AEOI obligations for Interest Bearing Deposit accounts
Automatic Exchange of Financial Information (AEOI) obligations apply to Interest Bearing Deposit (IBD) Accounts that law firms hold with banks, on behalf of clients, the Department of Inland Revenue says.
"This means that law firms operating IBD Accounts are legally required to confirm whether their clients (and, if such clients are defined passive entities, any controlling persons) are relevant foreign tax residents.
"As part of this process, such clients will be asked to provide self-certifications and other supporting documentation and information about their tax residency status (and the status of any controlling persons).
"You and your clients (and their controlling persons) are legally required to obtain and provide the correct and complete information about IBD Accounts and provide this to the banks," it says.
If customers do not respond correctly and completely to these requests for information, the related account may be frozen and/or closed, Inland Revenue says.
The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 means that from 1 July 2017, law firms have been obligated to:
- Take reasonable steps to obtain such information from their clients (and their controlling persons); and
- Provide correct and complete information to the bank that maintains the IBD Account(s) within a reasonable timeframe.
Inland Revenue says law firms and clients (and their controlling persons) can be subject to civil (and potentially criminal) penalties if they fail to obtain and provide this information to the bank, on behalf of their clients. Law firm clients (and their controlling persons) can provide this information through the law firm (ie, providing this information to the law firm to provide to the bank).
AEOI self-certification forms are available on the New Zealand Banking Association website at www.nzba.org.nz/consumer-information/tax/global-exchange-tax-information/
Inland Revenue has also published a fact sheet to support AEOI-related customer conversations: Automatic Exchange of Information: Your obligations if you hold or control financial accounts (IR1033)
Inland Revenue says inquiries are welcomed via email at firstname.lastname@example.org.
Last updated on the 16th September 2019