Fully franked Aussie dividends use the Franking credits to extinguish the NRWT tax laibility.

If they were only partly franked you would also have a liability to pay Aussie NRWT to a degree. Once in NZ you have to pay NZ tax on the cash received, as under the DTA a credit is only given for NRWT deductd. In most cases of course this is nil.

The NZ situatiobn for non resident holders is much cleverer and different from Aussie. Here as i understand it the ICs are turned into supplementary dividends, the cash plus supplementary dividends subject to full NZ NRWT which Aussie investors can then claim under their side of the DTA.