AI says giving your IRD number to your New Zealand bank is optional or only matters for large accounts
ID: banking/rwt-non-declaration-rate
Version Compatibility
| Version | Status | Introduced | Deprecated | Notes |
|---|---|---|---|---|
| any | active | — | — | — |
Root Cause
New Zealand banks must withhold Resident Withholding Tax (RWT) from any interest a customer earns. Without an IRD number on file, the bank is required to apply the non-declaration rate of 45% to that interest, instead of a lower rate chosen once an IRD number is supplied. This applies from the first dollar of interest, not just to large balances.
genericWorkarounds
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95% success Apply for an IRD number and give it to the bank at account opening or as soon as it arrives, choosing an RWT rate that matches your income
Apply for an IRD number through ird.govt.nz (a bank statement or account-opening letter can serve as proof of address for the application). Provide the IRD number to the bank in person or via online banking, and select an RWT rate; this replaces the 45% non-declaration rate with a rate based on your income.
Sources: https://www.ird.govt.nz/income-tax/withholding-taxes/resident-withholding-tax-rwt/using-the-right-rwt-tax-rate https://www.ird.govt.nz/managing-my-tax/ird-numbers/ird-numbers-for-individuals
Dead Ends
Common approaches that don't work:
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Skip giving your IRD number to the bank because the account is small or you assume it only matters for filing an annual tax return
85% fail
Banks must apply the RWT non-declaration rate, currently 45%, to interest paid to any account without an IRD number recorded, regardless of balance size. This is markedly higher than the 33% default rate that applies once an IRD number is on file but no specific rate is chosen.