Auckland Reader S Sharma had sent us the following query:
I am a New Zealand citizen. I am planning to buy a house in Auckland.
Due to shortfall for the deposit amount, one of my relatives in India is willing to advance me NZ$40,000 as loan which I would be repaying in installments.
What is the procedure that I should follow? Are there any Tax implication for the loan amount?
Abdul Rafik, Community Compliance Officer at Inland Revenue Department replied:
Yes, there can be tax implications for a personal loan as described by you.
People who pay interest to individuals who are not New Zealand residents must deduct non-resident withholding tax (NRWT).
The following link to our NRWT Payer’s Guide on IRD website:
http://www.ird.govt.nz/resources/f/8/f8c9f3004ba3d8048274bf9ef8e4b077/ir291.pdf
If it turns out that the lender is also in New Zealand, then RWT will be due.
Here is a link to the RWT Payer’s Guide:
http://www.ird.govt.nz/forms-guides/number/forms-200-299/ir283-guide-rwt-interest-payers-guide.html
