New Zealand is one of many countries that has committed to a global initiative led by the Organisation for Economic Co-operation and Development (OECD) on the automatic exchange of financial account information for foreign tax residents. The Automatic Exchange of Information (AEOI) uses a Common Reporting Standard to share tax information.
Under AEOI, banks and other financial institutions will have to identify foreign tax residents among their customer base. It’s similar to their obligations under the US Foreign Account Tax Compliance Act (FATCA).
International regulations, reflected in New Zealand law, require New Zealand banks to undertake due diligence on the foreign tax status of their customers and provide relevant related information to Inland Revenue to share with other countries.
Banks are now required to ensure customers are certified within 90 days from when the account was opened.
Banks are also required to freeze or close accounts if they do not hold a complete and valid self-certification.
If your bank has contacted you, it’s important that you respond, regardless of your foreign tax status or your account may be frozen or closed.
Inland Revenue administers the law relating to AEOI. Information about the law and what it might mean for you is available here. Inland Revenue’s information for customers who hold bank accounts is available here.
NZBA’s member banks have developed an industry set of tax residency self-certification forms (individual and entity) for completion by law firm trust account clients. The forms are intended to assist law firms to collect and pass on information about their trust clients to their banks to help meet Foreign Account Tax Compliance Act (FATCA) and AEOI requirements. These forms have been developed in consultation with IRD.
To obtain copies of the forms, or if you have any questions about them, please contact your bank.