Banks required to share customer information under new tax law

New tax law that comes into force on 1 July will require banks to provide Inland Revenue with tax information for certain customers.

The new law, aimed at reducing global tax evasion, means that banks and other financial institutions will need to identify accounts held by foreign tax residents. They will then have to report information about those customers to Inland Revenue, which will in turn share that information with other countries’ tax agencies that are party to the information sharing agreement.

The tax information sharing scheme is reciprocal, and other countries will report to Inland Revenue on New Zealand tax residents in their jurisdictions.

“The policy behind this legal requirement is designed to combat tax evasion around the world. The banking industry supports that goal,” says New Zealand Bankers’ Association chief executive Karen Scott-Howman.

“It means that banks may ask existing customers to confirm if they are tax residents in countries other than New Zealand. It also means that banks will ask new customers after 1 July to self-certify their country or countries of tax residence.”

Under the law, customers identified as foreign tax residents will need to provide banks with their date of birth and foreign taxpayer identification number.

The so-called ‘Automatic Exchange of Information’ (AEOI) adopts the Common Reporting Standard (CRS) to share information among participating countries.

At this stage Inland Revenue will be sharing information with 58 other jurisdictions. The information must be reported to Inland Revenue by 30 June every year, with the first exchange of information taking place in 2018.

A factsheet for customers who hold or control accounts at banks and other financial institutions is available from Inland Revenue at:

http://www.ird.govt.nz/forms-guides/number/forms-1000-1099/ir1033-automatic-exchange-of-information.html

More information about AEOI is available at:

http://www.ird.govt.nz/campaigns/2017/aeoi.html

ENDS