The Foreign Account Tax Compliance Act (FATCA)
was introduced to prevent offshore tax evasion by United States
persons (includes citizens, tax residents and entities) whether
they reside in the US or not.
The rules will require non-U.S. financial institutions,
investment entities and insurance companies report back to the
United States Internal Revenue Service (IRS) on their US clients
and owners if their financial assets exceed certain thresholds.
New Zealand Financial Institutions (NZFI)
NZFI's (who are not exempted) are required to register with
the IRS before the 31 December 2014; NZFI's include:
superannuation funds, and
private equity firms.
NZFI's will be required to report financial details of
account holders (who's assets exceed pre-determined thresholds)
back to the IRS annually. This will include the details of:
U.S. tax residents
U.S. entities that are specified U.S. persons
certain non-U.S. entities that are controlled by U.S. tax
residents or U.S. citizens, and
certain financial institutions that are
Are Family Trusts included
The NZ Law Society has recently written to all law firms warning
that it might be possible for some family trusts to be classed as
Financial Institutions under this law – generally any entity
that primarily invests in securities will be included.
NZ IRD's role
To reduce the FATCA compliance burden for individual New Zealand
financial institutions, and to create specific exemptions from
reporting, New Zealand has signed an Intergovernmental Agreement
(IGA) with the U.S.
The completed agreement, and supporting changes to domestic
legislation, requires NZFI's to send their FATCA reports
directly to the NZ Inland Revenue Department to exchange with the
IRS, instead of dealing individually with the IRS. The IRD will
provide the secure electronic system to receive and send on the
Cavell Leitch does not directly provide specialist taxation
advice, however if you have any questions regarding FATCA and how
it might apply to you, please feel free to contact our specialist
Banking Team and they can recommend an appropriate tax specialist
who will be able to assist.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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