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Financial institutions

This page is for New Zealand financial institutions (NZFIs) affected by the Common Reporting Standard (CRS).

Find out more about CRS due diligence and reporting requirements

What financial institutions need to do

From 1 July 2017 Reporting New Zealand financial institutions (Reporting NZFIs) will need to:

  • carry out CRS due diligence by reviewing their financial accounts to identify accounts held and/or in certain circumstances controlled by relevant foreign tax residents
  • collect prescribed information about these people or entities (and accounts), and
  • in certain circumstances report this information annually to Inland Revenue for exchange with jurisdictions that have automatic exchange of information (AEOI) exchange agreements with New Zealand.

Similarly, overseas financial institutions must identify their New Zealand tax resident account holders and certain controlling persons and report accounts to us through their local tax authorities if New Zealand has an AEOI exchange relationship with that country or jurisdiction.

Go to Inland Revenue's Special report on the automatic exchange of information

Go to the Common Reporting Standard on the OECD's Automatic Exchange Portal

Go to the Inland Revenue Guidance on the CRS
PDF | 1.25mb | 165 pages

Go to the New Zealand CRS Applied Standard
PDF | 450kb | 22 pages

An Inland Revenue factsheet is available to support AEOI related customer conversations.

Find out more about your AEOI obligations if you hold or control financial accounts

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What a financial institution is for CRS purposes

Reporting NZFIs will have CRS due diligence and reporting obligations, if they are an entity, ie not an individual and if all of the following are satisfied:

  • the entity is a financial institution
  • the financial institution is a NZFI, and
  • the NZFI is a Reporting NZFI.

An "entity" will be a financial institution based on the activities that it carries out or how it is managed. This covers both:

  • legal persons, for example, incorporated companies, and
  • legal arrangements, for example, trusts.

This means that legal persons and legal arrangements can, depending on the circumstances, be financial institutions. However, the definition of “entity” does not cover individuals.

There are two types of entities for CRS purposes - financial institutions, and non-financial entities (NFEs).

Financial institutions

There are four types of financial institutions covered by the CRS:

  • custodial institutions
  • depository institutions
  • investment entities, and
  • specified insurance companies.

For more information on the types of financial institutions, go to section 3.1 of the Inland Revenue Guidance on the CRS.

These types of financial institutions are broadly similar to FATCA. Apart from more obvious entities such as banks, this can also include non-bank deposit takers, collective investment entities, mutual funds, private equity funds, hedge funds, investment managers and advisors, and certain brokers and trusts (including some managed family trusts). You can find more information in the Inland Revenue guidance Section 11 "Application of CRS to particular types of entities and structures".

Go to the Inland Revenue Guidance on the CRS
PDF | 1.25mb | 165 pages

Non-financial entities (NFEs)

If an entity is not a financial institution it will by default be an NFE. There are two categories of NFEs - active NFEs and passive NFEs. The meaning of active and passive NFE is summarised in section 1.9 of the Inland Revenue Guidance on the CRS.

Go to the Inland Revenue Guidance on the CRS
PDF | 1.25mb | 165 pages

If an NFE is not active, it will by default be a passive NFE. NFEs will not have due diligence and reporting obligations. However, if they hold accounts with Reporting NZFIs they will have obligations to assist those institutions with their due diligence and reporting obligations. For passive NFEs, this would include providing information about their controlling persons.

When a financial institution is a “New Zealand” financial institution

A financial institution will be an NZFI if it is a:

  • New Zealand resident entity for CRS purposes, excluding any branch located outside New Zealand, or
  • New Zealand branch of a foreign resident entity for CRS purposes.

The circumstances when a financial institution will be a NZFI are summarised in section 3.2 of the Inland Revenue Guidance on the CRS.

Go to the Inland Revenue Guidance on the CRS
PDF | 1.25mb | 165 pages

When a New Zealand financial institution is a “Reporting” New Zealand financial institution

An NZFI will be a Reporting New Zealand financial institution (Reporting NZFI) unless it is a Non-Reporting NZFI. The meaning of Non-Reporting financial institution is set out in Section VIII (B)(1) of the CRS.  For more information about NZFIs go to section 3.3 to 3.6 of the Inland Revenue Guidance on the CRS.

Go to the Inland Revenue Guidance on the CRS
PDF | 1.25mb | 165 pages

The Commissioner of Inland Revenue can determine that certain institutions that satisfy set criteria are Non-Reporting financial institutions.

Read the Common Reporting Standard on the OECD's Automatic Exchange Portal

Find out more

If you have questions or would like to join the AEOI industry implementation update please email us at global.aeoi@ird.govt.nz