What's changed?
The Government made changes to Resident Withholding Tax, Prescribed Investor Rates and Goods and Services Tax, on 1 October.
Resident Withholding Tax (RWT) is the tax deducted on interest paid to New Zealand residents on deposits. All RWT rates decreased to align with the new personal income tax rates.
Company Withholding Tax Rate changed from 30% to 28% on 1 April 2011.
A Prescribed Investor Rate (PIR) is used to calculate tax on the taxable investment income earned from a Portfolio Investment Entity (PIE). Examples of PIEs include some superannuation schemes and unit trusts. More information on PIEs.
Goods and Services Tax (GST) is tax paid on the purchase of goods and services. On 1 October 2001 GST increased from 12.5% to 15%.
The information contained in this ASB website does not constitute specific tax advice to any person. We recommend that investors seek independent tax advice.
Does this affect me?
Changes to GST
On 1 October 2010, GST increased from 12.5% to 15%. It is up to each business to decide how much of the 2.5% increase to pass on in the form of increased prices.
If you had any automatic payments set up to pay regular bills, you may need to update these to reflect price increases.
Changes to RWT
On 1 October 2010, RWT rates were reduced to align with the new personal income tax rates. This means investors pay less tax on interest income. The taxable income thresholds used to calculate RWT did not change, only the RWT percentage tax rates.
| Taxable income | Previous RWT rate | RWT rate from 1 October 2010 |
| $0 - $14,000 | 12.5% | 10.5% |
| $14,001 - $48,000 | 21% | 17.5% |
| $48,001 - $70,000 | 33% | 30% |
| Over $70,000 and over | 38% | 33% |
Changes to company tax rates
On 1 April 2011 the company withholding tax rate changed from 30% to 28%.
Please note if you have not let us know your RWT rate and IRD number you will be taxed at a RWT rate of 33%.
Family Trusts
Most Family Trusts should continue to pay Income Tax at 33%.
Changes to PIRs
On 1 October 2010, all PIRs decreased. This means investors pay less tax on investment income earned from a PIE. The taxable income thresholds used to calculate the PIR did not change, only the PIR percentages.
| Income threshold | Previous PIR | PIR from 1 October 2010 |
| New Zealand tax residents who earned taxable income of $14,000 or less and total income (including PIE income) of $48,000 or less in either of the last two tax years to 31 March. | 12.5% | 10.5% |
| New Zealand tax residents who don’t meet the above criteria and earned taxable income of $48,000 or less and total income (including PIE income) of $70,000 or less in either of the last two tax years to 31 March. | 21% | 17.5% |
| New Zealand tax residents who earned taxable income of more than $48,000 or total income (including PIE income) of more than $70,000 in both of the last two tax years to 31 March. | 30% | 28% |
| Investors who aren’t New Zealand tax residents | 30% | 28% |
| Companies, unit trusts, charities or not-for-profit organisations | 0% | 0% |
| Trusts (excluding unit trusts) e.g. family trusts, estates etc. (certain testamentary trusts will be able to choose a PIR of 10.5% (12.5% prior to 1 October)). | 0%, 21% or 30% | 0%, 17.5% or 28% |
The information contained in this ASB website does not constitute specific tax advice to any person. We recommend that investors seek independent tax advice.
What should I do?
Resident Withholding Tax
ASB moved all affected customers to the new RWT rate automatically on 1 October 2010. If we already have your correct RWT rate, you don’t need to do anything.
If you’re not sure which RWT rate is right for you, you can use our RWT calculator to check, visit the Inland Revenue Department 's website or call them on 0800 377 774.
If you’d like to check or change your RWT rate, you can do so in FastNet Classic (under ‘Personal Details / Update tax details’), by calling 0800 803 804 or at any ASB branch.
Family Trusts
Inland Revenue required ASB to move all customers who were on a RWT rate of 33% to 30% on 1 October 2010, including family trusts.
However, most family trusts need to continue paying income tax on trustee income at 33%. If you are running a family trust and your trust needs to be moved back to a RWT rate of 33%, please contact us to let us know. If your trust is taxed at an incorrect rate, you may end up owing tax at the end of the tax year.
You can change the RWT rate for your family trust at any ASB branch or by calling us on 0800 803 804.
Prescribed Investor Rates
ASB moved all affected customers to their new PIR automatically on 1 October 2010. If we already have your correct PIR, you don’t need to do anything.
If you’re not sure which PIR is right for you, you can use our PIR calculator to check.
If you’d like to check or change your PIR, you can do so in FastNet Classic (under ‘Personal Details / Update tax details’), by calling us on 0800 803 804 or at any ASB branch.
ASB Term Fund customers
As the changes to PIRs happened part-way through the tax year, ASB made a special distribution to all ASB Term Fund customers on 30 September 2010. The special distribution meant that returns earned from 1 April 2010 to 30 September 2010 and from 1 October 2010 to 31 March 2011 could be taxed at the different rates.
Goods and Service Tax
The increase to GST means that many businesses increased their prices on or after 1 October 2010. If you have been advised by a business you deal with that you need to increase the amount of an automatic payment, you can do this in FastNet Classic (under ‘Payments / Automatic Payments’), by calling us on
0800 803 804 or at any ASB branch.
The information contained in this ASB website does not constitute specific tax advice to any person. We recommend that investors seek independent tax advice.
For more information on the ASB Term Fund, see the ASB Term Fund Investment Statement. Units in the ASB Term Fund are issued by ASB Group Investments Limited. Investments in the ASB Term Fund are not deposits with ASB Bank Limited. ASB Bank guarantees ASB Term Fund account balances at the prevailing rate (before tax and any fees). The guarantee is unsecured.
