New Zealand Automatic Exchange of Financial Account Information in Tax Matters

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As you are probably aware, New Zealand is one of the over 100 countries that have agreed to automatically share some financial account information about foreign tax residents using the Common Reporting Standard (CRS).  This exchange of information is globally referred to as Automatic Exchange of Financial Account Information in Tax Matters (AEOI).  The objective of it is to assist in detecting and deterring offshore tax evasion.

In New Zealand, information collected from under the CRS may also be used by the IRD for purposes other than AEOI.  For example, the IRD could potentially use this information to assist it to verify that the correct rates have been used for non-resident withholding tax.

From 1 July 2017, reporting New Zealand financial institutions (NZFIs) must undertake new due diligence procedures for CRS purposes.  These procedures include identifying financial accounts held, or in some cases controlled, by foreign tax residents; collecting prescribed information; and reporting that information annually to the IRD.  From 17 April 2018, NZFIs will be able to submit any CRS reports to the IRD through the IRD’s online system (myIR) for the initial reporting period commencing 1 July 2017 and ending 31 March 2018, and then for annual cycles of 1 April to 31 March.  All CRS reports must be filed with the IRD by no later than 30 June each year.

CRS may have impact on New Zealand residents who have connections with other countries.  To help you reduce some unnecessary tax risks resulting from CRS, we have put together a few check-points for your consideration.  Please take a moment to go through the list below and, if necessary, take actions to update your records with your financial institutions or seek further advice as soon as possible.

1.       Review your tax residency status.  Have you ever lived in other countries?  Do you have various personal, social and economic connections with other countries?  If yes, please check whether you are treated as a tax resident in those countries.  You may need to seek professional advice in the relevant country.

2.       Prior to 30 June 2017, do you hold any personal or entity accounts with New Zealand or overseas banks or financial institutions (e.g. an investment house)?  Do you have signing authority for, control over, or connections of any other kinds with a financial account that is not under your name (e.g. your relative’s bank account) in New Zealand or overseas?  Do you receive (or may receive) beneficiary distribution from a trust’s financial account(s)?  Do you have a related financial account in New Zealand that has a 2% AIL applying to it?  If your answer is yes to any of the above questions, please check whether the information held about you by your various financial institutions are correct.  Particularly, if any of your financial account contains one or more of the following “indicia”, is the information correct?  You may need to contact your financial institutions to obtain the relevant information.

a)       identification of the account holder as a resident of a foreign jurisdiction;

b)      current mailing or residence address (including a post office box) in a foreign jurisdiction;

c)       one or more telephone numbers in a foreign jurisdiction and no telephone number in New Zealand;

d)      standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a foreign jurisdiction;

e)      currently effective power of attorney or signatory authority granted to a person with an address in a foreign jurisdiction; or

f)        a “hold mail” instruction or “in-care-of” address in a foreign jurisdiction if the Reporting NZFI does not have any other address on file for the account holder

3.       Since 1 July 2017, have you opened a new account with a financial institution in New Zealand or overseas?  If yes, have you completed a “self-certification” with the financial institution, and is all the information included in your self-certification correct?  Again, you may need to contact your financial institutions to obtain the relevant information.

4.       Do you have an New Zealand entity that is a “Financial institution”, which is required by law to register with the IRD and have CRS reporting obligations?  Financial institution generally means a custodial institution, depository institution, specified insurance company, or investment entity (include both “in business” and “managed” investment entities).  Most of these categories require that the entity carry on a specified type of business for customers.  Therefore, they will be very unlikely to apply to your family entities (e.g. a family trust, etc.).  However, if your entity derives most of its income (50% or more) from investing or trading in financial assets over a relevant period and it is managed by a financial institution (e.g. a financial institution corporate trustee or fund manager), then it could be a “managed” investment entity financial institution and thus has CRS registration and reporting obligations.  If you believe that any of your entity falls under this category, please contact your fund manager/investment advisor as soon as possible to check what actions have been undertaken.  Please contact us if further advice is required regarding this point.

5.       Reporting NZFIs will also be required to report to the IRD certain accounts where they have not been able to determine the residency of an account holder.  These are known as “undocumented accounts”.  If an account is undocumented the Reporting NZFI will need to re-apply procedures annually until the account ceases to be undocumented.  Therefore, it is important that you check the tax residency details are correct for all the financial accounts you have connections with.

6.       CRS is an ongoing monitoring process, if you have a change in circumstance, your financial institutions may need to re-assess your account status and report to the relevant tax authority.

7.       As you are aware, New Zealand tax residents’ overseas financial accounts and shares investments are often subject to various New Zealand tax rules, including financial arrangement rules, foreign investment funds rules, etc.  Unless an exemption applies (e.g. the transitional resident exemption), those overseas investments need to be reported to the IRD under the relevant tax rules.  We may have discussed these issues with you when preparing your New Zealand tax returns.  If required, please revisit your tax return documentation.  If you believe that you have any overseas financial accounts/investments that need to be reported to the IRD, but have not yet done so due to omission or other reasons, please discuss with us as soon as possible.  In this situation, it might be necessary to make a voluntary disclosure to the IRD.


The above information is a very brief summary of a few key points under the AEOI and CRS laws in New Zealand.  It is for your information only and does not constitute a tax opinion or advice.  If you require advice, please contact us or your tax adviser.  You can also find more information about tax residency, AEOI and CRS through NZ<> and OECD<>.