1. Automatic Exchange of Information (AEOI)
Graham Hunt, Michael Webb
Jo Poole, Danielle Weiss
November 2016
Wellington / Auckland

2. Overview Quick Recap Legislation Progress Timeframes
Key Themes from Submissions
IR Guidance
Questions

3. Quick Recap

4. Why? To detect & deter offshore tax evasion
A global initiative driven by the OECD
Strict requirements
Broader context
Other global initiatives
Wider benefits for New Zealand

5. Shared responsibilities
CRS
due diligence
reporting
Common Reporting Standard
AEOI
exchange
Automatic Exchange of Information

6. CRS steps Reporting Financial institutions 1. Review
Financial Accounts
1. Review
2. To Identify
Reportable Accounts
3. By Applying
Due Diligence Rules
4. Then
Report Relevant Information

7. Two Jurisdiction types
Reportable Jurisdictions
Participating Jurisdictions
NZ provides information to them
NZ receives information from them
largely irrelevant for those that adopt the wider approach to reporting
important for look-through of Passive NFEs*
*Non Financial Entity (NFE)

8. Passive NFE Entity Financial Institution (FI)
Non Financial Entity (NFE)
Passive NFE
Active NFE

9. 2. Legislation Progress

10. Taxation Bill* Update Special dispensation for AEOI
Bill introduced 8 August 2016
With Select Committee
Expecting report back 21 November 2016
On track for enactment early 2017
Special dispensation for AEOI
Continued engagement with stakeholders
Constitutional constraints
Foreign trust disclosure rules
*Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill

11. 3. Timeframes

12. AEOI key dates Activity Date Call for submissions (NRFIs & accounts)
Mid-November 2016-End January 2017
Draft IR guidance issued
Mid-December 2016
Call for submissions (Reportable jurisdictions)
(TBC)
Feedback on draft IR guidance
January – mid-February 2017
Legislation receives Royal Assent
Early 2017 (TBC)
NZ version of CRS published
After enactment
Lists published (NRFIs, accounts, participating jurisdictions)
Final IR guidance issued
Order in Council (Reportable jurisdictions)
CRS start date
1 July 2017

13. Start date for new accounts
New Zealand timing
Legislation
Due Diligence
(FIs)
Reporting (FIs)
Exchange (IR)
Bill introduced
Referral to Select Committee
Call for submissions (NRFIs & excluded accounts)
Legislation enacted
IR guidance & lists issued
Aug. 2016
Late 2016
Early 2017
1 Jul. 2017
31 Mar. 2018
Reviews of high value pre-existing individual accounts
Reviews of all other pre-existing accounts
30 Jun. 2018
30 Sept. 2018
31 Mar. 2019
30 Jun. 2019
30 Sept. 2019
1st reporting period
(9 months)
2nd reporting period
(12 months)
Reporting deadline
Exchange of data 1st period
Exchange of data 2nd period
Start date for new accounts

14. 4. Key Themes from Submissions

15. General Themes
Inland Revenue continue engaging with the industry to help them prepare
Guidance & lists published as a matter of urgency, and if possible CRS timeframes be extended
Concern that some reportable jurisdictions may not be trustworthy
Privacy concerns – eg. use of information gathered for one purpose for alternative purposes

16. Sovereignty Incorporation by reference Accessibility
Surrendering sovereignty
Accessibility
Legislation proposes incorporating the CRS* into NZ law
Copyright issues prevent the CRS being available on Inland Revenue & NZ legislation websites
Ambulatory approach
Acknowledge concerns
Discussing options with Select Committee
*CRS = Common Reporting Standard (OECD)

17. Penalties Clarifying absolute liability vs lack of reasonable care
Interaction
Capping
Defences need to be strengthened
Additional time for Transitional Measures defence
On-going ‘no fault’ defence for financial institutions
Public education campaign needed
Given penalties apply to customers
Other
Associated with
Person no longer connected

18. Optionality No compulsion to adopt options
Permitted choice rule needs to be clearer
Grace period
Immediate reporting
Distributions to beneficiaries
Difficult for RFI* to identify
Timing issues (eg if distribution not declared until after 31 March)
*RFI = Reporting Financial Institution

19. Four Lists Exclusion Lists Jurisdiction Lists List submissions NRFIs*
Excluded Accounts
Jurisdiction Lists
Reportable Jurisdictions
Dependent on Global Forum, end of 2016?
Participating Jurisdictions
List submissions
NRFIs, Excluded Accounts, Reportable Jurisdictions
No submissions for Participating Jurisdictions
Process
*NRFI = Non Reporting Financial Institution

20. Themes – technical issues
Customer on-boarding process
Non responsive customers
AML / FATCA procedures
Determining residency
Changes in circumstances
Practical application of options
Application to trusts
Application of penalties regime

21. 5. IR Guidance

22. IR Guidance Draft Guidance Table of Contents of Draft IR guidance
Released by Christmas 2016
Feedback by mid-February 2017
Send practical examples to highlight concerns
Indicate key pressure points for business
Useful & user friendly
Based on your feedback
Table of Contents of Draft IR guidance
Main themes

23. IR Guidance – cont. Table of Contents (Draft Guidance)
Overview of AEOI & the CRS
Outline who will have obligations under the CRS
Outline what those obligations will be:
Due diligence
Reporting
Record keeping
Providing information
Penalties & anti-avoidance
Application of principles to specific types of entities

24. IR Guidance – industry themes
Industry concerns
Determining residency
Practical due diligence
Starting CRS due diligence
Customer forms
Meaning of ‘on account opening’
AML (Anti Money Laundering)
Practical CRS reporting
Information & optionality
Timeframe & methods

25. IR Guidance – themes cont.
Applying CRS to trusts
As financial institutions
As passive NFEs
Processes to apply for trust accounts
Applying CRS to managed funds
Who maintains the relevant account
Who does the reporting
How does CRS impact persons or entities using investment managers
All of these themes feed into the guidance

26. Technology Solution High-level design stage
Follows CRS (Common Reporting Standard)
Three approaches being considered
XML file upload – large Financial Institutions (FIs)
Template spreadsheet – medium FIs
Online form (IR site) – small FIs

27. 6. Questions

28. Contact us Email AEOI questions to global.aeoi@ird.govt.nz
FATCA questions to
IR Webpage
AEOI Consultation paper
OECD AEOI Portal

29. Thank you! For your time today
Please continue to give us your feedback