Violation of NZ Human Rights Law
Violation of NZ Privacy Law
No Ability under NZ law to withold tax
Cannot comply with FATCA under NZ law
Suggest “Intergovernmental Agreement” (I am getting tired of this)
There is an insert in the middle from the Australian Bankers Association
I’m not arguing that IRD doesn’t have some information. They do have a lot (account balances, withholding tax etc), including information on non-residents’ accounts.
What they DON’T do is:
1) Track which other countries these people have tax obligations to
2) Automatically transfer information to other countries (Oz is a special case)
Both these points are required by FACTA.
Australia and NZ have a very close relationship, shared history and culture, very similar public policy settings, and a lot of economic/legal integration points to underpin this. It is not an analogue for FATCA.
@Steven and JustMe
I believe if you look at some of industry groups presenting(Swedbank, Australian Bankers, etc) a lot of the presentations are dealing with the Americans abroad issue which is kind of interesting because as many have said no one was thinking of that at when the legislation or the idea of FATCA was being developed. There are actually three big issues as I see it from the comment letters in totality. One is the proposed rules apply to basic checking and savings accounts which really earn little interest anywhere in the world in this day in age so there really isn’t any “tax loss” to begin with. Two is a lot of countries have mandatory service laws for ALL local residents like Canada, Aus, NZ, Sweden, France(and eventually I suspect most countries will go in this direction). Third in a lot of countries they aren’t local Americans to make setting up the W9 reporting systems are at all cost effective for 0.5% of your customer base.
In the big meeting last month Joe Green actually asked the Treasury point blank to exclude all non resident US Persons from the application of FATCA to which the Treasury replied they would need to actually change the legislation to do that however my sense is they understood they very much have a problem on there hand. Like I said it will be interesting to the extent that EVERY presentation deals with the Americans abroad issue does it effectively start to snowball. I saw from the Australian Bankers Association comments they have a whole delegation coming to Washington for the whole week so I assume they have additional meetings on Capital Hill etc. My sense also is Democrats Abroad hasn’t had much contact with the industry groups so the hearing will I suspect be a good opportunity to make some industry contacts for them.
Check out my next post for whatever its worth.
Very interesting. What you say about NZ IRD withholding makes sense to me. My greencard Auzzie wife, originally opened the account, and then only later did I sign on them much later, so maybe some withholding form was created that I didn’t know about.
Very informative stuff on CATCA. I would love to see the US get some of its own medicine, so will look for your future post. The knowledge you bring to these subjects is very helpful…
BTW, did you hear the one about Iceland dropping the Krona, and adopting the Canada Dollar? Just a thought actually….
I think you’re reading the corporate double-speak too literally by interpreting that the NZBA “welcomes” ANY of this stuff. No one outside of the US wants FATCA in ANY way shape or form, regardless whether the arrangement is bank-to-irs or bank-to-govt-to-irs. They are simply informing the IRS that the IRS has no other choice, and they are using a mindless platitude to communicate the message by “welcoming” the framework being used with other countries. As for the “need to overcome legal impediments..” they are referring to to the IRS’s need, not the NZBA’s need.
“it doesnt look like NZ or Australia are looking for a way out of the information sharing idea of FATCA”
This is irrelevant. They don’t need to. FATCA is ***ILLEGAL*** in NZ and will not happen without the explicit consent and action of the NZ govt. The NZ govt will need to explicitly act to put in place a mechanism that allows the FATCA requirements to be met. And the NZ govt will not act until the US govt puts in place reciprocal measures (and not just half-arsed ones) and removes its public policy conflicts it has with NZ (i.e. barbaric FBAR penalties that will be used to discriminate against NZers).
Now you might think any country would do anything for access to US markets. The US govt tries this trick all the time. It frequently demands that the NZ govt change legislation to allow draconian sanctions for music downloading, and to dismantle public health care drug purchasing mechanisms that “rob US pharmaceutical companies of the profits that they deserve”. The US govt demands this in exchange for paltry reductions in the US’s protectionist stance towards NZ. Through FATCA, the US govt isn’t promising a reduction in protectionist policy in return for a NZ public policy change, it is threatening an increase in the protectionist policy in unless the NZ public policy change is implemented. Thankfully (and hopefully this continues) the NZ government rarely caves.
If the US govt wants to shut its markets to the rest of the world, then so be it. The US govt controls US policy and is free to shut its markets to the outside world; the NZ govt controls NZ policy and will continue to do so.
@Tim and Moby…
I see the NZ financial Services industry has put in a submission…http://bit.ly/IEKsub
I notice that they point out breaches to the New Zealand Privacy Act and the New Zealand Human Rights Act of 1993, but find it surprising that Mike Moore representation from the government does not!! http://bit.ly/JoOjcp
They are also concerned about Kiwi Saver and retirement schemes and want them excluded.
That is their only area of recommendations.
For the record Here is the actual Testimony at the FATCA May 15th public hearing from Australia/New Zealand Banking Industry…
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You might be interested in this exchange I had with BNZBank on twitter. The other two I sent a message to have not responded…