract activity or service set out in the certificate for which no amount of tax is to be withheld.
Defined in this Act: amount, amount of tax, apply, assessable income, Commissioner, contract activity or service, contract payment, double tax agreement, income tax, Inland Revenue Acts, non-resident contractor, pay
Compare: 2004 No 35 s NC 18(1), Income Tax (Withholding Payments) Regulations 1979, regulation 5(3)
Section RD 24 heading: amended, on 1 April 2019, by section 210(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 24(1)(a): amended, on 30 March 2021, by section 130(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 24(2) heading: replaced, on 1 April 2019, by section 210(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 24(2): amended, on 1 April 2019, by section 210(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 24 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 24 list of defined terms assessable income: inserted, on 30 March 2021, by section 130(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RD 24 list of defined terms exemption certificate: repealed, on 1 April 2019, by section 210(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 24 list of defined terms income: repealed, on 30 March 2021, by section 130(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Fringe benefit tax (FBT) rules and fringe benefits
Introductory provisions
RD 25 FBT rules and their application
Meaning
(1)
The FBT rules means—
(a)
sections CX 2 to CX 38 (which relate to fringe benefits); and
(b)
sections GA 2, GB 31, and GB 32 (which relate to FBT); and
(c)
(d)
schedules 1, part C (Basic tax rates: income tax, ESCT, RWT, and attributed fringe benefits) and 5 (Fringe benefit values for motor vehicles); and
(e)
sections 46B to 46E, 93, Part 7, and section 139B of the Tax Administration Act 1994.
Application
(2)
The FBT rules apply to an employer who provides a fringe benefit to their employee in connection with their employment.
Defined in this Act: employee, employer, employment, FBT, FBT rules, fringe benefit
Compare: 2004 No 35 s OB 1 “FBT rules”
RD 26 Liability for FBT
Liability
(1)
An employer who provides a fringe benefit to an employee is liable to pay FBT under sections RD 27 to RD 57, choosing a method of payment described in subsection (2).
Payment options
(2)
An employer must choose 1 of the following options for the payment of FBT:
(a)
the single rate option, see section RD 58; or
(b)
the alternate rate option, see section RD 59; or
(c)
if eligible, the close company option, see section RD 60; or
(d)
if eligible, the small business option, see section RD 61.
Election
(3)
An employer may make an election under subsection (2)(a) or (b) by providing a return setting out the rate chosen.
Defined in this Act: business, close company, employee, employer, FBT, fringe benefit, pay
Compare: 2004 No 35 s ND 1(1)–(3)
Value of fringe benefits
RD 27 Determining fringe benefit values
What sections RD 28 to RD 53 do
(1)
Sections RD 28 to RD 53 set out the rules for determining the value of a fringe benefit provided by an employer to an employee in connection with their employment. The taxable value of a fringe benefit when an employee pays an amount for receiving the benefit is dealt with in sections RD 54 to RD 57.
When value cannot be ascertained
(2)
If, under sections RD 28, RD 29, and RD 33 to RD 41, the value of a fringe benefit cannot be ascertained, the value is the market value or otherwise as the Commissioner determines.
Meaning of market value
(3)
In subsection (2), market value means the price normally paid, at the time when the fringe benefit is received by the employee, for the fringe benefit in a sale—
(a)
in the open market; and
(b)
freely offered; and
(c)
made on ordinary trade terms; and
(d)
to a member of the public at arm’s length.
Defined in this Act: amount, Commissioner, employee, employer, employment, fringe benefit, market value, New Zealand, pay
Compare: 2004 No 35 ss ND 1A(1), ND 1L
Section RD 27(3): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 224(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RD 28 Private use of motor vehicle: calculation methods
What this section does
(1)
This section limits the way an employer may use a method for calculating the value of the benefit that they provide to an employee by making a motor vehicle available for the employee’s private use.
Choosing method in first return
(2)
When a person first files a return relating to a vehicle for the purposes of this section, they may calculate the value of the benefit using either of the valuation methods set out in schedule 5 (Fringe benefit values for motor vehicles).
Using method in first return
(3)
The person must use the method chosen in the first return referred to in subsection (2) in calculating the value of the benefit for the length of time—
(a)
starting after the end of the period of the first return; and
(b)
continuing to the earliest of the following dates:
(i)
the date of the disposal of the vehicle:
(ii)
the date on which the vehicle ceases to be leased by the employer or an associated person without a consecutive or successive lease of the vehicle by them:
(iii)
the date that is 5 years after start of the period of the first return.
Returns after 5 years
(4)
In a return relating to the vehicle for a period beginning 5 years or more after the start of the period of the first return, the person may calculate the value of the benefit using either of the valuation methods set out in schedule 5.
Cost price valuation method
(5)
Despite subsections (3) and (4), the person must apply schedule 5, clause 1 or 2, using the cost price valuation method if—
(a)
the vehicle is owned, leased, or rented by the employer or an associated person; and
(b)
the employer or the associated person owned, leased, or rented the vehicle—
(i)
during the period of the first return, if the period begins before 1 April 2006:
(ii)
before 1 April 2006.
Exception: vehicle not subject to arrangement
(6)
Subsection (5) does not apply if a first return for the vehicle is for a period that starts on or after 1 April 2006 and the vehicle is not the subject of an agreement or arrangement referred to in section CX 7 (Employer or associated person treated as having right to use vehicle under arrangement).
Exception: 5 years after first return
(7)
Subsection (5) does not apply if the person owns the vehicle and a period of 5 years or more since the start of the period of the first return has elapsed.
Defined in this Act: arrangement, associated person, employee, employer, lease, motor vehicle, private use
Compare: 2004 No 35 s ND 1A(1)–(1D)
RD 29 Private use of motor vehicle: formulas
What this section does
(1)
This section sets out the formulas for calculating the value of the benefit that an employer provides to an employee by making a motor vehicle available for their private use.
Quarterly payment
(2)
If FBT is paid quarterly, the value of the benefit is calculated using the formula—
days × schedule 5 amount ÷ 90.
Annual payment
(3)
If FBT is paid on an annual basis, the value of the benefit is the total of the amounts calculated under subsection (2) for the 4 quarters in the applicable tax year.
Payment by income year
(4)
If FBT is paid on an income year basis, the value of the benefit is calculated using the formula—
days × schedule 5 amount ÷ 365.
Definition of items in formulas
(5)
In the formula,—
(a)
in subsection (2), days refers to the number of days in the quarter on which the vehicle is made available for private use, reduced by the number of days on which the vehicle was a work-related vehicle, or 90, whichever is less:
(b)
in subsection (4), days refers to the number of days in the income year on which the vehicle is made available for private use, reduced by the number of days on which the vehicle was a work-related vehicle:
(c)
in subsections (2) and (4), schedule 5 amount refers to the amount calculated under schedule 5 (Fringe benefit values for motor vehicles) as the value of the benefit that would have been received for unlimited private use of the vehicle in that quarter or income year, as applicable.
Test period
(6)
To calculate the value of the benefit, an employer may choose to use a test period under section RD 31 to establish private use.
Defined in this Act: amount, employee, employer, FBT, income year, motor vehicle, private use, quarter, tax year, work-related vehicle
Compare: 2004 No 35 s ND 1A(2)–(6)
RD 30 Private use of motor vehicle: 24-hour period
When this section applies
(1)
This section applies for the purposes of a calculation of the value of a benefit under section RD 29.
Meaning of day
(2)
In section RD 29(5)(a) and (b), in relation to a motor vehicle and the item days in the formulas, a day is—
(a)
a 24-hour period starting from a time in a day that a person who owns or leases the vehicle chooses; or
(b)
a 24-hour period starting at midnight if paragraph (a) does not apply.
Choosing starting point and notifying Commissioner
(3)
For the purposes of subsection (2)(a), the person must—
(a)
choose a starting point for the day that is a whole number of an hour after midnight; and
(b)
notify the Commissioner of their election when filing the next return relating to the vehicle.
Elections
(4)
An election under subsection (2)(a)—
(a)
is effective from the start of the quarter, income year, or tax year to which a return relates; and
(b)
applies to all vehicles in relation to which the person files a return.
Hour applying for 2 income years
(5)
If the person chooses under subsection (3)(a) a particular hour in the 24-hour period as the starting point of the day, that hour continues to apply to the use of the vehicle from the start of the relevant quarter, income year, or tax year, as applicable, for a minimum period of 2 income years.
When circumstances change
(6)
An employer may apply to the Commissioner to amend the starting point of the 24-hour period, or to treat the election as revoked, if the employer’s circumstances have changed in a way that—
(a)
is more than minor; and
(b)
makes the starting point no longer relevant to the employer’s business.
Defined in this Act: apply, business, Commissioner, day, employer, income year, motor vehicle, notify, quarter, tax year
Compare: 2004 No 35 s ND 1AB
Section RD 30(6): amended, on 2 June 2016, by section 58(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 30 list of defined terms apply: inserted, on 2 June 2016, by section 58(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 31 Motor vehicle test period
Recording details for test period
(1)
To establish the value of the benefit provided through a motor vehicle being made available to an employee for their private use, an employer may choose to record the details of the use of the vehicle by the employee for a test period.
Number used in calculations
(2)
The number of days on which a vehicle is available for an employee’s private use that is ascertained in the test period is the number used in the calculation in section RD 29(2). For the calculation in section RD 29(4), the relevant number is the number of days ascertained in the test period multiplied by 4.
Quarter or 3 months for test period
(3)
If FBT is paid quarterly or annually, the test period is a quarter. If FBT is paid on an income year basis, the test period is 3 consecutive months of an income year.
Period showing pattern of use
(4)
The employer must—
(a)
choose a test period that shows, or is likely to show, a pattern of use of the motor vehicle by the employee that fairly represents the use of the vehicle by the employee over the whole of the applicable term; and
(b)
keep a record of the test period, including accurate details of the days in the period on which the vehicle is available for the employee’s private use.
Work-related vehicles
(5)
In subsection (4), a day on which the vehicle is a work-related vehicle is treated as a day on which the vehicle is not available for private use.
Term of 3 years
(6)
The number of days of availability for private use ascertained in the test period applies for a term of 3 years. The term starts, as applicable, as follows:
(a)
if FBT is paid quarterly, on the first day of the test period:
(b)
if FBT is paid on an annual basis, on the first day of the tax year in which the test period occurs:
(c)
if FBT is paid on an income year basis, on the first day of the income year in which the test period occurs.
Reduction of term
(7)
The term referred to in subsection (6) is reduced if the number of days of actual private use of the motor vehicle is 20%, or more than 20%, higher than the number ascertained in the test period. In this case, the term ends on the last day of the applicable quarter, year, or income year. If the employer chooses to start another test period, the existing term ends just before the start of the new term.
When test period no longer representative
(8)
If the Commissioner considers that the result ascertained in the test period does not, or does no longer, fairly represent the actual private use of the motor vehicle by the employee, the Commissioner may notify the employer that the term will end on a particular date. Following notification, the employer must not use that result again.
Defined in this Act: Commissioner, employee, employer, FBT, income year, motor vehicle, notify, private use, quarter, tax year, work-related vehicle
Compare: 2004 No 35 s ND 1B(1)–(6)
RD 32 Replacement motor vehicles
For the purposes of section RD 31, a replacement motor vehicle is treated in the same way as the vehicle it replaces if the result ascertained in the test period is likely to be fairly representative of the average availability for the private use of the vehicle during the term.
Defined in this Act: motor vehicle, private use
Compare: 2004 No 35 s ND 1B(7)
RD 33 Subsidised transport
Percentage of highest public fare
(1)
The value of a benefit that an employer provides to their employee in subsidised transport is 25% of the highest fare the employer charges the public for the equivalent transport in terms of class, extent, and occasion. This subsection is overridden by subsection (2).
When benefit provided under arrangement
(2)
Despite section CX 2(2) (Meaning of fringe benefit), if the fringe benefit is provided under an arrangement with a third person, the value of the benefit is determined under subsection (3).
Percentage or actual payment
(3)
If a third person provides the employee with subsidised transport under an arrangement with their employer, the value of the benefit is the greatest of—
(a)
25% of the highest fare the employer charges the public for the equivalent transport in terms of class, extent, and occasion; and
(b)
25% of the highest fare the third person charges the public for the equivalent transport in terms of class, extent, and occasion, if the third person is a company in the same group of companies as the employer; and
(c)
the amount that the employer has paid or is liable to pay the person for the benefit provided.
GST
(4)
In this section, for a registered person who may claim input tax for subsidised transport, amount means the GST-inclusive amount.
Defined in this Act: amount, arrangement, company, employee, employer, fringe benefit, group of companies, GST, input tax, pay, subsidised transport
Compare: 2004 No 35 s ND 1C
RD 34 Employment-related loans: value using prescribed interest rates
When this section applies
(1)
This section applies when an employer provides a benefit to their employee in an employment-related loan and the employer does not choose to determine the value of the benefit under section RD 35.
Amount of interest or amount under financial arrangement
(2)
The value of the benefit in a period is the amount by which the prescribed interest on the loan is more than—
(a)
the amount of interest that accrued on the loan in the period; or
(b)
when the loan is a financial arrangement and it is appropriate for the nature of the loan, the income that would have accrued to the employer’s benefit in the period as calculated under the yield to maturity method.
Meaning of prescribed interest
(3)
For the purposes of this section, prescribed interest means,—
(a)
except as provided in paragraph (b), the amount of interest that would have accrued on the loan during the quarter or tax year had the interest been calculated on the daily balance of that loan at the prescribed rate of interest:
(b)
for loans made on or before 31 March 1985, the interest on which is not subject to review, the amount of interest that would have accrued on the loan during the quarter or tax year had the interest been calculated on the daily balance of the loan at the non-concessionary rate of interest for—
(i)
the tax year in which the agreement to make the loan was signed; or
(ii)
if the agreement was not in writing, the year in which the loan was agreed to by all parties.
Defined in this Act: amount, employee, employer, employment-related loan, financial arrangement, income, interest, non-concessionary rate of interest, prescribed interest, quarter, tax year
RD 35 Employment-related loans: value using market interest rates
Choosing to use market interest rate
(1)
An employer may choose to value a benefit provided to their employee in an employment-related loan using the market interest on the loan if—
(a)
the employer is in the business of lending money to the public:
(b)
the employer is in a group of companies that has a member which is in the business of lending money to the public.
Value of benefit
(2)
The value of the benefit referred to in subsection (1) in a period is the amount by which the market interest on the loan is more than—
(a)
the amount of interest that accrued on the loan in the period; or
(b)
when the loan is a financial arrangement and it is appropriate having regard to the nature of the loan, the income that would have accrued to the employer’s benefit in the period as calculated under the yield to maturity method.
Using method for 2 income years
(3)
Having made an election under subsection (1), the employer must use the method for the income year to which the election relates and for the next income year.
Notifying Commissioner of change to method
(4)
An employer may not change the method of calculating the value of the benefit for an income year, other than from a method given by a paragraph of subsection (5) to the method given by the other paragraph of subsection (5), unless the employer notifies the Commissioner of the proposed change at least 1 year before the start of the income year in which the change is to occur.
Effectiveness of election in some cases
(4B)
Despite subsections (3) and (4), the method chosen by an employer described in subsection (1)(b) takes effect for the first quarter beginning after the Commissioner receives the election, if the employer—
(a)
is not in the business of lending money; and
(b)
does not pay FBT on an income year basis under section RD 60; and
(c)
does not pay FBT on an annual basis under section RD 61; and
(d)
notifies the Commissioner of the proposed change before 1 April 2016.
Minimum period of use for method in some cases
(4C)
Despite subsections (3) and (4), if subsection (4B) applies to the employer’s chosen method, the employer must use the method for a period beginning with the start of the first quarter to which the election applies under subsection (4B) and ending with the finish of the income year following the income year that includes the start of the first quarter.
Market interest
(5)
In this section, market interest means the amount of interest calculated at the rate of interest that—
(a)
would apply to a borrower belonging to a group of persons to whom a loan of the kind provided to the employee is offered when—
(i)
the group has a comparable credit risk to the group to which the employee belongs; and
(ii)
membership of the group arises from a factor or factors that do not include a connection between a member and the employer; and
(iii)
the group is sufficient in number to ensure a transaction on an arm’s length basis; or
(b)
is the lowest rate of interest for a loan, of the kind provided to the employee, that is provided by the lender—
(i)
to customers for which the characteristics that are treated by the lender as relevant to the rate of interest for a loan are similar to those of the employee; and
(ii)
in the ordinary course of business; and
(iii)
during the quarter (the loan quarter) in which the loan is provided to the employee, or during the preceding quarter if calculating the rate for the loan quarter is impracticable.
Calculating amount of interest
(6)
For the purposes of subsection (5), the amount of interest is the amount accrued on the loan during the quarter or tax year calculated on the daily balance of the loan at the rate referred to in the subsection.
Defined in this Act: amount, business, Commissioner, employee, employer, employment-related loan, financial arrangement, group of companies, group of persons, income, income year, interest, market interest, notify, quarter, tax year, year
Compare: 2004 No 35 s ND 1DB
Section RD 35(1): replaced, on 24 February 2016, by section 225(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 35(4): amended, on 1 April 2019, by section 258(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 35(4B) heading: inserted, on 24 February 2016, by section 225(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 35(4B): inserted, on 24 February 2016, by section 225(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 35(4C) heading: inserted, on 24 February 2016, by section 225(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 35(4C): inserted, on 24 February 2016, by section 225(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 35(5): replaced, on 1 April 2019, by section 258(2) (and see section 258(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RD 35 list of defined terms group of companies: inserted, on 24 February 2016, by section 225(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 35 list of defined terms year: inserted, on 24 February 2016, by section 225(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RD 36 Repayment of employment-related loans
Repayment at start of tax year
(1)
For the purposes of sections RD 34 and RD 35, an amount of income of an employee applied in an income year to repay an employment-related loan provided to the employee is treated as applied towards repayment on the first day of the income year or, if the date of the advance of the loan falls after that day, the later date.
Limitation
(2)
Subsection (1) applies only when an employee derives an amount that—
(a)
is salary or wages, an extra pay, a dividend, or interest; and
(b)
is payable by the relevant employer without any amount of tax being withheld and paid under the PAYE rules, the RWT rules, or the NRWT rules, or is a fully imputed dividend; and
(c)
is income of the employee in the tax year in which it is applied to repay the loan, or in an earlier income year.
Amounts derived and applied in different tax years
(3)
Subsection (4) applies when an employee derives income that—
(a)
is applied to repay an employment-related loan; and
(b)
relates to an income year after the income year in which it is applied to repay the loan.
Treatment of amount
(4)
The employee may treat the amount as derived in the earlier income year, but must notify the Commissioner of their decision within the time allowed to the employer for providing a return of income for the income year, or a longer time if the Commissioner allows.
Defined in this Act: amount, amount of tax, Commissioner, dividend, employee, employer, employment-related loan, extra pay, fully-imputed dividend, income, income year, interest, notify, NRWT rules, pay, PAYE rules, return of income, RWT rules, salary or wages, tax year
Compare: 2004 No 35 s ND 1E
Section RD 36(2): amended, on 29 March 2018, by section 211(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 36(2)(b): replaced, on 29 March 2018, by section 211(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 36 list of defined terms amount of tax: inserted (with effect on 1 April 2008), on 21 December 2010, by section 128(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 36 list of defined terms fully-imputed dividend: inserted (with effect on 1 April 2008), on 30 March 2017, by section 264(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RD 36 list of defined terms non-resident passive income: amended (with effect on 1 April 2008), on 21 December 2010, by section 128(2)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 36 list of defined terms NRWT rules: inserted (with effect on 1 April 2008), on 21 December 2010, by section 128(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 36 list of defined terms resident passive income: amended (with effect on 1 April 2008), on 21 December 2010, by section 128(2)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RD 36 list of defined terms RWT rules: inserted (with effect on 1 April 2008), on 21 December 2010, by section 128(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
RD 37 Contributions to superannuation schemes
Amount of contribution
(1)
The value of a benefit that an employer provides in contributing to a superannuation scheme for an employee is the amount of the contribution made by the employer.
GST
(2)
In this section, for a registered person who may claim input tax for a contribution to a superannuation scheme, amount means the GST-inclusive amount.
Defined in this Act: amount, contribution, GST, employee, employer, input tax, superannuation scheme
Compare: 2004 No 35 s ND 1H
RD 38 Contributions to funds, trusts, and insurance premiums
Sickness, accident, or death benefit fund
(1)
The value of the benefit that an employer provides in contributing to a sickness, accident, or death benefit fund for an employee is the amount of the contribution made by the employer.
Funeral trust
(2)
The value of the benefit that an employer provides in contributing to a funeral trust for an employee is the amount of the contribution made by the employer.
Specified insurance premium
(3)
The value of the benefit that an employer provides in paying an insurance premium described in section CX 16 (Contributions to life or health insurance) for an employee is the amount of the premium paid by the employer.
Insurance fund of friendly society
(4)
The value of the benefit that an employer provides in contributing to an insurance fund of a friendly society for an employee is the amount of the contribution made by the employer.
Defined in this Act: amount, contribution, employee, employer, friendly society, sickness, accident, or death benefit fund, specified insurance premium
Compare: 2004 No 35 s ND 1I
RD 39 Benefits provided by charitable organisations
Value of benefit
(1)
The value of a benefit under section CX 25(2) (Benefits provided by charitable organisations) that a charitable organisation provides in a short-term charge facility is the sum of—
(a)
the amount that the organisation pays for or towards buying or hiring the goods and services obtained by the employee under the short-term charge facility:
(ab)
the amount that the organisation pays for or towards consideration, other than money or money’s worth, for goods and services obtained by the employee under the short-term charge facility:
(b)
any interest incurred in relation to buying or hiring the goods and services or obtaining other consideration for the goods and services:
(c)
when the short-term charge facility is a credit card or charge card provided for an employee’s use solely for purposes unconnected with the organisation or its operations, the associated account or service fee.
When subsections (3) and (4) apply
(2)
Subsections (3) and (4) apply in a tax year to an employer that is a charitable organisation when—
(a)
the employer provides a benefit to their employee in a short-term charge facility that is a fringe benefit under section CX 25(1); and
(b)
the employer is required to pay FBT for the tax year on a quarterly basis; and
(c)
the value of the benefit in the short-term charge facility in the first quarter of the tax year is no more than the lesser of $1,200 and 5% of the employee’s salary or wages for the tax year.
Employer’s liability
(3)
The employer’s liability to pay FBT on a benefit provided in a quarter of the tax year depends on whether the taxable value of all the benefits (the accumulated value) that the employer provides to the employee in the period from the start of the tax year to the end of the quarter is more than the lesser of $1,200 and 5% of the employee’s salary or wages for the tax year (the threshold value).
Calculation of liability
(4)
The employer is liable to pay FBT for a quarter of a tax year on the following amounts:
(a)
zero, if the accumulated value for the quarter is no more than the threshold value:
(b)
the accumulated value if the quarter is the first in the tax year for which the accumulated value is more than the threshold value:
(c)
the taxable value of all the benefits provided in the quarter, if neither of paragraph (a) and (b) applies.
Defined in this Act: amount, charitable organisation, employee, employer, FBT, fringe benefit, interest, quarter, salary or wages, short-term charge facility, tax year
Compare: 2004 No 35 ss ND 1IB, ND 8B
Section RD 39(1)(ab): inserted, on 1 April 2014, by section 84(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RD 39(1)(b): amended, on 1 April 2014, by section 84(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RD 39(2)(c): amended, on 1 April 2014, by section 84(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RD 39(3): amended, on 1 April 2014, by section 84(4) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RD 39(4)(c): amended, on 1 April 2014, by section 84(5) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
RD 40 Goods
Market value or cost
(1)
The value of a fringe benefit that an employer provides to an employee in goods is determined as follows:
(a)
when the person providing the goods manufactured, produced, or processed them, their market value:
(b)
when the person providing the goods otherwise acquired them, or paid for them to be acquired, dealing at arm’s length with the supplier of the goods, the cost of the goods to the person:
(c)
if the person providing the goods is a company included in a group of companies, then, as the person chooses, the value of the benefit under either paragraph (a) or (b), applying the provisions as if the group of companies were 1 company.
Sale in open market
(2)
Despite subsection (1), if the value of the fringe benefit as determined under that subsection would be more than the amount that would have been paid to the employer for the purchase of the goods in a sale described in paragraphs (a) to (d), then the value is treated as that amount. The sale must be—
(a)
at retail in the open market in New Zealand; and
(b)
freely offered; and
(c)
made on ordinary trade terms; and
(d)
to a member of the public with whom the employer is at arm’s length.
Some definitions
(3)
In this section,—
cost, for a registered person who may claim input tax for the goods, means the GST-inclusive cost of the goods bought or the amount that the person paid for the goods
market value means the lowest price, at the time at which the goods were provided to the employee, for which identical goods were sold by the same person to an arm’s length buyer, whether wholesaler, retailer, or the public, in the open market in New Zealand in a sale freely offered and made on ordinary trade terms
price, for a registered person who may claim input tax for goods that they manufacture, produce, or process, means the GST-inclusive price of those goods to that person.
Defined in this Act: amount, company, cost, employee, employer, group of companies, GST, identical goods, input tax, market value, New Zealand, pay, price, registered person
Compare: 2004 No 35 s ND 1J
Section RD 40(1)(b): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RD 41 Services
Price, amount paid, or fee
(1)
The value of a fringe benefit that an employer provides to an employee in services is,—
(a)
when an employer normally provides the services as part of their business, the price charged by the employer—
(i)
at the time they provided the services; and
(ii)
for the same or similar services to the public in the open market in New Zealand; and
(iii)
on ordinary trade or professional terms between buyers and sellers independent of each other:
(b)
when an employer pays for the services to be provided, dealing at arm’s length with the supplier of the services, the amount paid or payable:
(c)
if neither paragraph (a) nor (b) applies, the price or fee that the employer or supplier providing the services would at that time have charged the public, had they provided the same or similar services to the public in the open market in New Zealand on ordinary trade or professional terms.
Exclusions
(2)
This section does not apply to a service that consists of making available a motor vehicle for private use, providing an employment-related loan, or providing subsidised transport.
Services provided to group of employees
(3)
For the purposes of this section, a person who provides services to an employee belonging to a group of employees is treated as providing the same or similar services to the public in the open market in New Zealand on ordinary trade or professional terms if the person provides the same or similar services to a group of persons that—
(a)
negotiates the transaction on an arm’s-length basis; and
(b)
is comparable in number to the group of employees.
Some definitions
(4)
In this section,—
amount, for a registered person who may claim input tax for that service, means the GST-inclusive amount
fee and price, for a registered person who may claim input tax for that service, means the GST-inclusive fee or price.
Defined in this Act: amount, business, employee, employer, employment-related loan, fee, fringe benefit, GST, input tax, motor vehicle, New Zealand, pay, price, private use, registered person, subsidised transport
Compare: 2004 No 35 s ND 1K
RD 42 Goods at staff discount
Goods discounted for employees
(1)
This section applies when an employer disposes of goods in the normal course of their business to an employee when all the following apply:
(a)
the retail price of identical goods is $200 or less to an arm’s length buyer in the open market in New Zealand in a sale freely offered and made on ordinary trade terms; and
(b)
the price of the goods to the employee is lower than their cost to the employer, the difference resulting from a staff discount that the employer normally provides to employees; and
(c)
at the time of the disposal, the staff discount is no more than 5% of the price of identical goods in the circumstances referred to in paragraph (a).
Cost of goods
(2)
The goods are treated as having been sold at a price equal to the cost of the goods to the employer.
Defined in this Act: business, cost, employee, employer, identical goods, New Zealand, price
Compare: 2004 No 35 s ND 1N
Section RD 42(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 42(1)(c): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RD 43 Goods on special with staff discount
Sale of identical goods
(1)
This section applies when an employer disposes of goods to an employee on a day when the employer is offering identical goods for sale or other disposal in the normal course of their business at a special price and when all the following apply:
(a)
the price of the identical goods is $200 or less to an arm’s length buyer in the open market in New Zealand in a sale freely offered and made on ordinary trade terms; and
(b)
the price of the goods to the employee is lower than their cost to the employer, the difference resulting from a staff discount that the employer offers to the employee in addition to any other discount; and
(c)
just before or after the disposal to the employee, a reasonable quantity of the identical goods is available in the open market in New Zealand; and
(d)
the price is at least 95% of the cost of the goods to the employer, or at least 95% of the price on the day of the disposal of the identical goods to the public in the open market in New Zealand, whichever is less.
Cost of goods
(2)
The goods are treated as having been sold at a price equal to the cost of the goods to the employer.
Defined in this Act: business, cost, employee, employer, identical goods, New Zealand, price
Compare: 2004 No 35 s ND 1O
Section RD 43(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 43(1)(c): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 43(1)(d): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RD 44 Goods disposed of by group companies
For the purposes of sections RD 42 and RD 43, if a company that is included in a group of companies disposes of goods to an employee of another company in the group, the disposal is treated as if it were made directly from employer to employee.
Defined in this Act: company, employee, employer, group of companies
Compare: 2004 No 35 s ND 1P(2)
Section RD 44 heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 44: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RD 45 Unclassified benefits
Liability limited
(1)
An employer is liable to pay FBT on an unclassified benefit only within the limits described in this section.
Quarterly payment
(2)
When FBT is paid quarterly, an employer is liable for FBT on an unclassified benefit provided to an employee in a quarter only if—
(a)
the total taxable value of all unclassified benefits provided in the quarter to the employee by the employer, or by persons associated, at any time in the quarter, with the employer, is more than $300; or
(b)
the total taxable value of all unclassified benefits in the categories described in subsection (4) provided in the last 4 quarters including the current quarter, whether accounted for on a quarterly or an income year basis, is more than $22,500.
Yearly payment
(3)
When FBT is paid on either an annual basis or an income year basis, except when subsection (5) applies, an employer is liable for FBT on unclassified benefits provided to an employee in the tax year or income year only if—
(a)
the total taxable value of all unclassified benefits provided in the tax year or income year to the employee by the employer, or by persons associated, at any time in the tax year or income year, with the employer, is more than $1,200; or
(b)
the total taxable value of all unclassified benefits in the categories described in subsection (4) provided in the tax year or income year is more than $22,500.
Categories
(4)
The categories, for an employer, are—
(a)
unclassified benefits provided by the employer to their employees:
(b)
unclassified benefits provided by persons associated, at any time in the relevant period, with the employer to employees of the employer:
(c)
unclassified benefits provided by the employer to employees of persons associated, at any time in the relevant period, with the employer:
(d)
if the employer is a company, unclassified benefits provided by other companies that are part of the same group of companies as the employer, at any time in the relevant period, to employees of those other companies.
Period longer or shorter than income year
(5)
When an employer accounts for FBT on an income year basis, and the period for which they have accounted under section RD 60 differs from an income year for the reasons described in subsection (6), an employer is liable for FBT on unclassified benefits provided in the period only if—
(a)
the total taxable value of all unclassified benefits provided in the period to an employee by the employer, or by persons associated, at any time in the quarter, with the employer, is more than the figure that is the same fraction or multiple of $1,200 as the number of days in the period is a fraction or multiple of 365; or
(b)
the total taxable value of all unclassified benefits in the categories described in subsection (4) provided in the period is more than the figure that is the same fraction or multiple of $22,500 as the number of days in the period is a fraction or multiple of 365.
Reasons for difference
(6)
In subsection (5), the income year for which the employer has accounted may be longer or shorter than the normal income year because the employer has either—
(a)
started or ceased business during that income year; or
(b)
chosen, with the agreement of the Commissioner, to file a return under this subpart for the income year ending with the date of the annual balance of their accounts.
Defined in this Act: associated person, balance date, business, Commissioner, company, employee, employer, , FBT, group of companies, income year, pay, quarter, return of income, tax year, unclassified benefit
Section RD 45: replaced, on 1 April 2022, by section 154(1) (and see section 154(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
RD 46 Adjustments for unclassified benefits on amalgamation
When employer ceases to exist
(1)
This section applies when a company that is an employer ends its existence on amalgamation or when a new company is established on amalgamation. An adjustment is allowed for unclassified benefits in the period in which the amalgamation occurs.
Quarterly payment
(2)
If the amalgamating company pays FBT quarterly, an adjustment must be made in the quarter in which the amalgamation occurs reducing the figure of $22,500 referred to in section RD 45(2)(b) by an amount calculated using the formula—
$22,500 × number of days in the quarter after amalgamation
÷ days in the quarter.
Adjustment in quarter of amalgamation
(3)
If the amalgamated company pays FBT quarterly, and the amalgamated company is a new company established on amalgamation, an adjustment must be made in the quarter in which the amalgamation occurs reducing the figure of $22,500 referred to in section RD 45(2)(b) by an amount calculated using the formula—
$22,500 × number of days in the quarter before amalgamation
÷ days in the quarter.
Annual payment
(4)
If the amalgamating company pays FBT annually, an adjustment must be made for the year in which the amalgamation occurs reducing the figure of $22,500 referred to in section RD 45(2)(b) by an amount calculated using the formula—
$22,500 × number of days in the year after amalgamation ÷ 365.
Adjustment in year of amalgamation
(5)
If the amalgamated company pays FBT annually, and the amalgamated company is a new company established on amalgamation, an adjustment must be made for the year in which the amalgamation occurs reducing the figure of $22,500 referred to in section RD 45(2)(b) by an amount calculated using the formula—
$22,500 × number of days in the year before amalgamation ÷ 365.
Defined in this Act: amount, amalgamated company, amalgamating company, amalgamation, company, employer, FBT, pay, quarter, unclassified benefit, year
Compare: 2004 No 35 s ND 1R
Section RD 46(2): amended, on 1 April 2009, by section 17(a) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(2) formula: amended, on 1 April 2009, by section 17(a) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(3): amended, on 1 April 2009, by section 17(b) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(3) formula: amended, on 1 April 2009, by section 17(b) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(4): amended, on 1 April 2009, by section 17(c) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(4) formula: amended, on 1 April 2009, by section 17(c) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(5): amended, on 1 April 2009, by section 17(d) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 46(5) formula: amended, on 1 April 2009, by section 17(d) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Attributing fringe benefits to employees
RD 47 Attribution of certain fringe benefits
What this section applies to
(1)
This section applies when an employer provides a fringe benefit by—
(a)
making available a motor vehicle for an employee’s private use under section CX 6 (Private use of motor vehicle):
(b)
providing an employment-related loan to an employee under section CX 10 (Employment-related loans) but not a loan by a life insurer under section CX 11 (Employment-related loans: loans by life insurers):
(c)
providing to an employee a benefit with a taxable value of $1,000 or more in a year for each of the following categories:
(i)
subsidised transport under section CX 9 (Subsidised transport):
(ii)
a contribution to a superannuation scheme under section CX 13 (Contributions to superannuation schemes):
(iii)
a contribution to a sickness, accident, or death benefit fund under section CX 14 (Contributions to sickness, accident, or death benefit funds):
(iv)
a contribution to a funeral trust under section CX 15 (Contributions to funeral trusts):
(v)
the payment of a specified insurance premium or a contribution to an insurance fund of a friendly society under section CX 16 (Contributions to life or health insurance):
(d)
providing unclassified benefits to an employee under section CX 2(1)(b)(ii) (Meaning of fringe benefit) with a total taxable value of $2,000 or more in a year.
Attributing fringe benefit to employee
(2)
The employer must attribute the fringe benefit to the employee, calculating the FBT liability under section RD 50.
Defined in this Act: employee, employer, employment-related loan, FBT, friendly society, fringe benefit, life insurer, loan, motor vehicle, pay, private use, sickness, accident, or death benefit fund, specified insurance premium, subsidised transport, superannuation scheme, unclassified benefit
Compare: 2004 No 35 s ND 3(1), (1A)
RD 48 When attributed benefits provided to more than 1 employee
If an employer provides a fringe benefit to which section RD 47 applies to more than 1 employee, the employer must attribute the benefit to the employee who mainly uses or receives it in a quarter or income year, as applicable. If the employer cannot determine which employee mainly uses or receives the benefit, they must pool the benefit under section RD 53.
Defined in this Act: contribution, employee, employer, fringe benefit, income year, quarter
Compare: 2004 No 35 s ND 3(2)
RD 49 Application of thresholds to attributed benefits
When this section applies
(1)
This section applies when the value of a fringe benefit described in section RD 47 is above or below the threshold referred to in that section.
Below threshold
(2)
If the taxable value of a benefit under section RD 47(1)(c) and (d) is under the relevant threshold, the employer must either—
(a)
attribute all fringe benefits with an annual taxable value under the relevant threshold that fall within the particular category; or
(b)
pool the value of the benefit under section RD 53.
Exception for subsidised transport
(3)
Despite section RD 47(1)(c)(i), if the employer provides subsidised transport under section CX 9 (Subsidised transport) with a taxable value over the threshold, they may pool the value of the benefit under section RD 53 if all their employees have the same or a similar entitlement to the fringe benefit.
Amending thresholds
(4)
The Governor-General by Order in Council may determine the amount of the thresholds referred to in section RD 47, setting out the first tax year in which the threshold is to apply.
Secondary legislation
(5)
An Order in Council under subsection (4) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount, employee, employer, fringe benefit, subsidised transport, tax year
Compare: 2004 No 35 ss ND 3(4)–(7), ND 4, ND 16
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
RD 50 Employer’s liability for attributed benefits
When this section applies
(1)
This section applies when an employer is required to attribute the value of a fringe benefit to an employee under sections RD 47 and RD 49.
Tax liability
(2)
The employer’s FBT liability in relation to the employee is the amount calculated using the formula—
tax on all-inclusive pay − tax on cash pay.
Definition of items in formula
(3)
In the formula,—
(a)
tax on all-inclusive pay is the amount determined at the rate set out in schedule 1, part C, table 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) on the amount of the employee’s all-inclusive pay calculated using the formula in section RD 51(2):
(b)
tax on cash pay is the amount calculated under section RD 51(3)(b) or (4)(b).
Exception for shareholder-employees and persons with attributed income
(4)
If the employer has an exception for an employee under section RD 52 in a tax year, and the employer pays FBT at the rate of 49.25% of the taxable value of the attributed fringe benefits under section RD 52(3)(a), the employer must deduct the FBT payable in the tax year from the result of the formula in subsection (2).
Further options
(5)
Instead of calculating FBT under subsections (2) and (4), an employer may choose to—
(a)
pay FBT, for each employee to whom they are required to attribute the value of a fringe benefit under sections RD 47 and RD 49, at the rate of 63.93% on the taxable value of the fringe benefits attributed to the employee; or
(b)
apply subsection (6).
Requirements for employers who make election referred to in subsection (5)(b)
(6)
An employer who makes an election under subsection (5) to apply this subsection must—
(a)
pay FBT at the rate of 49.25% on the taxable value of the fringe benefits attributed to the employee, for each employee to whom all of the following apply:
(i)
the employee is an employee to whom the employer is required to attribute the value of a fringe benefit under sections RD 47 and RD 49; and
(ii)
the taxable value of all fringe benefits for the employee, as determined under section RD 51, is $13,400 or less; and
(iii)
the cash pay of the employee, as determined under that section, is $160,000 or less; and
(b)
for each other employee to whom the employer is required to attribute the value of a fringe benefit under sections RD 47 and RD 49,—
(i)
pay FBT at the rate of 63.93% on the taxable value of the fringe benefits attributed to the employee, if subparagraph (ii) does not apply; or
(ii)
pay FBT at the rate of 49.25% on the taxable value of the fringe benefits attributed to the employee, if the employee’s all-inclusive pay, calculated using the formula in section RD 51(2), is less than $129,681 and the employer chooses 49.25%.
Defined in this Act: amount, employee, employer, FBT, fringe benefit, pay, tax year
Compare: 2004 No 35 s ND 5(3)–(6)
Section RD 50(3)(a): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 50(4): amended, on 1 April 2021, by section 7(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 50(5) heading: replaced (with effect on 1 April 2021), on 30 March 2022, by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 50(5): replaced (with effect on 1 April 2021), on 30 March 2022, by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 50(6) heading: inserted (with effect on 1 April 2021), on 30 March 2022, by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 50(6): inserted (with effect on 1 April 2021), on 30 March 2022, by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
RD 51 Calculation of all-inclusive pay
When this section applies
(1)
This section applies to determine the amount of an employee’s all-inclusive pay for the purposes of section RD 50.
Calculation
(2)
The amount of an employee’s all-inclusive pay is calculated using the formula—
cash pay − tax on cash pay + taxable value of all fringe benefits.
Definition of items in formula for major shareholder
(3)
If the employee is a major shareholder, the items in the formula are—
(a)
cash pay is the cash pay of the employee for the income year in which the fringe benefit is attributed that is paid to the employee by the employer or a related employer, and includes—
(i)
a dividend and interest derived by the employee from their employer; and
(ii)
a dividend and interest derived by the employee from a related employer:
(b)
tax on cash pay is the tax on the cash pay of the employee calculated using the basic rate of income tax set out in schedule 1, part A, clause 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits),—
(i)
treating the cash pay as if it were the only taxable income of the employee:
(ii)
[Repealed](c)
taxable value of all fringe benefits is—
(i)
the taxable value of all fringe benefits attributed to the employee in the tax year; and
(ii)
the taxable value of all fringe benefits attributed to a person associated with the employee in the income year if the person does not receive the fringe benefits as an employee of the employer.
Definition of items in formula for person who is not major shareholder
(4)
If the employee is not a major shareholder, the items in the formula are—
(a)
cash pay is the cash pay of the employee for the tax year in which the fringe benefit is attributed that is paid to the employee by the employer or a related employer:
(b)
tax on cash pay is the tax on the cash pay of the employee calculated using the basic rate of income tax set out in schedule 1, part A, clause 1,—
(i)
treating the cash pay as if it were the only taxable income of the employee:
(ii)
[Repealed](c)
taxable value of all fringe benefits is the taxable value of all fringe benefits attributed to the employee in the tax year.
Timing of amounts
(5)
In this section, the cash pay of a shareholder-employee who derives an amount of pay referred to in paragraph (b) or (c) of the definition of pay in subsection (6) is treated as derived in the income year following the income year in which it was received or attributed.
Some definitions
(6)
In this section,—
pay means—
(a)
salary or wages; and
(b)
income, other than from a PAYE income payment, to which section RD 3B or RD 3C applies; and
(c)
an amount attributed under section GB 29 (Attribution rule: calculation); and
(d)
an extra pay; and
(e)
a schedular payment
related employer means a branch or division of an employer, or a person associated with the employer.
Defined in this Act: amount, associated person, dividend, employee, employer, extra pay, FBT, fringe benefit, income, income tax, income year, interest, major shareholder, pay, related employer, resident in New Zealand, salary or wages, schedular payment, shareholder-employee, tax, tax credit, tax year, taxable income
Compare: 2004 No 35 ss ND 5(1), (2), ND 7, ND 7A
Section RD 51(3)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 515 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 51(3)(b): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 51(3)(b)(i): amended (with effect from 1 April 2008), on 29 May 2008, by section 43(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RD 51(3)(b)(ii): repealed, on 1 April 2008, by section 43(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RD 51(4)(b)(i): amended (with effect from 1 April 2008), on 29 May 2008, by section 43(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RD 51(4)(b)(ii): repealed, on 1 April 2008, by section 43(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RD 51(6) pay paragraph (b): replaced, on 29 March 2018 (with effect on 30 March 2017), by section 212 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 52 Calculation for certain employees when information lacking
When this section applies
(1)
This section applies in relation to the following persons when an employer does not have sufficient information to complete a calculation under section RD 50 or RD 51:
(a)
a shareholder-employee who derives salary or wages, or income, other than from a PAYE income payment, to which section RD 3B or RD 3C applies; or
(b)
an employee receiving attributed income under section GB 29 (Attribution rule: calculation) from a company or trust that is their employer.
Calculations under sections RD 50 and RD 51 not required
(2)
Sections RD 50 and RD 51 do not apply in the tax year or income year, as applicable, in which the employer is required to attribute a fringe benefit to the employee.
Alternative rates
(3)
The employer must either—
(a)
pay FBT at the rate of 49.25% of the taxable value of the fringe benefits attributed for the tax year, and apply sections RD 50 and RD 51 to the benefits in the next tax year; or
(b)
pay FBT at the rate of 63.93% of the taxable value of the fringe benefits attributed for the tax year.
Defined in this Act: company, employee, employer, FBT, fringe benefit, income, income year, pay, salary or wages, shareholder-employee, tax year
Compare: 2004 No 35 s ND 5A
Section RD 52(1)(a): amended, on 29 March 2018 (with effect on 30 March 2017), by section 213 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 52(3)(a): amended, on 1 April 2021, by section 8(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 52(3)(b): amended, on 1 April 2021, by section 8(2) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
RD 53 Pooling non-attributed benefits
When this section applies
(1)
This section applies in a tax year when an employer provides a fringe benefit that is—
(a)
a benefit provided to a former employee; or
(b)
an employment-related loan provided by a life insurer under section CX 11 (Employment-related loans: loans by life insurers); or
(c)
a benefit to which section RD 48 applies that cannot be attributed to a particular employee; or
(d)
an attributed benefit to which section RD 49(2) applies; or
(e)
subsidised transport to which section RD 49(3) applies.
Pooling value
(2)
The employer must pool the value of the benefits.
Final quarter pooling
(3)
For the final quarter of the tax year, the employer must create 2 pools, 1 for each of the following groups of persons:
(a)
the first pool is for an employee who is a major shareholder, or a person associated with an employee who is a major shareholder (unless that person receives the fringe benefit as an employee of the employer):
(b)
the second pool is for all other employees.
Final quarter calculation
(4)
The employer must calculate FBT for the final quarter of the tax year on the annual taxable value of the pooled fringe benefits—
(a)
at the rate of 63.93% for the first pool; and
(b)
at the rate of 49.25% for the second pool.
Defined in this Act: associated person, employee, employer, employment-related loan, FBT, fringe benefit, group of persons, life insurer, major shareholder, quarter, subsidised transport, tax year
Compare: 2004 No 35 s ND 6
Section RD 53(4)(a): amended, on 1 April 2021, by section 9(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 53(4)(b): amended, on 1 April 2021, by section 9(2) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Taxable value of fringe benefits
RD 54 Value of and payments towards fringe benefits
Value of benefit
(1)
The taxable value of a fringe benefit is the value of the benefit. Subsection (2) overrides this subsection.
Reduction for payment by employee
(2)
If an employee pays an amount for receiving a fringe benefit, the value of the benefit is reduced by the lesser of the value of the benefit and the amount paid.
When associate pays amount
(3)
If section GB 32 (Benefits provided to employee’s associates) applies, the value of the benefit is reduced when a person associated with the employee pays an amount for the benefit.
Exclusions
(4)
This section does not apply to—
(a)
an employment-related loan:
(b)
a payment to acquire or improve an asset if receiving or using the asset does not constitute a fringe benefit.
Defined in this Act: amount, associated person, employee, employment-related loan, fringe benefit, pay
Compare: 2004 No 35 ss GC 15(3), (4), ND 1S
Section RD 54(2): amended, on 1 April 2014, by section 85 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RD 54 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 516 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RD 55 Private use of motor vehicle: taxable value in cases of part ownership
If a fringe benefit is provided by making available a motor vehicle to an employee for their private use, and the vehicle is owned in part by the employee (or, if section GB 32 (Benefits provided to employee’s associates) applies, a person associated with the employee), the taxable value of the fringe benefit is determined under section RD 56 or RD 57.
Defined in this Act: associated person, employee, fringe benefit, motor vehicle, private use
Compare: 2004 No 35 s ND 1T
RD 56 Private use of motor vehicle: when schedular value not used
When this section applies
(1)
This section applies when the employer has not valued the motor vehicle using schedule 5, clause 9 (Fringe benefit values for motor vehicles).
Reduction
(2)
In the calculation of the taxable value of the fringe benefit, the value of the benefit determined under sections RD 28 to RD 30 is reduced by an amount that is the applicable percentage of the cost (determined including GST under schedule 5, clause 8(a)) of the motor vehicle to the employee or the associated person as follows:
(a)
if FBT is paid quarterly, 2.5%:
(b)
if FBT is paid on an annual basis, 2.5% for each quarter in which the vehicle was part-owned by the employee or the associated person:
(c)
if FBT is paid on an income year basis, 10%.
When period longer or shorter than income year
(3)
In subsection (2)(c) and section RD 57(2)(c) and (3), if the period for which the employer accounts for FBT differs from a normal income year for the reasons described in subsection (4), the amount by which the taxable value of the fringe benefit is reduced is a percentage of the cost (determined including GST under schedule 5, clause 8(a)) of the motor vehicle to the employer or the associated person equal to the amount calculated using the formula—
10% × number of days in period ÷ 365.
Reasons for difference
(4)
The period for which the employer has accounted may be longer or shorter than the normal income year because the employer has either—
(a)
started or ceased business during that income year; or
(b)
chosen, with the agreement of the Commissioner, to provide a fringe benefit return for the income year ending with the date of the annual balance of their accounts.
When vehicle owned less than whole year
(5)
If an employee has not been part-owner of the motor vehicle for the whole of the income year, or the period referred to in subsection (4), a reduction under this section is reduced by the proportion of the number of days of the income year or period for which the employee was not a part-owner to the total number of days of that income year or period.
Defined in this Act: amount, associated person, business, Commissioner, employee, employer, FBT, fringe benefit, GST, income year, motor vehicle, pay, quarter
Compare: 2004 No 35 s ND 1U
Section RD 56(1): amended, on 1 April 2008, by section 540(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 56(2): amended, on 1 April 2008, by section 540(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 56(3): amended, on 1 April 2008, by section 540(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RD 57 Private use of motor vehicle: when schedular value used
When this section applies
(1)
This section applies when an employer has valued the motor vehicle using schedule 5, clause 9 (Fringe benefit values for motor vehicles).
Reduction
(2)
In the calculation of the taxable value of the fringe benefit, the value of the benefit determined under sections RD 28 to RD 30 is reduced by an amount that is the applicable percentage of the cost, determined excluding GST, under schedule 5, clause 6(a) in the following way:
(a)
when FBT is paid quarterly, by a percentage calculated using the formula—
2.5 + (2.5 × schedule 5 rate):
(b)
when FBT is paid on an annual basis, by a percentage for each quarter in which the vehicle was part-owned by the employee or associated person calculated using the formula—
2.5 + (2.5 × schedule 5 rate):
(c)
when FBT is paid on an income year basis, by a percentage calculated using the formula—
10 + (10 × schedule 5 rate).
Schedule 5 rate
(3)
In the formulas, schedule 5 rate is the rate of GST specified in schedule 5, clause 10(b) to (e) for the employer and the relevant quarter and relevant income year, as applicable.
Defined in this Act: amount, associated person, employee, employer, FBT, fringe benefit, GST, income year, motor vehicle, pay, quarter
Compare: 2004 No 35 s ND 1V
Section RD 57(1): amended, on 1 April 2008, by section 541 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 57(3): amended, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 214(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Options for payment of FBT
RD 58 Single rate option
Rate for all quarters
(1)
An employer who chooses to pay their FBT liability under the single rate option must pay FBT at the rate of 63.93% of the taxable value of a fringe benefit for each of the 4 quarters of a tax year.
Replacing final quarter calculation
(2)
Despite subsection (1), an employer may ask the Commissioner to replace the FBT liability determined for the final quarter under this section with an amount calculated under section RD 59(4). The employer must provide the information necessary for the calculation.
Defined in this Act: amount, ask, Commissioner, employer, FBT, fringe benefit, pay, quarter, tax year
Compare: 2004 No 35 ss ND 1(2)(b), (4), ND 2(2)
Section RD 58(1): substituted, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 67(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RD 58(1): amended, on 1 April 2021, by section 10 (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 58 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 59 Alternate rate option
Election
(1)
This section applies when an employer chooses to pay their FBT liability under the alternate rate option.
First three quarters
(2)
The employer may pay FBT for any or all of the first 3 quarters of a tax year at 49.25% of the taxable value of a fringe benefit.
Alternate rate
(3)
The employer must pay FBT at the rate of 63.93% of the taxable value of a fringe benefit for any of the first 3 quarters of a tax year for which they do not pay at the rate of 49.25% under subsection (2).
Final quarter
(4)
For the final quarter of the tax year, the employer must calculate the total FBT payable for each employee under sections RD 50 and RD 53 for the tax year and subtract the amount of FBT payable for the previous 3 quarters of the tax year.
Decision irrevocable
(5)
The decision to use the alternate rate option cannot be changed after the return is filed.
Defined in this Act: amount, employee, employer, FBT, fringe benefit, pay, quarter, tax year
Compare: 2004 No 35 ss ND 1(2)(a), ND 2(1)–(4), ND 10(1)
Section RD 59(2): amended, on 1 April 2021, by section 11(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 59(2): amended, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 68(2)(a) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RD 59(3): substituted, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 68(2)(b) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RD 59(3): amended, on 1 April 2021, by section 11(2)(a) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 59(3): amended, on 1 April 2021, by section 11(2)(b) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 59(4): amended, on 2 November 2012, by section 138 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
RD 60 Close company option
When this section applies
(1)
This section applies in an income year when an employer that is a close company provides a fringe benefit to a shareholder-employee if, in the preceding income year,—
(a)
the gross amounts of tax for both PAYE income payments and employer’s superannuation cash contributions withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes) for the tax year, as modified by section RA 20(2) (Amalgamation of companies), were no more than $1,000,000; or
(b)
the only benefit provided by the employer was a fringe benefit—
(i)
arising under section CX 6(1) (Private use of motor vehicle); and
(ii)
limited to making available to shareholder-employees 1 vehicle or 2 vehicles for their private use; or
(c)
the employer did not employ any employees.
Income year basis
(2)
The employer may choose to pay their FBT liability on an income year basis, informing the Commissioner of their decision no later than—
(a)
the last day of the first quarter of the relevant income year; or
(b)
the last day of the quarter in which the employer first starts employing employees, if subsection (1)(c) applies.
Rate or calculation
(3)
The employer must pay FBT on the taxable value of fringe benefits in the income year in which they make their election and in later income years either—
(a)
at the rate of 63.93% of the taxable value of a fringe benefit; or
(b)
by calculating for the relevant income year their FBT liability under sections RD 50 and RD 53.
Replacing rate with calculated liability
(4)
Despite subsection (3), the employer may ask the Commissioner to replace the FBT liability determined under subsection (3)(a) with a calculation under subsection (3)(b). The employer must provide the information necessary for the calculation.
Part-periods
(5)
If an income year for which an employer chooses to pay FBT on an income year basis does not start on the same day as the first day of a quarter, the employer must treat the period between the first day of the quarter in which the first day of the income year falls and the first day of the income year as if it were a quarter.
More than 1 business
(6)
If an employer ceases business and starts a new business, or operates 2 or more businesses at the same time, the total of all amounts of tax withheld under section RA 5(1)(a) and (c) must be aggregated.
Defined in this Act: amount of tax, ask, business, close company, Commissioner, employee, employer, employer’s superannuation cash contribution, FBT, fringe benefit, gross, income year, inform, pay, PAYE income payment, quarter, shareholder-employee, tax year
Compare: 2004 No 35 ss ND 1(2)(c), (5), ND 14, ND 15(7), (8)
Section RD 60(1): substituted, on 1 April 2009, by section 18(1) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 60(1)(a): substituted (with effect on 1 April 2008), on 6 October 2009, by section 517(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 60(1)(a): amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 93(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 60(1)(a): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 17 July 2013, by section 86(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RD 60(2): amended, on 2 June 2016, by section 59(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 60(2)(b): amended, on 1 April 2009, by section 18(2) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
Section RD 60(3)(a): amended, on 1 April 2021, by section 12 (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 60(3)(b): amended (with effect on 1 April 2021), on 30 March 2022, by section 156(1) (and see section 156(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 60(6): amended (with effect on 1 April 2008), on 6 October 2009, by section 517(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 60 list of defined terms ask: inserted, on 2 June 2016, by section 59(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 60 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 517(4)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 60 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 517(4)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 60 list of defined terms inform: inserted, on 2 June 2016, by section 59(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 61 Small business option
When this section applies
(1)
This section applies when an employer provides a fringe benefit to an employee who is not a shareholder-employee in a tax year if, for the preceding tax year,—
(a)
the gross amounts of tax for both PAYE income payments and employer’s superannuation cash contributions withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes) for the tax year were no more than $1,000,000; or
(b)
the employer did not employ any employees.
Annual basis
(2)
The employer may choose to pay their FBT liability on an annual basis, informing the Commissioner of their decision no later than—
(a)
30 June in the relevant tax year; or
(b)
the last day of the quarter in which the employer first starts employing employees, if subsection (1)(b) applies.
Rate or calculation
(3)
The employer must pay FBT on the taxable value of fringe benefits in the tax year in which they make their election and in later tax years either—
(a)
at the rate of 63.93% of the taxable value of a fringe benefit; or
(b)
by calculating for the relevant tax year their FBT liability under sections RD 50 and RD 53.
Replacing rate with calculated amount
(4)
Despite subsection (3), the employer may ask the Commissioner to replace the FBT liability determined under subsection (3)(a) with a calculation under subsection (3)(b). The employer must provide the information necessary for the calculation.
Quarters in year
(5)
For the purposes of subsection (3), the tax year is treated as if it were 4 consecutive quarters.
More than 1 business
(6)
If an employer ceases business and starts a new business, or operates 2 or more businesses at the same time, the total of all amounts of tax withheld under section RA 5(1)(a) and (c) must be aggregated.
Defined in this Act: amount of tax, ask, business, Commissioner, employee, employer, employer’s superannuation cash contribution, employer’s superannuation contribution, FBT, fringe benefit, gross, inform, pay, PAYE income payment, quarter, shareholder-employee, tax year
Compare: 2004 No 35 ss ND 1(2)(c), (4), (5), ND 13
Section RD 61(1)(a): substituted (with effect on 1 April 2008), on 6 October 2009, by section 518(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 61(1)(a): amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 94(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RD 61(2): amended, on 2 June 2016, by section 60(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 61(3)(a): amended, on 1 April 2021, by section 13 (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 61(3)(b): amended (with effect on 1 April 2021), on 30 March 2022, by section 157 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RD 61(6): amended (with effect on 1 April 2008), on 6 October 2009, by section 518(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 61 list of defined terms ask: inserted, on 2 June 2016, by section 60(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 61 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 518(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 61 list of defined terms inform: inserted, on 2 June 2016, by section 60(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 62 Changes in payment periods
No changes for simple or alternate rate options
(1)
An employer’s decision to pay FBT on a quarterly basis under the single rate option or the alternate rate option cannot be changed.
When requirements for yearly basis no longer met
(2)
If an employer who has chosen for a tax year to pay FBT on an income year basis or on an annual basis no longer meets the relevant requirements of section RD 60(1) or RD 61(1), the employer must pay their FBT liability for fringe benefits provided to employees on or after the first day of the tax year under the single rate option or the alternate rate option.
Choosing to change to quarterly basis
(3)
An employer who has chosen for a tax year to pay FBT on an income year basis or on an annual basis, may choose at any time to pay FBT on a quarterly basis.
When change takes effect
(4)
An employer who chooses to change their payment period under subsection (3) must pay their FBT liability on a quarterly basis for a fringe benefit provided from—
(a)
the first day of the next tax year, if the employer previously paid on an annual basis; or
(b)
the first day of the next income year of the employer, if the employer previously paid on an income year basis; or
(c)
another date agreed by the employer and the Commissioner.
Choosing to change to income year basis
(5)
If an employer who is eligible to use the close company option has been paying FBT on a quarterly basis, and chooses to change to payment on an income year basis, a calculation must be made under section RD 59 for the period—
(a)
beginning immediately after the end of the last full tax year for which the employer pays FBT on a quarterly basis:
(b)
ending immediately before the start of the first income year for which the election applies.
Part-periods
(6)
If an employer changes their payment period from an income year to a quarter, and the day referred to in subsection (4)(b) is not the same day as the first day of a quarter, then for the purposes of the payment of FBT, the employer must treat the period between that day and the first day of the next quarter as if it were a quarter.
Defined in this Act: close company, Commissioner, employee, employer, FBT, income year, pay, quarter, tax year
RD 62B Obligations of cross-border employees when FBT liability not paid
When this section applies
(1)
This section applies when a cross-border employee receives a fringe benefit in relation to a period when they are providing employment services in New Zealand.
Employees’ obligations
(2)
If the employer and employee agree and record in a document that the employee is liable for employment-related tax obligations, the employee must—
(a)
treat the value of the fringe benefit as a PAYE income payment and withhold and pay tax as if an employer; and
(b)
provide the relevant information required under section 23I of the Tax Administration Act 1994. The employer must provide the employee with the relevant information that the employee does not have.
When person exempt
(3)
Subsection (2)(a) does not apply if the employee is exempt from paying the amount of the liability.
Defined in this Act: amount, Commissioner, cross-border employee, fringe benefit, New Zealand, pay
Section RD 62B: inserted, on 1 April 2023, by section 105 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
RD 63 When employer stops employing staff
Who this section applies to
(1)
This section applies in a tax year to an employer who stops employing staff and does not intend to replace them. But this section does not apply to an employer who continues to provide a fringe benefit to a former employee.
Treated as final quarter
(2)
The employer must pay FBT under section RD 59, treating the quarter of the tax year in which the employment ended as if it were the final quarter.
Single rate option
(3)
As an alternative to the application of sections RD 50 and RD 53, the employer may choose to pay FBT under the single rate option—
(a)
making the calculation in relation to the period from the start of the tax year to the date on which the employer stops employing staff; and
(b)
taking into account any earlier payments of FBT made in relation to an employee.
Defined in this Act: employee, employer, FBT, fringe benefit, pay, quarter, tax year
Compare: 2004 No 35 s ND 8
Section RD 63(3): amended (with effect on 1 April 2021), on 30 March 2022, by section 158 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Employer’s superannuation contribution tax (ESCT) rules and employer’s superannuation contributions
Introductory provisions
RD 64 ESCT rules and their application
Meaning
(1)
The ESCT rules means—
(a)
section CX 49 (Employer’s superannuation contributions); and
(b)
(c)
subparts 3C and 3D, sections 22AA, 47, 124H to 124K, 124O to 124Q, Part 9, and schedules 4 and 5 of the Tax Administration Act 1994.
Application
(2)
The ESCT rules apply to an employer or a person who makes an employer’s superannuation cash contribution.
Defined in this Act: employer, employer’s superannuation cash contribution, ESCT rules
Compare: 2004 No 35 ss NE 1, OB 1 “SSCWT rules”
Section RD 64(1)(c): replaced (with effect on 1 April 2019), on 26 June 2019, by section 75(1) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RD 64(1)(c): amended, on 1 April 2020, by section 75(2) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RD 64(2): amended (with effect on 1 April 2008), on 2 November 2012, by section 139(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 64 list of defined terms employer’s superannuation contribution: repealed, on 2 November 2012, by section 139(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 64 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 2 November 2012, by section 139(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
RD 65 Employer’s superannuation cash contributions
Contribution in money for benefit of employees or past employees
(1)
An employer’s superannuation cash contribution means a superannuation contribution paid in money either to a superannuation fund or under the KiwiSaver Act 2006 to the Commissioner for later payment to a superannuation fund, if the contribution is—
(a)
an employer’s superannuation contribution:
(b)
made by a person for the benefit of 1 or more of their past employees.
Determining amount of contribution
(2)
The amount of an employer’s superannuation cash contribution is the sum of—
(a)
the amount of the contribution received by the superannuation fund or, for a contribution paid to the Commissioner under the KiwiSaver Act 2006, received by the Commissioner for payment to the superannuation fund; and
(b)
the amount of tax withheld for the employer’s superannuation contribution.
Payment of amount of tax
(3)
An employer or person who makes an employer’s superannuation cash contribution on behalf of an employee or past employee must pay to the Commissioner the amount of tax for the contribution. The amount is payable in 2 payment periods in a month as set out in section RA 15 (Payment dates for interim and other tax payments) unless they are an employer to whom RD 4(2) applies.
Contributions to KiwiSaver schemes and complying superannuation funds[Repealed]
(4)
[Repealed]Formula: subsection (4)(b)(i)[Repealed]
(5)
[Repealed]Formula: subsection (4)(b)(ii)[Repealed]
(6)
[Repealed]Definition of items in formulas[Repealed]
(7)
[Repealed]Contributions to complying superannuation funds[Repealed]
(8)
[Repealed]Formula: subsection (8)(c)(i)[Repealed]
(9)
[Repealed]Formula: subsection (8)(c)(ii)[Repealed]
(10)
[Repealed]Definition of items in formulas[Repealed]
(11)
[Repealed]When contribution paid[Repealed]
(12)
[Repealed]Some definitions[Repealed]
(13)
[Repealed]Defined in this Act: amount, amount of tax, Commissioner, employee, employer, employer’s superannuation cash contribution, ESCT, pay, superannuation fund
Compare: 2004 No 35 ss NE 2(2), NE 3, NE 3B, NE 6, OB 1 “employer’s superannuation contribution”
, “specified superannuation contribution”
Section RD 65(1) heading: replaced (with effect on 1 April 2008), on 2 November 2012, by section 140(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 65(1): replaced (with effect on 1 April 2008), on 2 November 2012, by section 140(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 65(2): amended (with effect on 1 April 2008), on 6 October 2009, by section 519(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 65(2)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 519(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 65(3): amended, on 1 April 2019, by section 216 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RD 65(3): amended (with effect on 1 April 2008), on 2 November 2012, by section 140(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 65(3): amended (with effect on 1 April 2012), on 2 November 2012, by section 140(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 65(4) heading: repealed, on 1 April 2012, pursuant to section 9(1) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65(4): repealed, on 1 April 2012, by section 9(1) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65(5) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(5): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(6) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(6): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(7) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(7): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(8) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(8): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(9) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(9): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(10) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(10): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(11) heading: repealed, on 1 April 2009, pursuant to section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(11): repealed, on 1 April 2009, by section 55(b) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RD 65(12) heading: repealed (with effect on 1 April 2008), on 6 October 2009, pursuant to section 519(10) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 65(12): repealed (with effect on 1 April 2008), on 6 October 2009, by section 519(10) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 65(13) heading: repealed, on 1 April 2012, pursuant to section 9(2) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65(13): repealed, on 1 April 2012, by section 9(2) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms complying fund calculation period: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms complying fund rules: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms complying superannuation fund: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms compulsory employer contribution: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 519(12) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 65 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 519(12) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 65 list of defined terms KiwiSaver calculation period: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms KiwiSaver contribution: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms KiwiSaver scheme: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section RD 65 list of defined terms salary or wages: repealed, on 1 April 2012, by section 9(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
RD 66 Complying fund rules
[Repealed]Section RD 66: repealed, on 1 April 2012, by section 10 of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Calculating amounts of tax
RD 67 Calculating amounts of tax for employer’s superannuation cash contributions
The amount of tax for an employer’s superannuation cash contribution is—
(a)
the amount determined under schedule 1, part D, clause 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits), unless paragraph (b) or (c) applies; or
(b)
33% of the employer’s superannuation cash contribution, if the contribution is made by a person for the benefit of 1 or more of their past employees and paragraph (c) does not apply; or
(c)
39% of the employer’s superannuation cash contribution, if an employer chooses 39% and the contribution is to a defined benefit fund.
Defined in this Act: amount, amount of tax, defined benefit fund, employer, employer’s superannuation cash contribution
Section RD 67: replaced (with effect on 1 April 2021), on 30 March 2022, by section 159 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
RD 67B Calculating amounts of tax following changes to rates or thresholds
When a change occurs to a rate or threshold in this Act or the Tax Administration Act 1994 affecting the amount of tax for an employer’s superannuation cash contribution, the calculation of the amount of tax must be made using the rate applying on—
(a)
the day on which the PAYE income payment to which the contribution relates is paid or is otherwise under this Act treated as paid; or
(b)
for a contribution that is not tied to a particular PAYE income payment, the day on which the contribution is paid.
Defined in this Act: amount of tax, employer’s superannuation cash contribution, pay, PAYE income payment
Section RD 67B: inserted, on 1 April 2018, by section 217 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RD 68 Choosing to have amount treated as salary or wages
Amount treated as salary or wages
(1)
With the agreement of their employer who makes an employer’s superannuation cash contribution on their behalf, an employee may choose to have some or all of an employer’s superannuation cash contribution made on their behalf treated as salary or wages under the PAYE rules.
Revoking election
(2)
The employee’s election is valid until they notify their employer of its revocation.
Defined in this Act: employee, employer, employer’s superannuation cash contribution, notify, PAYE rules, salary or wages
Compare: 2004 No 35 s NE 2A(1), (2)
Section RD 68(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 521(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 68(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 521(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 68(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 521(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 68(2): added (with effect on 1 April 2008), on 6 October 2009, by section 521(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 68(2): amended, on 2 June 2016, by section 61(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RD 68 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 521(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 68 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 521(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 68 list of defined terms notify: inserted, on 2 June 2016, by section 61(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RD 69 Choosing different rates for employer’s superannuation cash contributions
[Repealed]Section RD 69: repealed, on 1 April 2012, by section 12 of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
RD 70 Calculating amounts of tax on failure to withhold
When this section applies
(1)
This section applies when an employer, person, or PAYE intermediary does not withhold under section RD 65(3) an amount of tax for an employer’s superannuation cash contribution.
Calculation of amount of tax
(2)
The amount of tax is calculated using the formula—
(tax rate ÷ (1 − tax rate) × contribution to fund) − tax already paid.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) at the time the contribution was made:
(b)
contribution to fund is the amount of the contribution received by the superannuation fund excluding the amount of tax:
(c)
tax already paid is any amount of tax for the contribution that has already been paid.
Defined in this Act: amount, amount of tax, employer, employer’s superannuation cash contribution, pay, PAYE intermediary, superannuation fund
Compare: 2004 No 35 s NE 5
Section RD 70(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 523(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 70(1): amended (with effect on 1 April 2008), on 2 November 2012, by section 144(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 70(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RD 70 list of defined terms basic rate: repealed, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RD 70 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 523(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 70 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 523(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RD 71 Amounts of tax treated as paid to and received by superannuation funds
In determining whether an employer or a person has met their obligation to pay a contribution to a superannuation fund—
(a)
the employer, the person, or their PAYE intermediary is treated as having paid to the superannuation fund an amount of tax withheld under the ESCT rules or the PAYE rules, if applicable; and
(b)
the fund is treated as having received the amount referred to under paragraph (a); and
(c)
the payment referred to in paragraph (a) and the receipt referred to in paragraph (b) are treated as having occurred when the superannuation fund received the employer’s superannuation cash contribution.
Defined in this Act: amount of tax, employer, employer’s superannuation cash contribution, ESCT rules, pay, PAYE intermediary, PAYE rules, superannuation fund
Compare: 2004 No 35 s NE 6
Section RD 71: amended (with effect on 1 April 2008), on 2 November 2012, by section 145(1)(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 71(a): amended (with effect on 1 April 2008), on 2 November 2012, by section 145(1)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RD 71(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 524(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 71(c): substituted (with effect on 1 April 2008), on 6 October 2009, by section 524(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 71 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 524(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RD 71 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 524(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RD 71B Obligations of cross-border employees when amounts of tax not paid
When this section applies
(1)
This section applies when an employer or person makes an employer’s superannuation cash contribution or an employer’s contribution to a foreign superannuation scheme for a cross-border employee that relates to a period during which the employee is providing employment services in New Zealand.
Employees’ obligations
(2)
If the employer and employee agree and record in a document that the employee is liable for employment-related tax obligations, then the employee must—
(a)
provide the relevant information required under section 23I of the Tax Administration Act 1994. The employer must provide the employee with the relevant information that the employee does not have; and
(b)
pay the amount of the tax, as if an employer.
When person exempt
(3)
Subsection (2)(b) does not apply if the employee is exempt from paying the amount of tax.
Defined in this Act: amount of tax, Commissioner, cross-border employee, employer’s superannuation cash contribution, foreign superannuation scheme, New Zealand, pay
Section RD 71B: inserted, on 1 April 2023, by section 107 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Tax on certain withdrawals from superannuation funds[Repealed]
Heading: repealed, on 1 April 2011, by section 114 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
RD 72 Recovery of tax paid by superannuation funds
[Repealed]Section RD 72: repealed, on 1 April 2011, by section 114 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Subpart RE—Withholding tax on resident passive income (RWT)
Contents
Introductory provisions
RE 1 RWT rules and their application
Meaning
(1)
The RWT rules means—
(a)
this subpart; and
(b)
sections LA 4, LA 6, and LB 3 (which relate to tax credits for RWT); and
(c)
subpart 3E, sections 26B, 26C, 27, 28, 28B, 54B to 54E, 55, 55B, 78D, 99, and 124ZF, Part 9, sections 170 to 172, and 185 of the Tax Administration Act 1994.
Application
(2)
The RWT rules apply to a person who pays an amount of resident passive income.
Defined in this Act: amount, pay, resident passive income, RWT rules
Compare: 2004 No 35 s OB 1 “RWT rules”
Section RE 1(1)(c): amended, on 1 April 2020, by section 260(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RE 1(1)(c): amended, on 18 March 2019, by section 260(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RE 2 Resident passive income
Interest, dividends, and certain distributions
(1)
Resident passive income means an amount paid to a person to the extent to which it consists of—
(a)
interest:
(b)
a dividend:
(c)
a taxable Maori authority distribution other than a retirement scheme contribution:
(d)
a replacement payment paid to a person under a share-lending arrangement.
Exclusions and inclusions
(2)
Subsections (3) to (5) override subsection (1).
Exclusions from interest
(3)
The following amounts are excluded from interest under this section:
(a)
exempt interest:
(b)
interest derived by a person who has RWT-exempt status under section RE 27:
(c)
interest that is non-resident passive income:
(d)
interest derived from outside New Zealand by a non-resident:
(e)
interest that is exempt income under section CW 27 (Certain income derived by transitional resident):
(f)
interest paid by a company and derived by another company when both companies are part of the same group of companies at the time of the payment:
(g)
interest paid to an intermediary—
(i)
by a client in relation to the operation of a tax pooling account; or
(ii)
by the Commissioner under section RP 18 (Deposits in tax pooling accounts):
(h)
interest payable under section 120D or Part 7 of the Tax Administration Act 1994:
(i)
interest arising because section EI 2 (Interest from inflation-indexed instruments) applies to an inflation-indexed instrument.
Inclusions in interest
(4)
For the purposes of this section, the following amounts are treated as interest and not as a dividend:
(a)
a dividend that a building society pays to a member in relation to a withdrawable share in the society:
(b)
a dividend that a friendly society pays to its member in relation to a share in the society.
Exclusions from dividends
(5)
The following amounts are excluded from a dividend under this section:
(a)
a dividend that is exempt income—
(i)
through the application of section CW 9, CW 10, or CW 10B (which relate to income from equity); or
(ii)
under section CW 27 (Certain income derived by transitional resident); or
(iib)
under section CW 39 (Local authorities):
(iii)
[Repealed](b)
an amount—
(i)
of an association rebate that is excluded from being a dividend by section CB 34(5)(a) (Amounts derived by members from mutual associations); or
(ii)
that is payable to a person by a company and is treated as being a dividend by sections GB 23 to GB 25 (which relate to excessive remuneration):
(bb)
a dividend from a portfolio investment entity:
(c)
[Repealed](d)
a dividend derived by a person who has RWT-exempt status under section RE 27:
(e)
a dividend that is non-resident passive income:
(f)
a dividend derived by a non-resident other than a dividend that has a source in New Zealand:
(fb)
a dividend paid by a company and derived by another company, if the dividend is fully imputed and the paying company chooses to exclude the dividend from being resident passive income:
(g)
a dividend paid by a company and derived by another company when both are part of the same group of companies at the time of the payment:
(gb)
an amount treated as a dividend under section CB 32C (Dividend income for first year of look-through company):
(h)
a dividend that is excluded income under section CX 50B (Contributions to retirement savings schemes) or would be excluded income under that section in the absence of subsection (2)(a) and (b):
(i)
a dividend other than a non-cash dividend that—
(i)
has an imputation ratio of 30/70 or more; and
(ii)
is paid by a unit trust or group investment fund (or RWT proxy on their behalf) that has not withheld RWT from any earlier dividend:
(j)
a dividend treated as derived by a person under section GB 1(3) (Arrangements involving dividend stripping).
Beneficiary income
(6)
If a person derives an amount described in this section in their capacity as trustee and the amount is beneficiary income, the amount is treated as not derived by the trustee.
Trustees’ RWT substitution payment
(7)
A trustee may pay an amount of money (the RWT substitution payment) to the relevant beneficiary that is equal to or less than the amount of RWT withheld for an amount to which subsection (6) applies (the RPI beneficiary income).
Effect of RWT substitution payment
(8)
The RWT substitution payment is treated as an amount of resident passive income that is beneficiary income, with the same nature as the RPI beneficiary income. There is no liability or obligation to withhold RWT in relation to the RWT substitution payment.
Defined in this Act: amount, association rebate, beneficiary, beneficiary income, building society, Commissioner, company, dividend, excluded income, exempt income, exempt interest, friendly society, fully imputed, group investment fund, group of companies, imputation ratio, inflation-indexed instrument, interest, New Zealand, non-cash dividend, non-resident, non-resident passive income, pay, portfolio investment entity, replacement payment, resident passive income, RWT, RWT-exempt status, RWT proxy, RWT substitution payment, share, share-lending arrangement, source in New Zealand, tax pooling account, taxable Maori authority distribution, trustee, unit trust, withdrawable share
Compare: 2004 No 35 s NF 1(2), (4), (5)
Section RE 2(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 525(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 2(1)(c): amended, on 1 April 2008, by section 542(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2(3)(b): amended, on 1 April 2020, by section 218(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 2(3)(c): amended (with effect on 1 April 2008), on 6 October 2009, by section 525(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 2(3)(h): amended, on 30 June 2014, by section 140(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RE 2(3)(i): inserted, on 30 June 2014, by section 140(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RE 2(5)(a)(i): amended, on 1 April 2022, by section 160(1) (and see section 160(5) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 2(5)(a)(ii): amended, on 1 April 2022, by section 160(2) (and see section 160(5) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 2(5)(a)(iib): inserted, on 1 April 2022, by section 160(3) (and see section 160(5) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 2(5)(a)(iii): repealed, on 1 April 2020, by section 218(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 2(5)(b): replaced (with effect on 1 April 2008), on 30 March 2021, by section 131(1) (and see section 131(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RE 2(5)(bb): inserted (with effect from 1 April 2008), on 29 May 2008, by section 44(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RE 2(5)(c): repealed (with effect on 30 June 2009), on 2 November 2012 (applying for income years beginning on or after 1 July 2009), by section 146(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 2(5)(d): amended, on 1 April 2020, by section 218(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 2(5)(f): amended, on 21 December 2010, by section 129(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RE 2(5)(fb): inserted, on 1 April 2017, by section 265(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 2(5)(g): amended, on 1 April 2022, by section 160(4) (and see section 160(5) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 2(5)(g): amended, on 1 April 2019, by section 218(4) (and see section 218(6) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 2(5)(gb): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 265(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 2(5)(h): added, on 1 April 2008, by section 542(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2(5)(i): added, on 1 April 2008, by section 542(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2(5)(i)(i): replaced, on 1 April 2017, by section 265(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 2(5)(j): added (with effect on 1 April 2008), on 7 December 2009, by section 106(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 2(7) heading: added (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years if the trustee has taken a tax position in a tax return that is consistent with subsection (1)), by section 124(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RE 2(7): added (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years if the trustee has taken a tax position in a tax return that is consistent with subsection (1)), by section 124(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RE 2(8) heading: added (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years if the trustee has taken a tax position in a tax return that is consistent with subsection (1)), by section 124(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RE 2(8): added (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years if the trustee has taken a tax position in a tax return that is consistent with subsection (1)), by section 124(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RE 2 list of defined terms association rebate: inserted (with effect on 1 April 2008), on 30 March 2021, by section 131(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RE 2 list of defined terms attributed repatriation: repealed, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RE 2 list of defined terms beneficiary: inserted (with effect on 1 April 2008), on 29 August 2011, by section 124(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RE 2 list of defined terms combined imputation and FDP ratio: repealed, on 1 April 2017, by section 265(4)(a) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 2 list of defined terms derived from New Zealand: repealed, on 21 December 2010, by section 129(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RE 2 list of defined terms excluded income: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2 list of defined terms FDP ratio: repealed, on 1 April 2017, by section 265(4)(a) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 2 list of defined terms fully imputed: inserted, on 1 April 2017, by section 265(4)(b) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 2 list of defined terms group investment fund: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2 list of defined terms imputation ratio: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2 list of defined terms inflation-indexed instrument: inserted, on 30 June 2014, by section 140(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RE 2 list of defined terms non-cash dividend: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2 list of defined terms portfolio investment entity: inserted (with effect from 1 April 2008), on 29 May 2008, by section 44(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RE 2 list of defined terms resident in New Zealand: repealed (with effect on 1 April 2008), on 6 October 2009, by section 525(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 2 list of defined terms RWT: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2 list of defined terms RWT-exempt status: inserted, on 29 March 2018, by section 218(5)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 2 list of defined terms RWT exemption certificate: repealed, on 29 March 2018, by section 218(5)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 2 list of defined terms RWT proxy: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 2 list of defined terms RWT substitution payment: inserted (with effect on 1 April 2008), on 29 August 2011, by section 124(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RE 2 list of defined terms source in New Zealand: inserted, on 21 December 2010, by section 129(2)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RE 2 list of defined terms unit trust: inserted, on 1 April 2008, by section 542(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Withholding obligations
RE 3 Obligation to withhold RWT
Obligation to withhold and pay
(1)
A person to whom section RE 1(2) applies is liable to withhold resident withholding tax (RWT) and pay the amount to the Commissioner if they make the payment and—
(a)
they have an obligation to withhold an amount of tax under section RE 4 and are not excluded under sections RE 5 and RE 6 from meeting the obligation:
(b)
[Repealed](c)
they are an RWT proxy in relation to the payment.
Non-cash dividends
(2)
For the purposes of subsection (1), if the payment is a non-cash dividend, the person must calculate the amount of tax under section RE 14 and pay the amount to the Commissioner.
Defined in this Act: amount, amount of tax, Commissioner, non-cash dividend, pay, RWT, RWT proxy
Compare: 2004 No 35 s NF 2(1A), (1AB)
Section RE 3(1)(a): substituted (with effect on 1 April 2008), on 6 October 2009, by section 526(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 3(1)(b): repealed (with effect on 1 April 2008), on 6 October 2009, by section 526(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RE 4 Persons who have withholding obligations
Requirements
(1)
A person referred to in section RE 3(1)(a) meets the requirements of this section for an obligation to withhold an amount of tax if they meet at least 1 requirement of each of subsections (2) and (3) in relation to a payment of resident passive income.
Requirement for person
(2)
The person must be, at the time the payment is made,—
(a)
resident in New Zealand; or
(b)
if not resident in New Zealand,—
(i)
carrying on a taxable activity in New Zealand through a fixed establishment in New Zealand; and
(ii)
not excluded under subsection (4).
Requirements for person and payment
(3)
In addition to meeting a requirement of subsection (2), 1 of the following requirements must be met at the time the payment is made:
(a)
the person has RWT-exempt status under section RE 27:
(b)
the payment is made in whole or in part in carrying on a taxable activity, whether or not the person acts as agent or trustee for another person:
(c)
the payment is a dividend:
(d)
the payment is a taxable Maori authority distribution:
(e)
the payment is a replacement payment under a share-lending arrangement:
(f)
the person is a custodial institution that pays on or transfers an amount of investment income to an end investor, see section RE 10C.
When person not treated as resident or carrying on taxable activity
(4)
For the purposes of subsection (2), a person who is not resident in New Zealand and is carrying on a taxable activity in New Zealand through a fixed establishment in New Zealand, is treated as not meeting the requirements of the subsection if they establish that, at the time the payment is made,—
(a)
for an amount payable in relation to money lent or to shares issued by another person,—
(i)
the payment is attributable to or effectively connected with a fixed establishment of the person outside New Zealand; and
(ii)
all amounts payable in relation to the money lent or to the shares are payable in a currency other than New Zealand currency:
(b)
for dividends payable in relation to shares issued by the person, the person is not required by generally accepted accounting practice to express its financial statements in New Zealand currency.
Currency conversion
(5)
A person who is required to withhold RWT in relation to a payment of resident passive income that is in a currency other than New Zealand currency may withhold and pay the amount of the RWT in the foreign currency.
Conversion rates: credit
(6)
For the purposes of subsection (5), in the calculation of the amount of RWT to be credited against income tax, the amount must be converted to New Zealand currency at the option of the person deriving the resident passive income at either—
(a)
the close of trading spot exchange rate on the day the RWT is paid; or
(b)
an exchange rate specified by the Commissioner for this purpose in relation to the month in which the RWT is paid.
Conversion rates: payment
(7)
For the purposes of subsection (5), in the calculation of the amount of RWT to be paid to the Commissioner, the amount must be converted to New Zealand currency either at—
(a)
the close of trading spot exchange rate on the first working day of the month after the month in which the day the RWT is withheld; or
(b)
a conversion rate applying under section OB 60(6) (Imputation credits attached to dividends) if the resident passive income is a dividend and the person required to withhold RWT under subsection (5) is an Australian ICA company that chooses to use that rate; or
(c)
the exchange rate on the date on which the payment of income is received.
Defined in this Act: amount, Australian ICA company, close of trading spot exchange rate, Commissioner, company, custodial institution, dividend, end investor, fixed establishment, income tax, investment income, interest, money lent, New Zealand, pay, replacement payment, resident in New Zealand, resident passive income, RWT, RWT-exempt status, share, share-lending arrangement, taxable activity, taxable Maori authority distribution, trustee, working day
Compare: 2004 No 35 s NF 2(3), (4)
Section RE 4(1): amended (with effect on 1 April 2008), on 27 February 2014, by section 125(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section RE 4(3)(a): amended, on 1 April 2020, by section 219(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 4(3)(f): inserted, on 1 April 2020, by section 180(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 4(4)(a): replaced (with effect on 1 April 2008), on 27 February 2014, by section 125(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section RE 4(4)(b): replaced (with effect on 1 April 2008), on 27 February 2014, by section 125(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section RE 4(6): amended (with effect on 30 June 2009), on 6 October 2009, by section 527(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 4(7)(b): amended, on 1 April 2020, by section 180(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 4(7)(c): inserted, on 1 April 2020, by section 180(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 4 list of defined terms custodial institution: inserted, on 1 April 2020, by section 180(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 4 list of defined terms end investor: inserted, on 1 April 2020, by section 180(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 4 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 527(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 4 list of defined terms investment income: inserted, on 1 April 2020, by section 180(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 4 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 219(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 4 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 219(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 5 No withholding obligation in certain circumstances
When this section applies
(1)
This section applies when a person (person A)—
(a)
pays an amount to another person (person B); or
(b)
receives a payment while acting as agent or bare trustee for person B.
No obligation if person B exempt
(2)
For the purposes of determining whether person A is required under section RE 4 to withhold RWT, the payment is treated as not consisting of resident passive income if person A has established that person B has RWT-exempt status under section RE 27.
No obligation in relation to non-cash dividends
(2B)
Section RE 4 does not apply in relation to a dividend referred to in section RE 14C.
No obligation if person B transitional resident
(3)
If person A receives an amount of resident passive income while acting as agent or bare trustee for person B, they are not required to withhold RWT in relation to the amount when—
(a)
person B notifies person A that—
(i)
they are a transitional resident for a period; and
(ii)
an amount paid during the period from a particular source is exempt income of person B under section CW 27 (Certain income derived by transitional resident); and
(b)
person A receives the payment during the period from the particular source; and
(c)
person A has no reasonable grounds for believing that the payment is not exempt income of person B under section CW 27.
Defined in this Act: amount, dividend, exempt income, notify, pay, resident passive income, RWT, RWT-exempt status, transitional resident, trustee
Compare: 2004 No 35 s NF 2(7), (7B)
Section RE 5(2): amended, on 1 April 2020, by section 220(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 5(2B) heading: inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 220(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 5(2B): inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 220(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 5 list of defined terms dividend: inserted, on 29 March 2018 (with effect on 1 April 2017), by section 220(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 5 list of defined terms RWT-exempt status: inserted, on 29 March 2018, by section 220(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 5 list of defined terms RWT exemption certificate: repealed, on 29 March 2018, by section 220(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 6 When obligation to withhold unreasonable
When this section applies
(1)
This section applies when a person (person A) who is a person listed in a paragraph in section 32E(2)(a) to (h) of the Tax Administration Act 1994—
(a)
receives an amount from another person (person B); or
(b)
makes a payment at person B’s request.
No obligation if unreasonable
(2)
For the purposes of determining whether person A is required under section RE 4 to withhold RWT, the payment is treated as not consisting of resident passive income of person B to the extent to which—
(a)
person A could not reasonably be expected to be aware that the payment was resident passive income; or
(b)
for an amount that is a redemption payment, person A could not reasonably be expected to be aware of the amount that consisted of resident passive income.
Defined in this Act: amount, pay, redemption payment, request, resident passive income, RWT
Compare: 2004 No 35 s NF 2(8)
Section RE 6 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RE 7 When resident passive income paid to trustees
Who this section applies to
(1)
This section applies when—
(a)
an amount is paid to a person (person A) who is acting as trustee for another person (person B) at the time; and
(b)
some or all of the amount is resident passive income other than a replacement payment under a share-lending arrangement; and
(c)
person A—
(i)
does not have RWT-exempt status under section RE 27 at the time of the payment; and
(ii)
is paid the amount in the conduct of a taxable activity carried on by them; and
(iii)
is not a nominee to whom section RE 8 applies.
Obligation to withhold
(2)
At the time the payment is made and to the extent to which it has not already been withheld, person A must withhold RWT for the payment and pay it to the Commissioner.
Relationship with section RE 9
(3)
Section RE 9 overrides this section.
Defined in this Act: amount, Commissioner, nominee, pay, replacement payment, resident passive income, RWT, RWT-exempt status, share-lending arrangement, taxable activity, trustee
Compare: 2004 No 35 s NF 3(1), (2)
Section RE 7(1)(c)(i): amended, on 1 April 2020, by section 221(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 7 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 221(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 7 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 221(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 8 When resident passive income paid to nominees
Who this section applies to
(1)
This section applies when—
(a)
an amount is paid to a person (person A) who is a nominee for another person (person B) at the time; and
(b)
some or all of the amount is resident passive income; and
(c)
person A—
(i)
has RWT-exempt status under section RE 27 at the time of the payment; or
(ii)
is paid the amount in the conduct of a taxable activity carried on by them.
Obligation to withhold
(2)
At the time the payment is received and to the extent to which it has not already been withheld, person A must withhold RWT for the payment and pay it to the Commissioner.
Relationship with section RE 9
(3)
Section RE 9 overrides this section.
Defined in this Act: amount, Commissioner, nominee, pay, resident passive income, RWT, RWT-exempt status, taxable activity
Compare: 2004 No 35 s NF 3(1)
Section RE 8(1)(c)(i): amended, on 1 April 2020, by section 222(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 8 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 222(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 8 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 222(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 9 Agents’ or trustees’ obligations in relation to certain dividends
When this section applies
(1)
This section applies when an agent or trustee is required to withhold RWT from certain dividends.
Dividends other than those having the nature of interest
(2)
To the extent to which the resident passive income consists of a dividend other than a dividend treated as interest, an amount of tax that must be withheld under section RE 3 is treated as an amount to which the RWT rules apply.
Non-cash dividends
(3)
To the extent to which the resident passive income consists of a non-cash dividend, the trustee or agent must pay to the Commissioner an amount equal to the amount of tax for the dividend as if it were the amount of tax required to be withheld and paid under the RWT rules.
Obligation of person paying not overridden
(4)
This section does not override the obligation of the person who pays the resident passive income to the agent or trustee to withhold RWT for the payment under section RE 4.
Defined in this Act: amount, amount of tax, Commissioner, dividend, dividend treated as interest, non-cash dividend, pay, resident passive income, RWT, RWT rules, trustee
Compare: 2004 No 35 s NF 3(3)–(5)
Section RE 9(2): substituted (with effect on 30 June 2009), on 6 October 2009, by section 528(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 9 list of defined terms FDP rules: repealed (with effect on 30 June 2009), on 6 October 2009, by section 528(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RE 10 Special rule relating to payments of interest
Threshold for amounts of interest
(1)
This section applies to a person who—
(a)
pays resident passive income consisting of interest; and
(b)
either does not have RWT-exempt status under section RE 27 at the time of the payment or is a person described in section 32E(2)(k) or (l) of the Tax Administration Act 1994 or is a person with RWT-exempt status under section 32I of that Act; and
(c)
has paid an amount of resident passive income consisting of interest that is equal to or less than $5,000 in the tax year before the tax year in which the payment is made; and
(d)
would be liable to withhold RWT for the resident passive income in the absence of this section.
Minimum amount
(2)
Despite section RE 4(3), the person is required to withhold the amount of tax for the payment only if the total resident passive income consisting of interest paid by the person in the tax year in which the payment is made is more than $5,000.
Interest payments made in relation to taxable activities
(3)
For the purposes of subsection (2), and despite section RE 4(3)(b), a person who pays an amount of resident passive income consisting of interest in relation to the carrying on of a taxable activity in a tax year is required to withhold RWT for the resident passive income only if the amount that relates to the taxable activity is more than $5,000 for the tax year. This subsection does not apply in relation to a person referred to in subsection (1)(b) other than a person who does not have RWT-exempt status.
Defined in this Act: amount, amount of tax, interest, pay, resident passive income, RWT, RWT-exempt status, tax year, taxable activity
Compare: 2004 No 35 s NF 2(5)
Section RE 10(1)(b): replaced, on 1 April 2020, by section 223(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 10(1)(c): replaced, on 1 April 2020, by section 223(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 10(3) heading: inserted, on 1 April 2020, by section 223(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 10(3): inserted, on 1 April 2020, by section 223(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 10 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 223(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 10 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 223(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 10 list of defined terms taxable activity: inserted, on 1 April 2020, by section 223(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 10B Amounts withheld from distributions to holders of FIF attributing interests
When this section applies
(1)
This section applies when—
(a)
a distribution is made to a holder of an attributing interest in a FIF; and
(b)
section CD 36 (Foreign investment fund income) or EX 59(2) (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method) applies to the distribution; and
(c)
an amount is withheld by the payer from the distribution because the payer has treated the distribution as resident passive income subject to the RWT rules.
Treatment of amount
(2)
The amount withheld is treated as—
(a)
RWT for the purposes of this subpart and subpart LA (General rules for tax credits), and sections LB 3 (Tax credits for resident withholding tax), and RM 1 to RM 10 (which relate to refunds); and
(b)
tax paid in excess for the purposes of Part 10B of the Tax Administration Act 1994.
Treatment of distribution
(3)
The distribution is treated as resident passive income for the purposes of the sections listed in subsection (2).
Refunds
(4)
Subsection (2) does not apply if the payer or the holder applies under section RM 8(4) or (5) (Overpaid RWT or NRWT), as applicable, for a refund in relation to the amount withheld before the next 31 March after the date on which the amount of tax was withheld.
Defined in this Act: amount of tax, apply, attributing interest, FIF, pay, resident passive income, RWT, tax
Section RE 10B: inserted (with effect on 1 April 2008), on 7 December 2009, by section 107(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 10B list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RE 10C Obligations of custodial institutions in relation to certain payments of investment income
When this section applies
(1)
This section applies for the purposes of sections RE 4 and RF 4 (Non-resident passive income received by agents and others) when—
(a)
a person who is a custodial institution receives a payment of investment income; and
(b)
the institution has RWT-exempt status; and
(c)
the institution pays on or transfers the amount received to an end investor.
When this section does not apply
(2)
This section does not apply to a custodial institution that is the specified operator of a designated FMI to the extent that the designated FMI is a settlement system. The exclusion extends to a nominee or agent of the specified operator.
Meaning of settlement system and other terms
(2B)
For the purposes of subsection (2) and this subsection,—
(a)
FMI settlement means a settlement within the meaning of section 5 of the Financial Market Infrastructures Act 2021:
(b)
settlement system—
(i)
means a system or arrangement for effecting FMI settlements or processing settlement instructions in accordance with rules; and
(ii)
includes a payment system:
(c)
designated FMI, rules, settlement instruction, and specified operator have the same meanings as in section 5 of the Financial Market Infrastructures Act 2021.
Obligation to withhold
(3)
At the time the payment or transfer is made and to the extent to which the amount of tax has not already been withheld, the custodial institution that makes the payment to the end investor must withhold the amount of tax for the payment and pay it to the Commissioner.
Agreements to transfer withholding obligations: outsourcing withholding
(4)
A custodial institution that is required to withhold an amount of tax for a payment may, before the date on which the payment is received by the institution, enter into an agreement with another person (person B) for person B to withhold the amount of tax and pay it to the Commissioner. However, if person B does not withhold the amount of tax and pay it to the Commissioner, the withholding obligation remains with the custodial institution.
Agreements to transfer withholding obligations: passing obligation to other custodial institutions
(5)
When a payment of investment income is paid on or transferred through interposed custodial institutions before being paid to an end investor, the custodial institution that is last in the chain may enter into an agreement with another custodial institution that precedes them in the chain, for the latter institution to withhold the amount of tax for the payment and pay it to the Commissioner. In this case, the withholding obligation passes to the latter institution, and the final custodial institution’s obligation is discharged.
Meaning of custodial institution
(6)
For the purposes of this section and sections RE 4 and RF 4, a custodial institution means an entity—
(a)
that holds financial assets or financial instruments as a bare trustee on account for another person; and
(b)
whose activities are supervised or regulated under the Financial Markets Conduct Act 2013, the Financial Market Infrastructures Act 2021, the Financial Markets Authority Act 2011, the Financial Advisers Act 2008, or the Banking (Prudential Supervision) Act 1989, or are supervised or regulated under corresponding legislation in another jurisdiction.
Meaning of end investor
(7)
For the purposes of this section and sections RE 4 and RF 4, an end investor—
(a)
means an investor to whom a payment of investment income is made who is—
(i)
a direct investor, whether resident or non-resident, who is the beneficial owner of the investment:
(ii)
a custodial institution that is not resident in New Zealand; and
(b)
includes a trustee, PIE, or PIE proxy if the person or entity has an obligation to provide investment income information to the Commissioner.
When branches located in New Zealand
(7B)
For the purposes of subsection (7)(a)(ii), if the non-resident custodial institution has a branch located in New Zealand that receives a payment of investment income, the branch is treated as the person who must withhold the amount of tax for the payment under subsection (3).
Meaning of investment income
(8)
For the purposes of this section, and sections RE 4 and RF 4, investment income means—
(a)
resident passive income under section RE 2(1)(a) to (c) subject to the withholding obligations set out in sections RE 3 and RE 4:
(b)
non-resident passive income under section RF 2(1) (Non-resident passive income) subject to the withholding obligations set out in section RF 3 (Obligation to withhold amounts of tax for non-resident passive income):
(c)
attributed income of investors in portfolio investment entities under sections CP 1, CX 56, and CX 56B (which relate to attributed PIE income).
Relationship with sections RE 7 and RE 8
(9)
This section overrides sections RE 7 and RE 8 (which relate to amounts paid to trustees and nominees).
Defined in this Act: amount, amount of tax, attributed PIE income, business, Commissioner, custodial institution, designated FMI, end investor, fixed establishment, FMI settlement, investment income, New Zealand, non-resident, non-resident passive income, pay, portfolio investment entity, resident, resident passive income, rules, RWT, RWT-exempt status, settlement instruction, settlement system, specified operator
Section RE 10C: inserted, on 1 April 2020, by section 181 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RE 10C(2): replaced, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C(2B) heading: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C(2B): inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C(3): amended (with effect on 1 April 2020), on 30 March 2021, by section 132(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RE 10C(6)(b): replaced (with effect on 1 April 2020), on 30 March 2021, by section 132(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RE 10C(6)(b): amended, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C(6)(b): amended, on 1 July 2022, by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
Section RE 10C(7)(a)(ii): replaced (with effect on 1 April 2020), on 30 March 2022, by section 161(1) (and see section 161(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 10C(7B) heading: inserted (with effect on 1 April 2020), on 30 March 2022, by section 161(2) (and see section 161(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 10C(7B): inserted (with effect on 1 April 2020), on 30 March 2022, by section 161(2) (and see section 161(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RE 10C list of defined terms designated FMI: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C list of defined terms FMI settlement: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C list of defined terms rules: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C list of defined terms settlement instruction: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C list of defined terms settlement system: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
Section RE 10C list of defined terms specified operator: inserted, on 1 March 2024, by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
RE 11 Notification by companies
When this section applies
(1)
This section applies when a company that is not a Maori authority is entitled to receive a payment of resident passive income other than a replacement payment under a share-lending arrangement.
Notification required
(2)
The company must notify the person making the payment that they are a company.
Withholding rate
(3)
The person making the payment must withhold RWT for the payment at the relevant rate set out in schedule 1, part D, clause 4 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) for a payment made on or after the date of notification.
Consequence of failure to notify
(4)
If the company does not notify the person making the payment, the person must apply the higher withholding rate set out in section RE 19(3).
Defined in this Act: company, Maori authority, notify, pay, replacement payment, resident passive income, RWT, share-lending arrangement
Compare: 2004 No 35 s NF 2B
Section RE 11(1): amended, on 29 March 2018, by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 11(3): amended (with effect on 1 April 2008), on 6 October 2009, by section 529(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 11(3): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 11 list of defined terms trustee: repealed, on 29 March 2018, by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Calculating amounts of tax
RE 12 Interest
When this section applies
(1)
This section applies when a person makes a payment of resident passive income that consists of interest.
Calculation of amount of tax
(2)
The amount of tax for the payment that the person must withhold and pay to the Commissioner is calculated using the formula—
(tax rate × (interest paid + foreign withholding tax)) − foreign withholding tax.
Definition of items in formula
(3)
In the formula,—
(a)
(b)
interest paid is the interest paid before the amount of tax is determined:
(c)
foreign withholding tax is the amount of foreign withholding tax paid or payable on the interest paid.
Modification for 2009–10
(4)
Despite subsection (3)(a), the amount of tax that the person must withhold and pay may, if the person chooses, be calculated, under subsection (3), using a tax rate of 0.38 if—
(a)
the payment of resident passive income is made in the 2009–10 tax year; and
(b)
the tax rate under subsection (3)(a) would be 0.39 in the absence of this subsection.
Modification for companies and portfolio investment entities for 2010–11 tax year
(5)
Despite subsection (3)(a), the amount of tax that the person must withhold and pay may, if the person chooses, be calculated under subsection (3) using a tax rate of 0.30 if—
(a)
the payment of resident passive income that consists of interest is made in the 2010–11 tax year to—
(i)
a portfolio investment entity; or
(ii)
a company that is not a Maori authority; and
(b)
the tax rate under subsection (3)(a) would be 0.33 in the absence of this subsection.
Defined in this Act: amount of tax, Commissioner, company, foreign withholding tax, income year, interest, Maori authority, pay, portfolio investment entity, resident passive income
Compare: 2004 No 35 s NF 2(1)(a)
Section RE 12(3)(a) tax rate: amended (with effect on 1 April 2008), on 6 October 2009, by section 530(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RE 12(3)(a) tax rate: amended (with effect from 1 April 2008), on 15 December 2008, by section 33(1) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RE 12(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 12(4) heading: added, on 1 April 2009, by section 33(2) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RE 12(4): added, on 1 April 2009, by section 33(2) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section RE 12(5) heading: added, on 1 April 2010 (applying for the 2010–11 income year), by section 108(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 12(5) heading: amended (with effect on 1 April 2010), on 7 September 2010, by section 115(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section RE 12(5): added, on 1 April 2010 (applying for the 2010–11 income year), by section 108(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 12(5)(a): substituted (with effect on 1 April 2010), on 7 September 2010, by section 115(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section RE 12(5)(a)(ii): amended, on 29 March 2018, by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 12 list of defined terms company: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 12 list of defined terms income year: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 12 list of defined terms Maori authority: inserted (with effect on 1 April 2010), on 7 September 2010, by section 115(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section RE 12 list of defined terms portfolio investment entity: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 12 list of defined terms trustee: repealed, on 29 March 2018, by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 13 Dividends other than non-cash dividends
When this section applies
(1)
This section applies when a person makes a payment of resident passive income that consists of a dividend other than a non-cash dividend.
When this section does not apply
(1B)
This section does not apply if,—
(a)
at the same time as making a payment of a dividend other than a non-cash dividend, the person also makes a payment of a non-cash dividend; and
(b)
they choose to apply section RE 14B; and
(c)
the requirements of section RE 14B are met.
Calculation of amount of tax
(2)
The amount of tax for the payment that the person must withhold and pay to the Commissioner is calculated using the formula—
(tax rate × (dividend paid + tax paid or credit attached))
− tax paid or credit attached.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
dividend paid is the amount of the dividend paid before the amount of tax is determined:
(c)
tax paid or credit attached is the total of the following amounts:
(i)
if the dividend is paid in relation to shares issued by an imputation credit account (ICA) company, the amount of an imputation credit attached to the dividend:
(ii)
if the dividend is paid in relation to shares issued by a company not resident in New Zealand, the amount of foreign withholding tax paid or payable on the amount of dividend.
(iii)
[Repealed]Defined in this Act: amount, amount of tax, Commissioner, company, dividend, foreign withholding tax, ICA company, imputation credit, non-cash dividend, pay, resident in New Zealand, resident passive income, share
Compare: 2004 No 35 s NF 2(1)(b)
Section RE 13(1B) heading: inserted, on 1 April 2017, by section 266(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 13(1B): inserted, on 1 April 2017, by section 266(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 13(3)(a) tax rate: amended (with effect from 1 April 2008), on 29 May 2008, by section 45 of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RE 13(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 13(3)(c)(ii): amended, on 1 April 2017, by section 266(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 13(3)(c)(iii): repealed, on 1 April 2017, by section 266(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 13 list of defined terms FDP credit: repealed, on 1 April 2017, by section 266(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RE 14 Non-cash dividends other than certain share issues
When this section applies
(1)
This section applies when a person makes a payment of resident passive income that consists of a non-cash dividend other than—
(a)
a bonus issue in lieu:
(b)
a share issued under a profit distribution plan:
(c)
a dividend referred to in section RE 14C.
When this section does not apply
(1B)
This section does not apply if,—
(a)
at the same time as making a payment of a relevant non-cash dividend the person also makes a payment of a dividend other than a non-cash dividend; and
(b)
they choose to apply section RE 14B; and
(c)
the requirements of section RE 14B are met.
Calculation of amount of tax
(2)
The amount of tax for the payment that the person must pay under subsection (4) to the Commissioner is calculated using the formula—
(tax rate × dividend paid ÷ (1 − tax rate)) − tax paid or credit attached.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
dividend paid is the amount of the dividend paid before the amount of tax is determined:
(c)
tax paid or credit attached is the total of the following amounts:
(i)
if the dividend is paid in relation to shares issued by an ICA company, the amount of an imputation credit attached to the dividend:
(ii)
if the dividend is paid in relation to shares issued by a company not resident in New Zealand, the amount of foreign withholding tax paid or payable on the amount of dividend.
(iii)
[Repealed]Treatment as if amount of tax withheld
(4)
For the purposes of subsection (2), the person must pay to the Commissioner the amount calculated as if it were the amount of tax required to be withheld and paid under the RWT rules.
Defined in this Act: amount, amount of tax, bonus issue in lieu, Commissioner, company, foreign withholding tax, ICA company, imputation credit, non-cash dividend, pay, profit distribution plan, resident in New Zealand, resident passive income, RWT rules, share
Compare: 2004 No 35 s NF 2(1)(c), (2)
Section RE 14 heading: replaced (with effect on 1 October 2012), on 2 November 2012, by section 147(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 14(1): replaced (with effect on 1 October 2012), on 2 November 2012, by section 147(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 14(1)(c): inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 224(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 14(1B) heading: inserted, on 1 April 2017, by section 267(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 14(1B): inserted, on 1 April 2017, by section 267(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 14(2) formula: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 141(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RE 14(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 14(3)(c)(ii): amended, on 1 April 2017, by section 267(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 14(3)(c)(iii): repealed, on 1 April 2017, by section 267(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 14 list of defined terms FDP credit: repealed, on 1 April 2017, by section 267(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 14 list of defined terms profit distribution plan: inserted (with effect on 1 October 2012), on 2 November 2012, by section 147(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
RE 14B Combined cash and non-cash dividends
When this section applies
(1)
This section applies when a person has made an election in accordance with sections RE 13(1B) and RE 14(1B) and the amount of the cash dividend paid at the same time as the non-cash dividend is equal to or greater than the amount calculated by the formula in subsection (2).
Calculation of amount of tax
(2)
The amount of tax for the payment of the cash dividend and the non-cash dividend that the person must withhold and pay to the Commissioner is calculated using the formula—
(tax rate × (dividends + tax paid or credit attached)) − tax paid or credit attached.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
dividends is the total amount of the cash dividend and the non-cash dividend paid before the amount of tax is determined:
(c)
tax paid or credit attached is the total of the following amounts:
(i)
if a dividend is paid in relation to shares issued by an ICA company, the total amount of imputation credits attached to the dividends:
(ii)
if a dividend is paid in relation to shares issued by a company not resident in New Zealand, the amount of foreign withholding tax paid or payable on the total amount of the dividends.
Treatment as if amount of tax withheld for 1 combined dividend
(4)
The total amount of the cash dividend and the non-cash dividend is treated as 1 payment of 1 dividend (the combined dividend), and the amount calculated under the formula in subsection (2) is the amount that is required to be withheld from the combined dividend and paid under the RWT rules.
Section RE 14B: inserted, on 1 April 2017, by section 268 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RE 14C Non-cash dividends distributed through intermediaries
Sections RE 5 and RE 14 do not apply in relation to a non-cash dividend when—
(a)
a company or trustee of a trust—
(i)
derives the dividend from a foreign company; and
(ii)
distributes the dividend to a shareholder in the company or to a beneficiary of the trust, as applicable, who is in either case a natural person; and
(iii)
acts as an intermediary in relation to the distribution of the dividend; and
(b)
the distribution is made in the same income year in which the dividend is derived.
Defined in this Act: company, foreign company, income year, non-cash dividend, shareholder, trustee
Section RE 14C: inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 225(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 15 Bonus issues in lieu and shares issued under profit distribution plans
When this section applies
(1)
This section applies when a person makes a payment of resident passive income that consists of a dividend that is—
(a)
a bonus issue in lieu:
(b)
a share issued under a profit distribution plan.
Calculation of amount of tax
(2)
The amount of tax for the payment is calculated using the formula—
(tax rate × (alternative amount + tax paid or credit attached))
− tax paid or credit attached.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
alternative amount is, as applicable,—
(i)
the net amount of money offered as an alternative to the bonus issue before the amount of tax is determined; or
(ii)
for a share issued under a profit distribution plan, the net amount offered by the company for the reacquisition of the share before the amount of tax is determined:
(c)
tax paid or credit attached is the total of the following amounts:
(i)
if the dividend is paid in relation to shares issued by an ICA company, the amount of an imputation credit attached to the dividend:
(ii)
if the dividend is paid in relation to shares issued by a company not resident in New Zealand, the amount of foreign withholding tax paid or payable on the amount of dividend.
(iii)
[Repealed]Defined in this Act: amount, amount of tax, bonus issue in lieu, Commissioner, company, dividend, foreign withholding tax, ICA company, imputation credit, pay, profit distribution plan, RWT rules, resident in New Zealand, resident passive income, share
Compare: 2004 No 35 s NF 2(1)(d)
Section RE 15 heading: replaced (with effect on 1 October 2012), on 2 November 2012, by section 148(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 15(1): replaced (with effect on 1 October 2012), on 2 November 2012, by section 148(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 15(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 15(3)(b) alternative amount: replaced (with effect on 1 October 2012), on 2 November 2012, by section 148(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 15(3)(b)(ii): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RE 15(3)(c)(ii): amended, on 1 April 2017, by section 269(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 15(3)(c)(iii): repealed, on 1 April 2017, by section 269(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 15 list of defined terms Commissioner: inserted (with effect on 1 October 2012), on 2 November 2012, by section 148(4) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 15 list of defined terms FDP credit: repealed, on 1 April 2017, by section 269(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 15 list of defined terms profit distribution plan: inserted (with effect on 1 October 2012), on 2 November 2012, by section 148(4) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RE 15 list of defined terms RWT rules: inserted (with effect on 1 October 2012), on 2 November 2012, by section 148(4) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
RE 16 Taxable Maori authority distributions
When this section applies
(1)
This section applies when a Maori authority makes a payment of resident passive income that consists of a taxable Maori authority distribution in the form of a sum of money or an amount of a credit in the balance of an account with the Maori authority.
Calculation of amount of tax
(2)
The amount of tax for the payment that the Maori authority must withhold and pay to the Commissioner is calculated using the formula—
(tax rate × (distribution amount + credit attached)) − credit attached.
Non-cash amounts
(3)
Despite subsection (2), if the resident passive income is not paid in cash, the amount of tax for the payment that the Maori authority must pay to the Commissioner is calculated using the formula—
(tax rate × distribution amount ÷ (1 − tax rate)) − credit attached.
Definition of items in formulas
(4)
In the formulas in subsections (2) and (3),—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 6 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
distribution amount is the amount of the distribution before the amount of tax is determined:
(c)
credit attached is the amount of the Maori authority credit attached to the distribution.
Defined in this Act: amount, amount of tax, Commissioner, Maori authority, Maori authority credit, pay, resident passive income, taxable Maori authority distribution
Compare: 2004 No 35 s NF 2(1)(e), (f)
Section RE 16(4)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RE 17 Replacement payments under share-lending arrangements
When this section applies
(1)
This section applies when a person makes a payment of resident passive income that consists of a replacement payment under a share-lending arrangement.
Calculation of amount of tax
(2)
The amount of tax for the payment is calculated using the formula—
(tax rate × payment ÷ (1 − tax rate)) − credit attached − credit transferred.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
payment is the amount of the replacement payment excluding an imputation credit attached under section OB 64 (Replacement payments):
(c)
credit attached is the amount of an imputation credit attached to the replacement payment under section OB 64:
(d)
credit transferred is the amount of an imputation credit shown in a credit transfer notice relating to the replacement payment.
(e)
[Repealed]Defined in this Act: amount, amount of tax, credit transfer notice, imputation credit, pay, replacement payment, resident passive income, share-lending arrangement
Compare: 2004 No 35 s NF 2(1)(g)
Section RE 17(2) formula: replaced, on 1 April 2017, by section 270(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 17(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 17(3)(d): amended, on 1 April 2017, by section 270(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 17(3)(e): repealed, on 1 April 2017, by section 270(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RE 17 list of defined terms FDP credit: repealed, on 1 April 2017, by section 270(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RE 18 Payments made by RWT proxies
Calculation of amount of tax
(1)
A person who is an RWT proxy for a person paying resident passive income that consists of a dividend must withhold an amount of tax for the payment calculated using the formula—
tax rate × amount paid ÷ (1 − tax rate).
Definition of items in formula
(2)
In the formula,—
(a)
tax rate is the basic rate set out in schedule 1, part D, clause 3 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
amount paid is the amount of the dividend paid.
Defined in this Act: amount, amount of tax, dividend, pay, resident passive income, RWT proxy
Compare: 2004 No 35 s NF 2(1B)
Section RE 18(2)(a) tax rate: amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 116(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section RE 18(2)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RE 18B Capital value increase under inflation-indexed instruments: RWT cap
Calculation of amount of tax
(1)
For an interest payment under an inflation-indexed instrument, the payer is obliged, in addition to withholding under section RE 12, to withhold and pay to the Commissioner the lesser of the following amounts of tax:
(a)
the net amount of the interest payment (the current coupon payment) remaining after the withholding of RWT under section RE 12:
(b)
the amount given by the formula in subsection (2).
Formula for subsection (1)(b)
(2)
The formula for the purposes of subsection (1)(b) is:
CV increase × tax rate.
Definition of items in formula in subsection (2)
(3)
In the formula in subsection (2),—
(a)
CV increase is the amount calculated under the formula in subsection (4), if it is positive:
(b)
tax rate is the basic rate set out in schedule 1, part D, clause 3 or 4 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Formula for subsection (3)(a)
(4)
The formula for the purposes of subsection (3)(a) is:
CV current coupon payment − CV previous coupon payment.
Definition of items in formula in subsection (4)
(5)
In the formula in subsection (4),—
(a)
CV current coupon payment is an amount that is or will be payable for the money lent under the instrument, to the extent to which the amount has accrued at the time of the current coupon payment and the amount is determined by a fixed relationship to 1 or more indices of general price inflation in New Zealand:
(b)
CV previous coupon payment is—
(i)
an amount that is or will be payable for the money lent under the instrument, to the extent to which the amount has accrued at the time of the interest payment before the current coupon payment and the amount is determined by a fixed relationship to 1 or more indices of general price inflation in New Zealand; or
(ii)
the face value of the instrument, if there has been no interest payment before the current coupon payment.
Defined in this Act: amount, inflation-indexed instrument, interest, money lent, pay
Section RE 18B: inserted, on 30 June 2014, by section 142 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RE 18B(1) heading: inserted (with effect on 30 June 2014), on 24 February 2016, by section 226 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RE 19 Choosing other rates
When this section applies
(1)
This section applies when a person (person A) is entitled to receive resident passive income other than a replacement payment under a share-lending arrangement.
Person choosing rate
(2)
Person A may notify the person who is required to withhold the amount of tax for the payment to use 1 of the rates set out in schedule 1, part D, clause 3 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Company choosing rate
(3)
Despite subsection (1), if person A is a company, they may notify the person making the payment to withhold the amount of tax for the payment at the rate set out in schedule 1, part D, clause 4.
Application of rate
(4)
The rate chosen under subsection (2) or (3) applies to amounts of tax withheld from the date on which notice is given.
Defined in this Act: amount of tax, company, notice, notify, pay, replacement payment, resident passive income, share-lending arrangement, tax withheld
Compare: 2004 No 35 ss NF 2A(1), (3), NF 2D(1), (3)
Section RE 19 heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 109(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 19(2): amended (with effect from 1 April 2008), on 29 May 2008, by section 46(a) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RE 19(2): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RE 19(3): amended (with effect from 1 April 2008), on 29 May 2008, by section 46(b) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section RE 19 list of defined terms notice: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Paying amounts of tax
RE 20 Paying RWT
A person who is required under the RWT rules to withhold RWT must pay the amount of tax to the Commissioner under sections RA 15 and RA 16 (which relate to payment dates and the basis on which the payment dates are set).
Defined in this Act: amount of tax, Commissioner, pay, RWT, RWT rules
Compare: 2004 No 35 s NF 4(1), (2)
RE 21 Basis for payment of RWT
When this section applies
(1)
Subsections (2) to (5) apply for the purposes of section RA 6(1) (Withholding and payment obligations for passive income) to a person who is required under the RWT rules to withhold RWT for resident passive income consisting of interest.
RWT of $500 or more in total
(2)
If the person estimates for a tax year that they will be required to withhold $500 or more in total for each month of the tax year, they must pay the amount of tax to the Commissioner on a monthly basis.
RWT of less than $500 in total
(3)
If the person estimates for a tax year that they will be required to withhold less than $500 in total for each month of the tax year, they may pay the amount of tax to the Commissioner in 2 instalments as described in section RA 15 (Payment dates for interim and other tax payments).
When subsection (5) applies
(4)
Subsection (5) applies when the person has withheld more than $500 in total amounts of tax for a 2 month-period from the start of 1 month in a tax year to the end of the month following that month.
Total in 2-month period
(5)
Despite subsections (2) and (3), the person must pay the total amount of tax to the Commissioner for the 2-month period by the 20th day of the month following the end of the period.
When subsection (7) applies
(6)
Subsection (7) applies for the purposes of section RA 6(1) to a person who is required under the RWT rules to withhold RWT for resident passive income consisting of a dividend, a replacement payment, or a taxable Maori authority distribution.
Dividends, replacement payments, and taxable Maori authority distributions
(7)
The person must pay the amount of tax to the Commissioner on a monthly basis.
Defined in this Act: amount of tax, Commissioner, dividend, interest, pay, replacement payment, resident passive income, RWT, RWT rules, tax year, taxable Maori authority distribution
Compare: 2004 No 35 s NF 4(1)–(5), (7), (8)
Section RE 21(2) heading: amended (with effect on 1 April 2008), on 26 June 2019, by section 76(1) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RE 21(2): amended (with effect on 1 April 2008), on 26 June 2019, by section 76(2) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RE 21(3) heading: amended (with effect on 1 April 2008), on 26 June 2019, by section 76(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RE 21(3): amended, on 30 March 2022, by section 162 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
RE 22 When payment treated as non-resident passive income
When this section applies
(1)
This section applies when—
(a)
a person (person A) is required to pay an amount that would be treated as resident passive income in the absence of this section to another person (person B); and
(b)
person A receives resident passive income as agent or trustee for person B.
No liability
(2)
If person A concludes on reasonable grounds after making reasonable inquiries that an amount is non-resident passive income derived by person B, and person A has complied with their obligations under this Act and the Tax Administration Act 1994 in relation to paying non-resident withholding tax (NRWT) to the Commissioner, they have no liability under the RWT rules in relation to the amount.
Payment derived by non-resident
(3)
For the purposes of determining person A’s liability under the RWT rules, the amount is treated as derived by a non-resident.
Defined in this Act: amount, Commissioner, pay, non-resident, non-resident passive income, NRWT, resident passive income, RWT rules, trustee
Compare: 2004 No 35 s NF 5
Section RE 22(1)(a): substituted (with effect on 1 April 2008), on 7 December 2009, by section 110(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RE 22 list of defined terms resident in New Zealand: repealed (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
RE 23 When amount of tax treated as FDP credit
[Repealed]Section RE 23: repealed, on 1 April 2017, by section 271 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RE 24 When amount of tax treated as Maori authority credit
When this section applies
(1)
This section applies when a Maori authority withholds an amount of tax for a taxable Maori authority distribution.
Maori authority credit
(2)
The amount is treated as a Maori authority credit attached to the distribution by the Maori authority for the purposes of sections LO 1 to LO 4, OK 16, OK 19, and OK 20 (which relate to the amount and treatment of Maori authority credits).
Defined in this Act: amount of tax, Maori authority, Maori authority credit, taxable Maori authority distribution
Compare: 2004 No 35 s NF 8A(1)
RE 25 When amount of tax treated as imputation credit
When this section applies
(1)
This section applies when a share user under a share-lending arrangement withholds under the RWT rules an amount of tax for a replacement payment.
Imputation credit
(2)
The amount of tax withheld—
(a)
is treated for the share supplier as an imputation credit attached to the replacement payment in addition to an imputation credit that the share user attached to the payment under section OB 64 (Replacement payments); and
(b)
does not give rise under section LB 3 (Tax credits for resident withholding tax) to a tax credit or refund for the share supplier.
Defined in this Act: amount of tax, imputation credit, replacement payment, RWT rules, share-lending arrangement, share supplier, share user, tax credit
Compare: 2004 No 35 s NF 8B
RE 26 Payment by proxy
An RWT proxy who is required to withhold RWT in relation to a payment of resident passive income is treated as having withheld the amount from the payment at the time the payment is made.
Defined in this Act: amount, pay, resident passive income, RWT, RWT proxy
Compare: 2004 No 35 s NF 4(9)
Persons with RWT-exempt status
Heading: replaced, on 1 April 2020, by section 226(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 27 RWT-exempt status
Application
(1)
A person may apply to the Commissioner for RWT-exempt status if they are a person listed in section 32E(2) of the Tax Administration Act 1994.
When status ends
(2)
A person ceases to have RWT-exempt status if—
(a)
they no longer meet the requirements in subsection (1); or
(b)
the Commissioner revokes the status under section 32L of the Tax Administration Act 1994.
Notifying Commissioner
(3)
If a person who has RWT-exempt status becomes aware they no longer meet the requirements, they must notify the Commissioner under section 32K of the Tax Administration Act 1994.
Notifying investment providers
(4)
A person who has RWT-exempt status must notify their investment provider of their status and of a change in their status. For a list of investment providers, see section 25E(1) of the Tax Administration Act 1994.
Defined in this Act: apply, Commissioner, notify, RWT-exempt status
Compare: 2004 No 35 ss NF 9(1), NF 11(1), (2)
Section RE 27 heading: replaced, on 1 April 2020, by section 226(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27(1): replaced, on 1 April 2020, by section 226(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27(2) heading: replaced, on 1 April 2020, by section 226(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27(2): replaced, on 1 April 2020, by section 226(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27(3): amended, on 1 April 2020, by section 226(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27(4) heading: inserted, on 1 April 2020, by section 226(6) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27(4): inserted, on 1 April 2020, by section 226(6) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RE 27 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 226(7)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 27 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 226(7)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 28 When RWT-exempt status ends
When this section applies
(1)
This section applies in a month when a person’s RWT-exempt status ends. But the section does not apply if the person continues to be required to withhold RWT in the course of carrying out a taxable activity.
Payment of outstanding amounts of tax
(2)
The person must pay to the Commissioner all amounts of RWT withheld and not paid to the Commissioner by the 20th day of the month following the month in which the status ends.
Defined in this Act: amount, Commissioner, pay, RWT, RWT-exempt status, taxable activity
Compare: 2004 No 35 s NF 4(6)
Section RE 28 heading: replaced, on 1 April 2020, by section 227(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 28(1): amended, on 1 April 2020, by section 227(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 28(2): amended, on 1 April 2020, by section 227(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 28 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 227(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 28 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 227(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 29 Establishing whether persons have RWT-exempt status
(1)
This section applies for the purposes of section RE 5(2) to set out the ways for person A to establish—
(a)
whether person B is a person who has RWT-exempt status; and
(b)
that the status has not ended.
(2)
Person A may establish that—
(a)
they have made a search of the electronic register that the Commissioner provides on which the details of persons with RWT-exempt status are listed; or
(b)
they have taken reasonable steps to confirm that person B is a person listed in section 32E(2)(a) to (h) of the Tax Administration Act 1994; or
(c)
except in relation to a person listed in section 32E(2)(k) or (l) of that Act or to whom the Commissioner has provided RWT-exempt status under section 32I of that Act, they have been given person B’s tax file number and have been notified that person B has RWT-exempt status.
Defined in this Act: Commissioner, notify, RWT-exempt status, tax file number
Section RE 29: replaced, on 1 April 2020, by section 228 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RE 30 When unincorporated bodies have RWT-exempt status
When this section applies
(1)
This section applies when—
(a)
an unincorporated body that is carrying on a taxable activity has RWT-exempt status; and
(b)
the exemption relates to the carrying on of the taxable activity.
Treatment of payments made by unincorporated bodies
(2)
For the purposes of the RWT rules, a payment that the body makes in the course of carrying on the taxable activity is treated as a payment made by the body and not by a member of the body. This subsection overrides subsection (7).
Treatment of payments to members of unincorporated bodies
(3)
For the purposes of the RWT rules, a payment made to a member of the body in their capacity as a member and in the course of carrying on the taxable activity of the body is treated as a payment made to the body and not to the member.
Joint and several liability for amounts of tax
(4)
Each member of the body is jointly and severally liable for the RWT that the body is required to pay for as long as the member remains part of the body.
Natural persons, partnerships, joint ventures, trustees
(5)
For the purposes of subsection (4),—
(a)
if the member is a natural person, their estate is liable after their death for an amount payable that remains unpaid:
(b)
if the body is a partnership, joint venture, or the trustees of a trust, a member continues as a member until the date the Commissioner is notified of a change of membership.
Members and committees
(6)
Subsection (7) applies to an unincorporated body other than a partnership, joint venture, or the trustees of a trust, when the business of the body is managed by the members or a committee of its members.
Responsibility of committee officers and members
(7)
If something is required to be done under the RWT rules by or on behalf of the body, each member holding office as president, chair, treasurer, secretary, or a similar office is jointly and severally responsible. In default, each member holding office bears the responsibility. Action taken by 1 officer or committee member is sufficient.
Joint and several liability for actions required
(8)
If something is required to be done under the RWT rules by or on behalf of the body, each member is jointly and severally liable to do it. However, action taken by 1 member is sufficient. Subsection (7) overrides this subsection.
Changes in membership
(9)
A change in membership of the unincorporated body has no effect for the purposes of the RWT rules. Subsection (5)(b) overrides this subsection.
Some definitions
(10)
In this section,—
member means a partner, joint venturer, a trustee, or a member of a body.
Defined in this Act: amount, member, notify, partner, partnership, pay, RWT, RWT-exempt status, RWT rules, taxable activity, trustee
Compare: 2004 No 35 s NF 10
Section RE 30 heading: amended, on 1 April 2020, by section 229(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 30(1)(a): amended, on 1 April 2020, by section 229(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 30(10) partnership and partner: repealed, on 1 April 2008, by section 22(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
Section RE 30 list of defined terms notify: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RE 30 list of defined terms RWT-exempt status: inserted, on 1 April 2020, by section 229(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RE 30 list of defined terms RWT exemption certificate: repealed, on 1 April 2020, by section 229(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Subpart RF—Withholding tax on non-resident passive income (NRWT)
Contents
Introductory provisions
RF 1 NRWT rules and their application
Meaning
(1)
The NRWT rules means—
(a)
this subpart; and
(ab)
subpart FG (Treatment of notional loans to New Zealand branches of foreign banks); and
(b)
section LB 5 (Tax credits for non-resident withholding tax); and
(c)
sections LJ 1 to LJ 3, LJ 6, and LJ 7 (which relate to tax credits for foreign income tax); and
(d)
sections LK 1 to LK 5, and LK 7 (which relate to tax credits related to attributed CFC income); and
(db)
section RZ 13 (Treatment of prepayments); and
(dc)
section YD 5(1)(d), and (4) to (9) (Apportionment of income derived partly in New Zealand); and
(e)
sections 32M, 49, 100, Part 9, and sections 165B and 185 of the Tax Administration Act 1994.
Application
(2)
The NRWT rules apply to a person who makes a payment that consists of non-resident passive income.
What this section does not apply to
(3)
This section does not apply to an amount referred to in section CC 1(2)(a) to (d) (Land) to which section CC 9 (Royalties) applies.
Exception: certain income from land
(4)
Despite subsection (3), this section does apply to non-resident passive income that is an amount paid for—
(a)
the exploitation of, or right to exploit, plant material or a naturally occurring material or mineral arising in or on the land:
(b)
the removal of, or right to remove, plant material or a naturally occurring material or mineral arising in or on the land.
Defined in this Act: amount, non-resident passive income, NRWT rules, pay
Compare: 2004 No 35 s OB 1 “NRWT rules”
Section RF 1(1)(ab): inserted, on 30 March 2017, by section 272(1) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 1(1)(db): inserted, on 30 March 2017, by section 272(2) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 1(1)(dc): inserted, on 30 March 2017, by section 272(2) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 1(3) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 111(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 1(3): added (with effect on 1 April 2008), on 7 December 2009, by section 111(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 1(4) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 111(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 1(4): added (with effect on 1 April 2008), on 7 December 2009, by section 111(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 1 list of defined terms amount: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
RF 2 Non-resident passive income
Interest, certain dividends, and royalties
(1)
Non-resident passive income means income having a source in New Zealand that—
(a)
a non-resident derives and that consists of—
(i)
a dividend other than an investment society dividend:
(ii)
a royalty:
(iii)
an investment society dividend when the non-resident is not engaged in business in New Zealand through a fixed establishment in New Zealand:
(iv)
interest, other than interest derived in the circumstances set out in subsection (2B):
(v)
non-resident financial arrangement income; or
(b)
a New Zealand resident company that is treated under a double tax agreement as not being resident in New Zealand derives and that is a dividend other than an investment society dividend.
Inclusion: Capital value increase under inflation-indexed instruments
(1B)
Non-resident passive income includes an amount, arising at the time of a relevant coupon payment (the current coupon payment) equal to the amount given by the formula in section RE 18B(4) (Capital value increase under inflation-indexed instruments: RWT cap) in relation to the current coupon payment, if that current coupon payment is—
(a)
non-resident passive income under subsection (1); and
(b)
in relation to an inflation-indexed instrument.
Exclusions: non-residents
(2)
The following amounts derived by a non-resident are excluded from non-resident passive income:
(a)
an amount of exempt income:
(b)
interest arising because section EI 2 (Interest from inflation-indexed instruments) applies to an inflation-indexed instrument:
(c)
an amount of excluded income under sections CX 56B and CX 56C (which relate to attributed PIE income), as applicable:
(d)
an amount derived by a trustee of a trust after the effective date of an election under section HC 33(1) (Choosing to satisfy income tax liability of trustee) for the trust.
Exclusions: dual resident companies
(2BA)
The following amounts derived by a New Zealand resident company that is treated under a double tax agreement as not being resident in New Zealand are excluded from non-resident passive income:
(a)
an amount of exempt income:
(b)
an amount of excluded income under sections CX 56B and CX 56C, as applicable:
(c)
an amount derived by a trustee of a trust after the effective date of an election under section HC 33(1) for the trust.
Interest exceptions
(2B)
Subsection (1)(a)(iv) does not include interest derived from money lent by a non-resident—
(a)
for the purposes of a business they carry on in New Zealand through a fixed establishment in New Zealand; or
(b)
when the non-resident is—
(i)
a registered bank engaged in business in New Zealand through a fixed establishment in New Zealand; and
(ii)
not associated with the person to whom the money is lent; or
(c)
that has given rise to non-resident financial arrangement income under section RF 12E(1).
When subsection (4) applies
(3)
Subsection (4) applies in an income year when a person derives non-resident passive income consisting of—
(a)
a dividend other than an investment society dividend:
(b)
a royalty for the use, production, or reproduction of, or for the right to use, produce, or reproduce, a literary, dramatic, musical, or artistic work in which copyright subsists:
(c)
interest or a royalty derived by a life insurer from a company resident in New Zealand when the interest or royalty is treated as arising as a result of the life insurer’s election under section EY 49 (Non-resident life insurer becoming resident):
(d)
interest or an investment society dividend when the person paying and the person deriving the interest or dividend are not associated persons:
(e)
interest when the person paying the interest is a member of a New Zealand banking group.
Final withholding
(4)
If the person is a filing taxpayer, the schedular income tax liability for the corresponding tax year under section BC 7 (Income tax liability of person with schedular income) for non-resident passive income referred to in subsection (3) is determined by the amount of tax required to be withheld under this Part.
Exception: minimum amount
(5)
Despite subsection (4), if a person derives non-resident passive income consisting of interest, investment society dividends, or a royalty other than those described in subsection (3), the person’s income tax liability for the corresponding tax year is the greater of—
(a)
the sum of the total non-resident withholding tax (NRWT) for which they are liable and the amount that would be their income tax liability for the tax year if they had not derived non-resident passive income in the tax year:
(b)
the amount that would be their income tax liability in the absence of this subsection.
Company deriving minimum amount
(6)
For the purposes of subsection (5) for a company, if the total amount of non-resident passive income and other income derived by the company in the corresponding tax year is not more than $1,000, the income tax liability of the company for the tax year is the sum referred to in subsection (5)(a).
Application of financial arrangements rules
(7)
The financial arrangements rules do not apply to the calculation of an amount of non-resident passive income except to the extent to which the amount is non-resident financial arrangement income or an amount to which subpart FG (Treatment of notional loans to New Zealand branches of foreign banks) applies.
Interest payable by Commissioner
(8)
For interest payable under Part 7 of the Tax Administration Act 1994, NRWT withheld by the Commissioner is treated as paid on the date it is withheld. Section 100 and Part 9 of that Act do not apply to the Commissioner and that interest, but the other provisions of the NRWT rules do apply.
Defined in this Act: amount, amount of tax, associated person, business, Commissioner, company, dividend, double tax agreement, excluded income, exempt income, filing taxpayer, financial arrangements rules, fixed establishment, income, income tax liability, income year, inflation-indexed instrument, interest, investment society dividend, life insurer, money lent, New Zealand, New Zealand banking group, New Zealand resident, non-resident, non-resident financial arrangement income, non-resident passive income, NRWT, NRWT rules, pay, registered bank, resident in New Zealand, royalty, schedular income, schedular income tax liability, source in New Zealand, tax year
Compare: 2004 No 35 ss NG 1(2)–(4), NG 3, NG 4
Section RF 2(1) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 531(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 2(1): replaced (with effect on 30 August 2022), on 31 March 2023, by section 108(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2(1B) heading: inserted, on 30 June 2014, by section 143(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RF 2(1B): inserted, on 30 June 2014, by section 143(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RF 2(2) heading: replaced (with effect on 30 August 2022), on 31 March 2023, by section 108(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2(2)(b): replaced, on 30 June 2014, by section 143(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RF 2(2)(c): added (with effect on 1 April 2008), on 6 October 2009, by section 531(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 2(2)(c): amended (with effect on 1 April 2010), on 21 December 2010 (applying for the 2010–11 and later income years), by section 130(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RF 2(2)(c): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 531(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 2(2)(d): inserted, on 23 March 2020, by section 182 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 2(2BA) heading: inserted (with effect on 30 August 2022), on 31 March 2023, by section 108(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2(2BA): inserted (with effect on 30 August 2022), on 31 March 2023, by section 108(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2(2B) heading: inserted, on 30 March 2017, by section 273(2) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2(2B): inserted, on 30 March 2017, by section 273(2) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2(2B): amended (with effect on 30 August 2022), on 31 March 2023, by section 108(4) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2(3)(e): inserted, on 30 March 2017, by section 273(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2(4): amended, on 30 March 2017, by section 273(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2(5): amended (with effect on 1 April 2008), on 6 October 2009, by section 531(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 2(7): amended, on 30 March 2017, by section 273(5) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2(8): amended (with effect on 1 April 2008), on 24 February 2016, by section 227 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RF 2 list of defined terms derived from New Zealand: repealed, on 21 December 2010, by section 130(3)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RF 2 list of defined terms double tax agreement: inserted (with effect on 30 August 2022), on 31 March 2023, by section 108(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2 list of defined terms excluded income: inserted (with effect on 1 April 2008), on 6 October 2009, by section 531(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 2 list of defined terms income year: inserted, on 30 March 2017, by section 273(6) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2 list of defined terms inflation-indexed instrument: inserted, on 30 June 2014, by section 143(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section RF 2 list of defined terms money lent: inserted, on 30 March 2017, by section 273(6) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2 list of defined terms New Zealand banking group: inserted, on 30 March 2017, by section 273(6) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2 list of defined terms New Zealand resident: inserted (with effect on 30 August 2022), on 31 March 2023, by section 108(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2 list of defined terms non-resident financial arrangement income: inserted, on 30 March 2017, by section 273(6) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2 list of defined terms registered bank: inserted, on 30 March 2017, by section 273(6) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2 list of defined terms source in New Zealand: inserted, on 21 December 2010, by section 130(3)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
RF 2B Non-resident financial arrangement income: outline and concepts
What this section does
(1)
This section applies for the purposes of sections RF 2C and RF 12D to RF 12J to provide an outline of the provisions relating to the taxation of non-resident financial arrangement income and to describe the key terms used in the provisions. This section—
(a)
operates only as an aid to understanding; and
(b)
does not override the definition of any term used in this Act; and
(c)
does not prevail in any case where a conflict arises between this section and another provision of this Act.
Purpose
(2)
The purpose of the rules for non-resident financial arrangement income is to ensure that the payment of NRWT on interest derived by a related-party lender is aligned with deductions for expenditure that a borrower has under the financial arrangements rules.
Key concepts
(3)
The following are the key concepts:
(a)
non-resident financial arrangement income, which is the equivalent of interest derived by a lender, see section RF 2C:
(b)
related-party debt which is a financial arrangement between associated persons, or persons who are regarded as associated, that provides funds to a borrower who is allowed a deduction for expenditure under the arrangement, see section RF 12H (Meaning of related-party debt):
(c)
indirect associated funding which is an arrangement involving some form of back-to-back lending, see section RF 12I (Concepts used for definition of related-party debt).
When does a lender derive non-resident financial arrangement income?
(4)
An offshore lender will derive non-resident financial arrangement income when—
(a)
they are associated with or related to a borrower who is resident in New Zealand; and
(b)
the funding is provided through a financial arrangement that is a related-party debt; and
(c)
interest payments on the arrangement are deferred when compared to interest deductions by the borrower; and
(d)
the borrower’s expenditure on related-party debt is more than a de minimis amount.
How is the income calculated?
(5)
The non-resident financial arrangement income of a lender is aligned with the amount of the expenditure incurred by the borrower on related-party debt, see section RF 12D.
What are first year adjustments?
(6)
An adjustment is made for the first year in which a lender derives non-resident financial arrangement income. The lender is treated as having derived an additional amount that is sufficient to reverse the deferral described in subsection (4)(c), see section RF 12F.
How is the income taxed?
(7)
The lender’s income is non-resident passive income from which NRWT must be withheld, see section RF 2.
Defined in this Act: amount, associated person, deduction, financial arrangement, financial arrangements rules, interest, non-resident financial arrangement income, non-resident passive income, NRWT, pay, related-party debt, resident in New Zealand
Section RF 2B: inserted, on 30 March 2017, by section 274 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2B(1): amended, on 29 March 2018 (with effect on 30 March 2017), by section 230 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RF 2B list of defined terms approved issuer: repealed, on 18 March 2019, by section 261 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RF 2C Meaning of non-resident financial arrangement income
When this section applies
(1)
This section, and sections RF 12D to RF 12J, apply for the purposes of the NRWT rules when—
(a)
a person (the borrower) is—
(i)
resident in New Zealand; or
(ii)
a non-resident carrying on a business in New Zealand through a fixed establishment in New Zealand; and
(b)
the borrower is party to a financial arrangement with a non-resident (the lender) through which funding is provided to the borrower, other than funding provided by the lender through a fixed establishment in New Zealand; and
(c)
the financial arrangement—
(i)
gives rise to non-resident passive income under section RF 2(1)(a)(iv); or
(ii)
would give rise to income referred to in subparagraph (i) in the absence of section RF 2(2B)(c).
Meaning of non-resident financial arrangement income
(2)
Non-resident financial arrangement income, for a financial arrangement and an income year, means an amount having a source in New Zealand that is accrued on a related-party debt and derived by a lender in the income year when—
(a)
non-resident financial arrangement income was derived in relation to the arrangement by a lender in an earlier income year; or
(b)
the following requirements are met for the income year:
(i)
the total expenditure incurred by the borrower on related-party debt is more than the de minimis set out in subsection (3); and
(ii)
in relation to the financial arrangement, the deferral calculation set out in subsection (4) is less than 90%.
Related-party de minimis
(3)
The de minimis applies when the total expenditure on all related-party debt incurred in the previous income year under the financial arrangements rules by the borrower, and all companies that are in the same group of companies as the borrower, is $40,000 or less.
Deferral calculation
(4)
Subject to subsection (6), the deferral calculation referred to in subsection (2)(b)(ii) is the percentage calculated using the formula—
accumulated payments ÷ (accumulated accruals − hybrid deductions).
Definition of items in formula
(5)
In the formula,—
(a)
accumulated payments for the income year is the total interest paid in relation to the financial arrangement by the borrower for the period that—
(i)
starts on the day on which the financial arrangement first meets the requirements for a related-party debt; and
(ii)
ends on the NRFAI due date for the borrower’s income year:
(b)
accumulated accruals is an amount equal to the total expenditure that the borrower incurs under the arrangement when the arrangement is a related-party debt for the period that—
(i)
starts on the day on which the financial arrangement first meets the requirements for a related-party debt; and
(ii)
ends on the last day of the income year before the income year referred to in paragraph (a)(ii):
(c)
hybrid deductions is an amount equal to the part of the expenditure that the borrower incurs under the arrangement in the period given by paragraph (b) that has been denied as a deduction under subpart FH (Hybrid and branch mismatches of deductions and income from multi-jurisdictional arrangements) when the expenditure is incurred and is not allowed as a deduction under the subpart in that period, on the date referred to in paragraph (b)(ii).
When calculation treated as more than 90%
(6)
For the purposes of the calculation in subsection (4), the result of the formula is treated as more than 90% if—
(a)
the item accumulated accruals is equal to the item hybrid deductions:
(b)
the date in subsection (5)(b)(ii) occurs before the date in subsection (5)(b)(i).
NRFAI due date
(7)
The NRFAI due date, for a financial arrangement, is the due date for the payment of NRWT for the period that ends on the last day of the second month following the end of an income year.
Foreign exchange movements
(8)
For the purposes of subsections (4) and (5), the calculation of total interest and total expenditure must be made in the currency of the financial arrangement.
Choosing to disregard de minimis and deferral calculation
(9)
See section RF 12G for elections to disregard the related-party de minimis and the deferral calculation.
Example
Three years ago, NZ Sub A Ltd (A) borrowed NZ$1m from a non-resident associate (Foreign Lender Ltd). A’s financial arrangement expenditure on this arrangement for each year has been $42,000, $50,000 and $53,000. For the same 3-year period, A has paid interest of $19,000, $20,000 and $21,000. At the end of the second year, the deferral calculation is ($19,000 + $20,000) ÷ $42,000 = 92.9%, so no NRFAI arises. However, at the end of the third year the deferral calculation is ($19,000 + $20,000 + $21,000) ÷ ($42,000 + $50,000) = 65.2%. As this is below 90%, NRFAI arises for the first time in the third year. The NRFAI will be treated as paid under section RF 12E on the last day of the second month after A’s balance date.
Defined in this Act: amount, amount of tax, arrangement, associated person, company, financial arrangement, financial arrangements rules, fixed establishment, income year, interest, money lent, non-resident, non-resident financial arrangement income, non-resident passive income, New Zealand, New Zealand banking group, NRFAI due date, NRWT, NRWT rules, pay, related-party debt, resident in New Zealand, ring-fenced tax loss, source in New Zealand
Section RF 2C: inserted, on 30 March 2017, by section 274 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 2C(1)(c)(i): amended (with effect on 30 August 2022), on 31 March 2023, by section 109 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 2C(4) formula: amended, on 1 July 2018, by section 46(1) (and see section 46(4) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Section RF 2C(5)(c): inserted, on 1 July 2018, by section 46(2) (and see section 46(4) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Section RF 2C(6)(a): replaced (with effect on 1 July 2018), on 30 March 2021, by section 133(1) (and see section 133(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RF 2C list of defined terms approved issuer: repealed, on 18 March 2019, by section 262 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RF 2C list of defined terms arrangement: inserted, on 1 July 2018, by section 46(3) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Section RF 2C list of defined terms ring-fenced tax loss: inserted, on 1 July 2018, by section 46(3) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Withholding obligations
RF 3 Obligation to withhold amounts of tax for non-resident passive income
Withholding amount of tax
(1)
A person who makes a payment of non-resident passive income must withhold the amount of tax for the payment and pay it to the Commissioner. The obligation to withhold arises under section RA 6(2) (Withholding and payment obligations for passive income) at the time of payment.
Exclusion
(2)
Despite subsection (1), no obligation to withhold NRWT arises in relation to an amount treated as a dividend under section GB 1(3) (Arrangements involving dividend stripping).
Defined in this Act: amount, amount of tax, Commissioner, dividend, non-resident passive income, NRWT, pay
Compare: 2004 No 35 s NG 8(1)
Section RF 3(1) heading: inserted (with effect on 1 April 2008), on 7 December 2009, by section 112(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 3(2) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 112(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 3(2): added (with effect on 1 April 2008), on 7 December 2009, by section 112(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 3 list of defined terms amount: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 3 list of defined terms dividend: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 3 list of defined terms NRWT: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
RF 4 Non-resident passive income received by agents and others
When this section applies
(1)
This section applies when—
(a)
an agent, custodial institution, or other person in New Zealand receives a payment of non-resident passive income on behalf of a person entitled to the payment; and
(b)
some or all of the amount of tax for the payment has not been withheld.
Obligation to withhold: agent, custodial institution, or other person
(2)
The agent, custodial institution, or other person must withhold the amount of tax referred to in subsection (1)(b) for the payment and pay it to the Commissioner. The obligation to withhold arises at the time of receipt.
Notifying agent, custodial institution, or other person
(3)
If, in the circumstances described in subsection (1)(a), the person paying the non-resident passive income has withheld the amount of tax for the payment, they must notify the agent, custodial institution, or other person of the amount withheld. Notification must be made at the time the payment is made.
Agreements to transfer withholding obligations: outsourcing withholding
(4)
A custodial institution that is required to withhold an amount of tax for a payment may, before the date on which the payment is received by the institution, enter into an agreement with another person (person B) for person B to withhold the amount of tax and pay it to the Commissioner. However, if person B does not withhold the amount of tax and pay it to the Commissioner, the withholding obligation remains with the custodial institution.
Agreements to transfer withholding obligations: passing obligation to other custodial institutions
(5)
When a payment of investment income is paid on or transferred through interposed custodial institutions before being paid to an end investor, the custodial institution that is last in the chain may enter into an agreement with another custodial institution that precedes them in the chain, for the latter institution to withhold the amount of tax for the payment and pay it to the Commissioner. In this case, the withholding obligation passes to the latter institution, and the final custodial institution’s obligation is discharged.
Defined in this Act: amount, amount of tax, Commissioner, custodial institution, end investor, investment income, New Zealand, non-resident passive income, notify, pay
Compare: 2004 No 35 s NG 8(2), (3)
Section RF 4(1)(a): amended, on 1 April 2020, by section 183(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(2) heading: amended, on 1 April 2020, by section 183(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(2): amended, on 1 April 2020, by section 183(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(3) heading: amended, on 1 April 2020, by section 183(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(3): amended, on 1 April 2020, by section 183(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(4) heading: inserted, on 1 April 2020, by section 183(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(4): inserted, on 1 April 2020, by section 183(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(5) heading: inserted, on 1 April 2020, by section 183(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4(5): inserted, on 1 April 2020, by section 183(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4 list of defined terms amount: inserted, on 1 April 2020, by section 183(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4 list of defined terms custodial institution: inserted, on 1 April 2020, by section 183(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4 list of defined terms end investor: inserted, on 1 April 2020, by section 183(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section RF 4 list of defined terms investment income: inserted, on 1 April 2020, by section 183(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
RF 5 When amounts of tax already withheld
A person is not required to withhold NRWT when some or all of the payment consists of resident passive income to the extent to which the amount of tax has already been collected.
Defined in this Act: amount of tax, non-resident passive income, NRWT, pay, resident passive income
Compare: 2004 No 35 s NF 2(6)
RF 6 When amounts of tax not withheld or partly withheld
Person as filing taxpayer
(1)
When a person is required under section RA 6(2) (Withholding and payment obligations for passive income) to withhold NRWT and does not withhold the full amount required under this Part, the person deriving the non-resident passive income is treated for this purpose as a filing taxpayer.
When amount treated as dividend
(1B)
A person who derives non-resident passive income that is a dividend under section GB 1(3) (Arrangements involving dividend stripping) is treated as a filing taxpayer.
Debt payable
(2)
The amount of tax referred to in subsection (1) as not withheld is a debt payable by the person to the Commissioner, and is treated as having become due under section RA 10 (When obligations not met).
Non-cash dividends
(3)
Subsection (2) applies in relation to a non-cash dividend described in section RF 10 as if the amount equal to the amount of tax for the dividend were the amount payable.
Commissioner’s powers to recover
(4)
In recovering the amount, the Commissioner may take the steps the Commissioner thinks fit in relation to the person in default or liable to pay, whether or not they are the same person.
Defined in this Act: amount, amount of tax, Commissioner, filing taxpayer, non-cash dividend, non-resident passive income, NRWT, pay
Compare: 2004 No 35 s NG 13
Section RF 6(1B) heading: inserted (with effect on 1 April 2008), on 7 December 2009, by section 113(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 6(1B): inserted (with effect on 1 April 2008), on 7 December 2009, by section 113(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Calculating amounts of tax
RF 7 General rate for NRWT
When this section applies
(1)
This section applies to a payment of non-resident passive income other than a payment to which sections RF 8 to RF 12 apply.
Calculation of amount of tax
(2)
The amount of tax is calculated using the formula—
payment × 0.15.
Defined in this Act: amount of tax, non-resident passive income, NRWT, pay
Compare: 2004 No 35 s NG 2(1)(c)
RF 8 Certain dividends
When this section applies
(1)
This section applies when a person makes a payment of non-resident passive income that consists of a dividend, except to the extent to which the payment is—
(a)
an investment society dividend; or
(b)
a supplementary dividend under subpart LP (Tax credits for supplementary dividends); or
(c)
[Repealed](d)
a fully imputed dividend; or
(e)
[Repealed](f)
[Repealed](g)
an amount paid by a foreign investment PIE to a notified foreign investor under section HM 44B (NRWT calculation option) to the extent to which the amount represents the fully imputed portion of a dividend and the related supplementary dividend derived by the PIE.
Calculation of amount of tax
(2)
The amount of tax is calculated using the formula—
dividend payment × 0.3.
Defined in this Act: amount of tax, dividend, foreign investment PIE, fully imputed, investment society dividend, non-resident passive income, notified foreign investor, pay, supplementary dividend
Compare: 2004 No 35 s NG 2(1)(a)
Section RF 8(1)(c): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 128(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 8(1)(e): repealed, on 1 April 2017, by section 275(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 8(1)(f): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 128(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 8(1)(g): inserted, on 1 April 2013 (applying for the 2013–14 and later income years), by section 150(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RF 8 list of defined terms CTR additional dividend: repealed (with effect on 1 July 2011), on 7 May 2012, by section 128(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 8 list of defined terms FDP: repealed, on 1 April 2017, by section 275(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 8 list of defined terms foreign investment PIE: inserted, on 1 April 2013 (applying for the 2013–14 and later income years), by section 150(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RF 8 list of defined terms fully credited for conduit tax relief: repealed (with effect on 1 July 2011), on 7 May 2012, by section 128(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 8 list of defined terms fully imputed: inserted (with effect on 1 April 2008), on 6 October 2009, by section 532 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 8 list of defined terms notified foreign investor: inserted, on 1 April 2013 (applying for the 2013–14 and later income years), by section 150(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
RF 9 When dividends fully imputed
When this section applies
(1)
This section applies for the purposes of sections RF 8, RF 10, RF 11B, and RF 11BB to determine the extent to which a dividend is fully imputed.
Fully imputed
(2)
The extent to which a dividend is fully imputed is calculated using the formula—
(imputation credit amount + supplementary dividend amount)
× (1 − tax rate) ÷ tax rate.
Definition of items in formula
(3)
In the formula in subsection (2),—
(a)
imputation credit amount is the amount of an imputation credit attached to the dividend:
(b)
supplementary dividend amount is the amount of a supplementary dividend payable under subpart LP (Tax credits for supplementary dividends) for the dividend:
(c)
tax rate is the basic rate of income tax set out in schedule 1, part A, clause 2, (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) for the tax year in which the dividend is paid.
Fully credited for FDP[Repealed]
(4)
[Repealed]Definition of items in formula[Repealed]
(5)
[Repealed]Fully credited for conduit tax relief[Repealed]
(6)
[Repealed]Definition of item in formula[Repealed]
(7)
[Repealed]Defined in this Act: amount, dividend, imputation credit, income tax, pay, supplementary dividend, tax year
Compare: 2004 No 35 ss NG 2(3), (4), OB 1 “fully conduit tax relief credited”
Section RF 9 heading: amended, on 1 April 2017, by section 276(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9(1): amended (with effect on 30 August 2022), on 31 March 2023, by section 110 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RF 9(1): amended, on 1 April 2017, by section 276(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9(1): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 129(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 9(1): amended, on 1 February 2010, by section 114 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 9(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 533(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 9(3)(c) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RF 9(4) heading: repealed, on 1 April 2017, pursuant to section 276(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9(4): repealed, on 1 April 2017, by section 276(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9(5) heading: repealed, on 1 April 2017, pursuant to section 276(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9(5): repealed, on 1 April 2017, by section 276(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9(6) heading: repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, pursuant to section 129(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 9(6): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 129(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 9(7) heading: repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, pursuant to section 129(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 9(7): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 129(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 9 list of defined terms FDP: repealed, on 1 April 2017, by section 276(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9 list of defined terms FDP credit: repealed, on 1 April 2017, by section 276(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 9 list of defined terms fully credited for conduit tax relief: repealed (with effect on 1 July 2011), on 7 May 2012, by section 129(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
RF 10 Non-cash dividends
When subsections (2) to (5) apply
(1)
Subsections (2) to (5) apply when a person makes a payment of non-resident passive income that consists of a non-cash dividend to the extent to which the amount is not fully imputed.
When amount not taxable bonus issue
(2)
The amount of tax, when the payment is not a taxable bonus issue, is calculated using the formula—
rate A ÷ (1 − rate A) × dividend payment.
Definition of items in formula
(3)
In the formula in subsection (2),—
(a)
rate A is the rate of tax set out in section RF 8:
(b)
dividend payment is the amount of the dividend paid to the extent to which the amount of the dividend is not fully imputed, as described in section RF 9(2), disregarding the amount of tax to be withheld.
(c)
[Repealed](d)
[Repealed]When amount taxable bonus issue
(4)
The amount of tax, when the payment is a taxable bonus issue, is calculated using the formula—
rate A × dividend payment.
Definition of items in formula
(5)
In the formula in subsection (4),—
(a)
rate A is the rate of tax set out in section RF 8:
(b)
dividend payment is the amount of the dividend paid calculated under section CD 7(2), CD 7B(2), or CD 8(3) (which relate to bonus issues)—
(i)
other than a dividend referred to in the item bonus issue:
(ii)
to the extent to which the amount of the dividend is not fully imputed (as described in section RF 9).
(c)
[Repealed](d)
[Repealed](e)
[Repealed]Fully imputed non-cash dividends
(5B)
When a payment of non-resident passive income consists of a non-cash dividend, the rate of NRWT payable on the amount is 0% to the extent to which the amount is fully imputed.
Amount treated as amount withheld and paid under NRWT rules
(6)
A person who is liable under this section for NRWT must pay the amount to the Commissioner. The amount is treated as if it were an amount withheld and paid under the NRWT rules for the purposes of this Act and the Tax Administration Act 1994.
Amount part of dividend[Repealed]
(7)
[Repealed]Defined in this Act: amount, amount of tax, Commissioner, dividend, fully imputed, non-cash dividend, non-resident passive income, NRWT, NRWT rules, pay, tax, taxable bonus issue
Compare: 2004 No 35 ss NG 2(1)(b)(ii), NG 9
Section RF 10(1) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 534(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 10(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 534(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 10(2) formula: replaced, on 1 April 2017, by section 277(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(3)(a): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 130(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 10(3)(b): replaced, on 1 April 2017, by section 277(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(3)(c): repealed, on 1 April 2017, by section 277(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(3)(d): repealed, on 1 April 2017, by section 277(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(4) formula: replaced, on 1 April 2017, by section 277(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(5)(b): amended (with effect on 1 October 2012), on 2 November 2012, by section 151(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RF 10(5)(b)(ii): replaced, on 1 April 2017, by section 277(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(5)(c): repealed, on 1 April 2017, by section 277(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(5)(d): repealed, on 1 April 2017, by section 277(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10(5)(e): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 130(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 10(5B) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 534(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 10(5B): inserted (with effect on 1 April 2008), on 6 October 2009, by section 534(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 10(7) heading: repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, pursuant to section 130(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 10(7): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 130(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 10 list of defined terms CTR additional dividend: repealed (with effect on 1 July 2011), on 7 May 2012, by section 130(5) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 10 list of defined terms FDP: repealed, on 1 April 2017, by section 277(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10 list of defined terms FDP credit: repealed, on 1 April 2017, by section 277(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 10 list of defined terms fully credited for conduit tax relief: repealed (with effect on 1 July 2011), on 7 May 2012, by section 130(5) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section RF 10 list of defined terms fully imputed: inserted (with effect on 1 April 2008), on 6 October 2009, by section 534(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 10 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 534(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RF 11 Dividends paid to companies associated with non-residents
When this section applies
(1)
This section applies when—
(a)
a non-resident formerly held a share in a company (company A) resident in New Zealand; and
(b)
while the non-resident held the share, company A was associated with the non-resident; and
(c)
the non-resident has disposed of the share to another company (company B) that is resident in New Zealand and associated with the non-resident; and
(d)
some or all of the price for which company B acquired the share remains after the acquisition unpaid or owing in any way to the non-resident, whether or not the amount is secured.
Dividend derived
(2)
While an amount of the price remains unpaid or owing, a dividend paid to company B in relation to the share is treated as having been paid to the non-resident and as derived as a dividend by the non-resident at the time the dividend is paid.
Defined in this Act: amount, company, dividend, non-resident, pay, resident in New Zealand, share
Compare: 2004 No 35 s NG 14
Section RF 11 heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 535(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 11(1)(b): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 535(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 11(1)(c): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 535(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 11 list of defined terms control: repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RF 11B Dividends paid by companies in certain situations
The rate of NRWT payable on a payment of non-resident passive income in the form of a dividend paid by a company to a non-resident is—
(a)
to the extent to which the payment is a fully-imputed dividend, 0% if—
(i)
the non-resident has a direct voting interest in the company of 10% or more:
(ii)
the non-resident does not have a direct voting interest in the company of 10% or more and, in the absence of this section, the post-treaty tax rate for the dividend would be less than 15% if no imputation credits were attached to the payment:
(b)
to the extent to which the payment is not a fully-imputed dividend, the post-treaty tax rate for the dividend that, in the absence of this section, would apply if no imputation credits were attached to the payment.
Defined in this Act: company, direct voting interest, dividend, fully imputed, imputation credits, non-resident, non-resident passive income, NRWT, pay, post-treaty tax rate
Section RF 11B: replaced (with effect on 1 February 2010), on 2 November 2012, by section 152 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RF 11B list of defined terms fully imputed: inserted, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RF 11B list of defined terms fully-imputed dividend: repealed, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RF 11BB Certain dividends paid to dual resident companies
When this section applies
(1)
This section applies when a company makes a payment of non-resident passive income in the form of a dividend to a New Zealand resident company (the recipient) that is treated under a double tax agreement as not being resident in New Zealand to the extent to which the dividend is not fully imputed, if—
(a)
the requirements of section CW 10(1)(b) to (d), (5), and (6) (Dividend within New Zealand wholly-owned group) are met; and
(b)
the requirement of section CW 10(1)(f) is not met; and
(c)
the recipient becomes a company that is not a foreign company before the DRCD deferral date.
Amount of tax
(2)
The amount of tax is the lesser of—
(a)
the amount of tax that the payer would be required to withhold and pay in the absence of this section; and
(b)
the sum of all dividends paid by the recipient while it was treated under the double tax agreement as not being resident in New Zealand to the extent to which those dividends were not fully imputed.
Defined in this Act: amount of tax, company, dividend, double tax agreement, DRCD deferral date, foreign company, fully imputed, New Zealand resident, non-resident passive income, pay, resident in New Zealand
Section RF 11BB: inserted (with effect on 30 August 2022), on 31 March 2023, by section 111 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
RF 11C Interest paid by non-resident companies to non-residents
When this section applies
(1)
This section applies in relation to an amount of non-resident passive income that consists of interest and is paid—
(a)
by a company that is resident in a country or territory outside New Zealand for the purposes of a double tax agreement; and
(b)
to a person that is resident in a country or territory outside New Zealand for the purposes of the double tax agreement.
Application of double tax agreement and NRWT rules to amount
(2)
The double tax agreement and the NRWT rules apply to the amount as being interest, despite any provision in the double tax agreement that would otherwise require the amount to be treated as being a dividend.
Defined in this Act: amount, company, dividend, double tax agreement, interest, New Zealand, non-resident passive income, NRWT rules, pay, tax
Section RF 11C: inserted (with effect on 1 April 2008), on 27 June 2018, by section 47(1) (and see section 47(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
RF 12 Interest paid by approved issuers or transitional residents
When this section applies
(1)
This section applies in relation to an amount of non-resident passive income that consists of—
(a)
interest that—
(i)
is paid by an approved issuer under a registered security; and
(ii)
unless the approved issuer is a member of a New Zealand banking group as described in section FE 33 (New Zealand banking group), is derived by a person not associated with the approved issuer except by being a beneficiary of a trust (a security trust) established for the main purpose of protecting and enforcing beneficiaries’ rights under the registered security; and
(iii)
is not a payment to which section RF 12B applies; and
(iv)
if the interest relates to related-party debt, is derived at a time when the person is not associated with the approved issuer other than as a beneficiary of a security trust, and the funding provided by the lender under the related-party debt does not meet the requirements in section RF 12H(1)(a)(ii), and the lender does not meet the requirements in section RF 12H(1)(a)(iii):
(b)
interest that—
(i)
is paid by a transitional resident in relation to money borrowed by them while non-resident; and
(ii)
is not paid in relation to a business carried on through a fixed establishment in New Zealand; and
(iii)
is derived by a person not associated with the transitional resident; and
(iv)
is not a payment to which section RF 12B applies.
Zero-rating
(2)
The rate of NRWT payable on the amount is 0%.
Interest paid under registered securities
(3)
For the purposes of the NRWT rules, an amount of interest is paid by an approved issuer under a registered security only if it is treated as paid in relation to a registered security under section 86I of the Stamp and Cheque Duties Act 1971.
Defined in this Act: amount, approved issuer, associated person, business, company, fixed establishment, income, interest, life insurer, New Zealand, New Zealand banking group, non-resident, non-resident passive income, NRWT, NRWT rules, pay, registered security, related-party debt, resident in New Zealand, transitional resident
Compare: 2004 No 35 s NG 2(1)(b)(i), (ib)
Section RF 12: substituted (with effect on 1 April 2008), on 6 October 2009, by section 536(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 12(1)(a)(ii): replaced, on 30 March 2017, by section 278(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 12(1)(a)(ii): amended (with effect on 30 March 2017), on 30 March 2022, by section 163(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RF 12(1)(a)(iii): amended, on 30 March 2017, by section 278(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 12(1)(a)(iv): replaced (with effect on 30 March 2017), on 30 March 2022, by section 163(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RF 12(3): amended (with effect on 1 April 2008), on 7 December 2009, by section 116 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RF 12 list of defined terms New Zealand banking group: inserted, on 30 March 2017, by section 278(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 12 list of defined terms related-party debt: inserted, on 30 March 2017, by section 278(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12B Interest derived jointly with residents
When payment derived jointly with resident
(1)
If a person makes a payment of non-resident passive income that consists of interest derived by 2 or more persons jointly and at least 1 person deriving the interest is a New Zealand resident, the amount of tax for the payment is calculated using the formula—
(tax rate × (interest paid + foreign withholding tax)) − foreign withholding tax.
Definition of items in formula
(2)
In the formula,—
(a)
(b)
interest paid is the amount of interest paid before the amount of tax is determined:
(c)
foreign withholding tax is the amount of foreign withholding tax paid or payable on the amount of interest paid.
Treatment as filing taxpayer
(3)
For the purposes of this section, the New Zealand resident referred to in subsection (1) is treated as a filing taxpayer.
Defined in this Act: amount, amount of tax, filing taxpayer, foreign withholding tax, interest, New Zealand resident, non-resident passive income, pay
Compare: 2004 No 35 s NG 2(1)(ab)
Section RF 12B: inserted (with effect on 1 April 2008), on 6 October 2009, by section 536(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RF 12C Amount derived from non-resident life insurer becoming resident
When this section applies
(1)
This section applies when an amount of non-resident passive income is—
(a)
derived by a life insurer from a company resident in New Zealand; and
(b)
treated as income as a result of the granting of the insurer’s application under section EY 49 (Non-resident life insurer becoming resident).
Zero-rating
(2)
The rate of NRWT payable on the amount is 0%.
Defined in this Act: amount, apply, company, life insurer, New Zealand, non-resident passive income, NRWT, pay, resident in New Zealand
Compare: 2004 No 35 s NG 2(1)(b)(iii)
Section RF 12C: inserted (with effect on 1 April 2008), on 6 October 2009, by section 536(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RF 12C list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Certain financial arrangements involving related-party debt
Heading: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12D Determining amount of non-resident financial arrangement income
Amount of income
(1)
The amount of non-resident financial arrangement income derived by a lender in an income year is an amount equal to the expenditure incurred in the income year on the related-party debt by the borrower.
Applying general rule
(2)
Subsections (3), (4), (5), (6), and (7) apply for the purposes of subsection (1) and sections RF 2B, RF 2C, RF 12E to RF 12J, and RZ 13 (Treatment of prepayments).
Expenditure
(3)
Expenditure excludes an amount that may be an expense of the borrower under the arrangement but is not, and will not be, an amount received by the lender.
Spreading method
(4)
For financial arrangements involving related-party debt, the spreading method that must be applied in determining the amount incurred is the method used by the borrower for the financial arrangement under subpart EW (Financial arrangements rules) excluding the following methods for which another spreading method must be substituted:
(a)
the fair value method:
(b)
the market valuation method under section EW 18 (Market valuation method).
Foreign exchange movements
(5)
The calculation of total interest and total expenditure must be made in the currency of the financial arrangement.
When lender’s income zero
(6)
In the calculation of non-resident financial arrangement income, if the borrower has income on the related-party debt, the amount derived by the lender is treated as zero.
Part years
(7)
For the purposes of subsection (1), a reference to an income year includes a reference to a part of an income year.
Example
NZ Sub B Ltd (B) has borrowed US$100m from its non-resident parent and will repay US$125m in 5 years’ time. Calculated in US dollars, the financial arrangement expenditure for each year is US$4m, US$4.5m, US$5m, US$5.5m, and US$6m respectively. B must calculate NRFAI in US dollars for each year then, for the purposes of paying NRWT, convert this into NZ dollars using the currency conversion in subpart YF (Currency conversion). B has also entered into a hedge to buy US$125m in 5 years’ time for NZ$200m. Because the hedge does not give rise to interest or NRFAI, income or expenditure relating to the hedge is excluded from B’s NRWT calculations.
Defined in this Act: amount, expenditure, fair value method, financial arrangement, income, income year, non-resident financial arrangement income, related-party debt, spreading method
Section RF 12D: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12E When non-resident financial arrangement income treated as paid
Amount paid
(1)
An amount of non-resident financial arrangement income is treated as paid on the last day of the second month following the end of the borrower’s income year.
When debt matures, ends, or no longer qualifies
(2)
Despite subsection (1), if a related-party debt matures, ends, or no longer qualifies as a related-party debt during the borrower’s income year, the non-resident financial arrangement income is treated as paid on the last day of the second month following the relevant event.
Defined in this Act: amount, income year, non-resident financial arrangement income, pay, related-party debt
Section RF 12E: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12F Adjustments: first year additional amounts
When this section applies
(1)
This section applies for the first income year in which a lender derives non-resident financial arrangement income under a financial arrangement. It increases the lender’s income by adding an amount that the lender would have derived if the financial arrangement had always given rise to non-resident financial arrangement income.
Formula
(2)
The amount is calculated using the formula—
total accrual income − total interest.
Definition of items in formula
(3)
In the formula,—
(a)
total accrual income is the total expenditure incurred by the borrower under the arrangement to the extent to which the arrangement is held by a non-resident person for the period that—
(i)
starts on the date on which the borrower became party to the arrangement; and
(ii)
ends on the last day of the income year that precedes the first income year:
(b)
total interest is the total interest paid by the borrower to all non-residents for the period that—
(i)
starts on the date on which the borrower became party to the arrangement; and
(ii)
ends on the NRFAI due date for the borrower’s income year.
Example continued from section RF 2C
Foreign Lender Ltd has derived NRFAI for the first time in the third year of a loan to NZ Sub A Ltd (A). The NRFAI derived for this year is equal to A’s financial arrangement expenditure for the third year of $53,000. However, as this year is the first in which Foreign Lender Ltd has derived NRFAI on this related-party debt, it also derives an additional amount of ($42,000 + $50,000) – ($19,000 + $20,000 + $21,000) = $32,000.
Defined in this Act: amount, financial arrangement, income, income year, interest, non-resident, non-resident financial arrangement income, NRFAI due date, NRWT, pay, related-party debt
Section RF 12F: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12G Choosing to treat income as non-resident financial arrangement income
When this section applies
(1)
This section applies for the first income year in which the borrower is party to a financial arrangement described in section RF 2C(1)(b).
Elections related to de minimis
(2)
The borrower may choose to disregard the application of the related-party de minimis referred to in section RF 2C(3).
Elections related to deferral calculation
(3)
Despite section RF 2C(4), if the result of the deferral calculation by the borrower is, or is treated as, more than 90%, they may choose to disregard the application of the calculation for an arrangement—
(a)
that is for a period of more than 12 months; and
(b)
in relation to which they reasonably expect non-resident financial arrangement income will arise for a later income year.
Making elections
(4)
The election must be made by notifying the Commissioner by the earlier of—
(a)
the first day on which interest described in section RF 2(1)(a)(iv) is paid:
(b)
the last day of the income year in which the arrangement becomes a related-party debt.
Example
NZ Sub C Ltd (C) has borrowed $500,000 from its non-resident parent. Although interest accrues on this loan, C does not expect to make any interest payments for some years. C has also borrowed from a bank but has no other related-party loans. C’s expected financial arrangement expenditure on the related-party debt for the first 3 years is $32,000, $36,000 and $41,000. C will not have to calculate whether NRFAI arises until the end of the third year as this is when the related party de minimis is reached. However, C expects that once the related party de minimis is reached, NRFAI will arise because there are expected to be no interest payments. Therefore, C notifies Inland Revenue during the first year, that it will withhold NRWT on NRFAI from the start of the first year.
Defined in this Act: Commissioner, financial arrangement, income year, inform, interest, non-resident financial arrangement income, notify, related-party debt
Section RF 12G: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RF 12G(4)(a): amended (with effect on 30 August 2022), on 31 March 2023, by section 112 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
RF 12H Meaning of related-party debt
Meaning of related-party debt
(1)
Related-party debt means a financial arrangement under which—
(a)
a person (the lender) is party to an arrangement that provides funds to another person (the borrower) when—
(i)
the lender and borrower are associated persons; or
(ii)
the funding is provided through an indirect associated funding arrangement, as described in section RF 12I(2); or
(iii)
the lender is a member of a non-resident owning body that is associated with the borrower, as described in section RF 12I(3); and
(b)
expenditure arises for the borrower for which they are allowed a deduction.
New Zealand banking group exclusion
(2)
Subsection (1), other than paragraph (a)(ii), does not apply to a financial arrangement to which a member of a New Zealand banking group as determined under section FE 33 (New Zealand banking group) is party.
Associated persons
(3)
When subsection (1)(a)(iii) applies, the borrower and the member of the non-resident owning body are treated as if they were associated for the purposes of this section, and sections RF 2C, RF 12, RF 12D to RF 12G, RF 12I, and RF 12J and section 32M of the Tax Administration Act 1994.
Defined in this Act: amount, associated person, deduction, financial arrangement, income year, New Zealand banking group, non-resident owning body, related-party debt
Section RF 12H: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12I Concepts used for definition of related-party debt
When this section applies
(1)
This section applies for the purposes of section RF 12H to describe what is meant by indirect associated funding arrangements and funding through non-resident owning bodies.
Indirect associated funding arrangements
(2)
An indirect associated funding arrangement exists when—
(a)
a non-resident person (the indirect lender) provides funds or pays money, directly or indirectly, to another person (the direct lender) who provides funds to a third person (the borrower)—
(i)
in order for the funds to be provided to the borrower, or to reimburse the direct lender or compensate them, for providing the funds to the borrower; and
(ii)
with the purpose or effect that the borrower incurs financial arrangement expenditure and the indirect lender does not derive non-resident passive income from the borrower; and
(b)
the indirect lender is associated with the borrower; and
(c)
the funding does not meet the requirements of section RF 12H(1)(a)(i) and (iii) for related-party debt.
Non-resident owning bodies
(3)
A non-resident owning body is treated as associated with a borrower when the ownership interest, within the meaning set out in paragraph (a) of the definition of that term, in the borrower of all the members of the non-resident owning body is 50% or more.
Examples
NZ Sub D Ltd (D) borrows $1m at an interest rate of 6% from 3rd Party Finance Co Ltd (Finance Co) which agrees to provide this amount because D International, a non-resident associate of D, agrees to lend $800,000 at an interest rate of 4% to Finance Co. This is treated as a loan of $800,000 from D International to D, and a loan of $200,000 from Finance Co to D. D makes an interest payment of $60,000 to Finance Co, and Finance Co makes an interest payment of $32,000 to D International. D is treated as making an interest payment of $32,000 to Finance Co as agent for D International, so must withhold $3,200 NRWT. If D does not, Finance Co will be required to do so.
Two unrelated foreign investors agree to purchase 40% each of a New Zealand company with the remaining 20% held by a New Zealand investor. The New Zealand company has borrowed $1m, with the amounts being $400,000 from each of the foreign investors and $200,000 from the New Zealand investor and all borrowing is on similar terms. The 2 foreign investors are members of a non-resident owning body as they are acting together as if they were a single entity. Neither foreign investor is associated with the New Zealand business, either individually or as a consequence of being a member of the non-resident owning body. However, because they are members of the non-resident owning body, interest payments derived by the foreign investors will be ineligible for AIL and the loans may give rise to non-resident financial arrangement income.
Defined in this Act: arrangement, associated person, interest, non-resident, non-resident owning body, non-resident passive income, ownership interest, pay, related-party debt
Section RF 12I: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 12J Treatment of certain payments made under indirect associated funding arrangements
Payments made under funding arrangements
(1)
The payment made under an indirect associated funding arrangement described in section RF 12I(2), to the extent to which subsection (2) applies, is treated as made under a financial arrangement between the borrower and the indirect lender, and not made under a financial arrangement between the borrower and the direct lender.
Treatment of payments
(2)
Under this subsection,—
(a)
an amount that the indirect lender pays to the direct lender is treated as paid by the indirect lender to the borrower to the extent to which the amount is not more than the amount paid by the direct lender to the borrower:
(b)
an amount that the borrower pays to the direct lender is treated as paid to the direct lender as agent for the indirect lender to the extent to which the amount is not more than the amount paid by the direct lender to the indirect lender.
When amounts of tax not withheld
(3)
For the purposes of subsection (2)(b), if the borrower does not withhold the full amount required to be withheld under sections RA 6 (Withholding and payment obligations for passive income) and RF 3, the direct lender must withhold NRWT on interest paid to them.
No liability for direct lender
(4)
Despite subsection (3), the direct lender has no liability to withhold an amount of tax for the payment if the borrower has notified the direct lender that—
(a)
the payment is not made under an indirect associated funding arrangement:
(b)
non-resident financial arrangement income has been derived on the financial arrangement.
Determining interest paid and effect of reduction
(5)
For the purposes of subsection (3),—
(a)
paragraph (d) of the definition of pay does not apply:
(b)
for the financial arrangement, a reduction for the direct lender through the application of subsection (4) and paragraph (a) has no effect on the amount of NRWT that must be withheld on behalf of the indirect lender.
Defined in this Act: amount, amount of tax, associated person, financial arrangement, income tax liability, interest, notify, NRWT, pay
Section RF 12J: inserted, on 30 March 2017, by section 279 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Paying amounts of tax
RF 13 Basis for payment of amounts of tax for non-resident passive income
When this section applies
(1)
This section applies when a person estimates for a tax year that they will not be required by the NRWT rules to withhold total NRWT of $500 or more.
Two instalments
(2)
The person may pay to the Commissioner the amount withheld for the tax year in 2 instalments.
When threshold reached during tax year
(3)
If the threshold amount of $500 is reached at a time in a tax year, the person must pay to the Commissioner—
(a)
the amount of tax withheld from the start of the tax year to the end of the month in which the threshold is reached; and
(b)
for the remainder of the tax year, the amount of tax on a monthly basis.
Defined in this Act: amount of tax, Commissioner, NRWT, NRWT rules, pay, tax withheld, tax year
Compare: 2004 No 35 s NG 11(1)–(3)
RF 14 Treatment of FDP credits
[Repealed]Section RF 14: repealed, on 1 April 2017, by section 280 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RF 15 Commissioner’s power to vary amounts of tax
Special circumstances
(1)
For the purposes of meeting the special circumstances of a case or class of cases, the Commissioner may—
(a)
relieve a person from an obligation to withhold NRWT under section RA 6(2) (Withholding and payment obligations for passive income), RF 3, RF 4, or RF 10; or
(b)
vary the amount of tax that a person must withhold under section RA 6(2).
Exclusion for certain payments of interest
(2)
This section does not apply to an amount of tax for a payment of interest derived jointly with a person resident in New Zealand as described in section RF 12(1).
NRWT rules apply as if amended
(3)
On the exercise of a power under subsection (1), the NRWT rules apply in the particular case as if they were amended in the way in which the power is exercised.
Defined in this Act: amount of tax, Commissioner, interest, NRWT, NRWT rules, pay, resident in New Zealand
Compare: 2004 No 35 s NG 10
RF 16 Relationship with RSCT rules
When this section applies
(1)
This section applies when a retirement scheme contributor makes a retirement scheme contribution for a person who is non-resident and pays RSCT for the contribution.
NRWT
(2)
The contributor is treated as having withheld from the contribution an amount of NRWT equal to the lesser of—
(a)
the amount of RSCT paid:
(b)
the NRWT payable in relation to the contribution.
Treatment of balance
(3)
Section LB 6 (Tax credits for RSCT) applies to any balance of RSCT paid.
Defined in this Act: non-resident, NRWT, pay, retirement scheme contribution, retirement scheme contributor, RSCT
Compare: 2004 No 35 s NG 16B
Section RF 16: added, on 1 April 2008, by section 544 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Subpart RG—Payments for foreign dividends (FDP)
[Repealed]Subpart RG: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Contents
| [Repealed] | |||
| RG 1 | FDP rules and their application [Repealed] | ||
| RG 2 | Foreign dividends [Repealed] | ||
| [Repealed] | |||
| RG 3 | Obligation to pay FDP [Repealed] | ||
| [Repealed] | |||
| RG 4 | Calculating amount of FDP [Repealed] | ||
| [Repealed] | |||
| RG 5 | Credit balance in branch equivalent tax account [Repealed] | ||
| RG 6 | Using loss balances [Repealed] | ||
| RG 7 | Reduction of payments for conduit tax relief [Repealed] | ||
Introductory provisions[Repealed]
Heading: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 1 FDP rules and their application
[Repealed]Section RG 1: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 2 Foreign dividends
[Repealed]Section RG 2: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Obligation to make payments[Repealed]
Heading: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 3 Obligation to pay FDP
[Repealed]Section RG 3: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Calculation of payments[Repealed]
Heading: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 4 Calculating amount of FDP
[Repealed]Section RG 4: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Adjustments to payments[Repealed]
Heading: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 5 Credit balance in branch equivalent tax account
[Repealed]Section RG 5: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 6 Using loss balances
[Repealed]Section RG 6: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RG 7 Reduction of payments for conduit tax relief
[Repealed]Section RG 7: repealed (with effect on 30 June 2009), on 6 October 2009, by section 540(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Subpart RH—Withholding tax on retirement scheme contributions
Subpart RH: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Contents
RH 1 RSCT rules and their application
Meaning
(1)
The RSCT rules means—
(a)
this subpart; and
(b)
section BE 1(5B) (Withholding liabilities); and
(c)
section CX 50B (Contributions to retirement savings schemes); and
(d)
section LB 6 (Tax credits for RSCT); and
(e)
section LE 7B (Credit of RSCT for imputation credit); and
(f)
section LO 2B (Credit of RSCT for Maori authority credit); and
(g)
section MB 1(5B) (Adjustments for calculation of family scheme income); and
(h)
section MB 6 (Treatment of distributions from retirement savings schemes); and
(i)
schedule 1, part D, clause 7; and
(j)
sections 28C and 48B and Part 9 of the Tax Administration Act 1994.
Application
(2)
The RSCT rules apply to a retirement scheme contributor who makes a retirement scheme contribution.
Defined in this Act: retirement scheme contribution, retirement scheme contributor, RSCT rules
Compare: 2004 No 35 s OB 1 “RSCWT rules”
Section RH 1: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RH 2 Retirement scheme contributions
Contribution for benefit of members
(1)
A retirement scheme contribution means a contribution in money by a retirement scheme contributor to a retirement savings scheme for the benefit of a person who is a member of, or who has an ownership interest in, the contributor.
Tax credits
(2)
For the purposes of subsection (1), money includes an amount of an imputation credit or a Maori authority credit.
Determining amount of contribution
(3)
The amount of a retirement scheme contribution is the sum of—
(a)
the amount of the contribution received by the retirement savings scheme and not withheld under subsection (5) on behalf of the retirement scheme contributor; and
(b)
the amount of tax for the retirement scheme contribution.
Payment of amount of tax
(4)
A retirement scheme contributor who pays an amount that represents a retirement scheme contribution must withhold and pay to the Commissioner the amount of tax for the contribution. The amount is payable monthly under section RA 15 (Payment dates for interim and other tax payments).
Appointment of agent
(5)
For the purposes of subsection (4), a contributor may appoint the retirement savings scheme as agent in relation to the calculation and payment of the amount of tax.
Defined in this Act: amount, amount of tax, Commissioner, imputation credit, Maori authority credit, retirement savings scheme, retirement scheme contribution, retirement scheme contributor
Compare: 2004 No 35 ss NEB 1(2), NEB 2, NEB 3(1)(a), OB 1 “retirement scheme contribution”
Section RH 2: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RH 3 Retirement savings schemes
Requirements for entity
(1)
An entity is a retirement savings scheme for a person if the entity—
(a)
is a portfolio investment entity; and
(b)
holds funds from a retirement scheme contribution for the person; and
(c)
has rules (the distribution rules) governing the distribution by the entity of funds in which the person has an interest that—
(i)
are approved by the Commissioner as fair and reasonable; and
(ii)
meet the requirements of subsection (2).
Requirements for rules
(2)
The rules must provide that—
(a)
the availability of a distribution to the person is restricted before the person reaches an age of retirement set out in the rules:
(b)
the person is not permitted to make a withdrawal before the age of retirement other than a withdrawal—
(i)
to repay a student loan under the Student Loan Scheme Act 2011:
(ii)
to pay fees and expenses related to tertiary education:
(iii)
to buy a home if the person does not own one:
(iv)
that the person would be permitted to make if the scheme were a KiwiSaver scheme:
(v)
in circumstances set out in the distribution rules that have been approved under subsection (1)(c)(i):
(c)
the entity may require the person to provide information to ensure that the requirements relating to a withdrawal are met.
Defined in this Act: Commissioner, income year, portfolio investment entity, retirement savings scheme, retirement scheme contribution, retirement scheme contributor
Compare: 2004 No 35 s NEB 5
Section RH 3: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section RH 3(2)(b)(i): amended, on 1 April 2012, by section 223 of the Student Loan Scheme Act 2011 (2011 No 62).
Section RH 3(2)(b)(iv): amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
RH 4 Retirement scheme contributors
An entity is a retirement scheme contributor for a person for an income year if—
(a)
the entity is—
(i)
the trustee of a widely-held trust that is a unit trust:
(ii)
a company other than a close company:
(iii)
a Maori authority; and
(b)
the person is a unit holder, shareholder, or member of the entity:
(c)
in or before the income year, the entity makes a payment intended to be a retirement scheme contribution for the person.
Defined in this Act: close company, company, income year, Maori authority, pay, retirement savings scheme, retirement scheme contribution, retirement scheme contributor, shareholder, trustee, unit holder, unit trust, widely-held trust
Compare: 2004 No 35 s NEB 6
Section RH 4: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Calculating amounts of tax
Heading: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RH 5 Calculating amounts of tax for retirement scheme contribution
The amount of tax for a retirement scheme contribution is the amount determined under schedule 1, part D, clause 7 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Defined in this Act: amount of tax, retirement scheme contribution
Compare: 2004 No 35 s NEB 1(1)
Section RH 5: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
RH 6 Calculating amounts of tax on failure to withhold
When this section applies
(1)
This section applies when a retirement scheme contributor or retirement savings scheme does not withhold an amount of tax for a retirement scheme contribution under section RH 2(4).
Calculation of amount
(2)
The amount is calculated using the formula—
(tax rate ÷ (1 − tax rate) × contribution to scheme) − tax already paid.
Definition of items in formula
(3)
In the formula,—
(a)
tax rate is the rate of RSCT for the person set out in schedule 1, part D, clause 7 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
(b)
contribution to scheme is the amount of the retirement scheme contribution received by the retirement savings scheme excluding the amount of tax:
(c)
tax already paid is any amount of tax for the contribution that has already been paid.
Defined in this Act: amount, amount of tax, retirement savings scheme, retirement scheme contribution, retirement scheme contributor, RSCT
Compare: 2004 No 35 s NEB 4(1)
Section RH 6: inserted, on 1 April 2008, by section 545 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Subpart RL—Residential land withholding tax
Subpart RL: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Contents
RL 1 Residential land withholding tax
What this subpart does
(1)
This subpart imposes an obligation to pay a tax called residential land withholding tax (RLWT).
When this subpart applies
(2)
This subpart applies for a residential land purchase amount in relation to a disposal of residential land located in New Zealand by a person (the vendor) to another person (the purchaser) if—
(a)
(b)
the vendor is an offshore RLWT person.
How this subpart applies to joint owners
(3)
For the purposes of this subpart, vendors who are co-owners are treated as disposing of separate residential land on the basis of an appropriate split of the underlying residential land and the consideration for its disposal.
When this subpart does not apply
(4)
This subpart does not apply if the vendor holds an RLWT certificate of exemption that applies for the disposal of the relevant residential land. Section 54E of the Tax Administration Act 1994 provides for the issue of RLWT certificates of exemption to vendors.
When this subpart does not apply: relationship property
(4B)
This subpart does not apply if section FB 3A(2) (Residential land) applies for the disposal of the relevant residential land.
Specific rules
(5)
In this subpart,—
(a)
section RL 2 provides rules for vendors and conveyancers in relation to who must pay RLWT and satisfy RLWT liability:
(b)
section RL 3 provides rules for purchasers in relation to who must withhold RLWT from relevant residential land purchase amounts. It also provides rules for segregating the RLWT withheld:
(c)
section RL 4 provides rules for calculating how much tax must be paid or withheld and paid for residential land purchase amounts:
(d)
section RL 5 provides rules for paying RLWT:
(e)
section RL 6 provides rules for the Commissioner repaying RLWT.
Return and information provisions in Tax Administration Act 1994
(6)
Sections 54B, 54C, and 54D of the Tax Administration Act 1994 provide for the giving of returns and information in relation to RLWT obligations.
Defined in this Act: dispose, land, offshore RLWT person, residential land, residential land purchase amount, RLWT, RLWT certificate of exemption
Section RL 1: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RL 1(2)(a): amended (with effect on 27 March 2021), on 31 March 2023, by section 113 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section RL 1(2)(a): amended (with effect on 27 March 2021), on 30 March 2021, by section 134 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section RL 1(4B) heading: inserted, (with effect on 1 July 2016), on 21 February 2017, by section 95 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RL 1(4B): inserted, (with effect on 1 July 2016), on 21 February 2017, by section 95 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RL 2 Vendors: who must pay, and how?
Liability of vendor
(1)
The vendor is liable to pay the amount of RLWT provided in section RL 4.
Conveyancers: agency for RLWT obligations
(2)
The vendor’s conveyancer, or if the vendor does not have a conveyancer, the purchaser’s conveyancer, is treated as the agent (the paying agent) of the vendor in relation to the RLWT, and, in relation to the RLWT, must provide returns and satisfy the vendor’s liability.
Conveyancers: no agency for other obligations
(3)
The paying agent is not treated as the vendor’s agent for income, or for a tax obligation other than RLWT, solely because of their agency in relation to RLWT.
Conveyancers: relationship with subject matter
(4)
Sections HD 2, HD 3, and HD 4 (which relate to agents) do not apply to a paying agent that is agent only in relation to RLWT.
Liability of conveyancers
(5)
The paying agent, as agent in relation to the RLWT, is not jointly and severally liable in relation to the vendor’s RLWT or in relation to a debt under section RA 10 (When obligations not met). The vendor alone is liable to pay the RLWT, despite the paying agent’s obligation to satisfy the vendor’s liability.
Liability of conveyancers: exception for penalties
(6)
Despite subsection (5), if the paying agent fails to satisfy the vendor’s liability, then,—
(a)
for the purposes of Part 9 of the Tax Administration Act 1994, the paying agent is treated as failing to pay an amount of withholding tax equal to the amount of RLWT liability they failed to satisfy, if the paying agent has subtracted or retained an amount from a residential land purchase amount; or
(b)
for the purposes of Part 9 of the Tax Administration Act 1994 other than section 139B, the paying agent is treated as failing to pay an amount of withholding tax equal to the amount of RLWT liability they failed to satisfy, if the paying agent has not subtracted or retained an amount from a residential land purchase amount.
Liability of conveyancers: reasonable reliance
(7)
A paying agent is not liable for a penalty under Part 9 of the Tax Administration Act 1994 for a failure described in subsection (6)(b) if, for that failure,—
(a)
the paying agent has relied on a form and accompanying documents given to them in accordance with section 54C of the Tax Administration Act 1994; and
(b)
the paying agent’s reliance on the form and accompanying documents is reasonable.
Treatment of amount
(8)
An amount subtracted or retained from a residential land purchase amount by a paying agent to satisfy the vendor’s RLWT liability—
(a)
is treated as received—
(i)
by the vendor; and
(ii)
at the time the residential land purchase amount is paid to them; and
(b)
is treated for the purposes of this Act as derived by the vendor at the same time and in the same way as they derive the residential land purchase amount.
Defined in this Act: agent, amount, amount of tax, Commissioner, conveyancer, pay, residential land purchase amount, RLWT
Section RL 2: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RL 2(6)(a): amended, (with effect on 1 July 2016), on 21 February 2017, by section 96(a) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RL 2(6)(b): amended, (with effect on 1 July 2016), on 21 February 2017, by section 96(b) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RL 2(8): amended, (with effect on 1 July 2016), on 21 February 2017, by section 96(c) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RL 3 Associated persons: who must pay, and how?
Despite section RL 2, if the vendor and purchaser are associated persons—
(a)
the vendor is not liable to pay the amount of RLWT provided in section RL 4; and
(b)
the purchaser must withhold the amount of RLWT provided in section RL 4.
Defined in this Act: amount, associated person, RLWT, RLWT rules
Section RL 3: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
RL 4 How much RLWT?
How much tax?
(1)
The total amount (RLWT) that the relevant person described in section RL 2 or RL 3 must pay or withhold for residential land purchase amounts is equal to the lesser of the amounts described in subsections (2), (4), and (6). The RLWT is paid or withheld for each residential land purchase amount, up to the maximum of the relevant residential land purchase amount. All amounts in this section are GST exclusive.
Calculation of amount
(2)
For the purposes of subsection (1), the amount is the greater of zero and the amount calculated using the formula—
RLWT rate × (current purchase price − vendor’s acquisition cost).
Definition of items in formula
(3)
In the formula in subsection (2),—
(a)
(b)
current purchase price is the purchase price agreed by the vendor and purchaser for the disposal of the residential land, including deposits and part payments, that the residential land purchase amount relates to:
(c)
vendor’s acquisition cost is the purchase price paid by the vendor for their acquisition of the residential land.
Calculation of amount
(4)
For the purposes of subsection (1), the amount is calculated using the formula—
0.10 × current purchase price.
Definition of item in formula
(5)
In the formula in subsection (4), current purchase price has the same meaning as in subsection (3)(b).
Calculation of amount
(6)
For the purposes of subsection (1), the amount is the greater of zero and the amount calculated using the formula—
current purchase price − security discharge amount − outstanding rates.
Definition of items in formula
(7)
In the formula in subsection (6),—
(a)
current purchase price has the same meaning as in subsection (3)(b):
(b)
security discharge amount is—
(i)
zero, if paragraph (ii) does not apply:
(ii)
the total of the amounts required by licensed security holders to discharge their mortgages or other securities over the residential land, if the relevant person who must pay RLWT is the vendor or the vendor’s conveyancer:
(c)
outstanding rates is the amount of local authority rates outstanding.
A definition
(8)
In this section, licensed security holder means a person who has a mortgage or other security over the relevant residential land, if that person is—
(a)
a registered bank:
(b)
a licensed non-bank deposit taker.
Defined in this Act: amount, amount of tax, company, dispose, licensed non-bank deposit taker, licensed security holder, registered bank, residential land, residential land purchase amount, RLWT
Section RL 4: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section RL 4(1): amended (with effect on 1 July 2016), on 21 February 2017, by section 97 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RL 4(3)(a): amended, on 1 April 2021, by section 15 (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RL 4(8)(b): amended, on 29 March 2018, by section 232(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RL 4 list of defined terms licensed non-bank deposit taker: inserted, on 29 March 2018, by section 232(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RL 5 Paying RLWT
Paying RLWT
(1)
A person who is required to pay or withhold RLWT must pay the amount of tax to the Commissioner under section RA 15 (Payment dates for interim and other tax payments).
Basis for payment of RLWT
(2)
For the purposes of section RA 6C (Withholding and payment obligations for residential land), the person must pay the amount of tax on a monthly basis.
Defined in this Act: amount of tax, Commissioner, RLWT
Section RL 5: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
RL 6 Commissioner repaying RLWT
Repaying RLWT
(1)
An amount of RLWT paid in relation to a person’s disposal of residential land may be repaid by the Commissioner to the person if and to the extent to which—
(a)
a tax credit for the RLWT is likely to be a surplus credit under section BC 8(4) for the relevant tax year, treating the person as only having income and deductions for land for the tax year and the relevant tax rate provided in section RL 4(3); and
(b)
the person has no outstanding tax obligations under the Inland Revenue Acts; and
(c)
the person gives the Commissioner the information in the form prescribed under section 54D of the Tax Administration Act 1994, including any prescribed accompanying documents.
Effect of repaying RLWT
(2)
For the purposes of section LB 6B (Tax credits for RLWT), an amount of RLWT repaid by the Commissioner is treated as not paid in relation to the residential land that the person disposed of.
Defined in this Act: amount, Commissioner, dispose, land, residential land, RLWT
Section RL 6: inserted, on 1 July 2016, by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Subpart RM—Refunds
Contents
Introductory provision
RM 1 What this subpart does
This subpart establishes and measures a person’s entitlement to a refund for an overpayment under this Part or another Part of this Act, how the amount of the refund may be used, and the limits placed on the amount and use of a refund for—
(a)
an imputation credit account (ICA) company:
(b)
[Repealed](c)
a Maori authority:
(d)
[Repealed](e)
a qualifying company:
(f)
certain unit trusts and group investment funds.
Defined in this Act: amount, group investment fund, ICA company, Maori authority, pay, qualifying company, unit trust
Section RM 1(b): repealed (with effect on 1 April 2017), on 30 March 2022, by section 164(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 1(d): repealed, on 30 March 2017, by section 281(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RM 1 list of defined terms company: repealed (with effect on 1 April 2017), on 30 March 2022, by section 164(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 1 list of defined terms foreign dividend: repealed (with effect on 1 April 2017), on 30 March 2022, by section 164(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 1 list of defined terms PCA person: repealed, on 30 March 2017, by section 281(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Refunds for overpaid amounts
RM 2 Refunds for overpaid tax
Amounts arising on original assessments
(1A)
The Commissioner must refund an amount of tax that a person has paid if—
(a)
the amount is more than the tax required to be paid by the person under this Part; and
(b)
the amount has arisen on an original assessment or an amended assessment referred to in subsection (3); and
(c)
the Commissioner is satisfied, or has received notice, that the person is entitled to the refund.
Amount more than required
(1)
The Commissioner must refund an amount of tax that a person has paid if—
(a)
the amount is more than the tax required to be paid by the person under this Part; and
(ab)
the amount has arisen on an amended assessment other than an amended assessment referred to in subsection (3); and
(b)
the Commissioner is satisfied, or receives notice, that the person is entitled to the refund before the end of—
(i)
for income tax, the 4-year period under section 108(1) of the Tax Administration Act 1994 for amendment of an assessment, if subparagraphs (ic) and (ii) do not apply; or
(ib)
for an ancillary tax or approved issuer levy, the 4-year period under section 108(1C) of that Act for amendment of an assessment, if subparagraphs (ic) and (ii) do not apply; or
(ic)
the 7-year period under section GC 13(6) (Calculation of arm’s length amounts) for amendment of an assessment, if that subsection applies; or
(ii)
the extended period allowed by the Commissioner under section 78B of that Act, if the Commissioner exercises the discretion under that section.
Provision of ancillary tax return treated as assessment
(1BA)
For the purposes of this section, the provision by a person of a return for an amount of an ancillary tax for a period is treated as the making of an assessment of the amount of the ancillary tax by the person.
Refundable credits
(1B)
An amount of tax under subsection (1) includes an amount of a refundable tax credit to which section LA 5(5) (Treatment of remaining credits) applies.
Refunds arising on amended assessments[Repealed]
(2)
[Repealed]Amounts arising on treatment of some backdated payments as exempt income
(3)
Subsection (1A) applies for an amended assessment arising from the treatment of a payment as being exempt income under section CZ 36 (Treatment of backdated payments for social rehabilitation: 2008–09 to 2017–18 income years).
Defined in this Act: amount, amount of tax, ancillary tax, assessment, Commissioner, notice, pay, refundable tax credit, tax
Compare: 2004 No 35 s MD 1(1)
Section RM 2(1A) heading: inserted (with effect on 1 April 2008), on 18 March 2019, by section 263(1) (and see section 263(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(1A): inserted (with effect on 1 April 2008), on 18 March 2019, by section 263(1) (and see section 263(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(1A)(b): amended (with effect on 1 April 2008), on 26 June 2019, by section 78(1) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RM 2(1)(ab): inserted (with effect on 1 April 2008), on 18 March 2019, by section 263(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(1)(ab): amended (with effect on 1 April 2008), on 26 June 2019, by section 78(2) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RM 2(1)(b): replaced (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, by section 87(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 2(1)(b)(i): replaced (with effect on 3 May 2016), on 18 March 2019, by section 264 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(1)(b)(ib): replaced (with effect on 3 May 2016), on 18 March 2019, by section 264 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(1)(b)(ic): inserted (with effect on 3 May 2016), on 18 March 2019, by section 264 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(1BA) heading: inserted, on 30 March 2022, by section 165(1) (and see section 165(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 2(1BA): inserted, on 30 March 2022, by section 165(1) (and see section 165(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 2(1B) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 541(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 2(1B): inserted (with effect on 1 April 2008), on 6 October 2009, by section 541(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 2(2) heading: replaced (with effect on 1 April 2008), on 18 March 2019, by section 263(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 2(2) heading: repealed (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, pursuant to section 87(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 2(2): repealed (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, by section 87(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 2(3) heading: inserted (with effect on 1 April 2008), on 26 June 2019, by section 78(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RM 2(3): inserted (with effect on 1 April 2008), on 26 June 2019, by section 78(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section RM 2 list of defined terms amount: inserted, on 30 March 2022, by section 165(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 2 list of defined terms ancillary tax: inserted, on 30 March 2022, by section 165(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 2 list of defined terms notice: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 2 list of defined terms refundable tax credit: inserted (with effect on 1 April 2008), on 6 October 2009, by section 541(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RM 3 Refunds for overpaid FDP
[Repealed]Section RM 3: repealed, on 1 April 2017, by section 282 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 4 Overpayment on amended assessment
Assessment increasing tax
(1)
The Commissioner must refund an amount of tax that a person has paid if—
(a)
the person paid the amount as a result of an amendment to an assessment increasing the amount of tax payable by the person; and
(b)
the amount is more than the amount required to be paid by the person under this Part; and
(c)
for income tax, the 4-year period under section 108(1) of the Tax Administration Act 1994 beginning from the end of the tax year in which the assessment was amended has not ended; and
(d)
for an ancillary tax or approved issuer levy, the 4-year period under section 108(1C) of that Act beginning from the end of the period in which the return or statement was provided has not ended.
Provision of ancillary tax return treated as assessment
(1B)
For the purposes of this section, the provision by a person of a return for an amount of an ancillary tax for a period is treated as the making of an assessment of the amount of the ancillary tax by the person.
Refunds arising from mistakes[Repealed]
(2)
[Repealed]Defined in this Act: amount, amount of tax, ancillary tax, assessment, Commissioner, pay, tax year
Compare: 2004 No 35 s MD 1(2)
Section RM 4(1)(c): replaced (with effect on 3 May 2016), on 18 March 2019, by section 265 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 4(1)(d): inserted (with effect on 3 May 2016), on 18 March 2019, by section 265 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 4(1B) heading: inserted, on 30 March 2022, by section 166(1) (and see section 166(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 4(1B): inserted, on 30 March 2022, by section 166(1) (and see section 166(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 4(2) heading: repealed (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, pursuant to section 88(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 4(2): repealed (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, by section 88(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 4 list of defined terms ancillary tax: inserted, on 30 March 2022, by section 166(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RM 4 list of defined terms income year: repealed (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, by section 88(3)(a) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 4 list of defined terms tax year: inserted (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, by section 88(3)(b) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
RM 5 Overpayment on income statements
[Repealed]Section RM 5: repealed, on 1 April 2019, by section 266 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RM 6 Refunds after 4-year period ends
[Repealed]Section RM 6: repealed (with effect on 1 April 2013 and applying to overpayments for the 2013–14 and later tax years), on 17 July 2013, by section 89(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
RM 6B Refunds for overpaid AIM method instalments
Refund
(1)
The Commissioner must refund to a person the amount given by the formula in subsection (2), if the person uses the AIM method for a tax year and gives the Commissioner the required information in the form prescribed under section 45 of the Tax Administration Act 1994 (the form).
Formula
(2)
For the purposes of subsection (1) the refund amount is—
AIM payments year to date − AIM year to date.
Definition of items in formula
(3)
In the formula,—
(a)
AIM payments year to date means the amount of provisional tax paid by the person for the tax year on and before the last day of the instalment period that the form relates to:
(b)
AIM year to date means the amount of provisional tax liability that the person would have if the AIM method was applied for the period starting at the beginning of the tax year and finishing on the last day of the instalment period that the form relates to.
Defined in this Act: Commissioner, instalment date, provisional tax, tax year
Section RM 6B: inserted, on 1 April 2018, by section 41(1) (and see section 41(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
RM 7 Refunds to PAYE intermediaries
When this section applies
(1)
This section applies when a PAYE intermediary pays to the Commissioner an amount of tax for a PAYE income payment for an employer—
(a)
relying on a payment made to the trust account of the intermediary—
(i)
by the employer and later dishonoured; or
(ii)
mistakenly by a person and later recovered from the intermediary:
(b)
mistakenly from funds not provided by the employer for a purpose related to the PAYE income payment.
Refund to intermediary
(2)
The Commissioner must refund the amount of tax to the intermediary.
Defined in this Act: amount of tax, Commissioner, employer, pay, PAYE intermediary, PAYE income payment
Compare: 2004 No 35 s NBA 7
RM 8 Overpaid RWT or NRWT
When this section applies
(1)
This section applies when a person is required to withhold and pay to the Commissioner an amount of resident withholding tax (RWT) or non-resident withholding tax (NRWT), and the amount is more than the amount required to be paid under this Part.
Refund to person deriving payment or person withholding amount
(2)
The Commissioner must refund the amount of the overpayment to—
(a)
the person who derives the payment from which the amount of tax was withheld; or
(b)
the person who withheld the amount if they have paid the amount of the overpayment to the person deriving the payment and not subtracted the amount under section RA 12(5) and (6) (Adjustment to correct errors: certain excess amounts).
When subsections (4) and (5) apply
(3)
Subsections (4) and (5) apply when—
(a)
a holder of an attributing interest in a FIF receives a distribution from which an amount of tax for resident passive income has been withheld; and
(b)
section CD 36 (Foreign investment fund income) applies to the distribution.
Certain FIF income: application by holder
(4)
The holder may apply for a refund if—
(a)
they apply before the next 31 March after the date on which the amount was withheld, with supporting information to show that the threshold referred to in section CQ 5(1)(d) (When FIF income arises) has been exceeded for their corresponding income year; and
(b)
the person making the distribution has not—
(i)
paid them a refund of the amount; or
(ii)
applied themselves under subsection (5) for a refund in relation to the amount; and
(c)
they notify the person making the distribution of their application under this subsection.
Certain FIF income: application by payer
(5)
The person making the distribution may apply for a refund if—
(a)
they apply before the next 31 March after the date on which the amount was withheld, with supporting information to show the payment has been made to the holder without any subtraction permitted by section RA 12(5) and (6) (Adjustment to correct errors: certain excess amounts); and
(b)
the holder has not applied for a refund under subsection (4) in relation to the amount; and
(c)
they provide, in relation to the amount, a statement that they will not include particulars in their investment income information under sections 25F to 25H and make disclosure under section 25N of the Tax Administration Act 1994.
Use of refund
(6)
An amount of a refund paid under subsection (4) or (5) may be used under section RM 10 to satisfy a liability under the Inland Revenue Acts.
Defined in this Act: amount, amount of tax, apply, attributing interest, Commissioner, corresponding income year, FIF, Inland Revenue Acts, investment income information, notify, NRWT, pay, resident passive income, RWT
Compare: 2004 No 35 ss MD 1(4)(b), (c), NF 7(1), (2), (5), NG 16(1), (1A)
Section RM 8(3) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(3): added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(4) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(4): added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(5) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(5): added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(5)(c): replaced, on 1 April 2020, by section 233(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RM 8(6) heading: added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8(6): added (with effect on 1 April 2008), on 7 December 2009, by section 117(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 8 list of defined terms attributing interest: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8 list of defined terms corresponding income year: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8 list of defined terms FIF: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8 list of defined terms Inland Revenue Acts: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8 list of defined terms investment income information: inserted, on 1 April 2020, by section 233(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RM 8 list of defined terms notify: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section RM 8 list of defined terms resident passive income: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
RM 9 Calculations for attributed and non-attributed fringe benefits
When this section applies
(1)
This section applies when an employer chooses to pay fringe benefit tax (FBT) under sections RD 47 to RD 53 (which relate to attributed fringe benefits and non-attributed fringe benefits).
Result of calculations
(2)
If the result of the calculations of FBT on attributed fringe benefits or non-attributed fringe benefits is negative, the Commissioner must refund to the employer an amount equal to the deficiency.
Defined in this Act: amount, Commissioner, employer, FBT, pay
Compare: 2004 No 35 s ND 10(4)(a)
Use of refunds
RM 10 Using refund to satisfy tax liability
When this section applies
(1)
This section applies when a person is entitled to a refund of an amount of tax under sections RM 2, RM 4, and RM 5. An amount of tax under this section includes an amount of a refundable tax credit under section LA 5(5) (Treatment of remaining credits). Section LB 4 (Tax credits for families) may apply to adjust the amount available.
Request for particular application
(2)
The person may ask under section 173T of the Tax Administration Act 1994 for the Commissioner to apply some or all of the amount on a particular date to satisfy a liability under the Inland Revenue Acts.
Commissioner applying refund
(3)
If no request is made under subsection (2), the Commissioner may apply the amount of the refund to satisfy a liability that the person has under the Inland Revenue Acts.
Exclusion
(4)
Despite subsection (3), the Commissioner must not apply the amount of a refund under section LA 7(1)(a) (Remaining refundable credits: tax credits for social policy and other initiatives) or RM 8, or arising from an election under section IZ 8 (Election to use net loss for 2019–20 or 2020–21 year as tax loss in preceding year), to satisfy a liability of the person.
Defined in this Act: amount, amount of tax, ask, Commissioner, Inland Revenue Acts, refundable tax credit, request
Compare: 2004 No 35 ss MD 1(3), (3A), MD 1(4)
Section RM 10(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 543(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10(1): amended (with effect on 1 April 2013), on 17 July 2013, by section 90 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 10(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 543(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10(4): amended (with effect on 15 April 2020), on 30 April 2020, by section 14 of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RM 10(4): amended (with effect on 1 April 2015), on 24 February 2016, by section 228 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RM 10(4): amended (with effect on 1 April 2008), on 2 November 2012, by section 153 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RM 10(4): amended (with effect on 1 April 2008), on 6 October 2009, by section 543(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 10 list of defined terms refundable tax credit: added (with effect on 1 April 2008), on 6 October 2009, by section 543(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RM 11 Using GST refund to pay instalment of provisional tax
When this section applies
(1)
This section applies when a person who is liable to pay provisional tax has a goods and services tax (GST) refund in a taxable period as a result of the application of section 20(5) of the Goods and Services Tax Act 1985.
Using amount
(2)
The person may choose to use the amount of the refund to pay some or all of an instalment of provisional tax that is payable on the same instalment date.
Reduction in amount
(3)
If the Commissioner amends the assessment reducing the amount of the refund, the person’s payment of provisional tax arising from the GST refund is the reassessed amount.
Defined in this Act: amount, assessment, Commissioner, GST, instalment date, pay, provisional tax, taxable period
Compare: 2004 No 35 s MB 11
RM 12 Reduction in provisional tax liability
When this section applies
(1)
This section applies when the amount of provisional tax payable for a tax year is reduced by the person liable to pay the provisional tax, or by the Commissioner under section 119(2) of the Tax Administration Act 1994.
Reduction in amount of provisional tax payable
(2)
If the person applies for a refund of the amount of provisional tax already paid that is as a result of the reduction more than the amount that would have been payable in relation to earlier instalment dates for the tax year, the Commissioner must—
(a)
apply the overpayment as the person asks under section 173T of the Tax Administration Act 1994 or, if no request is made, in a way that the Commissioner determines in payment of tax or another amount that is payable by them; and
(b)
refund any balance of the overpayment.
Reduction in assessment
(3)
If the person’s residual income tax for the relevant tax year is no more than $5,000, and they apply for the refund of an amount of provisional tax that has been determined under section RC 9 (Provisional tax payable in instalments) and already paid, other than on a final instalment, the Commissioner must—
(a)
apply the amount as the person asks under section 173T of the Tax Administration Act 1994 or, if no request is made, in a way the Commissioner determines in payment of tax or another amount that is payable by them; and
(b)
refund any balance of the amount.
Treatment of amount refunded or credited
(4)
When an overpayment or amount of provisional tax for a tax year has been applied or refunded under subsection (2) or (3)—
(a)
a later instalment payable under section RC 10 or RC 11 (which relate to the methods used to calculate the amount of an instalment), as applicable, is calculated as if the total instalments previously payable were reduced by the amount of the overpayment or amount; and
(b)
the overpayment or amount applied or refunded is, from the date of action taken by the Commissioner, treated as not being provisional tax paid for the tax year.
Defined in this Act: amount, apply, ask, Commissioner, instalment date, pay, provisional tax, request, residual income tax, tax, tax year
Compare: 2004 No 35 s MB 36
Section RM 12(2): amended, on 2 June 2016, by section 63(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 12(3): amended, on 1 April 2020, by section 28(1) (and see section 28(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section RM 12(3): amended, on 2 June 2016, by section 63(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 12 list of defined terms apply: inserted, on 2 June 2016, by section 63(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 12 list of defined terms ask: inserted, on 2 June 2016, by section 63(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 12 list of defined terms request: inserted, on 2 June 2016, by section 63(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Limits on refunds and transfers
ICA companies
RM 13 Limits on refunds for ICA companies
When this section applies
(1)
This section applies when an ICA company is entitled to—
(a)
a refund of income tax under sections RM 2, RM 4, and RM 5, other than a refund of provisional tax paid under the AIM method; or
(b)
transfer an amount under section RC 32 (Wholly-owned groups of companies), other than a transfer of provisional tax paid under the AIM method.
Amount of refund or transfer limited
(2)
The amount of the refund or transfer must be no more than the credit balance of the ICA company in the imputation credit account at the latest of the following dates:
(a)
the last day of the tax year that has just ended:
(b)
the last day of a period for which the company is required to file a return under section 70(1) of the Tax Administration Act 1994:
(c)
the last day of a period for which the company filed an annual ICA return under section 70(3) of that Act.
Limits when company has extension of time for filing return
(3)
The amount of the refund or transfer must be no more than the credit balance of the ICA company in the imputation credit account on the last day of the most recent period for which the company has filed an annual ICA return if, when the ICA company becomes entitled to the refund or transfer,—
(a)
the ICA return for the most recent tax year that has ended (the last tax year) is not yet due because the company has an extension of time to file that return; and
(b)
the ICA company has filed an ICA return for no period that is referred to in subsection (2)(a) to (c) and ends after the beginning of the last tax year.
Defined in this Act: amount, annual ICA return, ICA company, imputation credit account, income tax, tax year
Compare: 2004 No 35 s MD 2(1), (1A)
Section RM 13(1)(a): amended, on 1 April 2018, by section 42(1) (and see section 42(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RM 13(1)(a): amended (with effect on 1 April 2013), on 17 July 2013, by section 91 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 13(1)(b): amended, on 1 April 2018, by section 42(2) (and see section 42(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RM 13(3) heading: replaced, on 30 March 2017, by section 283 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RM 13(3): replaced, on 30 March 2017, by section 283 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 14 Limits on refunds when company stops being ICA company
When this section applies
(1)
This section applies when a company stops being an ICA company and is entitled to have a refund or to make a transfer under section RM 13(1) for a tax year in which it was an ICA company.
Limit on amount of refund or transfer
(2)
The total amount refunded or transferred must be no more than the final balance of the imputation credit account arising as a debit under section OB 56 (ICA final balance) just before the company stopped being an ICA company.
Defined in this Act: amount, company, ICA company, imputation credit account, tax year
Compare: 2004 No 35 s MD 2(2)
RM 15 Changes in credit balances
Credit balance reduced
(1)
A credit balance is treated as reduced by the amount of a refund or transfer as described in sections RM 13 and RM 14 that is made earlier in the same tax year.
Credit balance increased
(2)
A credit balance is treated as increased by an amount equal to a debit to the company’s imputation credit account under section OB 41 (ICA debit for loss of shareholder continuity) arising after a credit is made to the company’s imputation credit account for an amount that has satisfied the company’s income tax liability for the tax year and before the date on which the credit balance is to be determined under sections RM 13 and RM 14.
Credit balance increased: refund after debit under section OB 41
(3)
For a company that has a refundable tax credit for a tax year after a debit to the company’s imputation credit account arises under section OB 41 (ICA debit for loss of shareholder continuity), a credit balance for the tax year is increased by an amount equal to the lesser of—
(a)
the debit under section OB 41:
(b)
the amount by which the refundable tax credit exceeds the total credits to the company’s imputation credit account, for amounts satisfying the company’s income tax liability, during the period from the date of the debit to the date on which the credit balance is to be determined under sections RM 13 and RM 14.
Defined in this Act: amount, company, imputation credit account, income tax liability, tax year
Compare: 2004 No 35 s MD 2(3), (4)
RM 15(3) heading: inserted, on 1 April 2018, by section 234 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RM 15(3): inserted, on 1 April 2018, by section 234 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RM 16 Treatment of amounts not refunded
When this section applies
(1)
This section applies when, through the application of sections RM 13 and RM 14, an overpayment of income tax by a company is not refunded to the company or transferred within a wholly-owned group of companies.
Satisfying liabilities or retained
(2)
The amount prevented from being a refund or transfer—
(a)
is applied to satisfy an income tax or provisional tax liability of the company for the tax year of the entitlement; and
(b)
may be used by the company to satisfy an income tax or provisional tax liability for a tax year other than the tax year of entitlement; and
(c)
is retained in the company’s tax account with the Commissioner to the extent to which paragraphs (a) and (b) do not apply, whether because the company is liquidated or for another reason.
Credit for provisional tax
(3)
Despite subsection (2), the amount may be credited on a provisional tax instalment date if residual income tax is treated under the Tax Administration Act 1994 as payable on the date set out in Part 7 of that Act.
Relationship with section RZ 6
(4)
Section RZ 6 (Limits on refunds: transitional dates) overrides subsection (2)(c).
Defined in this Act: amount, Commissioner, company, income tax, income tax liability, instalment date, liquidation, pay, provisional tax, residual income tax, tax account with the Commissioner, tax year, wholly-owned group of companies
Compare: 2004 No 35 s MD 2(5), (5A)
Section RM 16(3): amended (with effect on 1 April 2008), on 18 March 2019, by section 267(1) (and see section 267(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RM 17 Treatment of further income tax paid
When this section applies
(1)
This section applies for the purposes of sections RM 2, RM 4, and RM 5 when a company pays further income tax under sections OB 65 and OB 66 (which relate to further tax payable by ICA companies).
No refund
(2)
The company is not entitled to a refund of the amount of further income tax paid which is treated as tax paid to satisfy an obligation yet to arise.
Defined in this Act: amount, company, further income tax, pay
Compare: 2004 No 35 s MD 2(6)
Section RM 17(1): amended (with effect on 1 April 2013), on 17 July 2013, by section 92 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Companies receiving foreign dividends[Repealed]
Heading: repealed, on 1 April 2017, by section 284(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 18 Limits on refunds related to foreign dividends
[Repealed]Section RM 18: repealed, on 1 April 2017, by section 284(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 19 Treatment of financial arrangements
[Repealed]Section RM 19: repealed, on 1 April 2017, by section 284(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 20 Treatment of amounts not refunded
[Repealed]Section RM 20: repealed, on 1 April 2017, by section 284(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 21 Refunds when loss balances used to reduce net income
[Repealed]Section RM 21: repealed, on 1 April 2017, by section 284(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Maori authorities
RM 22 Limits on refunds for Maori authorities
When this section applies
(1)
This section applies when a Maori authority is entitled to a refund of income tax under sections RM 2, RM 4, and RM 5.
Amount of refund limited
(2)
The amount of the refund must be no more than the credit balance of the Maori authority in the Maori authority credit account at the latest of the following dates:
(a)
the last day of the tax year that has just ended:
(b)
the last day of a period for which the Maori authority is required to file a return under section 70B(1) of the Tax Administration Act 1994:
(c)
the last day of a period for which the Maori authority files a Maori authority credit account return under section 70B(3) of that Act.
Time for filing returns
(3)
Subsection (2) does not apply if the Maori authority has an extension of time to file its Maori authority credit account return for a tax year, and files the return with the extended time. In that case, the total amount refunded must be no more than the credit balance of the Maori authority in its Maori authority credit account on the last day of the tax year to which the return relates.
Satisfying liabilities or retained
(4)
If the Maori authority has a refund of income tax, and an amount paid in excess is not refunded because of the application of subsection (2) or section RM 23, the amount prevented from being a refund or transfer—
(a)
is used to satisfy an income tax or provisional tax liability of the Maori authority for the tax year of the entitlement; and
(b)
may be used by the Maori authority to satisfy an income tax or provisional tax liability for a tax year other than the tax year of entitlement; and
(c)
is retained in the authority’s tax account with the Commissioner to the extent to which paragraphs (a) and (b) do not apply.
Credit for provisional tax
(5)
Despite subsection (4), the amount may be credited on a provisional tax instalment date if residual income tax is treated under the Tax Administration Act 1994 as payable on the date set out in Part 7 of that Act.
Relationship with section RZ 6
(6)
Section RZ 6 (Limits on refunds: transitional dates) overrides subsection (4)(b).
Defined in this Act: amount, income tax, income tax liability, instalment date, Maori authority, Maori authority credit account, Maori authority credit account return, provisional tax, residual income tax, tax account with the Commissioner, tax year
Compare: 2004 No 35 s MD 2B(1), (1B)
Section RM 22(1): amended (with effect on 1 April 2013), on 17 July 2013, by section 93 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 22(5): amended (with effect on 1 April 2008), on 18 March 2019, by section 268(1) (and see section 268(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RM 23 Limits on refunds when Maori authority stops being Maori authority
When this section applies
(1)
This section applies when a Maori authority stops being a Maori authority and is entitled to a refund under section RM 2, RM 4, or RM 5 for a tax year in which it maintained a Maori authority credit account.
Limit on amount of refund
(2)
The amount refunded must be no more than the final balance of the Maori authority credit account arising as a debit under section OK 18 (MACA final balance) just before the Maori authority stopped being a Maori authority.
Defined in this Act: amount, Maori authority, Maori authority credit account, tax year
Compare: 2004 No 35 s MD 2B(2)
Section RM 23(1): amended (with effect on 1 April 2013), on 17 July 2013, by section 94 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
RM 24 Increase in credit balances
A credit balance is treated as increased by an amount equal to a debit to the Maori authority credit account under section OK 15 (MACA debit for loss of shareholder continuity) arising after the date of payment of instalment B set out in schedule 3, part A (Payment of provisional tax and terminal tax) for the authority’s income year that corresponds to the tax year and before the date on which the credit balance is to be determined under sections RM 22 and RM 23.
Defined in this Act: amount, corresponding income year, Maori authority credit account, pay, tax year
Compare: 2004 No 35 s MD 2B(3)
RM 25 Treatment of amounts not refunded
When this section applies
(1)
This section applies when, through the application of sections RM 22 and RM 23, an overpayment of income tax by a Maori authority is not refunded to the authority.
Satisfying liabilities or retained
(2)
The amount prevented from being a refund is—
(a)
applied to satisfy an income tax or provisional tax liability of the Maori authority for the tax year of the entitlement; and
(b)
retained by the Commissioner to the extent to which paragraph (a) does not apply.
Credit for provisional tax
(3)
Despite subsection (2), the amount may be credited on a provisional tax instalment date if residual income tax is treated under the Tax Administration Act 1994 as payable on the date set out in Part 7 of that Act.
Defined in this Act: amount, Commissioner, income tax, income tax liability, instalment date, Maori authority, pay, provisional tax, residual income tax
Compare: 2004 No 35 s MD 2B(4), (4B)
Section RM 25(3): amended (with effect on 1 April 2008), on 18 March 2019, by section 269(1) (and see section 269(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RM 26 Treatment of further income tax paid
When this section applies
(1)
This section applies for the purposes of sections RM 2, RM 4, and RM 5 when a Maori authority pays further income tax under section OK 21 or OK 22 (which relate to further income tax for closing debit balance or when Maori authority stops being a Maori authority).
No refund
(2)
The authority is not entitled to a refund of the amount of further income tax paid which is treated as tax paid to satisfy an obligation yet to arise.
Defined in this Act: amount, further income tax, Maori authority, pay, tax
Compare: 2004 No 35 s MD 2B(5)
Section RM 26(1): amended (with effect on 1 April 2013), on 17 July 2013, by section 95 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
RM 27 Application when no credits arise
Sections RM 22 to RM 26 do not apply in relation to an amount of tax paid for which no credit arises under section OK 2 (MACA payment of tax or transfer to account).
Defined in this Act: amount, amount of tax, pay
Compare: 2004 No 35 s MD 2B(6)
Section RM 27: amended, on 30 March 2022, by section 167 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Persons with policyholder credit accounts[Repealed]
Heading: repealed, on 30 March 2017, by section 285(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 28 Limits on refunds for PCA persons
[Repealed]Section RM 28: repealed, on 30 March 2017, by section 285(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 29 Limits on refunds when person no longer PCA person
[Repealed]Section RM 29: repealed, on 30 March 2017, by section 285(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 30 Changes in credit balances
[Repealed]Section RM 30: repealed, on 30 March 2017, by section 285(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RM 31 Treatment of amounts not refunded
[Repealed]Section RM 31(3): amended, on 18 March 2019, by section 270(1) (and see section 270(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RM 31: repealed, on 30 March 2017, by section 285(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Qualifying companies
RM 32 Application of sections RM 13 to RM 17 to qualifying companies
Sections RM 13 to RM 17 do not apply to an overpayment of tax by a qualifying company that may be refunded to or allocated by the company unless—
(a)
the overpayment was made as part of or under an arrangement—
(i)
to obtain a tax advantage of a kind referred to in section GB 35 (Imputation arrangements to obtain tax advantage); or
(ii)
to avoid a tax liability of a shareholder under this Act; and
(b)
the arrangement, or a part of it, was based on the company’s ability to obtain a refund of tax that the company would have under those sections in the absence of this section.
Defined in this Act: arrangement, pay, qualifying company, shareholder, tax advantage
Compare: 2004 No 35 s MD 2(7)
Certain unit trusts and group investment funds
RM 33 Limits on refunds for certain unit trusts and group investment funds
When this section applies
(1)
This section applies when a public unit trust or group investment fund—
(a)
is entitled to a refund under section RM 2, RM 4, or RM 5; and
(b)
goes into liquidation or chooses to become a portfolio investment entity; and
(c)
at the time of the liquidation or election, has—
(i)
a credit balance in its available subscribed capital (ASC) account on liquidation; and
(ii)
a zero balance in its imputation credit account.
Calculating amount of refund
(2)
The refund must be no more than an amount calculated using the formula—
ASC credit balance × maximum imputation ratio.
Definition of items in formula
(3)
In the formula,—
(a)
ASC credit balance is the credit balance in the ASC account of the public unit trust or group investment fund, as applicable:
(b)
maximum imputation ratio is the maximum permitted ratio calculated under section OA 18(2) (Calculation of maximum permitted ratios), read as if the words “in which the dividend or distribution is paid”
in subsection (3) were “in which the liquidation occurs or the election is made”
.
Defined in this Act: amount, ASC account, group investment fund, imputation credit account, liquidation, maximum permitted ratio, portfolio investment entity, public unit trust
Compare: 2004 No 35 s MD 2A
Section RM 33(1)(a): amended (with effect on 1 April 2013), on 17 July 2013, by section 97 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Subpart RP—Intermediaries
Contents
Introductory provision
RP 1 What this subpart does
This subpart establishes the obligations of PAYE intermediaries and tax pooling intermediaries in relation to the collection and payment of tax and the provision of information, and sets out the requirements for the operation of their respective accounts.
Defined in this Act: intermediary, pay, PAYE intermediary, tax
Compare: 2004 No 35 s MBA 1
PAYE intermediaries
Obligations and treatment of PAYE intermediaries
RP 2 PAYE intermediaries
Transferring obligations
(1)
An employer may arrange to transfer their pay-as-you-earn (PAYE) and employer’s superannuation contribution tax (ESCT) obligations to a person approved under section 124I or 124L of the Tax Administration Act 1994 as a PAYE intermediary.
Paying amounts of tax and filing returns
(2)
A PAYE intermediary must, on behalf of an employer who has transferred an obligation to them under subsection (1),—
(a)
withhold and pay to the Commissioner the amount of tax for a payment under the PAYE rules and the ESCT rules; and
(b)
file a return of income relating to the payment and the amount of tax for the payment.
When person no longer intermediary
(3)
A person who stops being a PAYE intermediary for an employer has the rights and obligations under the PAYE rules and ESCT rules of a PAYE intermediary in relation to funds that—
(a)
the employer pays to the person as intermediary; and
(b)
the person holds at the time they stop being an intermediary.
Defined in this Act: amount of tax, Commissioner, employer, ESCT, ESCT rules, pay, PAYE, PAYE intermediary, PAYE rules, return of income
Compare: 2004 No 35 ss NBA 1, NBA 8, NBB 7(3)
Section RP 2(1): amended, on 1 April 2020, by section 235(1)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 2(1): amended, on 18 March 2019, by section 293 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 2(2): amended, on 1 April 2020, by section 235(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 2(3): amended, on 1 April 2020, by section 235(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 2 list of defined terms listed PAYE intermediary: repealed, on 1 April 2020, by section 235(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RP 3 Requirements for listed PAYE intermediaries
[Repealed]Section RP 3: repealed, on 1 April 2020, by section 236 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RP 4 Payment of subsidies to certain PAYE intermediaries
[Repealed]Section RP 4: repealed, on 1 April 2020, by section 238 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RP 5 Subsidy claims
[Repealed]Section RP 5: repealed, on 1 April 2020, by section 238 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RP 6 Operation of PAYE intermediaries’ trust accounts
Nature of account
(1)
A PAYE intermediary’s trust account must be named as a trust account and established at a registered bank within the meaning of the Banking (Prudential Supervision) Act 1989.
Deposits
(2)
The deposits to the account consist of—
(a)
a payment of gross salary or wages paid by an employer:
(b)
an amount of employer’s superannuation cash contribution paid by an employer:
(c)
an amount of tax for a payment of salary or wages required under the PAYE rules and ESCT rules, or made under section RP 12:
(d)
an amount of a refund made by the Commissioner under section RM 7 (Refunds to PAYE intermediaries):
(e)
interest on the amount of the funds in the trust account.
Withdrawals
(3)
The withdrawals from the account consist of—
(a)
a payment of net salary or wages to an employee:
(b)
an amount of employer’s superannuation cash contribution paid by an employer:
(c)
an amount of tax for a payment of salary or wages withheld under section RP 12:
(d)
a payment that an employer would be required to make but for the arrangement with the PAYE intermediary, in relation to an amount of tax for a payment of salary or wages to an employee or an employer’s superannuation cash contribution made on behalf of an employee:
(e)
interest on the amount of the funds in the trust account.
Payments held on trust
(4)
A payment relating to an employee that is credited to the trust account of a PAYE intermediary is held by the PAYE intermediary on trust for the benefit of the employee and the Commissioner according to their respective rights and obligations.
Interest
(5)
Interest earned in the trust account of a PAYE intermediary by a payment that relates to an employee is held beneficially by the PAYE intermediary.
Defined in this Act: amount, amount of tax, Commissioner, employee, employer, employer’s superannuation cash contribution, ESCT rules, gross, interest, pay, PAYE intermediary, PAYE rules, salary or wages
Compare: 2004 No 35 s NBA 6
Section RP 6(1): amended, on 1 July 2022, by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
Section RP 6(2)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 544(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 6(3)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 544(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 6(3)(d): amended (with effect on 1 April 2008), on 6 October 2009, by section 544(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 6 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 544(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 6 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 544(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Employers’ responsibilities
RP 7 General responsibilities of employers
When this section applies
(1)
This section applies when an employer who meets the requirements of sections RP 8 to RP 11 arranges to transfer their PAYE obligations in relation to an employee and a pay period to a PAYE intermediary.
PAYE liabilities
(2)
The employer is not liable under the PAYE rules in relation to the employee and the pay period. However, the employer remains liable for the payment to the employee of the salary or wages for the pay period.
ESCT liabilities
(3)
If the PAYE intermediary assumes the employer’s obligations under the ESCT rules, the employer is not liable under the ESCT rules in relation to the employee and the pay period. However, the employer remains liable for the payment to the employee of the employer’s superannuation cash contribution made on the employee’s behalf.
Defined in this Act: employee, employer, employer’s superannuation cash contribution, ESCT rules, pay period, PAYE, PAYE intermediary, PAYE rules, salary or wages
Compare: 2004 No 35 s NBA 4(2), (3)
Section RP 7(3): amended (with effect on 1 April 2008), on 6 October 2009, by section 545(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 7 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 545(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 7 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 545(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RP 8 Information for PAYE intermediaries
An employer must provide the information sought by a PAYE intermediary within the time agreed by the employer and intermediary.
Defined in this Act: employer, PAYE intermediary
Section RP 8: replaced, on 1 April 2019, by section 239 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RP 9 Authorised transfers from accounts
When this section applies
(1)
This section applies when an employer has authorised the PAYE intermediary to direct the transfer of an amount from the employer’s bank account to meet an obligation that the PAYE intermediary has on the employer’s behalf in relation to an employee and a pay period.
Sufficient funds
(2)
The employer must ensure, at a time fixed by the PAYE intermediary, that the bank account has sufficient funds available for the transfer.
Defined in this Act: amount, employee, employer, pay period, PAYE intermediary
Compare: 2004 No 35 s NBA 4(1)(a)
RP 10 When transfers from accounts not authorised
Employer to pay amount of tax to trust account
(1)
If an employer has not authorised a PAYE intermediary to direct the transfer of funds as described in section RP 9, and the employer pays salary or wages directly to an employee for a pay period under section RP 12, the employer must pay the amount of tax for the payment required under the PAYE rules and ESCT rules into the PAYE intermediary’s trust account.
Employer to pay salary or wages to trust account
(2)
If the employer has not authorised the PAYE intermediary to direct the transfer of funds as described in section RP 9, and subsection (1) does not apply, the employer must pay the amount of the employee’s gross salary or wages for the pay period into the PAYE intermediary’s trust account. However, the employer may retain an amount lawfully owed to them by the employee before making the payment.
Defined in this Act: amount, amount of tax, employee, employer, ESCT rules, pay, pay period, PAYE intermediary, PAYE rules, salary or wages
Compare: 2004 No 35 s NBA 4(1)(b)(i), (ii)
RP 11 Employer’s superannuation cash contributions
If a PAYE intermediary has assumed the obligations of an employer under the ESCT rules in relation to an employee and a pay period, the employer must pay the amount of the employer’s superannuation cash contribution made in the pay period on behalf of the employee into the PAYE intermediary’s trust account.
Defined in this Act: amount, employee, employer, employer’s superannuation cash contribution, ESCT rules, pay, pay period, PAYE intermediary
Compare: 2004 No 35 s NBA 4(1)(b)(iii)
Section RP 11 heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 547(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 11: amended (with effect on 1 April 2008), on 6 October 2009, by section 547(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 11 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 547(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 11 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 547(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RP 12 When payments made directly to employees
Despite sections RP 9 and RP 10, an employer may pay an employee’s salary or wages directly to the employee in the following circumstances:
(a)
the payment is made on a day in a pay period that is not the usual day for a payment of salary or wages for the pay period; and
(b)
the payment is—
(i)
an advance of the employee’s salary or wages:
(ii)
salary or wages owed to the employee for an earlier pay period:
(iii)
a payment on the termination of the employee’s employment; and
(c)
the employer withholds for the salary or wages of the employee the amount of tax that would be required under the PAYE rules and the ESCT rules if the employer did not have an arrangement with a PAYE intermediary; and
(d)
the employer pays the amount referred to in paragraph (c) in the way described in sections RP 9 to RP 11.
Defined in this Act: amount of tax, arrangement, employee, employer, employment, ESCT rules, pay, pay period, PAYE rules, salary or wages
Compare: 2004 No 35 s NBA 4(4)
PAYE intermediaries’ responsibilities
RP 13 General responsibilities of PAYE intermediaries
When this section applies
(1)
This section applies when a PAYE intermediary assumes the PAYE and ESCT obligations in relation to an employee and a pay period that an employer would have under those rules in the absence of section RP 2(1).
No liability as employer
(2)
The PAYE intermediary does not become liable as an employer for the payment to the employee of the salary or wages for the pay period, or for the payment of an employer’s superannuation cash contribution made on behalf of the employee.
Defined in this Act: employee, employer, employer’s superannuation cash contribution, ESCT, pay, pay period, PAYE, PAYE intermediary, salary or wages
Compare: 2004 No 35 s NBA 5(1), (2)
Section RP 13(2): amended (with effect on 1 April 2008), on 6 October 2009, by section 548(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 13 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 548(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 13 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 548(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
RP 14 Collection, payment, and information requirements
A PAYE intermediary must—
(a)
calculate and withhold the amount of tax for a payment of salary or wages, and pay the amount to the Commissioner by electronic means and in the format required; and
(ab)
transfer the amount of any payroll donation to the relevant recipient within the period described in section 124ZG of the Tax Administration Act 1994; and
(b)
provide the relevant employment income information to the Commissioner under subpart 3C of that Act in electronic form and by means of an electronic communication as prescribed by the Commissioner; and
(c)
[Repealed](d)
keep the records referred to in section 22AA of that Act.
Defined in this Act: amount of tax, Commissioner, employment income information, pay, PAYE intermediary, salary or wages
Compare: 2004 No 35 s NBA 5(1)
Section RP 14(ab): inserted, on 6 January 2010, by section 549 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 14(ab): amended, on 1 April 2019, by section 271 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 14(b): replaced, on 1 April 2019, by section 240(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 14(c): repealed, on 1 April 2019, by section 240(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 14(d): amended, on 1 April 2019, by section 240(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 14 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 240(5)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 14 list of defined terms employment income information: inserted, on 1 April 2019, by section 240(5)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RP 14 list of defined terms PAYE income payment form: repealed, on 1 April 2019, by section 240(5)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RP 15 When employers have authorised transfers from accounts
If a PAYE intermediary has been given an authorisation by an employer under section RP 2(1), the intermediary must direct that, at or before the time of the transfer of the payment of salary or wages, an amount equal to the amount of tax for the payment required under the PAYE rules and ESCT rules is transferred to—
(a)
the Commissioner; or
(b)
the trust account established by the PAYE intermediary and identified in the employer’s notice under section 124O of the Tax Administration Act 1994.
Defined in this Act: amount, amount of tax, Commissioner, employer, ESCT rules, notice, pay, PAYE intermediary, PAYE rules, salary or wages
Compare: 2004 No 35 s NBA 5(1B)
Section RP 15(b): amended, on 18 March 2019, by section 293 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RP 16 Obligations for employer’s superannuation contributions
When section RP 11 applies, the PAYE intermediary assumes the obligations under the ESCT rules in relation to the employee and the pay period that the employer would have in the absence of section RP 2(1).
Defined in this Act: employee, employer, ESCT rules, pay period, PAYE intermediary
Compare: 2004 No 35 s NBA 5
Tax pooling intermediaries
RP 17 Tax pooling intermediaries
Meeting person A’s obligations
(1)
A person (person A) may ask a person who maintains a tax pooling account to act as a tax pooling intermediary between person A and the Commissioner in using funds in the tax pooling account to satisfy a liability of person A to pay an amount referred to in section RP 17B(2).
Person A and group companies
(2)
For the purposes of this section, if person A is a company in a group of companies, person A also includes the other companies that are in the group at the time—
(a)
an amount is deposited in a tax pooling account under section RP 18; and
(b)
as applicable,—
(i)
is used or transferred under section RP 17B:
(ii)
is transferred under section RP 19.
Defined in this Act: amount, ask, Commissioner, company, group of companies, intermediary, provisional tax, tax pooling account
Compare: 2004 No 35 s MBA 2
Section RP 17: amended (with effect on 1 April 2009), on 6 October 2009, by section 550 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 17(1) heading: inserted, on 29 August 2011, by section 125(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17(1): replaced (with effect on 1 April 2019), on 30 March 2022, by section 168(1) (and see section 168(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17(2) heading: added, on 29 August 2011, by section 125(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17(2): added, on 29 August 2011, by section 125(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17 list of defined terms amount: inserted, on 29 August 2011, by section 125(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 17 list of defined terms company: inserted, on 29 August 2011, by section 125(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17 list of defined terms group of companies: inserted, on 29 August 2011, by section 125(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
RP 17B Tax pooling accounts and their use
Meaning
(1)
A tax pooling account means a trust account into which a tax pooling intermediary pays an amount that they receive from a person in their role as intermediary.
Use of funds in tax pooling accounts
(2)
An amount held in a tax pooling account on behalf of a person may be refunded, transferred, sold, or used to satisfy a person’s liability for—
(a)
provisional tax other than under the AIM method:
(b)
terminal tax:
(c)
an increased amount of tax described in subsection (3):
(d)
interest under Part 7 of the Tax Administration Act 1994 on an increased amount of tax described in subsection (3):
(e)
interest under Part 7 of the Tax Administration Act 1994 on the provisional tax or terminal tax described in subsection (4):
(f)
a new liability described in subsection (12).
When original liability increased
(3)
For the purposes of this section, an increased amount of tax—
(a)
arises when a person’s previous assessed liability is increased after—
(i)
the Commissioner amends an assessment under section 113 of the Tax Administration Act 1994:
(ii)
the Commissioner makes a determination under section 119 of that Act:
(iii)
an assessment is made because the Commissioner or the person is treated under section 89H of that Act as having accepted a proposed adjustment:
(iv)
the person makes a voluntary disclosure:
(ab)
also arises when a person has—
(i)
before taking any action under subparagraph (ii), filed a return required to be provided for a tax type listed in subsection (8); and
(ii)
has made a voluntary disclosure in relation to the return:
(ac)
also arises when—
(i)
before any assessment or adjustment under subparagraph (ii) is made, the person has filed a return required to be provided for a tax type listed in subsection (8); and
(ii)
the Commissioner makes an assessment or adjustment increasing an amount previously payable:
(b)
includes deferrable tax as defined in section 3(1) of the Tax Administration Act 1994 payable by the person:
(bb)
includes an amount of tax (the agreed delay tax) for which the person has initiated a dispute under Part 4A of the Tax Administration Act 1994, if—
(i)
the facts and questions of law in the dispute closely resemble the facts and questions of law for an assessment that is at the time the subject of proceedings in a court or Taxation Review Authority; and
(ii)
the Commissioner and the person have agreed that the dispute will be determined by the final outcome of the proceedings; and
(iii)
the Commissioner and the person enter the agreement on or after the date on which the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 receives the Royal assent:
(c)
does not include the amount of the previous assessment or the amount that was previously payable under paragraph (ab) or (ac), as applicable.
Transfers for provisional tax or terminal tax
(4)
A person who chooses to use funds in a tax pooling account to satisfy an obligation for provisional tax (other than under the AIM method) for a tax year, terminal tax for a tax year, or interest under Part 7 of the Tax Administration Act 1994 on the provisional tax or terminal tax may ask the tax pooling intermediary to arrange the transfer of an amount to their tax account with the Commissioner as follows:
(a)
on a day that—
(i)
is, or is after, the first day of the person’s income year corresponding to the tax year; and
(ii)
is, or is before, the day that is 75 days after the person’s terminal tax date for the tax year, unless paragraph (b) or (c) applies:
(b)
on a day that—
(i)
is, or is after, the first day of the person’s income year corresponding to the tax year; and
(ii)
is, or is before, the day that is 76 days after the person’s terminal tax date for the tax year, if the person’s balance date falls at the end of October, November, or December, and the terminal tax date falls in a tax year that includes a 29 February:
(c)
if the amount is to be transferred from funds deposited on the person’s behalf in the tax pooling account under section RP 18 and the person’s return filing requirements have been met, at any time.
Group companies
(4B)
For the purposes of subsection (4)(c), if the person is part of a group of companies, the person includes the other companies in the group at the time at which a deposit to the tax pooling account is made, or funds purchased or used, as applicable.
Transfer within 60 days for increased amounts and use of money interest
(5)
If a person chooses to use funds in a tax pooling account to satisfy an obligation for an increased amount of tax as described in subsection (3)(a) to (ac), or for interest under Part 7 of the Tax Administration Act 1994 on the increased amount of tax, the tax pooling intermediary must apply to the Commissioner within 60 days from the date on which the Commissioner issues the notice of assessment increasing the amount to transfer the amount to the person’s tax account with the Commissioner.
Transfer within 60 days for deferrable tax, agreed delay tax, and use of money interest
(6)
If a person chooses to use funds in a tax pooling account to satisfy an obligation for deferrable tax under subsection (3)(b), for agreed delay tax referred to in subsection (3)(bb), or for interest under Part 7 of the Tax Administration Act 1994 on deferrable tax or agreed delay tax, the tax pooling intermediary must apply to the Commissioner within 60 days from the date on which the court proceedings are finally determined to transfer the amount to the person’s tax account with the Commissioner. For the purposes of this subsection, court proceedings include proceedings before the Taxation Review Authority.
Maximum amount of transfer
(7)
The maximum amount that a person may ask a tax pooling intermediary to transfer to meet an obligation to pay tax is—
(a)
for a transfer under subsection (4)(a) or (b), the total of—
(i)
the provisional tax or terminal tax payable:
(ii)
interest under Part 7 of the Tax Administration Act 1994 on the provisional tax or terminal tax:
(b)
for a transfer under subsection (4)(c), the amount of the funds deposited by the person under section RP 18:
(c)
for a transfer under subsection (5), the total of—
(i)
the increased amount of tax payable:
(ii)
interest payable under Part 7 of the Tax Administration Act 1994 on the increased amount of tax:
(d)
for a transfer under subsection (6), the total of—
(i)
the amount of deferrable tax or agreed delay tax payable:
(ii)
interest payable under Part 7 of the Tax Administration Act 1994 on the amount of deferrable tax or agreed delay tax.
Extended meaning for increased amount of tax and deferrable tax
(8)
For the purposes of sections RP 17 to RP 21, an increased amount of tax or deferrable tax includes an amount relating to—
(a)
tax paid or payable under the PAYE rules, ESCT rules, RSCT rules, RWT rules, or NRWT rules:
(b)
income tax, GST, FBT, further income tax, and imputation penalty tax payable under section 140B of the Tax Administration Act 1994.
When subsection (10) applies[Repealed]
(9)
[Repealed]Commissioner’s discretion to allow use of funds[Repealed]
(10)
[Repealed]Review[Repealed]
(11)
[Repealed]When funds may be used to meet new liability for tax or interest
(12)
Subsection (13) applies when—
(a)
a person is liable for an increased amount of a tax in a category referred to in subsection (14), or of interest under Part 7 of the Tax Administration Act 1994 (the Part 7 interest) on an increase in the amount of such a tax; and
(b)
the liability referred to in paragraph (a) (the new liability) does not relate to a liability of the person that arose from a return by the person, or an assessment of the person, made before the person becomes aware of the new liability; and
(c)
the person makes a voluntary disclosure of the new liability; and
(d)
the person notifies the Commissioner of the details of the new liability and the notification results in an assessment of the new liability or in an obligation to pay the new liability; and
(e)
the person makes the voluntary disclosure referred to in paragraph (c)—
(i)
within a reasonable time after the earliest time that the person or the person’s agent is aware of the person’s new liability; and
(ii)
before the date of the return referred to in paragraph (d); and
(iii)
before the person is notified, within the terms of section 141G(4) of the Tax Administration Act 1994, of a pending tax audit or investigation or that a tax audit or investigation has started.
Commissioner’s discretion to allow use of funds to meet new liability
(13)
On application by the person, the Commissioner may notify the person that the person may use funds in a tax pooling account to meet the new liability, if the Commissioner is satisfied that the new liability did not arise as a result of a choice by the person not to comply with the person’s obligations under the Inland Revenue Acts or as a result of a failure by the person to take reasonable care to comply with those obligations.
Categories of tax that may be included in new liability
(14)
The categories of tax that may be included in a new liability for the purposes of subsection (12) are—
(a)
ESCT:
(b)
FBT:
(c)
further income tax:
(d)
GST:
(e)
imputation penalty tax:
(f)
income tax:
(g)
NRWT:
(h)
PAYE:
(i)
RSCT:
(j)
RWT.
Defined in this Act: amount, amount of tax, apply, ask, assessment, balance date, Commissioner, corresponding income year, income tax, notice, notify, pay, provisional tax, return of income, tax account with the Commissioner, tax pooling account, terminal tax
Section RP 17B: inserted, on 6 October 2009, by section 551 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 17B(2): replaced (with effect on 3 July 2014), on 24 February 2016, by section 230(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(2)(a): amended, on 1 April 2018, by section 44(1) (and see section 44(3) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RP 17B(2)(d): amended, on 1 April 2019, by section 272(1) (and see section 272(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 17B(2)(e): inserted, on 1 April 2019, by section 272(1) (and see section 272(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 17B(2)(f): inserted, on 30 March 2022, by section 169(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(3)(ab): inserted, on 29 August 2011, by section 126(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(3)(ac): inserted, on 29 August 2011, by section 126(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(3)(bb): inserted (with effect on 3 July 2014), on 24 February 2016, by section 230(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(3)(c): amended, on 29 August 2011, by section 126(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(4) heading: substituted, on 29 August 2011, pursuant to section 126(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(4): substituted, on 29 August 2011, by section 126(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(4): amended, on 1 April 2019, by section 272(2) (and see section 272(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 17B(4)(a): replaced, on 30 March 2022, by section 169(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(4)(b): replaced, on 30 March 2022, by section 169(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(4B) heading: inserted, on 29 August 2011, by section 126(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(4B): inserted, on 29 August 2011, by section 126(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(5) heading: replaced (with effect on 3 July 2014), on 24 February 2016, by section 230(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(5): amended, on 2 June 2016, by section 65(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 17B(5): amended (with effect on 3 July 2014), on 24 February 2016, by section 230(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(5): amended, on 29 August 2011, by section 126(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(6) heading: replaced (with effect on 3 July 2014), on 24 February 2016, by section 230(5) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(6): amended, on 2 June 2016, by section 65(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 17B(6): amended (with effect on 3 July 2014), on 24 February 2016, by section 230(6) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(7) heading: added, on 29 August 2011, by section 126(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(7): added, on 29 August 2011, by section 126(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(7)(a): replaced, on 1 April 2019, by section 272(3) (and see section 272(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 17B(7)(c): replaced (with effect on 3 July 2014), on 24 February 2016, by section 230(7) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(7)(d): replaced (with effect on 3 July 2014), on 24 February 2016, by section 230(8) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 17B(8) heading: added, on 29 August 2011, by section 126(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(8): added, on 29 August 2011, by section 126(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B(9) heading: repealed, on 30 March 2022, pursuant to section 169(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(9): repealed, on 30 March 2022, by section 169(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(10) heading: repealed, on 30 March 2022, pursuant to section 169(4) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(10): repealed, on 30 March 2022, by section 169(4) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(11) heading: repealed, on 30 March 2022, pursuant to section 169(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(11): repealed, on 30 March 2022, by section 169(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(12) heading: inserted, on 30 March 2022, by section 169(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(12): inserted, on 30 March 2022, by section 169(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(13) heading: inserted, on 30 March 2022, by section 169(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(13): inserted, on 30 March 2022, by section 169(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(14) heading: inserted, on 30 March 2022, by section 169(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B(14): inserted, on 30 March 2022, by section 169(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 17B list of defined terms apply: inserted, on 2 June 2016, by section 65(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 17B list of defined terms ask: inserted, on 2 June 2016, by section 65(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 17B list of defined terms balance date: inserted, on 29 August 2011, by section 126(6) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B list of defined terms corresponding income year: inserted, on 29 August 2011, by section 126(6) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B list of defined terms income tax: inserted, on 29 August 2011, by section 126(6) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 17B list of defined terms notify: inserted, on 2 June 2016, by section 65(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 17B list of defined terms return of income: inserted, on 29 August 2011, by section 126(6) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
RP 18 Deposits in tax pooling accounts
When this section applies
(1)
This section applies when a tax pooling intermediary makes a deposit in a tax pooling account on behalf of a person.
Deposit held in trust
(2)
The intermediary holds the principal amount of the person’s deposit in trust for the person until the amount is—
(a)
credited to the person’s tax account with the Commissioner:
(b)
credited to another person’s tax account with the Commissioner:
(c)
refunded to the person:
(d)
transferred at the person’s request to another intermediary:
(e)
transferred at the intermediary’s request to another intermediary.
Effective date
(2B)
For the purposes of this section and sections RP 17B and RP 19, a deposit that is transferred between intermediaries under subsection (2)(d) or (e) retains its pre-transfer date.
Notification required
(3)
The intermediary must—
(a)
notify the person, at or before the time the person pays an amount to the intermediary, that the payment does not satisfy an obligation of the person to make a payment to the Commissioner; and
(b)
notify the Commissioner by electronic means, providing for each person who has contributed an amount as a deposit,—
(i)
the person’s name and tax file number; and
(ii)
the amount of the person’s contribution.
Confirming receipt of deposit and details
(4)
On receiving the deposit and details described in subsection (3), the Commissioner must provide confirmation of receipt.
Refunding deposit
(5)
If the details described in subsection (3) are not provided within 5 working days after a deposit is made, the Commissioner must refund the deposit.
Defined in this Act: amount, Commissioner, intermediary, notify, pay, request, tax account with the Commissioner, tax file number, tax pooling account, working day
Compare: 2004 No 35 ss MBA 3, MBA 4(3), MBA 5(1)–(4)
Section RP 18(2)(c): amended, on 6 October 2009, by section 552(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18(2)(d): added, on 6 October 2009, by section 552(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18(2)(e): added, on 6 October 2009, by section 552(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18(2B) heading: inserted, on 6 October 2009, by section 552(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18(2B): inserted, on 6 October 2009, by section 552(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18(4) heading: substituted, on 6 October 2009, by section 552(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18(4): substituted, on 6 October 2009, by section 552(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 18 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RP 19 Transfers from tax pooling accounts
Transferring amounts
(1)
A tax pooling intermediary may apply to the Commissioner to transfer an amount in their tax pooling account to the tax account of a person who is their client or to another intermediary.
Treatment of transferred amounts
(1B)
An amount transferred and credited to the tax account of a person for provisional tax or terminal tax is treated as follows:
(a)
for an amount credited on or before the date that is, or would have been, the person’s final instalment date for a tax year, as income tax paid to meet a provisional tax obligation under the provisional tax rules:
(b)
for an amount credited after the date that is, or would have been, the person’s final instalment date for a tax year,—
(i)
first, as applied under section 120F of the Tax Administration Act 1994 to pay interest that the person is liable to pay; and
(ii)
secondly, as income tax paid to meet the person’s provisional tax obligation.
Credited on date of deposit or later
(2)
The intermediary may apply to the Commissioner that the amount of a transfer under subsection (1) is credited in the person’s tax account or the account of another intermediary on the date on which the amount was deposited in the tax pooling account or on some later date.
Credit date
(3)
The credit date for an amount transferred to a person’s tax account is—
(a)
for a transfer under section RP 17B(4)(a) or (b), a date nominated that is no earlier than the first day of the relevant income year:
(b)
for a transfer under section RP 17B(4)(c), the date on which the person deposited the funds in a tax pooling account:
(c)
for an application made within the 60-day period referred to in section RP 17B(5) or (6), a date nominated that is no earlier than the original due date for the relevant period:
(d)
in any other case, the date on which the Commissioner receives the application for the transfer.
Details
(4)
For the purposes of this section, the intermediary must provide the following details to the Commissioner by electronic means:
(a)
the date of the transfer and the credit date, if it is different; and
(b)
the amount of the transfer; and
(c)
the tax file number of the person for whom the amount is transferred.
Statement
(5)
When an amount is transferred, the Commissioner must provide a statement showing the effect of the transfer to both the intermediary and the person for whom the transfer is made.
Defined in this Act: amount, apply, Commissioner, income tax, intermediary, pay, provisional tax, provisional tax rules, tax file number, tax pooling account, tax year, terminal tax
Compare: 2004 No 35 s MBA 6(1)–(3)
Section RP 19(1) heading: substituted, on 6 October 2009, by section 553(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 19(1): substituted, on 6 October 2009, by section 553(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 19(1): amended, on 2 June 2016, by section 66(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 19(1B) heading: inserted, on 6 October 2009, by section 553(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 19(1B): inserted, on 6 October 2009, by section 553(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 19(1B): amended (with effect on 3 July 2014), on 24 February 2016, by section 231 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 19(1B)(a): replaced, on 1 April 2019, by section 273(1) (and see section 273(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 19(1B)(b): replaced, on 1 April 2019, by section 273(1) (and see section 273(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 19(2): amended, on 2 June 2016, by section 66(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 19(2): amended, on 6 October 2009, by section 553(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RP 19(3): substituted, on 29 August 2011, by section 127 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 19(3)(a): replaced (with effect on 1 April 2019), on 30 March 2022, by section 170(1) (and see section 170(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section RP 19(3)(c): amended, on 2 June 2016, by section 66(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 19(3)(d): amended, on 2 June 2016, by section 66(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 19 list of defined terms apply: inserted, on 2 June 2016, by section 66(5) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RP 19B Transfers for certain expected tax liabilities
Who this section applies to
(1)
This section applies to a person who—
(a)
expects to have an income tax or provisional tax liability other than under the AIM method for a tax year; and
(b)
has acquired funds in a tax pooling account other than by depositing them on their own account; and
(c)
has not yet filed a return of income in relation to the liability for the tax year.
Using funds
(2)
The person may choose to use the funds towards the payment of the liability for the tax year on meeting all the requirements of this section.
Requirements at time of making request
(3)
At the time of making the request, the person must—
(a)
for an income tax liability, have met all their return filing requirements for earlier tax years:
(b)
for a provisional tax liability other than under the AIM method, have met all their obligations under the provisional tax rules for the tax year.
Effective date of transfer
(4)
The effective date that the person nominates for the transfer of funds must correspond to the relevant instalment date set out in schedule 3, part A (Payment of provisional tax and terminal tax).
Refunds
(5)
If an overpayment arises as a result of a transfer under this section, the amount of the overpayment is treated as follows:
(a)
first, the amount is transferred to meet a liability of the person for—
(i)
provisional tax (other than under the AIM method), terminal tax, and interest under Part 7 of the Tax Administration Act 1994, referred to in section RP 17B(4)(a) or (b):
(ii)
an amount referred to in section RP 17B(5) consisting of an increased amount of tax and interest payable under Part 7 of the Tax Administration Act 1994 on the increased amount of tax:
(iii)
an amount referred to in section RP 17B(6) consisting of deferrable tax, or agreed delay tax, and interest payable under Part 7 of the Tax Administration Act 1994 on the deferrable tax or agreed delay tax:
(b)
secondly, the amount is transferred with an effective date that is no earlier than the date on which the Commissioner received the later application:
(c)
thirdly, the amount is refunded to the person.
Relationship with section RP 17B
(6)
This section overrides section RP 17B(7)(a).
Defined in this Act: amount, apply, Commissioner, instalment date, provisional tax, provisional tax rules, request, return of income, tax pooling account, tax year, terminal tax
Section RP 19B: inserted, on 29 August 2011, by section 128 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 19B(1)(a): amended, on 1 April 2018, by section 45(1) (and see section 45(4) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RP 19B(3)(b): amended, on 1 April 2018, by section 45(2) (and see section 45(4) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section RP 19B(5): replaced (with effect on 3 July 2014), on 24 February 2016, by section 232 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RP 19B(5)(a)(i): replaced, on 1 April 2019, by section 274(1) (and see section 274(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RP 19B(5)(b): amended, on 2 June 2016, by section 67(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 19B list of defined terms apply: inserted, on 2 June 2016, by section 67(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 19B list of defined terms request: inserted, on 2 June 2016, by section 67(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RP 20 Declining, amending, or reversing transfers
When this section applies
(1)
This section applies when a tax pooling intermediary applies to the Commissioner to transfer an amount under section RP 19.
Tax avoidance
(2)
The Commissioner may refuse to accept the application, or may reverse the transfer, if the application is made for the purpose or effect of tax avoidance.
Non-compliance
(2B)
If the Commissioner considers that the application does not comply with sections RP 17 to RP 21, the Commissioner may—
(a)
decline to process the application:
(b)
amend the application:
(c)
reverse the transfer.
Failure to provide details
(3)
The Commissioner must refuse the transfer if—
(a)
it relates to a deposit for which the details have not been provided under section RP 18(3) and the period of 5-working days has not expired:
(b)
the details required under section RP 19(4) have not been provided.
Defined in this Act: amount, apply, Commissioner, intermediary, tax avoidance, working day
Compare: 2004 No 35 s MBA 6(4)–(9)
Section RP 20 heading: substituted, on 29 August 2011, by section 129(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 20(1): amended, on 2 June 2016, by section 68(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 20(2): amended, on 2 June 2016, by section 68(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 20(2B) heading: inserted, on 29 August 2011, by section 129(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 20(2B): inserted, on 29 August 2011, by section 129(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section RP 20(2B): amended, on 2 June 2016, by section 68(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 20(2B)(a): amended, on 2 June 2016, by section 68(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 20(2B)(b): amended, on 2 June 2016, by section 68(5) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 20 list of defined terms apply: inserted, on 2 June 2016, by section 68(6) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RP 21 Refunds from tax pooling accounts
A tax pooling intermediary may apply to the Commissioner to refund some or all of the balance in their tax pooling account.
Defined in this Act: apply, Commissioner, intermediary, tax pooling account
Compare: 2004 No 35 s MBA 7
Section RP 21: amended, on 2 June 2016, by section 69(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RP 21 list of defined terms apply: inserted, on 2 June 2016, by section 69(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Subpart RZ—Terminating provisions
Contents
Provisional tax
RZ 1 Certain elections to become person with provisional tax liability
When this section applies
(1)
This section applies when a person has a non-standard income year and has, between 10 October 2000 and the date on which the Taxation (Relief, Refunds, and Miscellaneous Provisions) Act 2002 received Royal asset, filed a return of income for the 1998–99 income year or a later income year on the basis that section MB 3(a) of the Income Tax Act 2004 (section MB 2A(1)(a)(i) before the enactment of that Act) applied.
Choosing to have provisional tax liability
(2)
The person may choose to be a person with a provisional tax liability for the income year for which the return was filed if they have paid provisional tax of more than $2,500 on or before the date of instalment F for the income year corresponding to the tax year for which the return was filed.
Defined in this Act: corresponding income year, income year, non-standard income year, provisional tax, return of income, tax year
Compare: 2004 No 35 s MZ 8
RZ 2 Amount of provisional tax based on 1997–98 or earlier tax year
For the purposes of sections MB 4 and MB 5 other than section MB 5(3) and (4) of the Income Tax Act 2004 (which relate to the methods for calculating provisional tax), and for a person who is a New Zealand superannuitant for the 1997–98 tax year, the person’s residual income tax for the tax year or for an earlier tax year is the amount that would have been their residual income tax if they—
(a)
had not been liable to pay the New Zealand superannuitant surcharge; and
(b)
had not paid any New Zealand superannuitant surcharge by way of surcharge deduction.
Defined in this Act: amount, New Zealand superannuitant, residual income tax, tax year
Compare: 2004 No 35 s MZ 9
RZ 3 Standard method: 2010–11 to 2012–13 income years
When this section applies
(1)
This section applies to the calculation of a person’s provisional tax liability, when section RC 5 (Methods for calculating provisional tax liability) applies,—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year and for instalments for the 2011–12 and 2012–13 income years, if the person is a new personal tax rate person:
(b)
for instalments payable for the 2011–12 and 2012–13 income years, if the person is a new company tax rate person.
Standard method modified: for 5% uplift
(2)
The standard method under section RC 5(2) is modified so that—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using 105%, the amount of provisional tax payable is calculated using 95%, if the person is a new personal tax rate person:
(b)
for the 2011–12 income year, instead of using 105%, the amount of provisional tax payable is calculated using—
(i)
95%, if the person is a new personal tax rate person; or
(ii)
100%, if the person is a new company tax rate person.
Standard method modified: for 10% uplift
(3)
The standard method under section RC 5(3) is modified so that—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using 110%, the amount of provisional tax payable is calculated using 95%, if the person is a new personal tax rate person:
(b)
for the 2011–12 income year, instead of using 110%, the amount of provisional tax payable is calculated using—
(i)
95%, if the person is a new personal tax rate person; or
(ii)
105%, if the person is a new company tax rate person:
(c)
for the 2012–13 income year, instead of using 110%, the amount of provisional tax payable is calculated using—
(i)
100%, if the person is a new personal tax rate person; or
(ii)
105%, if the person is a new company tax rate person.
Defined in this Act: amount, income year, new company tax rate person, new personal tax rate person, pay, provisional tax
Section RZ 3: substituted, on 1 October 2010, by section 29 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
RZ 4 GST ratio method: 2010–11 to 2013–14 income years
When this section applies
(1)
This section applies to the calculation of a person’s provisional tax liability, when section RC 8 (GST ratio method) applies and requires an amount of residual income tax or an assessment of income tax for the calculation of the GST ratio,—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year and for instalments for the 2011–12, 2012–13, and 2013–14 income years, if the person is a new personal tax rate person:
(b)
for instalments payable for the 2011–12, 2012–13, and 2013–14 income years, if the person is a new company tax rate person.
(2)
The GST ratio method under section RC 8 is modified so that—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year, and for the 2011–12 income year, if the person is a new personal tax rate person,—
(i)
the amount of residual income tax or the amount of an assessment of income tax for the preceding year, as applicable, is reduced by multiplying the amount by 0.90:
(ii)
the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.85:
(iii)
the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.80:
(b)
for instalments payable for the 2012–13 income year, if the person is a new personal tax rate person,—
(i)
the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.90:
(ii)
the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.85:
(c)
for instalments payable for the 2013–14 income year, if the person is a new personal tax rate person, the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.90:
(d)
for instalments payable for the 2011–12 income year, if the person is a new company tax rate person,—
(i)
the amount of residual income tax or the amount of an assessment of income tax for the preceding year, as applicable, is reduced by multiplying the amount by 0.95:
(ii)
the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:
(iii)
the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:
(e)
for instalments payable for the 2012–13 income year, if the person is a new company tax rate person,—
(i)
the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:
(ii)
the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:
(f)
for instalments payable for the 2013–14 income year, if the person is a new company tax rate person, the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95.
Defined in this Act: amount, assessment, GST ratio, income tax, income year, new company tax rate person, new personal tax rate person, pay, provisional tax, residual income tax
Section RZ 4: substituted, on 1 October 2010, by section 29 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
RZ 5 Calculating amounts under standard method: 2010–11 to 2012–13 income years
When this section applies
(1)
This section applies to the calculation of a person’s provisional tax liability, when section RC 10 (Calculating amount of instalment under standard and estimation methods) applies,—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year and for instalments for the 2011–12 and 2012–13 income years, if the person is a new personal tax rate person:
(b)
for instalments payable for the 2011–12 and 2012–13 income years, if the person is a new company tax rate person.
Calculation modified: for 5% uplift
(2)
In the calculation of the amount of an instalment, in section RC 10(3)(a), subparagraph (i) is modified so that—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using a 5% uplift, a 5% reduction is used, if the person is a new personal tax rate person:
(b)
for the 2011–12 income year, instead of using a 5% uplift, the amount of provisional tax payable is calculated using—
(i)
a 5% reduction, if the person is a new personal tax rate person; or
(ii)
no uplift, if the person is a new company tax rate person.
Calculation modified: for 10% uplift
(3)
In the calculation of the amount of an instalment, in section RC 10(3)(a), subparagraph (ii) is modified so that—
(a)
for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using a 10% uplift, a 5% reduction is used, if the person is a new personal tax rate person:
(b)
for the 2011–12 income year, instead of using a 10% uplift, the amount of provisional tax payable is calculated using—
(i)
a 5% reduction, if the person is a new personal tax rate person; or
(ii)
a 5% uplift, if the person is a new company tax rate person:
(c)
for the 2012–13 income year, instead of using a 10% uplift, the amount of provisional tax payable is calculated using—
(i)
no uplift, if the person is a new personal tax rate person; or
(ii)
a 5% uplift, if the person is a new company tax rate person.
Defined in this Act: amount, income year, new company tax rate person, new personal tax rate person, pay, provisional tax
Section RZ 5: substituted, on 1 October 2010, by section 29 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
RZ 5B Standard method: new personal tax rate persons from 1 October 2008 to end 2009–10 income year
[Repealed]Section RZ 5B: repealed, on 1 October 2010, by section 29 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
RZ 5C GST ratio method: new personal tax rate persons from 1 October 2008 to end 2009–10 income year
[Repealed]Section RZ 5C: repealed, on 1 October 2010, by section 29 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
RZ 5D Standard method or GST method: transition for Maori authorities
When this section applies
(1)
This section applies when the provisional tax liability of a Maori authority is calculated for the 2011–12 and 2012–13 income years (the transitional period).
Application of modified sections RZ 3 to RZ 5
(2)
Sections RZ 3 to RZ 5 apply for the transitional period to the Maori authority and the Maori authority’s provisional tax liability as if—
(a)
the Maori authority were a new company tax rate person:
(b)
in section RZ 3,—
(i)
in subsection (2)(b)(ii), 100% had been replaced by 95%:
(ii)
in subsection (3)(b)(ii), 105% had been replaced by 100%:
(iii)
in subsection (3)(c)(ii), 105% had been replaced by 100%:
(c)
in section RZ 4,—
(i)
in subsection (2)(d), 0.95 had been replaced by 0.9 in each place where it appears:
(ii)
in subsection (2)(e), 0.95 had been replaced by 0.9 in each place where it appears:
(d)
in section RZ 5,—
(i)
in subsection (2)(b)(ii), a reference to no uplift had been replaced by a reference to a 5% reduction:
(ii)
in subsection (3)(b)(ii), a reference to a 5% uplift had been replaced by a reference to no uplift:
(iii)
in subsection (3)(c)(ii), a reference to a 5% uplift had been replaced by a reference to no uplift.
Defined in this Act: Maori authority, new company rate person
Section RZ 5D: inserted (with effect on 1 October 2010), on 21 December 2010, by section 131 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RZ 5D list of defined terms provisional tax liability: repealed, on 27 February 2014, by section 131 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Refunds
RZ 6 Limits on refunds: transitional dates
ICA companies
(1)
If an imputation credit account (ICA) company has a refund of income tax, and an amount paid in excess is dealt with under section RM 16(2)(c) (Treatment of amounts not refunded), the amount may be used only for a tax year commencing after the 1988–89 tax year, whether that is before or after the year of that entitlement.
Maori authorities
(2)
If a Maori authority has a refund of income tax, and an amount paid in excess is dealt with under section RM 22(4)(b) (Limits on refunds for Maori authorities), the amount may be used only for a tax year commencing after the 2004–05 tax year, whether that is before or after the year of that entitlement.
PCA persons[Repealed]
(3)
[Repealed]Defined in this Act: amount, ICA company, income tax, Maori authority, tax year
Compare: 2004 No 35 ss MD 2(5)(a)(ii), MD 3(4)(a)
Section RZ 6(3) heading: repealed, on 30 March 2017, pursuant to section 286(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RZ 6(3): repealed, on 30 March 2017, by section 286(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RZ 6 list of defined terms PCA person: repealed, on 30 March 2017, by section 286(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Withdrawal income[Repealed]
Heading: repealed, on 2 June 2016, by section 70 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RZ 7 Withdrawal income
[Repealed]Section RZ 7: repealed, on 2 June 2016, by section 70 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RZ 8 Payment and rate of withdrawal tax
[Repealed]Section RZ 8: repealed, on 2 June 2016, by section 70 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RZ 9 Relief in certain cases
[Repealed]Section RZ 9: repealed, on 2 June 2016, by section 70 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
RZ 10 Recovery of amounts payable to Commissioner
[Repealed]Section RZ 10: repealed, on 2 June 2016, by section 70 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Refunds for life insurers
Heading: inserted (with effect on 3 July 2014), on 24 February 2016, by section 233 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RZ 11 Refunds for life insurers
The Commissioner must refund an amount of tax that a life insurer has paid to the extent to which—
(a)
the tax paid gave rise to imputation credits; and
(b)
for a tax year corresponding to an income year before the income year that includes 1 July 2010, the life insurer would be entitled to a refund under section RM 2(1) (Refunds for overpaid tax) or any provision corresponding to it in an earlier Act, treating section RM 2(1)(a) and any corresponding provision as modified so as to exclude the amount of the life insurer’s policyholder base income tax liability from the tax required to be paid by them; and
(c)
all other relevant requirements for a refund are met.
Defined in this Act: amount of tax, Commissioner, imputation credit, income year, life insurer, pay, policyholder base income tax liability, tax
Section RZ 11: added (with effect on 1 April 2008), on 6 October 2009, by section 556 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Tax pooling intermediaries
Heading: inserted (with effect on 3 July 2014), on 24 February 2016, by section 234 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
RZ 12 Adjustments to interest in requests made after commencement
When this section applies
(1)
This section applies when a tax pooling intermediary makes a request (the original request) to the Commissioner for a person under section RP 17B(5) or (6) (Tax pooling accounts and their use) after 2 July 2014 and before the date on which the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 receives the Royal assent.
Amendment request
(2)
The tax pooling intermediary, if authorised by the person, may make a request (the amendment request) to the Commissioner for the original request to be amended by adjusting the amount included to pay interest under Part 7 of the Tax Administration Act 1994.
Permitted changes
(3)
The amendments to the original request are limited to changes in—
(a)
the details required by section RP 19(4)(a) (Transfers from tax pooling accounts):
(b)
the details required by section RP 19(4)(b).
Maximum amount unchanged
(4)
The original request as amended must not request the transfer of an amount exceeding the maximum amount specified in section RP 17B(7).
Time limit for amendment request
(5)
The amendment request must be received by the Commissioner within 60 days from the date on which the Commissioner notifies the person of the amount of interest payable under Part 7 of the Tax Administration Act 1994.
Timing of effect
(6)
The original request as amended is treated as being made on the date on which the original request was made.
Defined in this Act: Commissioner, interest, tax pooling intermediary
Section RZ 12: inserted (with effect on 3 July 2014), on 24 February 2016, by section 234 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Non-resident financial arrangement income
Heading: inserted, on 30 March 2017, by section 287 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
RZ 13 Treatment of prepayments
When this section applies
(1)
This section applies for the purposes of the NRWT rules when—
(a)
a person resident in New Zealand enters into a financial arrangement before the date on which the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 receives the Royal assent (the date of enactment); and
(b)
either—
(i)
no obligation to withhold NRWT has arisen in relation to the arrangement before the date of enactment; or
(ii)
approved issuer levy has been paid in relation to the arrangement before the date of enactment; and
(c)
the arrangement would be a related-party debt if sections RF 12H to RF 12J (which relate to related-party debt) had applied to the arrangement before the date of enactment; and
(d)
the person is party to the arrangement on or after the date of enactment.
When excess treated as paid
(2)
If, at the date on which section 273(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 applies in relation to the arrangement, the total interest paid under the arrangement is more than the total expenditure accrued by the person on the arrangement, the excess interest is treated as paid on that date.
Foreign exchange treatment
(3)
For the purposes of subsection (2) and an arrangement that is denominated in a foreign currency, the calculation of total interest and total expenditure must be made in the currency of the arrangement and the excess converted to New Zealand dollars under subpart YF (Currency conversion).
Example
On 1 April 2010, X Ltd borrowed $1m from Foreign Parent Ltd, repayable on 31 March 2025. Foreign Parent also has a New Zealand branch. On 31 March each year from 2011 to 2016, X makes an interest payment of $60,000 to Foreign Parent. As Foreign Parent has a New Zealand branch, these interest payments are not non-resident passive income, so no NRWT is required to be withheld. Once the amendments to section RF 2(1)(d) are enacted, any interest payments by X to Foreign Parent will be non-resident passive income. On 30 September 2016, X makes a one-off interest payment of $400,000 and agrees with Foreign Parent that no further interest will be paid. X calculates that $35,000 of this payment covers the period from 1 April 2016 to the date on which the amendments to section RF 2(1)(d) are enacted. The remaining $365,000 is treated as a prepayment that is paid on the date of enactment, so X is required to withhold NRWT of $36,500.
Defined in this Act: amount, approved issuer, financial arrangement, income year, interest, NRWT, NRWT rules, pay, related-party debt, resident in New Zealand
Section RZ 13: inserted, on 30 March 2017, by section 287 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section RZ 13 list of defined terms approved issuer: inserted, on 29 March 2018 (with effect on 30 March 2017), by section 241 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RZ 13 list of defined terms approved issuer levy: repealed, on 29 March 2018 (with effect on 30 March 2017), by section 241 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
RZ 14 Listed PAYE intermediaries: transitional provision
Despite the repeal of sections RP 4 and RP 5, sections 124L, 124M, 124N, 124R, 185C, and 185D of the Tax Administration Act 1994, and the Income Tax (Payroll Subsidy) Regulations 2006 (which relate to the payment of subsidies to certain PAYE intermediaries) by the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018, those provisions continue to apply in relation to the payment of an amount of a subsidy or a claim for a subsidy to which a listed PAYE intermediary becomes entitled before the date of the repeal.
Defined in this Act: amount, pay, PAYE intermediary
Section RZ 14: inserted, on 1 April 2020, by section 242 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section RZ 14: amended, on 1 April 2020, by section 275 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RZ 15 Treatment of certain refunds made on income statements: 1 April 2008 to 31 March 2019
When this section applies
(1)
This section applies for the period that starts on 1 April 2008 and ends on 31 March 2019 when—
(a)
an income statement has been provided to a person for a tax year and the result is that an amount of tax must be refunded to the person; and
(b)
the person is a deceased person for whom no executor or administrator has been appointed; and
(c)
the amount is—
(i)
more than the confirmation threshold applying for the person at the time the income statement was provided; and
(ii)
not more than $15,000.
Persons confirming correctness of statements
(2)
The Commissioner may allow a person appearing on the list described in subsection (3) to confirm, to the best of their knowledge, the correctness of the income statement on behalf of the person.
List of classes of persons
(3)
The Commissioner must publish a list of the classes of persons who are considered likely to have a relationship with a deceased person and that the Commissioner considers may be best placed to confirm an income statement of a deceased person.
Defined in this Act: amount, amount of tax, Commissioner, income statement, tax year
Section RZ 15: inserted (with effect on 1 April 2008), on 18 March 2019, by section 276(1) (and see section 276(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
RZ 16 Treatment of certain refunds not paid within 4-year period: 1 April 2008 to 31 March 2013
When this section applies
(1)
This section applies for the period that starts on 1 April 2008 and ends on 31 March 2013 when—
(a)
a person overpaid their tax for an income year that falls in the period and was entitled to a refund of tax; and
(b)
the refund arose from the person’s return of income and not from an amended assessment; and
(c)
the Commissioner was unable to make the refund within the 4-year period referred to in section 108(1) of the Tax Administration Act 1994; and
(d)
after the expiry of the 4-year period, the refund could not be made under section RM 2 as it was before it was amended by section 87(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013.
(2)
The Commissioner may pay the refund to the person.
Defined in this Act: assessment, Commissioner, pay, return of income
Section RZ 16: inserted (with effect on 1 April 2008), on 18 March 2019, by section 277(1) (and see section 277(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section RZ 16(1)(c): amended (with effect on 1 April 2008), on 23 March 2020, by section 184 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
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Versions
Income Tax Act 2007
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