The Inland Revenue Department has issued Trusts Guidance Notes for the United States' Foreign Account Tax Compliance Act (FATCA).
The guidance sets out how IRD considers FATCA applies in New Zealand to trusts that maintain or hold financial accounts.
A trust that is a Reporting New Zealand financial institution will be required to register with the US Internal Revenue Service (IRS) and will have FATCA due diligence and reporting obligations.
The IRD guide outlines how FATCA applies to unit trusts, family trusts, trading trusts and charitable trusts.
IRD says it will produce separate guidance on the application of FATCA to solicitors' trust accounts.
The New Zealand Law Society's Practice Briefing FATCA and New Zealand Law Firms states that it will be updated when further information is received from IRD.
The Law Society remains in discussion with IRD and the New Zealand Bankers Association. Several different approaches are being explored and as soon as accord is reached this will be communicated to all law firms running trust accounts.