We make things easy by paying tax on the income you earn from an investment for you. This income is commonly called a dividend.
You don’t pay tax on things like withdrawing money from your Sharesies Wallet into your bank account.
Tax on NZ shares income
Tax on company dividends
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 pay tax to Inland Revenue on your behalf. At the end of each tax year, we’ll send all your RWT and imputation credit info to you in your very own tax statement.
Tax on exchange-traded fund (ETF) dividends
You pay tax on dividends you receive from investing in 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.
Tax on managed funds
With managed funds, the amount of tax you pay is based on the prescribed investor rate (PIR) you set in Sharesies. 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.
Tax is calculated when you sell any units at the end of the tax year (31 March). We keep a record of how much tax needs to be paid (or returned to you) with each calculation, and make things easy by making any payment to (or from) the IRD on your behalf. This will be deducted (or paid) into your Sharesies Wallet in April.
Always make sure your PIR is correct in Settings > Tax Details. Set your PIR.
Tax on US shares income
We keep a record of the income you receive from US shares and pay tax on your behalf to the Internal Revenue Service (IRS) and Inland Revenue.
Some countries have tax treaties to avoid taxing you twice on the same investment. Your tax options depend on what country you’re a citizen or tax resident of.
Before you start investing in US shares, we’ll ask you a few questions about your tax situation. We’ll assign your tax treaty rate for US shares based on:
- the answers you give on the W-8 BEN tax form (or W-9 form if you’re a US citizen or green card holder), and
- the address you’ve given in your Sharesies account..
NZ tax treaty benefit
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 US$1.00 dividend from a US company, we’ll pay 15% of the dividend in United States dollars (USD) to the IRS, and 18% of the dividend in New Zealand dollars (NZD) to Inland Revenue. You’ll receive the remaining 67% of the dividend amount in your US Wallet.
If you’re a US person
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 on your behalf, but no tax to the IRS.
For example, if you’re entitled to a US$1.00 dividend from a US company, we’ll pay 33% of the dividend in NZD to Inland Revenue as tax. You’ll receive the remaining 67% of the dividend into your US 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 you should seek tax advice.
If you live outside of NZ
If you have an address outside of NZ, 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 US$1.00 dividend from a US company, we’ll pay 30% of the dividend in USD to the IRS, 18% of the dividend in NZD to Inland Revenue, and you’ll receive the remaining 52% of the dividend into your US Wallet.
At the end of each tax year, we'll send you a statement that shows you how much tax you’ve paid. Find past tax statements in Sharesies by going to Settings > Tax Details.
Foreign investment fund (FIF) tax
If you hold overseas shares (not including Australian-listed companies) that cost more than NZ$50,000 in total, then you may be obliged to follow foreign investment rules set by Inland Revenue. If this is you, Sharesies can’t handle your FIF tax calculations for you and you should seek tax advice.
If your overseas shares cost less than NZ$50,000, you don’t need to pay FIF tax!