Are non residents taxed on dividends received in New Zealand? That’s the big question for overseas investors putting money into Kiwi companies. The short answer is yes, but the details matter. New Zealand applies a non-resident withholding tax (NRWT) on dividends, with different rates depending on whether the dividend is fully imputed, unimputed, or covered by a double tax agreement.
If you are an international shareholder, you probably want to know exactly how much tax will be taken before the money hits your account. That’s where understanding withholding tax on dividends NZ, imputation credits, and the role of DTAs comes into play. Get this wrong, and you could lose more of your investment returns than necessary.
We will break down how New Zealand taxes non-residents on dividends, when reduced rates apply, and what foreign investors should watch for. You’ll see real-world examples, a comparison table, and practical steps to check if your dividends qualify for lower tax. By the end, you’ll know whether the tax is final, when you might benefit from treaty relief, and how to stay compliant without leaving money on the table.
Understanding non-resident dividend taxation in New Zealand
When a company in New Zealand pays dividends to someone living overseas, tax rules apply differently compared to residents. The key point is that non-resident income tax is generally collected at source through withholding. This ensures the New Zealand Government captures tax before the money leaves the country.
If you are unsure whether you are classed as a non-resident, it’s worth reading our guide on non-resident for tax purposes in New Zealand.
How does non-resident withholding tax (NRWT) apply to dividends?
The main tool the Inland Revenue uses for overseas investors is non-resident withholding tax (NRWT). This tax is deducted directly by the New Zealand company before dividends are paid. The rate depends on whether the dividend carries imputation credits and if any tax treaty applies.
Standard NRWT rates for dividends
By default, the withholding tax on dividends NZ is 30%. This rate applies to unimputed dividends where no tax has already been paid at the company level.
- Fully unimputed dividends are taxed at the highest rate.
- Imputation credits can reduce the final rate significantly.
According to Inland Revenue guidance, NRWT is considered a final tax for non-residents, meaning you usually don’t need to file a New Zealand tax return if it has been withheld correctly.
When imputation credits reduce NRWT
Imputation credits are tax credits attached to dividends that show tax has already been paid by the company. For non-residents, this matters because:
- Fully imputed dividends can reduce the NRWT rate from 30% to as low as 15%.
- The company attaches a supplementary dividend in some cases to offset the impact of NRWT.
This ensures overseas investors are not double penalized when a company has already paid corporate tax.
Difference between fully imputed and unimputed dividends
The tax outcome depends heavily on whether the dividend is imputed or not:
- Fully imputed dividends: NRWT drops to 15% in most cases.
- Partially imputed dividends: NRWT is adjusted proportionally.
- Unimputed dividends: Full 30% NRWT applies unless a tax treaty overrides it.
Double tax agreements (DTAs) and foreign investors
Many investors worry about paying tax twice, once in New Zealand and again in their home country. That’s where double tax agreements (DTAs) come in. These treaties reduce or eliminate double taxation and can lower withholding rates.
How DTAs reduce withholding tax
DTAs are signed between New Zealand and other countries to ensure fair treatment. For example, a treaty may reduce the dividend NRWT rate from 30% to 15% or even 0% in some cases.
- Each country’s treaty terms are different.
- You must provide proof of tax residency in your country to claim the benefit.
Find out here the New Zealand DTAs list from IRD.
Key partner countries with tax treaties
Some countries have particularly favorable tax treaty arrangements with New Zealand. If you live in one of these, your dividends may be taxed at a lower rate.
- Australia
- United Kingdom
- United States
- Singapore
- Japan
Example reduced NRWT rates under DTAs
- Australia: 15%
- US: 15%
- UK: 15%
- Singapore: 15%
- Japan: 10%
If you are also receiving retirement income from abroad, check our article on overseas pension tax in New Zealand, as pensions and dividends are treated differently under DTAs.
Approved issuer levy (AIL) vs dividends
There’s often confusion between approved issuer levy (AIL) and dividend taxation. AIL only applies to interest payments on loans, not dividends. Still, it’s worth clarifying for investors.
- AIL applies to interest: for example, on bonds or loans.
- Dividends fall under NRWT and are not affected by AIL rules.
For a clear explanation, check the IRD guidance on AIL.
Practical examples of dividend taxation for non-residents
Let’s see how these rules play out in practice. Imagine you receive a NZ$1,000 dividend from a New Zealand company as a non-resident investor.
Table: Tax on a NZ$1,000 dividend for a non-resident
| Scenario | Dividend amount | NRWT rate | Tax withheld | Net received |
|---|---|---|---|---|
| Fully unimputed | $1,000 | 30% | $300 | $700 |
| Fully imputed | $1,000 | 15% | $150 | $850 |
| With DTA (e.g. Japan 10%) | $1,000 | 10% | $100 | $900 |
If you also expect to receive assets from abroad, dividends work differently compared to inheritances. Our guide on overseas inheritance tax in New Zealand explains the distinction.
Bonus for non residents taxed on dividends received in New Zealand
If you are considering investing in New Zealand companies, keep a few tips in mind:
- Always check if your home country has a DTA with New Zealand.
- Confirm if dividends are imputed, as this lowers the NRWT rate.
- Seek professional advice before moving money offshore to avoid surprises.
When you are planning a move, it’s smart to also get advice on tax considerations when leaving New Zealand. That way, you can align your investment strategy with your relocation plans.
Conclusion
So, are non residents taxed on dividends received in New Zealand? Yes, they are, mainly through the non-resident withholding tax (NRWT). The standard rate is 30%, but it drops to 15% for fully imputed dividends and can be even lower if your country has a double tax agreement with New Zealand. For overseas investors, the key is to check whether dividends are imputed, understand how imputation credits work, and confirm treaty benefits before you invest.
In most cases, NRWT is a final tax, meaning you don’t need to file a return in New Zealand once it’s deducted. That said, every situation is different, especially if you also receive overseas income or are moving countries. Take the time to review your personal tax position and, if in doubt, get professional advice to make sure your returns aren’t eaten up by unnecessary tax.
FAQ about are non residents taxed on dividends received in New Zealand?
Do non-residents pay tax on NZ dividends?
Yes, non-residents pay tax via non-resident withholding tax, which is deducted before dividends are paid out.
What is the withholding tax rate on dividends in New Zealand?
The default NRWT rate is 30%, but it falls to 15% for fully imputed dividends and can be reduced further under tax treaties.
Can non-residents use imputation credits?
Non-residents cannot claim them directly, but imputation credits lower the NRWT applied to dividends.
Do double tax agreements reduce dividend tax?
Yes, DTAs often reduce the NRWT rate to 15% or 10%, depending on the treaty country.
Do non-resident investors need to file a New Zealand tax return?
Usually not. If NRWT has been correctly withheld at source, no further filing is required.