Increasing visibility by revenue authorities on New Zealand investments

15 Nov 2023

The Commissioner of Inland Revenue shares information with various government agencies and evaluates whether information held about a taxpayer appears to be correct.  When the taxpayer is a non-resident, international influences come into play.

In addition to double tax agreements, New Zealand is a party to global standards on the automatic exchange of financial account information (AEOI)*.

Participating tax authorities exchange information with the goal being to ensure everyone pays the right amount of tax in the right country - the list of countries is extensive and according to OECD data there are some 113 countires participating, including 40 countries that do not have a double tax or tax information sharing agreement with New Zealand. The additional countries include Israel, Brazil, Monaco, New Caledonia and Pakistan**.

In the previous tax year, New Zealand introduced extensive new disclosure requirements for active trusts, including an annual requirement to provide the jurisdiction of tax residence and tax identification number for all parties who either introduced assets to the trust, benefited from the trust assets or who were able to exercise a level of control over the trust assets.

Inland Revenue is one of the authorities that gathers information to assist with New Zealand's reporting obligations under the AEOI agreements.  The new trust disclosure information is provided to Inland Revenue as part of the annual tax return filing requirements. As a result, New Zealand's previous negative compliance with the FATF recommendation for transparency and beneficial ownership of legal arrangements was upgraded to a largely compliant rating.

Inland Revenue refuses to share the extent of information sharing, but their 2022-2023 report confirms they exchange financial account information with almost 100 jurisdictions. They confirm the TIN has some relevance for CRS reporting but is also used in international matters to verify identity and residence.

For the 2023 tax year, the foreign information gathering has been rolled out by Inland Revenue to non-resident individuals.  What will the next tax year and a new government introduce? Given the larger global picture that influences New Zealand's disclosure requirements, it is likely disclosure requirements will continue to increase.

*American connections are captured pursuant to the Foreign Account Tax Compliance Act (FATCA) AEOI, and the majority of the rest of the world is captured pursuant to the Common Reporting Standard (CRS)