What are imputation credits?

Imputation credits represent the company tax already paid on the profit before it was paid to you as a dividend. New Zealand company tax is 28%, so a fully imputed dividend carries a credit for that tax. You can use the credit to offset your own tax on the dividend, which avoids the profit being taxed twice.

How is tax on dividends calculated in NZ?

The gross dividend is the cash dividend plus its imputation credits. Tax is charged on the gross amount at your rate, usually 33% for dividends. The imputation credit covers most of that, and the payer withholds a further 5% as resident withholding tax so the total reaches 33%.

What is the dividend yield?

Dividend yield is the annual dividend per share divided by the share price, shown as a percentage. A $1.00 share paying 6 cents a year has a 6% yield. It lets you compare the income from shares of different prices.

Dividend Calculator

Work out the income from your New Zealand shares, including imputation credits. Enter the number of shares you hold and the dividend per share, and the calculator shows the cash dividend, the imputation credits attached, the gross dividend, the resident withholding tax, and the net amount in your hand. Add a share price to see the dividend yield.

Number of shares

Dividend per share

Imputation

Your tax rate

Share price (optional, for yield)

net dividend in your hand

Cash dividend$0

Imputation credits$0

Gross dividend$0

RWT withheld$0

Imputation credits are based on the 28% company tax rate. RWT shown is the top-up to your tax rate.

How dividend tax works in New Zealand

When a company pays a dividend from profit it has already paid tax on, it attaches imputation credits for that 28% company tax. Your gross dividend is the cash plus those credits. Tax is charged on the gross amount, usually at 33%. The imputation credit covers most of it, and the payer withholds a further 5% as resident withholding tax so the total reaches 33%. This stops the same profit being taxed twice.

Worked example

You hold 1,000 shares paying an 18 cent fully imputed dividend. The cash dividend is $180. The imputation credit is $180 times 28 divided by 72, which is $70. The gross dividend is $250. Tax at 33% is $82.50, the credit covers $70, so $12.50 of RWT is withheld. You receive $167.50 in the hand.

The formulas

Cash dividend = shares times dividend per share
Imputation credit = cash times 0.28 / 0.72 (when fully imputed)
Gross dividend = cash + imputation credit
RWT withheld = gross times your rate, less the imputation credit

Related calculators

Investment Calculator: growth of an investment over time.
Compound Interest Calculator: reinvested returns.
Term Deposit Calculator: interest on a term deposit.
CGT Calculator: tax on a capital gain.

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