This article was originally created for Hayes Knight (now Nexia Auckland).
Home > Updates > Foreign Account Tax Compliance Act (FATCA) Agreement with the US
The FATCA legislation was enacted in the US in 2010 and requires foreign financial institutions to enter into agreements with the US’s Internal Revenue Service (IRS) and US Treasury to provide details about the tax affairs of their US clients. Banks, insurance companies and managed funds are among the financial institutions that would be affected by the legislation.
While the NZ Government supports moves to clamp down on tax evasion through effective exchange of information, the NZ Government wants to ensure the information goes through existing channels.
In the absence of the tax information agreement, non-US financial institutions would need to enter into individual agreements with the IRS to identify and report on customers who are US citizens. If they fail to enter into such agreements, the US can impose a 30% withholding tax on an institution’s US income.
Under the agreement, financial institutions would provide information to the IRD who would in turn pass the information on to the IRS.
For more information, please refer to the media statement http://taxpolicy.ird.govt.nz/news/2012-10-25-government-pursue-fatca-agreement or contact your Hayes Knight adviser or one of our Tax Team:
Phil Barlow Tax Director T +64 9 414 5444 F +64 9 414 5001 E firstname.lastname@example.org
Shelley-ann BrinkleySenior Manager – Tax Consulting T +64 9 414 5444 E email@example.com