Dividends and imputation credits in NZ: how they are taxed

When a New Zealand company pays you a dividend, some tax has usually been paid already. The company's tax comes through as imputation credits, and resident withholding tax (RWT) tops the credits up to 33% of the gross dividend. At year end the gross dividend is added to your income, and both credits reduce your tax. RWT can be refunded; imputation credits cannot, but any excess is carried forward to the next year.

The three parts of a dividend

Your dividend statement usually shows three numbers. Inland Revenue's IR3 guide puts them together like this:

Gross dividend = cash paid + imputation credits + RWT credits

The gross dividend is your taxable income, not the cash. That catches people out: if you look only at what landed in your bank account, you understate your income.

Here is a fully imputed $100 gross dividend:

What imputation credits are

A New Zealand company pays tax on its profit at 28%. When it pays a dividend out of that taxed profit, it can attach imputation credits so the tax is not paid twice: once by the company and again by you.

The most a company can attach is set by the maximum imputation ratio of 28:72. That works out to 38.89 cents of credit for each $1 of net profit after tax paid out as a dividend. A dividend with the maximum is called fully imputed; one with less is partly imputed; one with none is unimputed.

From your side, imputation credits work like tax you have already paid. They count against your income tax for the year, with one limit: they are not refundable. If they are more than your tax, the extra is carried forward, as explained below.

The 33% dividend RWT top-up

The company also deducts RWT. Inland Revenue's rule is that "RWT is deducted from your dividend to bring the total credits withheld up to 33% of the gross dividend". The more imputation attached, the less RWT is taken.

Here is how $1,000 of gross dividend splits at different levels of imputation:

The cash is the same in every row, because total credits always come to 33% of the gross. What changes is which kind of credit you hold, and that matters at year end: RWT is refundable, imputation credits are not.

Unlike RWT on interest, you do not choose a rate for dividend RWT. The top-up is always to 33%, whatever your income. If your rate is lower, the year-end square-up fixes it.

How dividends flow into your tax

Inland Revenue's year-end calculation, from Question 36 of the 2026 IR3 guide, runs in this order:

1. Add up taxable income, including the gross dividend, and work out the tax on it.
2. Subtract the independent earner tax credit, if you get it.
3. Subtract any overseas tax paid.
4. Subtract imputation credits, including any carried forward. This step cannot take the tax below zero; any excess carries forward.
5. Subtract PAYE, RWT on interest and dividends, and other tax credits. These can take you below zero, which means a refund.

Two things follow from that order. Imputation credits are used against your total tax, not just the tax on the dividend, so they can reduce the tax on your wages too. And dividend RWT sits in the final step, so it can be refunded in full.

Here is that order for someone earning $40,000 in wages in 2026/27 who receives a fully imputed $1,000 gross dividend, run through this site's engine:

Because dividends are part of your net income, they also count when Inland Revenue works out the independent earner tax credit. For 2026/27 that credit starts reducing at $66,000 and reaches nil at $70,000, so a large dividend can trim it if your income sits near that range. Our IETC guide has the detail.

Worked example: $1,000 of dividends at different incomes

Take a fully imputed $1,000 gross dividend in 2026/27: $280.00 imputation credit, $50.00 RWT and $670.00 cash, so $330.00 of credits. Using this site's engine, and assuming PAYE on the wages was right:

Look at the $14,000 row. The tax on the dividend is only $105.00, yet the $280.00 imputation credit is used in full, because it also offsets tax on the wages. Together with the $50.00 of RWT, $225.00 comes back. The full engine run, with PAYE included, shows a refund of $224.52 for this person; the 48 cents is rounding in PAYE on the wages.

At $200,000 the opposite happens. Income over $180,000 is taxed at 39%, and the credits only cover 33%, so the last $60.00 is paid at year end.

When imputation credits are more than your tax

Imputation credits can only reduce your tax to zero. Anything left over is not refunded; it is carried forward and used against your tax in the next year.

Say your only income in 2026/27 is $10,000 of fully imputed gross dividends, which carry $2,800.00 of imputation credits and $500.00 of RWT, and you receive $6,700.00 in cash. The engine gives:

The $500.00 of RWT comes back because it is a refundable credit. The $1,750.00 of excess imputation does not; it waits to be used against your tax in 2027/28 or a later year. If your income rises later, the carried-forward credits will reduce that tax.

Why the mix of credits matters on a low income

For the same person, the split between imputation and RWT changes what comes back now and what waits. Here is $10,000 of gross dividends as their only 2026/27 income, with tax of $1,050.00, at three levels of imputation:

The cash received is $6,700.00 in every case. On a low income, unimputed dividends actually return more money in the year, because RWT is refundable and imputation is not. On a higher income, where the credits are all used against tax, the split makes no difference to the result.

Checking a dividend statement

A dividend statement is worth a quick check before you rely on it, especially if you are filing an IR3. Take a partly imputed dividend with a gross amount of $1,000, imputation credits of $140.00, RWT of $190.00 and cash of $670.00. Three checks:

1. The parts add up to the gross. $670.00 cash plus $140.00 imputation plus $190.00 RWT is $1,000.00.
2. The credits come to 33%. $140.00 plus $190.00 is $330.00, which is 33% of $1,000.
3. The imputation is within the limit. At the 28:72 ratio, imputation can be at most 28% of the gross dividend, or $280.00 here. $140.00 is within it.

If any check fails, ask the company or share registry before you file. Then record the gross figure as your income, and keep the imputation and RWT figures separate, because they are treated differently at year end.

How dividends compare with other investment income

Reporting dividends and checking your figures

You often do not need to do anything. Dividends are already-taxed income, so if your only other income is salary, wages or similar, Inland Revenue includes them in your automatic income tax assessment after the year ends on 31 March 2027. If you file an IR3 because you have more than $200 of untaxed income, include your gross dividends, imputation credits and RWT on it.

A few more points:

• Dividends are not liable for the ACC earners' levy.
• Dividends from a listed PIE that does not use your PIR are optional to include in your return. Our PIR guide explains PIE tax.
• For 2026/27, any tax to pay is due on 7 February 2028, or 7 April 2028 with a tax agent and extension of time.

To check your own year, enter your wages, gross dividends, imputation credits and RWT in the investment income tax calculator. If you also earn interest, our RWT guide covers choosing the rate for that.

Questions people ask

Is a dividend taxed on the cash or the gross amount?

The gross amount: cash plus imputation credits plus RWT. A fully imputed $1,000 gross dividend pays $670.00 in cash but counts as $1,000 of income.

Can I get imputation credits refunded?

No. They reduce your income tax to zero at most. Any excess is carried forward to the next year. RWT on dividends, by contrast, is refundable.

Can I choose a lower RWT rate on dividends?

No. Dividend RWT tops the total credits up to 33% of the gross dividend. If your tax rate is lower, the difference comes back in the year-end square-up.

Do I owe extra tax on dividends if I earn over $180,000?

Usually yes. Income over $180,000 is taxed at 39% in 2026/27, and credits cover 33%, so a fully imputed $1,000 gross dividend leaves $60.00 to pay.