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Dividends & Resident Withholding Tax

IRD - 20 January 2012

Resident Withholding Tax (RWT) is payable on company dividends at a rate of 33 cents in every dollar of the gross dividend, less any Imputation Credits and Dividend Withholding Payment Credits attached to that dividend.

In the past, as the company tax rate was also 33 cents in the dollar, imputation credits were able to be attached at the 33% rate and no additional RWT was payable.

However, since the reduction in company tax rate to 30%, and now 28%, imputation credits are only able to be attached at a rate of 30 cents in the dollar, and for current and future year tax payments, 28 cents in the dollar. This creates a shortfall in the tax paid on the dividend and hence, RWT must be paid on the difference, on the 20th of the month following the dividend payment date.

We can assist you in calculating your dividend payments, imputation credits and RWT payable, please feel free to contact us to discuss this.

All information is correct at the date of article publication. Please note we provide the information as a service only. Accordingly, the contents are not intended as a substitute for specific professional advice and should not be relied upon for that purpose.

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