Hon Todd McClay
Minister of Revenue
2 July 2015
NZ-Canada double tax agreement now in force
Revenue Minister Todd McClay has welcomed a new double tax agreement between New Zealand and Canada, which is now in force.
Mr McClay says the new agreement, which lowers withholding taxes on dividends, interest and royalties between the two countries will be welcome news for businesses and investors in both countries.
“For businesses, tax agreements provide greater certainty and reduce the likelihood of being taxed twice on cross-border transactions, while investors will generally be better off as a result of lower withholding taxes on their cross-border investment returns,” says Mr McClay.
Under the new agreement, the withholding tax rate on dividends will fall from 15 per cent to a maximum of five per cent for an investor who holds a minimum of 10 per cent of the shares in the dividend-paying company.
The withholding rate on royalties has been lowered, from 15 per cent to 10 per cent generally, with a further reduced rate of 5 per cent for royalties on copyright, computer software, and other specified items. The withholding rate on interest payments has also been lowered, from 15 per cent to a maximum of 10 per cent.
“Canada is an important investment and trading partner for New Zealand. The new tax agreement updates and modernises the 1980 agreement between our two countries and is testament to the strong relationship we continue to share,” says Mr McClay.
The new withholding tax rates will apply from 1 August 2015.
For New Zealand income tax, the new agreement applies to income years beginning on or after 1 April 2016, and for Canadian income tax, it applies to income years beginning on or after 1 January 2016.
Full text of the new double tax agreement between New Zealand and Canada is available at www.taxpolicy.ird.govt.nz/tax-treaties
Media contact: Lesley Hamilton 027 490 1345