Tax on Sharesies investments

We make things easy by withholding tax on the income you earn from an investment for you. There’s no tax on things like withdrawing money from your Sharesies Wallet to your bank account.

Sometimes you may have other tax obligations—it’s your responsibility to ensure you’re paying the correct amount of tax.

New Zealand has tax treaty agreements with Australia and the US to avoid taxing you twice on the same investment. Your tax options depend on what country you’re a citizen or tax resident of.

Tax residency is different to your immigration status. Generally, you're considered an NZ tax resident when you’ve been in NZ for more than 183 days in any 12-month period, or when you’ve got a permanent residential address that you call home in NZ. You may also be a tax resident of a country outside NZ based on the time you spend there, ties to that country, or your citizenship.

Your tax residency will determine what tax information you provide to us on sign-up, and what tax you pay for your investments.

Tax works the same way for Kids Accounts as for adult accounts. Make sure to check that they’re using the correct prescribed investor rate (PIR) for tax on managed funds.

A child may be eligible for tax credits from Inland Revenue (IRD). They may not be able to use the tax credits until they’ve started earning other income or started working.

You pay tax on dividends you receive from investing in companies. This is a mixture of tax called resident withholding tax (RWT) and imputation credits.

When you receive a dividend in Sharesies, tax will already have been deducted from the amount you receive. Sharesies makes sure your RWT and dividend imputation credits add up to 33%.

We deduct tax from your taxable income and pay this to Inland Revenue (IRD) on your behalf. At the end of each tax year, we’ll provide a tax statement that includes all of the RWT and imputation credit info that we hold.

You pay tax on dividends you receive from investing in exchange-traded funds (ETFs) at a flat rate of 28%. Tax is managed by the fund provider.

If your income tax rate is lower than 28%, you can apply to use the imputation credit to reduce the tax you pay on other income you’ve received.

Some NZ companies are also listed PIEs and follow the same tax treatment.

Portfolio investment entities (PIEs) invest money from investors into other investments. NZ managed funds and some unlisted funds are called PIEs for tax purposes. With PIEs, the amount of tax you pay is based on your prescribed investor rate (PIR).

Tax is applied to investment income received by the fund itself—this is regardless of whether you’re personally making a gain or loss on your investments. Inland Revenue (IRD) will calculate any under or overpayment as part of your end-of-year tax assessment.

The number of units you own may change during the year (for example, if you sell or buy some units). If you sell any units, the tax to pay will be withheld when your sell order is settled. At the end of the tax year (31 March), we’ll calculate how much tax needs to be paid (or returned to you), which accounts for any tax deducted when selling, and make any payment to (or from) IRD on your behalf.

This is deducted from (or paid into) your Sharesies Wallet in April. If you don’t have enough NZD in your Wallet to cover the tax, your Wallet will show a negative balance.

You can update your PIR by going to Settings > Tax Details > Tax information.

If you’re a New Zealand tax resident, we’ll pay tax on your Australian dividends on your behalf.

When you receive a dividend payment from an Australian investment, overseas withholding tax (WHT) will need to be paid to the Australian Taxation Office (ATO). Sharesies will pay this tax on your behalf. The amount of WHT that needs to be paid on your dividend depends on how many franking credits the company has already paid on it.

Franking credits are very similar to NZ imputation credits. Both are used to reduce (or eliminate) double tax being paid on a dividend. However, franking credits cannot be claimed by New Zealand tax residents.

If the Australian company fully franks their dividend, no WHT needs to be paid. If the dividend is not fully franked, 15% of the unfranked portion needs to be paid as WHT. Sharesies will pay this to the ATO on your behalf before you receive the dividend in your Wallet.

Resident withholding tax (RWT) will also need to be paid to Inland Revenue (IRD) in NZ. RWT will be 33% of the total (gross) amount of the dividend, minus the WHT that needs to be paid (if there is any). You’ll receive 67% of the gross dividend in your Sharesies Wallet.

For example: an Australian company pays out a $100 AUD dividend that isn’t fully franked, so let’s say it has an unfranked amount of $80.

$80 x 15% = $12 paid as WHT to ATO

$100 x 33% - $12 = $21 paid as RWT to IRD

$100 - $12 - $21 = $67 net amount paid into your Wallet in Australian dollars (AUD).

For New Zealand investors, CGT applies when you own over 10% of a foreign company or exchange-traded fund (ETF) with significant interest in Australian real estate.

If you’re unsure if this applies to you, we recommend reaching out to a professional tax advisor for guidance.

Before you start investing in US shares, you need to fill out a digital W-8BEN or W-9 tax form to ensure your US tax details are correct.

You’ll be asked to re-sign this form every three years to keep your details up-to-date. If your form expires and you don’t fill out a new one, any income you receive from your US investments through Sharesies will be taxed at the highest rate (48%) until you re-confirm your US tax details.

If you live in NZ and you’re an NZ tax resident, Sharesies will pay a total of 33% tax on dividends you receive from US investments on your behalf.

For example, if you’re entitled to a $1.00 USD dividend from a US company, we’ll pay 15% of the dividend in United States dollars (USD) to the Internal Revenue Service (IRS), and 18% of the dividend in New Zealand dollars (NZD) to Inland Revenue (IRD). You’ll receive the remaining 67% of the dividend amount in your Wallet.

Some US dividends can also be paid to you from a non-US company—for example, a Canadian company listed on a US exchange. Tax will be deducted before the dividend is paid into your Wallet by the country in which the company is based. For NZ investors, we’ll deduct up to the 33% RWT amount and pay this directly to IRD.

Different tax treatment may apply when investing in companies that are American depositary receipts (ADRs).

If you’re a US citizen or green card holder, you’re considered a US person. Sharesies will pay a total of 33% tax on dividends you receive from US investments to Inland Revenue (IRD) on your behalf, but no tax to the Internal Revenue Service (IRS).

For example, if you’re entitled to a $1.00 USD dividend from a US company, we’ll pay 33% of the dividend in NZD to IRD as tax. You’ll receive the remaining 67% of the dividend in your Wallet.

As a US citizen or green card holder, you may have other tax obligations to the IRS. Sharesies won’t handle this for you and it’s your responsibility to ensure you’re paying the correct tax. Seek professional tax advice if you have further questions.

If you have an address outside of NZ and you’re not a US person, you won’t be able to claim a tax treaty rate. Sharesies will pay a total of 48% tax on dividends you receive from US investments on your behalf.

For example, if you’re entitled to a $1.00 USD dividend from a US company, we’ll pay 30% of the dividend in USD to the Internal Revenue Service (IRS), 18% of the dividend in NZD to Inland Revenue (IRD), and you’ll receive the remaining 52% of the dividend in your Wallet.

At the end of each tax year, we'll provide a statement that shows your income for tax purposes for the previous financial year ended 31 March. It’ll include tax information related to your NZ, US, and Australian investments through Sharesies.

In your tax statement, we’ll do our best to point out any details that need to be passed on to Inland Revenue (IRD). You can also find info about what you need to do at the end of the tax year on IRD’s website.

Find past tax statements in Sharesies by going to Settings > Tax Details > Tax statements.

What to do at the end of the tax year

Investors who hold overseas shares of which the total cost is more than $50,000 NZD at any point during the year may be obliged to follow foreign investment rules set by Inland Revenue (IRD). Sharesies doesn’t currently handle FIF tax calculations.

A FIF includes offshore investments like listed companies and exchange-traded funds (ETFs). However, most companies listed in Australia are excluded from FIF tax.

Some New Zealand-based funds have an overseas focus for what they invest in. For example, an NZX-listed ETF might invest in a US-listed ETF that tracks a US index. You wouldn’t need to pay FIF tax for this type of fund. But if you invested over $50,000 NZD in a US-listed ETF, then you’d need to consider your FIF tax obligations.

To see what exchange a fund is listed on, look for the exchange under the fund’s name.

If you’re looking for help with FIF calculations, you could consider integrating your Sharesies portfolio with Sharesight—a third-party service that offers investment reporting tools for a fee.

Alternatively, you can generate an investment holdings report to get data that may assist with your FIF tax calculations. To download, go to Investments > Manage > Download reports.

Sharesies does not offer tax advice. If you have any questions about your FIF or any other tax reporting obligations, you should seek professional tax advice.