The New Zealand government continues to forge closer links with other governments when it comes to the sharing of tax information.
To this end it has announced that New Zealand will assign up to the global Automatic Exchange of Information (AEOI). The agreement comes into effect from the 2018 tax year.
Those familiar with the US Foreign Account Tax Compliance Act (FATCA) will see a strong similarity between both of these tax agreements.
New Zealand banks will have an obligation to determine the tax residence of their bank account holders from 1 July 2017.
They will be required to report foreign bank account holders to the 97 countries have so far find a to the AEOI.
The aim of AEOI is to correctly identify bank account holders specifically with regard to anti-money laundering rules.
The definition of “financial institution” is fairly wide as you might expect from a global agreement and, in New Zealand’s case, may extend to closely held New Zealand companies and trusts.
Inland Revenue has already confirmed that it will share details of all private taxpayer rulings and unilateral transfer pricing rulings.
The aim is to provide tax authorities in various jurisdictions around the world with greater flexibility and knowledge in order to counter various tax practices that can result in the erosion of tax collections.
Inland Revenue has advised that the exchange will be with the 50 countries around the world (including Australia) that New Zealand has a tax treaty with.
What it will also mean is that these tax authorities around the world will now have access to a business’ commercial information that would have been supplied in support of a ruling.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.