RWT On Interest And Dividends
RWT on interest and dividends is resident withholding tax that Inland Revenue deducts from New Zealand tax residents before the cash hits the bank. Your payer, such as a bank or fund manager, takes it from interest and dividends you earn from New Zealand bank accounts and investments.
The amount depends on your tax status, the type of interest or dividend, and the information you give the payer. Pick a rate that does not match your income tax rate and you can get a bill when Inland Revenue squares you up at the end of the tax year. Give no IRD number on interest and the non declaration rate is 45%.
Use case: Dunedin saver
Situation: a labelled Dunedin term deposit. The saver has given the bank an IRD number. Total taxable income sits in Inland Revenue’s $15,601 to $53,500 band.
Action: choose 17.5% on interest so the RWT rate matches that income tax band. Do not leave the account on a default if that default is the wrong band.
Use case: Wellington joint account
Situation: a labelled Wellington couple on one savings account. One earns over $53,500. The other earns $53,500 or less. Both have valid IRD numbers with the bank.
Action: Inland Revenue: you can only use one RWT rate. Choosing 30% avoids the higher earner getting an end of year tax bill. Inland Revenue then splits the reported interest equally between those IRD numbers.
Use case: Hamilton Ltd
Situation: a labelled Hamilton company term deposit. The company has given its IRD number and has told the bank it is a company.
Action: it may use 28%, 33%, or 39%. If it does not choose a rate, Inland Revenue: tax is deducted at 28%. Most companies also pay income tax at 28%.
Use case: Christchurch dividend
Situation: a labelled Christchurch shareholder. The New Zealand company pays a cash dividend and attaches imputation credits for tax the company has already paid.
Action: dividend RWT is 33%, then imputation credits may offset that deduction. Keep the shareholder dividend statement for the return. This is not an interest rate you pick on internet banking.
45% is the missing IRD number rate
Inland Revenue: if you have not given your IRD number to your interest payer, they deduct 45%. That is not a new standard rate for everyone. IR283: if you later give an IRD number, the payer cannot refund the extra already taken. You recover it in your income tax assessment. Forum posts that divide RWT by the net interest also inflate the look of the rate: the deduction is taken from the gross interest.
This is not schedular withholding
RWT sits on investment income. Schedular withholding sits on listed contractor payments, with tax code WT and an IR330C. The Withholding and Schedular hub is the contractor clock. Do not put bank interest on an IR330C, and do not treat a 20% labour rate as your term deposit rate.
The withholding tax calculator is built for invoice WT, and it also sets out the RWT bands so you can see which clock you are on. Non resident passive income is a third clock: IR283 says interest paid to non residents is not subject to RWT. The payer deducts NRWT instead. On a joint account held by a resident and a non resident, Inland Revenue still wants RWT on all interest, and the non resident may claim a refund on an IR3NR or an IR386.
Interest
You choose 10.5%, 17.5%, 30%, 33%, or 39% when you have given an IRD number. Inland Revenue’s recipient page: if you do not choose a rate, 33% is deducted. Companies that have notified company status default to 28%. No valid IRD number: 45%.
Dividends
Inland Revenue: the RWT rate for dividend payments is 33%. Unit trust distributions are also taxed at 33% on the RWT hub. Imputation credits may offset the RWT. You do not elect 10.5% on a dividend the way you elect it on a savings account.
Interest rates from 31 July 2024
The RWT table on using the right RWT tax rate applies from 31 July 2024. Those bands match the personal income tax rates Inland Revenue lists from 1 April 2025: $15,600, $53,500, $78,100, and $180,000. Up to 30 July 2024 the older $14,000, $48,000, and $70,000 cutoffs still sat on the RWT page. Match your RWT choice to the bracket your total taxable income sits in, not to an average rate. That split is the same idea as effective vs marginal tax rate NZ.
| Your total taxable income | RWT rate on interest |
|---|---|
| Up to $15,600 | 10.5% |
| $15,601 to $53,500 | 17.5% |
| $53,501 to $78,100 | 30% |
| $78,101 to $180,000 | 33% |
| $180,001 and over | 39% |
| No valid IRD number given | 45% |
Source: Inland Revenue using the right RWT tax rate, from 31 July 2024, plus the 45% non declaration rate on the RWT hub from 1 April 2020.
Companies must notify the interest payer that they are a company. With an IRD number they may use 28%, 33%, or 39%. No chosen rate: 28%. Inland Revenue’s tax rates for businesses page: most companies pay income tax at 28%. Trustees are not required to notify company status and may use 17.5%, 30%, 33%, or 39%. A trustee of a testamentary trust may also use 10.5%. Maori authorities may use 17.5%, 30%, 33%, or 39%.
IR283 still lists 17.5% for individuals, Maori authorities, and trusts who have not chosen a rate and have not opened a new account since 31 March 2010. For a new account with no chosen rate, that guide uses 33%. Tell every bank if you open a new account. Use Choose your RWT deduction rate IR456, or your bank’s internet banking equivalent, when you pick the rate.
IR283 also says Inland Revenue checks elected rates against income details it holds. If the rate is inconsistent, Inland Revenue can tell the payer to change it, and will tell you as well. If you disagree, you can ask the payer to change it back after you check the rate page.
Dividend RWT is 33%, then imputation may offset it
Inland Revenue: a New Zealand company or unit trust may attach imputation credits to dividends. Those credits represent income tax the company has already paid, and they may offset the RWT deducted from the dividend paid to you. IR284 (October 2025) calculates cash dividend RWT at 33 cents in every dollar of the gross dividend, and the gross includes credits attached. RWT is then reduced by imputation credits (and any dividend withholding payment credit still in the formula). IR284 also says that if the dividend is fully imputed there will still be an amount of RWT to pay. Do not treat “fully imputed” as “no RWT”.
IR284 labelled example, ABC Ltd
Cash dividend $2,000. Imputation credit $200. RWT is 0.33 times ($2,000 plus $200) minus $200, which IR284 prints as $526. Net dividend paid to the shareholder is $1,474. Taxable gross dividend on the statement is $2,200.
Source: Inland Revenue Resident withholding tax (RWT) on dividends payer’s guide IR284, October 2025, cash dividend example.
IR284: companies are automatically registered as dividend RWT payers. Fully imputed dividends paid to another company can, from 1 April 2017, be paid without deducting RWT if the paying company chooses that. Dividends paid to people on the RWT exemption register are not deducted. Group company dividends sit outside that deduction list on the same guide. A May 2013 IR4K paper return is not the current filing path: IR284 wants investment income information electronically by the 20th of the month after the dividend is paid.
Joint accounts, myIR, and exemptions
Inland Revenue: investment income across joint accounts is split equally between holders who have given valid IRD numbers, including partnership investments that are not limited partnerships. If the split is wrong, you can amend the allocation when Inland Revenue completes your assessment or when you file. You may be asked for documents that support an unequal split. IR283: since 1 April 2018 payers should collect IRD numbers for everyone on the joint account. The payer does not need to split the interest; Inland Revenue does. If one holder has RWT exempt status and the other does not, the payer still deducts RWT on the whole account. Interest without RWT is only paid if all holders are exempt.
Details of investment income, and tax withheld, are reported to Inland Revenue and show in myIR, classified by type (interest, PIE, dividend) and by payer. If a share registry only holds one IRD number on jointly owned shares, the dividend can land on one person’s profile. That is a registry data issue, not a second RWT rate. At the end of the tax year Inland Revenue works out whether you have paid the right amount of tax. RWT credits come off residual income tax on the Act’s credit list, which is why leftover tax after interest and dividends still matters on what is residual income tax.
A valid RWT exemption puts your IRD number on the RWT exemption register. That is not a schedular certificate of exemption IR331. IR283 lists who can apply on IR451, including registered banks, PIEs, charities already on the Charities Services register (added automatically), and taxpayers who have earned or think they will earn more than $2 million a year. If you pay out more than $5,000 a year in interest as part of a taxable activity, IR283 says you must register as an RWT payer.
PIE income uses PIR, not RWT
Inland Revenue’s RWT hub: portfolio investment entities are taxed at different rates depending on the type of fund. The PIE overview is blunt: RWT is not charged on PIE income. Multi rate PIEs tax at the investor’s prescribed investor rate. For New Zealand resident individuals those PIR options are 10.5%, 17.5%, and 28%. You cannot choose a PIR of 0% on that resident page. If you do not give your PIE a PIR, 28% applies. A KiwiSaver scheme might be a PIE. Term deposits inside a PIE and term deposits sitting in an ordinary bank account are different tax clocks. Pick PIR with the PIE; pick RWT with the bank.
Tell the payer when your income changes
Inland Revenue: if your circumstances change, check whether the change affects your tax rate, and tell your payer. Using the wrong rate may mean an end of year tax bill. Review the rate after a pay rise, a drop in hours, retirement, or a first year of self employed profit sitting on top of wages.
What people get stuck on
r/PersonalFinanceNZ still asks whether a 45% deduction means RWT “went up”. Inland Revenue’s hub: 45% is the non declaration rate from 1 April 2020, used when the payer has no IRD number. Lawyer trust interest taxed at 45% is the same rule. Recover it in the assessment, as IR283 says the payer cannot unwind it once the 45% deduction was correct at the time.
Geekzone joint account threads mix bank practice with the law. Inland Revenue does not say “always use the highest rate”. It says use one rate, and it gives examples: 39% if both earn over $180,000, and 30% if one is over $53,500 and the other is $53,500 or less. Give both IRD numbers. Inland Revenue splits the income equally unless you later prove a different split.
Calculate.co.nz mixes PIR into the same page as RWT, which is useful as a warning and risky as a copy. Follow Inland Revenue: RWT is not charged on PIE income, and PIR tops out at 28% for resident individuals on the resident PIE page. That site’s “fully imputed dividend has 5% RWT” line is not the IR284 formula. IR284’s own ABC Ltd example still has RWT to pay after credits, and it says a fully imputed dividend still has RWT to pay. William Buck’s tables still omit 39% for companies and for many individuals: Inland Revenue’s live rate page includes 39%. PwC’s corporate treaty grid is NRWT, not this page. A 2013 IR4K is a stale paper dividend RWT return; IR284 is electronic by the 20th.