By Lee Harris - 29 Feb 2024
Recently, several foreign clients have asked for
assistance when the funds in their bank account disappeared. In
both situations, this was not fraud but rather banks had paid the
bank proceeds to the Commissioner of Inland Revenue (
IRD) pursuant to the Unclaimed Money Act
1971.
To recover the bank proceeds from IRD, the claim form required
money to be paid to a bank account in the client's country of
residence. Even though the client's New Zealand bank account
remained open, there was no option for funds to be paid into the
client's New Zealand bank account.
The Unclaimed Money Act permits a bank (or other holder of
funds) to pay funds to IRD where:
- funds in the account are more than $100; and
- the owner has not communicated or transacted with the bank over
a five-year period; and
- the owner has failed to provide the bank with information
requested about the funds.
If funds become unclaimed money pursuant to the Unclaimed Money
Act, the holder of the funds must, within a period of 1 month and
20 days from the end of a relevant reporting period, pay
funds to IRD. A reporting period could be as short as
either three months or six months, depending upon the approval that
the holder of funds has obtained from IRD.
IRD is not required to pay the owner interest over the time that
it holds the unclaimed money, and, if the owner does not claim
funds within a 25-year period, IRD is entitled to remove those
funds from the list of money able to be reclaimed. There is no
right of claim against IRD once money has been delisted.
It appears that banks are taking a more vigilant approach
towards funds invested in New Zealand by non-residents, but the
extent of funds that can be treated as unclaimed funds extends
beyond bank investments. Further examples are inactive KiwiSaver
funds or funds in a lawyer's trust account.
When you have cash investments in New Zealand, make sure your
contact details with the bank or holder are up to date so they can
contact you, read their correspondence and respond promptly to
queries, and use your account from time to time so that it remains
active.
If you find yourself in the unfortunate situation of an empty
investment account, don't hesitate to contact us as we can assist
in recovery of such funds.