AEOI implementation update
AEOI implementation update
IRD releases further information – 29 July 2016
Inland Revenue (IRD) has released a fact sheet on New Zealand’s implementation of Automatic Exchange of Information (AEOI) next year.
NZ’s AEOI implementation is still subject to legislative confirmation, with a tax bill expected to be introduced in August and passed by March 2017.
NZ’s implementation of AEOI comes into clearer focus
The fact sheet indicates the design decisions as being:
- A 1 July 2017 AEOI due diligence start date, with a first reporting period to 31 March 2018. Subsequent reporting periods will be 31 March tax years.
- Reporting will be due by 30 June each year, aligning with FATCA reporting.
- The “wider approach” to due diligence will be compulsory but reporting will be optional. That is, NZ financial institutions will need to identify all non-resident account holders (not just residents of countries that have signed up to AEOI) but can choose to filter the reporting. If reported unfiltered, IRD will filter and exchange only with participating jurisdictions.
- The rules for reviewing pre-existing accounts and account holders (i.e. accounts in existence prior to 1 July 2017) will broadly mirror the rules under FATCA. There will be a 3 month grace period (to 30 June) to conclude due diligence on pre-existing accounts. These will need to be reported in the return due that day.
- Inland Revenue will consult on excluded entities and accounts and reportable jurisdictions towards the end of 2016.
- NZ financial institutions will be able to rely on a “reasonable endeavours” defence to non-compliance with AEOI obligations until 31 March 2019.
- The penalties regime for AEOI non-compliance will extend beyond NZ financial institutions to also include account holders, controlling persons of account holders, and intermediaries. (It is also proposed this extension will apply for FATCA purposes.)
- NZ financial institutions will have up to 90 days to obtain a self-certification, where there are practical difficulties obtaining this at the time of account opening (i.e. on “day one”).
- AEOI due diligence may leverage off Anti-Money Laundering (AML) procedures, but any specific AEOI requirements will take precedence.
Time to start planning now
The fact sheet clarifies the position on a number of key AEOI design issues, including the “wider approach” to due diligence and reporting periods and timelines. It also notes that while AML procedures can be used, where there are divergences the AEOI rules must be applied. This is likely to result in some duplication.
This should now enable NZ financial institutions to plan their AEOI processes. The proposed legislative timetable is tight. Leaving this until legislation is passed in early 2017 will not be an option to comply with the 1 July start date.
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