New Zealand: AEOI implementation update

New Zealand: AEOI implementation update

The Inland Revenue Department (IRD) released a fact sheet describing next year’s implementation of the automatic exchange of information (AEOI) regime in New Zealand. AEOI implementation is still subject to legislative confirmation, with a tax bill expected to be introduced in August and passed by March 2017.

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Read the fact sheet

Implementation of AEOI comes into clearer focus

The fact sheet indicates the design decisions as being:

  • AEOI due diligence start date of 1 July 2017, 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, New Zealand 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, the 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 three-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.
  • New Zealand 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 New Zealand 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.
  • New Zealand financial institutions will have up to 90 days to obtain a self-certification when there are practical difficulties obtaining this certification at the time of an 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. 

What steps to consider next?

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, when there are divergences, the AEOI rules must be applied. This is likely to result in some duplication.   

With this, New Zealand financial institutions need to consider planning their AEOI processes. The proposed legislative timetable is tight. Leaving this planning until legislation is passed in early 2017 could result in a failure to comply with the 1 July start date.


For more information, contact a KPMG tax professional in New Zealand:

John Cantin | + 04 816 4518 |

Darshana Elwela | + 09 367 5940 |

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