The FATCA Issue And How It Impacts On New Zealand Businesses

The Foreign Account Tax Compliance Act, or FATCA as it is more often referred to, is a type of reporting regime that insures people and businesses in the United States meet their tax obligations there. US citizens and tax residents are required to report their worldwide income to the IRS no matter where in the world they happen to live.

It also requires any foreign financial institution to register with the IRS.

The nature of this legislation means that any New Zealand or Australian financial institution that does business in the United States is required to register. For that reason, it is likely that if you provide professional services you will receive an application form from your US-based customers.

As with most types of legislation, there are exemptions to the FATCA rules.

What it does mean is that, unless exempt, is that any New Zealand financial institution will need to register with the IRS. They will then need to report on the details of both US citizens and tax residents where those people have financial assets that exceed certain thresholds.

With increasing globalisation and datasharing, New Zealand based financial institutions will need to disclose certain information to Inland Revenue who will then pass it on to the IRS.

If this applies, you should really seek professional advice from us or contact Inland Revenue for more information.

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.