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If you pay investment income and make an error when withholding tax and reporting this to us, how you fix it depends on:

  • the kind of error
  • when the error is found.

Some errors may mean a previous return has to be amended, while others can be fixed in a future return.

When a previous return should be amended

You will need to amend the original return if the error:

  • relates to using the wrong IRD number for a payee (for example, the IRD number supplied is not theirs, but someone else’s)
  • relates to missing or incorrect income information
  • relates to filing using the wrong tax type (for example, if AIL was deducted instead of NRWT or vice versa, or a mix-up between IPS and DWT)
  • exceeds the limits for previous year correction
  • relates to a tax year earlier than the previous year.

In all these situations you should submit an amended return for the affected periods to replace the original return. You may be able to (in certain circumstances) edit specific records to correct the error as opposed to having to replace the entire return.

Amend an investment income return using the myIR online form

Amend an investment income return by file upload

When an IRD number is removed from a return

If you discover that an IRD number is wrong and you remove it from a previously filed return, but cannot replace it with the right number, you do not have to apply the non-declaration rate to the interest that has already been paid.

When not enough tax was deducted

If you pay resident passive income or non-resident passive income and, through an error, do not deduct enough tax from a payment, you can fix this without being charged penalties or interest. (There are some limits to this.)

You can correct the error by either:

  • reducing a later payment to the payee
  • recovering an amount from the payee
  • for a non-cash dividend, adjusting the amount that is subject to tax.

Limits on error correction

If you find an error in the tax year it was made, you must correct the error by the next reporting date for the investment income information relating to the payee.

For any errors found in the following tax year, you may make an adjustment in that year to fix the error from the first year, as long as both:

  • the payee is not paying you back directly
  • the total adjustments you’re making are no more than the greater of $2,000 or 5% of your withholding liability for RWT or NRWT, as applicable.

How to fix the error

Include the tax shortfall in the next return you send us, reported against the same payee.

You do not need to tell us about any corrections you make in the same tax year.

Tell us about any corrections you make for the previous year, along with the payee’s details and the amount of the adjustment.

When too much tax was deducted

If you withhold too much tax from a payment of resident or non-resident passive income, you can fix this by paying the excess amount to the payee.

Do this before 20 April after the end of the tax year if we have not already refunded the amount to the payee.

Only pay a refund if you have not yet provided the payee with either:

  • an end-of-year withholding tax certificate
  • a shareholder dividend statement
  • a statement to a member who received a taxable Maori authority distribution.

You need to tell us when you refund tax to a payee or inform us and the payee if you do not make the refund by the 20th of April.

How to fix the error

Include the extra tax you refunded in the next return you send us, reported against the same payee. You can report this as a negative tax amount in the return.

If you do not refund the tax before 20 April, then you need to tell us the details of:

  • the payee
  • what needs to be refunded.
Last updated: 29 Jun 2021
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