This page explains what Automatic Exchange of Information (AEOI) and the Common Reporting Standard (CRS) are and what they may mean for you.
Section overview
- What AEOI is
- What the CRS is
- Jurisdictions committed to CRS
- Who and what the CRS applies to
- How we will use this information
- Establishing tax residency
- Penalties that may apply
What AEOI is
Globalisation has made it easier for people to invest money outside their tax residence jurisdiction. This has provided opportunities for offshore tax evasion.
New Zealand is one of many jurisdictions that has committed to a global initiative led by the Organisation for Economic Co-operation and Development (OECD) on the automatic exchange of financial account information using the CRS.
This information is required by law to be collected by financial institutions around the world for reporting to tax authorities. Tax authorities will exchange this information to ensure everyone pays the right amount of tax. Tax pays for services we all need and to improve the communities in which we live.
If you're identified as being a foreign tax resident
If you currently hold (and, in certain circumstances, control) an account with a New Zealand financial institution, your financial account information may be reported to us. We may share this information with your home country or jurisdiction if New Zealand has an AEOI exchange relationship with them. This applies whether you are currently living in or outside of New Zealand.
If you're a New Zealand tax resident
If you have financial accounts in any of the jurisdictions participating in the AEOI, this information may be shared with us.
Go to our Tax Policy website for our Special report on the automatic exchange of information:
Special report on automatic exchange of information (Tax policy)
Find out more on the OECD website about tax transparency and international co-operation:
Tax transparency and international co-operation (OECD)
Go to the OECD YouTube channel for their Crackdown on tax evasion video:
Crackdown on tax evasion (OECD YouTube channel)
What the CRS is
The CRS is a global framework for the collection, reporting, and exchange of financial account information about people and entities investing outside of their tax residence jurisdiction.
The CRS and a comprehensive commentary along with other information about AEOI are available on the OECD's website. The CRS and the related commentary have been introduced into New Zealand law.
Go to the Common Reporting Standard on the OECD website:
International standards on tax transparency - Common Reporting Standard
Guidance on the CRS for AEOI - IR1048:
Download the New Zealand CRS Applied Standard:
CRS was modelled on the Foreign Account Tax Compliance Act (FATCA) introduced globally by the United States of America during 2014, but there are significant differences between the two schemes.
Find out more about FATCA:
Jurisdictions committed to CRS
Over 100 jurisdictions have committed to implementing the CRS. In 2018, 85 jurisdictions including New Zealand have completed around 4,500 bilateral exchanges.
Find more information on participating and reportable jurisdictions that are committed to implementing the CRS.
Jurisdictions committed to the Common Reporting Standard (CRS)
Download the OECD list of over 100 jurisdictions committed to implementing the CRS:
Status of commitments for the automatic exchange of financial account information (AEOI) (PDF 162KB)
New Zealand is prepared to receive financial account information from participating jurisdictions. We will only provide financial account information to reportable jurisdictions.
Who and what the CRS applies to
The CRS applies from 1 July 2017 to financial institutions, account holders and certain other people who control accounts.
What this means for account holders and certain controlling persons
If you hold an account with a financial institution (or if you hold an account for the benefit of another person) you may be asked to provide documentation and other information to assist that institution to carry out their due diligence and reporting obligations. This is required so that the financial institution can determine whether you are a foreign tax resident (or the person that you hold the account for is a foreign tax resident).
If you do not hold an account, but do control the account, the request for the information may come through the account holder who will then give this information to the financial institution. You can find out about when this could happen in section 1.9 of our Guidance on the CRS for AEOI - IR1048.
Go to our Automatic Exchange of Information - IR1033 factsheet to find out more about your obligations if you hold or control financial accounts.
It is important that you provide accurate information when requested and update the information if there is any material change within a reasonable timeframe. This includes taking reasonable efforts to obtain and provide information about any persons that you hold an account for.
Penalties may apply if you provide false or misleading information, fail to provide this information, or fail to provide an update if there is any material change to the information you have provided. See 'Penalties that may apply' below.
Find out more about excluded entities and accounts:
CRS determinations related to excluded entities and accounts (Tax Technical)
Important note about CRS and FATCA
The obligations to provide information also extend to FATCA as well as the CRS. Your financial institution will ask you to provide similar information for the purposes of FATCA.
Find out more about FATCA:
Foreign Account Tax Compliance Act (FATCA)
Find out more about what account holders and controlling persons need to do:
Account holders and controlling persons
What this means for financial institutions
Four broad categories of financial institution are covered by the CRS:
- custodial institutions
- depository institutions
- investment entities
- specified insurance companies.
Apart from entities like 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).
If a financial institution is a Reporting New Zealand Financial Institution (Reporting NZFI), it must identify accounts held by account holders who are foreign tax residents and, in certain circumstances, entities that are controlled by foreign tax residents.
You can find more about when a financial institution will be a Reporting NZFI in section 3.2 of our Guidance on the CRS for AEOI - IR1048.
From 1 July 2017, Reporting NZFIs will need to carry out CRS due diligence, collect prescribed information, and report this information annually to us.
Penalties can apply if a Reporting NZFI does not comply with these obligations.
Find out more about what financial institutions need to do:
How we will use this information
If you're identified or treated as being a foreign tax resident under the CRS, certain information about you may be collected and provided to us. This includes:
- your identity details
- your account balance
- your income and payment information
- other prescribed information.
If New Zealand has an AEOI exchange agreement with your jurisdiction of tax residence, we will send this information to the tax authority in that jurisdiction.
The exchange of financial account information will also mean that New Zealand receives better information about New Zealand tax residents' offshore investments. This will help us verify that these people have paid the correct tax on their offshore investments.
We may also use information collected from Reporting NZFIs under the CRS for other purposes. We will only use this information for matters that are consistent with our statutory role and obligations.
We will handle all information reported under the CRS in the strictest confidence as will the foreign tax authorities. Domestic laws, administrative practices and binding international treaties protect your information.
Establishing tax residency
If you have questions about your tax residence status, you should either contact us or another tax authority in a relevant country, or seek advice from a tax agent or advisor.
For CRS purposes there are special rules for determining the tax residency of certain types of entities, such as partnerships, limited liability partnerships, or similar legal arrangements that do not have a tax residence. These entities are treated as resident in the jurisdiction where their place of effective management is situated.
Find out more about establishing tax residency:
Tax residency status for individuals
Tax residency status for companies
For more information about tax residency rules applicable to CRS committed jurisdictions go to the OECD Automatic Exchange Portal:
Tax residency - Organisation for Economic Co-operation and Development
Double tax agreements (DTAs)
If two countries or territories both tax their residents on worldwide income, you could be taxed twice on the same income.
DTAs have been negotiated between New Zealand and many other countries or territories to decide which country or territory has the first or sole right to tax specific types of income.
Find out if your country or territory has a DTA with New Zealand:
Penalties that may apply
Account holders and controlling persons
Penalties may apply if you provide false or misleading information, fail to provide this information, or fail to provide an update if there is a material change to the information you have provided.
This includes civil penalties of $1,000 that Inland Revenue could apply as well as criminal penalties that can apply for knowledge-based offences.
You can find more information in Section 9 Penalties Regime in our Guidance on the CRS for AEOI - IR1048.
Reporting NZFIs
Penalties can apply if you do not comply with your CRS due diligence (including record keeping) and reporting obligations. This includes escalating thresholds of civil penalties and criminal penalties for knowledge-based offences.
You can find more information in Section 9 Penalties Regime in our Guidance on the CRS for AEOI - IR1048: