Section RE 12 — Income Tax Act 2007: Interest

RE 12 Interest When this section applies (1) This section applies when a person makes a payment of resident passive income that consists of interest. Calculation of amount of tax (2) The amount of tax for the payment that the person must withhold and pay to the Commissioner is calculated using the formula— (tax rate × (interest paid + foreign withholding tax)) – foreign withholding tax. Definition of items in formula (3) In the formula,— (a) tax rate is the basic rate set out in schedule 1, part D, clause 3 or 4 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits): (b) interest paid is the interest paid before the amount of tax is determined: (c) foreign withholding tax is the amount of foreign withholding tax paid or payable on the interest paid. Modification for 2009–10 (4) Despite subsection (3)(a), the amount of tax that the person must withhold and pay may, if the person chooses, be calculated, under subsection (3), using a tax rate of 0.38 if— (a) the payment of resident passive income is made in the 2009–10 tax year; and (b) the tax rate under subsection (3)(a) would be 0.39 in the absence of this subsection. Modification for companies and portfolio investment entities for 2010–11 tax year (5) Despite subsection (3)(a), the amount of tax that the person must withhold and pay may, if the person chooses, be calculated under subsection (3) using a tax rate of 0.30 if— (a) the payment of resident passive income that consists of interest is made in the 2010–11 tax year to— (i) a portfolio investment entity; or (ii) a company that is not a trustee or a Maori authority; and (b) the tax rate under subsection (3)(a) would be 0.33 in the absence of this subsection. Defined in this Act: amount of tax , Commissioner , company , foreign withholding tax , income year , interest , Maori authority , pay , portfolio investment entity , resident passive income , trustee Compare: 2004 No 35 s NF 2(1)(a) Section RE 12(3)(a) tax rate : amended (with effect on 1 April 2008), on 6 October 2009, by section 530(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section RE 12(3)(a) tax rate : amended (with effect from 1 April 2008), on 15 December 2008, by section 33(1) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105). Section RE 12(3)(a) tax rate : amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section RE 12(4) heading: added, on 1 April 2009, by section 33(2) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105). Section RE 12(4): added, on 1 April 2009, by section 33(2) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105). Section RE 12(5) heading: added, on 1 April 2010 (applying for the 2010–11 income year), by section 108(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section RE 12(5) heading: amended (with effect on 1 April 2010), on 7 September 2010, by section 115(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section RE 12(5): added, on 1 April 2010 (applying for the 2010–11 income year), by section 108(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section RE 12(5)(a): substituted (with effect on 1 April 2010), on 7 September 2010, by section 115(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section RE 12 list of defined terms company : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section RE 12 list of defined terms income year : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section RE 12 list of defined terms Maori authority : inserted (with effect on 1 April 2010), on 7 September 2010, by section 115(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section RE 12 list of defined terms portfolio investment entity : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section RE 12 list of defined terms trustee : inserted (with effect on 1 April 2010), on 7 September 2010, by section 115(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).