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  • Information Sharing – recent changes

     

    STAGE ONE  – Recent changes in laws has allowed for greater information sharing between Government Agencies, including IRD, Ministry of Social Development (WINZ), Immigration, Customs, Courts, Land Information NZ and ACC to name a few. This about enforcement of Social  and Tax Policy and to catch the cheaters. See previous articles from us in this regard.

    The new information sharing agreement between IRD and MSD was signed in July 2017 and came into effect during August 2017 enabling the sharing of personal information for targeted housing assistance and to verify income for student allowance entitlements. Also included was for the use of information for the purpose of assessing eligibility for, and entitlement to, benefits and subsidies; assessing and enforcing any obligations related to benefits and subsidies, including recovering any associated debt; assessing and enforcing tax obligations, including recovering any associated debt; or registering new customers or updating customer contact information and identifying information. This is on top of the relatively new sharing agreement with Customs and Immigration, and with ACC.  There will undoubtedly be more to come as the Government Agencies get streamlined systems and know how to use the new data they have.  If you think you may have an issue please contact us sooner than later.

    STAGE TWO -But not only that, the government has also signed up to the global Automatic Exchange Of Information (AEOI) initiative led by the OECD.  What does all this mean?

    Essentially it means that details of your world wide income, investments and assets will now be reported to the NZ IRD, by the tax agencies of 101 member countries.

    This will have far reaching effects because lots of people have Super schemes, bank accounts or other investments in other countries that people have mistakenly believed if the NZ IRD cannot see it (because no cash comes back to NZ) then there is no need to declare that income here.

    The rules have always been that you are required to return your worldwide income in your NZ Tax return.  If you think you may have a problem then please contact our team with some urgency.

    Where we have already seen some action in this space, around pensions held overseas or overseas investments.  If you have any overseas investment (small, large, taxable or non-taxable), the rules have changed so please make sure you either inform us about this or provide us with the records at year end.  If you are unsure that this would apply to you please contact us so we can look into it further on your behalf.

    The sort of things that you should consider:

    The fact that they may be taxed overseas is simply not enough as we are all required to return our worldwide income in our NZ tax return.  We often hear “but the funds do not enter NZ” this does not exclude you from the rules.  Until now the IRD has not had the resources to identify overseas earnings but going forward it will.

    The commitment of 101 countries to implement the AEOI initiative is already starting to raise some questions!  The global initiative is designed to address the international problem of offshore tax evasion, it will ensure greater transparency with the increase in globalised and cross-boarder activities, and the aim is to ensure that tax payers pay the right amount of tax to the right country.  As an OECD member, New Zealand has made an international commitment to implement AEOI and to complete its first international information exchanges by the 30 September 2018 deadline.

    The AEOI is understood to involve the systematic and periodic transmission of bulk tax payer information by the source country to the resident country concerning various categories of income (e.g. dividends, interest, royalties, salaries, pensions, etc).  This requires financial institutions to conduct due diligence on their financial accounts to identify those held or controlled by non residents; and report specified identity information (including tax residence) and financial information (such as account balances and interest earnings) in respect of those accounts to their local tax administration, who then send it to the overseas tax administration.

    The commitment of 101 countries to implement the AEOI initiative is already starting to raise some questions!  The global initiative is designed to address the international problem of offshore tax evasion, it will ensure greater transparency with the increase in globalised and cross-boarder activities, and the aim is to ensure that tax payers pay the right amount of tax to the right country.  As an OECD member, New Zealand has made an international commitment to implement AEOI and to complete its first international information exchanges by the 30 September 2018 deadline.

    The AEOI is understood to involve the systematic and periodic transmission of bulk tax payer information by the source country to the resident country concerning various categories of income (e.g. dividends, interest, royalties, salaries, pensions, etc).  This requires financial institutions to conduct due diligence on their financial accounts to identify those held or controlled by non residents; and report specified identity information (including tax residence) and financial information (such as account balances and interest earnings) in respect of those accounts to their local tax administration, who then send it to the overseas tax administration.

    Where we have already seen some action in this space, around pensions held overseas or overseas investments.  If you have any overseas investment (small, large, taxable or non-taxable), the rules have changed so please make sure you either inform us about this or provide us with the records at year end.  If you are unsure that this would apply to you please contact us so we can look into it further on your behalf.

    The sort of things that you should consider:

    The fact that they may be taxed overseas is simply not enough as we are all required to return our worldwide income in our NZ tax return.  We often hear “but the funds do not enter NZ” this does not exclude you from the rules.  Until now the IRD has not had the resources to identify overseas earnings but going forward it will.

     

     

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