Debt securities - rates, eligibility, availability of relief etc. - New Zealand
Withholding Tax
| Standard rate of withholding tax: | 15% | Holding requirements / restrictions: | Yes (a) |
a. New Zealand debt securities may not be held in Clearstream Banking on behalf of beneficial owners that are New Zealand residents that do not fall under the tax-exempt category. Customers are responsible for ensuring compliance with this restriction.
The standard rate of Non-Resident Withholding Tax (NRWT) on interest from all New Zealand debt securities is 15% for beneficial owners that are non-residents of New Zealand.
However, if the debt securities are covered by the Approved Issuer Levy regime, beneficial owners that have requested the Approved Issuer Levy regime to apply may pay the Approved Issuer Levy as an alternative to the NRWT.
As a consequence and subject to submission of the required documentation, New Zealand debt securities are taxed as follows:
Debt securities governed by the Approved Issuer Levy regime:
- Non-residents requesting the Approved Issuer Levy regime to apply:
- 0% if the registered security is a government debt security or a “qualified” corporate debt security meeting certain conditions; or
- 2% for other registered corporate debt securities.
N.B.: To request application of the Approved Issuer Levy regime, customers must submit the required documentation. If application of the regime is not requested, Approved Issuer Levy-eligible securities will be treated as standard debt securities and the rules for the NRWT regime will apply. - Non-residents requesting the NRWT regime to apply on Approved Issuer Levy-eligible securities:
- 0% for tax-exempt beneficial owners;
- Double Taxation Treaty (DTT) rate for beneficial owners resident in a DTT country.
- Beneficial owners, residents for tax purposes in New Zealand, or not residents in New Zealand but with a permanent establishment in New Zealand, recognised by the New Zealand Inland Revenue Department (IRD) as having the Resident Withholding Tax (RWT) exempt status will be exempted of tax.
Standard debt securities governed by the NRWT regime:
- 0% for tax-exempt beneficial owners;
- Double Taxation Treaty (DTT) rate for beneficial owners resident in a DTT country.
- 0% for beneficial owners, residents for tax purposes in New Zealand, or not residents in New Zealand but with a permanent establishment in New Zealand, recognised by the New Zealand Inland Revenue Department (IRD) as having the Resident Withholding Tax (RWT) exempt status.
Kauri Bonds:
Kauri bonds are New Zealand dollar denominated debt securities issued in New Zealand by a non-resident (or foreign) issuer. Clearstream Banking applies 0% withholding tax by default for the above-mentioned securities. No certification or tax instruction is required for non-residents beneficial owners to obtain this exemption.
However, beneficial owners residents for tax purposes in New Zealand, or not residents in New Zealand but with a permanent establishment in New Zealand, recognised by the New Zealand Inland Revenue Department (IRD) as having the Resident Withholding Tax (RWT) exempt status must provide their details including the IRD number to Clearstream Banking in order to be eligible for the 0% rate.
Availability of relief
Beneficial owners can obtain exemption at source or relief at source from withholding tax on interest from New Zealand debt securities as follows:
| Eligible beneficial owners | Relief at source | Quick Refund | Standard Refund |
Residents of Double Taxation Treaty (DTT) countries | Yes | Quick and standard refunds for New Zealand bonds under the Non-Resident Withholding Tax (NRWT) regime are available on a case-by-case and “best efforts” basis. For New Zealand bonds under the AIL regime, no quick or standard refunds are available. | |
Non-residents of New Zealand requesting the Approved Issuer Levy (AIL) regime. | Yes | ||
Tax-exempt beneficial owners (a) | Yes | ||
New Zealand tax-exempt beneficial owners | Yes | No | No |
a.Non-residents tax-exempt beneficial owners granted tax-exempt status by the New Zealand Inland Revenue Department.
Relief at source of withholding tax is available only if the appropriate documentation is submitted to Clearstream Banking.