FACTA a fact
Thursday, June 12th 2014, 5:09PM
New Zealand has signed an inter-governmental-agreement (IGA) with the US government which allows the sharing of tax information and is part of the US Foreign Account Tax Compliance Act (FATCA).
Under the arrangement US taxpayers will send information to IRD rather than the US IRS. The information will be shared with the IRS and the IGA is reciprocal meaning that New Zealand will also receive information about certain accounts held by New Zealand residents with US financial institutions.
There are exemptions for entities and accounts that are considered low-risk from a US tax evasion and avoidance perspective. This includes Superannuation, KiwiSaver schemes, tax pooling accounts, registered charities, and Maori authorities.
The aim of FACTA is to reduce tax evasion by US citizens investing outside of the US and failing to declare offshore investments and income.
Financial institutions that fail to adhere to the rules can have 30% of transactions associated with US financial instruments and other financial institutions withheld and paid over to the US IRS.
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