Investing in NZ fixed interest (income) investments

Issuers of fixed interest (income) investments such as bonds, finance company debentures, bank term deposits and others which pay a specified amount or rate of interest will generally be required to deduct "non-resident" withholding tax from interest paid to overseas residents and pay this to the NZ Inland Revenue Department.

The rate varies depending on the investor's country of residence and the tax deducted may be accepted as a tax credit in the resident country of the investor.

Approved Issuer Levy (AIL)

Most issuers of fixed interest type investments are, or can apply for "Approved Issuer" status. At the investor's behest, they can deduct this levy at the rate of 2% of the amount of interest paid in lieu of non-resident withholding tax.

Note that the AIL is not a tax per se and is unlikely to be accepted as a tax credit in the resident country of the investor.