The Canadian and New Zealand governments have recently entered into a Double Tax Agreement which replaces the previous Agreement of 1980.
The key features of the new Agreement (DTA) are:
• The withholding tax rate (WHT) for dividends reduces from 15% to a maximum of 5% where an investor holds at least 10% of the shares in the company paying the dividend.
• The WHT rate for interest reduces from 15% to 10%.
• The WHT rate for royalties reduces from 15% to 10% generally with a further reduction of 5% on royalties from copyright, software and other specified items.
The effective date for the application of the new WHT rates is 1 August 2015 for both countries. In other respects, the remaining provisions will apply to income years beginning on or after 1 January 2016 for Canada, and 1 April 2017 for New Zealand.
The New Zealand Revenue Minister, Todd McClay has said that the new DTA will help reduce tax impediments to trade and investment between Canada and New Zealand and will provide investors with greater certainty about how across border income will be taxed.