You pay tax on income from all your savings and investments, whether they're in NZ or overseas. Your tax rate is based on your income.
Paying tax on investments and savings in NZ
All NZ citizens and residents pay either Resident Withholding Tax (RWT) or tax at the Prescribed Investor Rate (PIR) on income from savings and investments in New Zealand. You need to choose the correct tax rate or you could face an unexpected bill at the end of the tax year.
Tell your provider — that is, your bank, fund manager or financial advisor:
- your IRD number
- the tax rate you should pay, based on your income.
If you have a joint investment, you should use the tax rate of whoever earns the most.
Rates for RWT
If you earn:
- $14,000 or less, choose 10.5%
- between $14,001 to $48,000, choose 17.5%
- between $48,001 to $70,000, choose 30%
- over $70,000, choose 33%.
If you don't give your provider your IRD number or let them know what tax rate they should use, they must tax your interest and investment income at 33%. If this rate isn't correct you could pay too much tax.
If you started your investment or savings account before 1 April 2010 and only gave your provider your IRD number, you'll pay 17.5% tax on your interest and investment income. If this rate is wrong, you might have to pay more tax at the end of the year.
Rates for PIR
If your investment is in a Portfolio Investment Entity (PIE) — for example managed funds like KiwiSaver — you pay tax at a different rate, known as PIR. Depending on your income, you pay between 10.5% and 28% tax.
How tax is collected
Your bank or financial provider deducts tax when they calculate the interest or dividends you've earned. This happens at least once a year. They pay the tax on your behalf to IRD and give you a statement of the tax you've paid in that financial year. They'll either:
- send the statement (IR15) to you, or
- ask you to log into your IRD account (My IR) and download it.