We make things easy by withholding tax amounts on the income you earn from an investment for you. There is no tax on things like withdrawing money from your Sharesies Wallet into your bank account.
New Zealand has tax treaty agreements with Australia and the US to avoid taxing you twice on the same investment.
Sometimes you may have other tax obligations, it’s your responsibility to ensure you’re paying the correct amount of tax.
Tax on NZ investment 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 deduct tax from your taxable income and pay this to the Inland Revenue (IR) on your behalf. At the end of each tax year, we’ll send all your RWT and imputation credit info that we hold to you in your very own tax statement.
Tax on listed portfolio investment entities (listed PIEs)
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.
Tax on New Zealand portfolio investment entities (PIEs)
The New Zealand managed funds you invest in are called PIEs (portfolio investment entities) for tax purposes. 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. IR 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, however the tax to pay is not calculated until the end of the tax year (31 March). We keep a record of your transactions and calculate how much tax needs to be paid (or returned to you), and make things easy by making any payment to (or from) IR on your behalf. This will be deducted (or paid) into your Sharesies Wallet in April. If there isn’t enough money (NZD) in your Wallet to cover the tax, your Wallet will show a negative balance.
Always make sure your PIR is correct in Account > Tax Details. Set your PIR.
Tax on Australian investment income
New Zealand tax residents
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 IR 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).
Capital gains tax (CGT)
For New Zealand investors, CGT applies when you own over 10% of a foreign company or 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.
Tax on US investment 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 (IR).
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 physical 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 $1.00 USD 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 IR. 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 IR.
Different tax treatment may apply when investing in companies that are American depositary receipts (ADRs). Read about tax on ADRs.
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 IR on your behalf, but no tax to the 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 Inland Revenue as tax. You’ll receive the remaining 67% of the dividend into 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 live outside of NZ
If you have an address outside of NZ and you are 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 IRS, 18% of the dividend in NZD to IR, and you’ll receive the remaining 52% of the dividend into your 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 Account > Tax Details.
Foreign investment fund (FIF) tax
If you hold overseas shares (excluding most Australian-listed companies) that cost more than $50,000 NZD in total at any time during the year, then you may be obliged to follow foreign investment rules set by IR. If this is you, Sharesies can’t handle your FIF tax calculations for you and you should seek professional tax advice.
Some New Zealand-based funds have an overseas focus to 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 your overseas shares held with Sharesies and elsewhere cost less than $50,000 NZD at all times during the year, you don’t need to pay FIF tax.