Do you have Business Overseas?

With more and more people travelling internationally and conducting business globally, it has become more common to pay tax in multiple jurisdictions. To ensure businesses pay the correct amount of tax in the appropriate jurisdictions, New Zealand has joined a group of 100 countries that use common reporting standards (CRS). By using a common approach to reporting tax obligations, it becomes more efficient for tax authorities to enforce these obligations and reduce tax evasion.

Part of the new CRS is the automatic exchange of financial information. This means that for particular situations, certain entities are legally required to collect and exchange information with other tax authorities. 

Each year by 30 June reports need to be submitted to the Inland Revenue Department where ALL of the following apply:
•    Your entity derives 50% or more income from financial assets e.g. shares, managed portfolios; AND
•    The investment is managed by a financial institution e.g. a custodial institution, depository institution, investment entity or specified insurance company; AND
•    The financial institution is a trust and either a settlor, trustee or a beneficiary who receives distributions from the trust are resident of another tax jurisdiction outside New Zealand.

With a focus specifically on the United States, the Foreign Account Tax Compliance Act also seeks to reduce tax evasion by US citizens, US tax residents or New Zealanders with a US bank account. This US legislation requires foreign financial institutions to report on those who have specified foreign financial assets that exceed certain thresholds. 

The purpose of this Act is to ensure that US persons meet their US tax obligations – it doesn’t change any basic tax rights.

If you want to know more about the thresholds, reporting requirements or would like to discuss CRS please contact Jenny on 09 407 7117 or by email jenny@wwc.co.nz