International requirements may freeze your bank account

New Zealand banks are reminding customers who have been asked about their foreign tax status that they need to respond to their bank as soon as possible.

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.

New Zealand Bankers’ Association deputy chief executive Antony Buick-Constable says: “If your bank has contacted you, it’s important that you respond. Banks need to ask certain customers to provide information about their tax status. If you’ve been contacted, it’s important that you respond to your bank, regardless of your tax status.

“If you don’t respond, or if your response is incomplete, your bank will be required to freeze or close accounts opened from 1 July 2017 to comply with the law.”

Banks are required to report relevant customer and account information to Inland Revenue by 30 June 2018, and annually from that date.

Although banks may contact their customers seeking tax information to comply with this legislation, they will never ask for password or other security information, including access to accounts.

The Automatic Exchange of Information (AEOI) adopts the Common Reporting Standard (CRS) to share information among participating countries, and is led by the Organisation for Economic Co-operation and Development (OECD). The information sharing is reciprocal.

The law, which is administered by Inland Revenue, came into force on 1 July 2017 and is aimed at reducing global tax evasion by account holders or their controlling persons. Banks and other financial institutions need to identify accounts held by foreign tax residents, and report relevant information to Inland Revenue, which in turn shares that information with other countries subject to the terms of international tax treaties.

Inland Revenue provides information for New Zealand bank account holders here: http://www.ird.govt.nz/resources/f/2/f231e7fb-a118-4ff3-bbcd-5102b320f595/ir1033.pdf

For more information about New Zealand’s agreement to share information with other countries to combat global tax evasion, see: http://www.ird.govt.nz/campaigns/2017/aeoi.html

ENDS