Use or lose your New Zealand cash investments - Unclaimed Money
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.
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.
Trust and Asset Planning
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