FATCA and New Zealand

42 thoughts on “FATCA and New Zealand”

1. Pingback: The Isaac Brock Society

2. http://kiwiwit.blogspot.ca/2014/01/taking-up-cudgels-again-in-2014-in.html
   Monday, January 20, 2014
   ‘Taking up the cudgels again in 2014 in defence of individual rights ‘

   ….”..FATCA treats any New Zealander with the misfortune of being born in the United States, or even born here to American parents, as “United States taxpayers that are resident in New Zealand.” The Government acknowledges that the proposed law explicitly overrides the Privacy Act, Human Rights Act and New Zealand Bill of Rights Act. To what purpose does it treat some New Zealanders as non-citizens? It is to enforce a US taxation regime that is one-sided, unique in the world and inconsistent with OECD model taxation agreements. This analysis on the New Zealand legislation from the Isaac Brock Society sets out the issues in more detail….”….

3. Of significance to those in NZ too – use arguments and evidence in this just released research paper by Canadian prof. Fulltext available as open source;

   http://ssrn.com/abstract=2433198

   FATCA and the Erosion of Canadian Taxpayer Privacy
   Arthur J. Cockfield
   Queen’s University – Faculty of Law
   April 1, 2014
   Report to the Office of the Privacy Commissioner of Canada, April 2014

4. We might need a FATCA in Australia thread, but I hope the NZers and Australians won’t mind if I put this here:
   http://www.taxinstitute.com.au/news/implementing-fatca-amending-bill-passes-house

   ’05 Jun 14 Implementing FATCA – amending Bill passes House’

   “On 4 June 2014 the Tax Laws Amendment (Implementation of the FATCA Agreement) Bill 2014 passed the House of Representatives, without amendment, and now moves to the Senate.

   The Bill will amend Schedule 1 to the Taxation Administration Act 1953 to require Australian financial institutions to collect information about their customers that are likely to be taxpayers in the United States of America and to provide that information to the Australian Commissioner of Taxation who will, in turn, provide that information to the US Internal Revenue Service.

   These amendments give effect to the Australian Government’s commitments as set out in the Agreement between the Government of Australia and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA (the Foreign Account Tax Compliance Act (US)), which was signed in Canberra on 28 April 2014.”

5. http://techday.com/netguide/news/internet-party-slams-five-eyes-as-kiwi-privacy-debate-rages-on/185645/

   ‘Internet Party slams Five Eyes as Kiwi privacy debate rages on…’
   June 9 – 8am James Henderson

   “The Trans-Pacific Partnership Agreement, Five Eyes intelligence sharing and the American Foreign Account Tax Compliance Act have put New Zealand’s sovereignty and independence at risk and must be immediately reviewed, says the Internet Party.

   In its draft Independence policy released last week, the Internet Party claims New Zealand’s sovereignty was being steadily eroded by shady backroom deals with foreign powers, impacting the ability of New Zealand to make its own decisions without undue influence.

   “Over the past few years, there have been a number of challenges to our independence – the Trans-Pacific Partnership Agreement (TPPA), Five Eyes intelligence sharing and the Foreign Tax Account Compliance Act (FATCA),” says Internet Party Leader Laila Harré.

   “We will take steps to prevent the erosion of New Zealand’s independence. We have the right to make our own decisions without kowtowing to foreign countries.”……………………………

6. New Zealand capitulation is complete: http://www.beehive.govt.nz/release/intergovernmental-fatca-agreement-signed

7. A USC in Australia is reporting that he could not open a “Virgin Saver Account”, a product of Citibank, due to his American citizenship:

   “I tried to open a Virgin Saver account and couldn’t get past the first page because of this declaration:

   “I state that I’m not a US Citizen/person for the purpose of US Federal Income Tax”

   Low and behold in the terms and conditions http://virginmoney.co…­ (page 34 section 11.2):

   11.2 You will be asked to certify under penalties of perjury that:
   (1) you are not a citizen or resident of the United States of America (USA); and
   (2) you have not been, nor do you expect to be present in the USA for a period aggregating 183 or more days during any calendar year.”

   http://www.meetup.com/americans-in-melbourne/messages/boards/thread/47863012/

   As we all know, Robert Stack’s work of propaganda, “Myth vs. Fatca”, denies that this will occur and so, obviously, it hasn’t:
   “Myth No. 2: Some claim that U.S. citizens living overseas will become outcasts in the international financial world.

   FACT: FATCA withholding applies to the U.S. investments of FFIs whether or not they have U.S. account holders, so turning away known U.S. account holders will not enable an FFI to avoid FATCA. “

8. https://jobloggz.wordpress.com/tag/tax/
   …”I was thinking through the ramifications of FACTA for us;
   What happens when we want to save for our retirement?
   What happens if we want to open a new bank account?
   What happens if we sold the house that I bought and freeholded before I met my husband, and put the money in our bank account?
   What happens to my information? I am a non-US citizen, and my personal data would be sent to the US with no privacy protections. The only way around that would be for our accounts to be separated..”…

   “Just to add insult to injury – the cost of enforcing US tax laws should be borne by the USA and FATCA, but the cost has been passed on to our spineless NZ government….”…

9. The US is extraterritorially inserting itself into the relationship between lawyers and their clients in NZ using FATCA.

   Interesting development in NZ regarding lawyers, their trust accounts (funds held for clients) and FATCA compliance:
   https://my.lawsociety.org.nz/news/law-society-provides-details-on-law-firm-fatca-requirements

   “Law Society provides details on law firm FATCA requirements

   The New Zealand Law Society has written to all New Zealand law firms, providing an update on the action they will need to take to comply with the FATCA regime.

   FATCA is the United States Foreign Account Tax Compliance Act. All law firms with trust accounts must consider whether the FATCA Agreement between New Zealand and the United States applies to them and what action they will need to take.

   The Law Society has prepared a Practice Briefing, FATCA and New Zealand Law Firms, which provides information on the FATCA regime and the steps that each law firm must take for it and any trust account it operates to comply with FATCA.

   The Law Society says that the Practice Briefing does not constitute legal advice and each law firm must consider its own position regarding its FATCA obligations.

   Discussions are currently underway between the Law Society, the New Zealand Bankers’ Association and the Inland Revenue Department to enable IRD to finalise guidance on the application of FATCA to law firms, lawyers’ trust account relationship entities and lawyers’ nominee companies. A guidance note is expected from the IRD before mid-2015 and the Practice Briefing will be updated when this is available.

   The Law Society has also developed some suggested forms to assists law firms with obtaining information from their clients. These are available on the Law Society website here. “

10. https://www.lawsociety.org.nz/for-lawyers/regulatory-requirements/client-care/united-states-foreign-account-tax-compliance-act-fatca/_nocache

    “New Zealand law firms with trust accounts may possibly be defined as “financial institutions” and could be subject to FATCA provisions. FATCA potentially has implications for the way New Zealand law firms with trust accounts conduct their practice. Law firms should consider whether the agreement applies to them and what action they will need to take.

    The Law Society has prepared a Practice Briefing to provide more information on the regime to assist law firms with assessing their particular position and FATCA obligations.

    The Law Society recommends that to help meet the requirements to certify in respect of clients, law firms (whether financial institutions or not) start obtaining information and consents from their clients (as to whether they are US citizens or US tax residents) either when a new matter arises (which will lead or is likely to lead to the law firm holding funds for the client) or at the latest before funds are lodged in the trust account……..”

    Is this even legal in NZ regarding solicitor-client privilege? Are the laws of NZ re solicitor-client privilege similar to those in Canada?

    I ask because in Canada, this was just decided by our Supreme Court; http://www.cbc.ca/news/politics/supreme-court-removes-fintrac-s-power-to-search-law-firms-1.2955940
    How can FATCA compel law firms to do what domestic anti-terrorism legislation was not able to? See for example;
    “……The Supreme Court of Canada has struck down sections of the federal anti-terrorist financing law because it violates solicitor-client privilege.

    It’s the end of a 15-year battle between Canada’s lawyers with the federal government over the lawyers’ right to protect their relationship with their clients.

    The law required them to keep track of and report their clients’ financial activities to the government.

    The unanimous court decision says the legal powers of FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) ‎violate the Constitution in the way it applies to lawyers.

    The court found the parts of the law that give authorities sweeping power to search and seize files from lawyers’ offices without a warrant carry an inherent risk of breaching solicitor-client privilege…….. .”

11. https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/taxnewsflash/Pages/2015-1/new-zealand-fatca-guidance-on-recalcitrant-accounts.aspx

    ”
    New Zealand – FATCA guidance on “recalcitrant accounts”
    May 11: The Inland Revenue finalized guidance on the reporting of “recalcitrant accounts” under the FATCA regime.

    The approach generally is to treat recalcitrant individuals as specified U.S. persons and recalcitrant entities as passive non-financial foreign entities (passive NFFEs).

    Default values have been provided for reporting purposes when information is not available.

    Read a May 2015 report https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/taxnewsflash/Documents/kpmg-nz-may11-2015.pdf [PDF 157 KB] prepared by the KPMG member firm in New Zealand…..”

12. ‘Inland Revenue’s role in FATCA’

    “This page explains how we’ll help you meet your FATCA obligations”

    Our role in the Foreign Account Tax Compliance Act
    Sending us your FATCA disclosures……..”
    http://www.ird.govt.nz/international/nzwithos/fatca/role/ir-role-fatca.html

    how very helpful Inland Revenue is being as one of the new arms of the US Treasury!

13. Posted this on the FATCA and Australia thread, but may be useful to those in NZ as well:
    http://isaacbrocksociety.ca/fatca-and-australia/comment-page-14/#comment-6538156

14. Senate Finance Committee submissions from New Zealand:
    http://www.finance.senate.gov/legislation/details/?id=34184F67-5056-A032-52C8-0A4960018D92

    Jeanie Morrison-Low
    Catherine Solomon
    James Barribeau
    Christopher Tillman
    Kent Deitemeyer
    Tim Olsen

15. Let us ANZACS work together keep checking FATCA and Australia also

    http://www.foxnews.com/opinion/2015/10/27/pro-family-pro-growth-tax-reform-for-21st-century.html

    I will also shift to a territorial tax system, thus ending the double-taxation of profits earned abroad for both businesses and individuals

16. from a NZer to Parliament

    http://www.parliament.nz/resource/en-nz/50SCFE_EVI_00DBHOH_BILL12926_1_A377275/ed36ce96eca9b51dc91293d2f03dd6591575eeaa

17. Some interesting facts about the current IRS environment:

    45% of overall IRS leadership has left since October 2011

    25% of the IRS workforce will be eligible to retire in 2016

    40% of the workforce will be eligible to retire in 2019

    More than 50% of the IRS workforce are age 50+

    The total IRS workforce is approximately 87,000 employees, 13,000 less than in 2010 and the IRS expects to lose 3,000 full-time employees in the upcoming fiscal year.

    According to the National Taxpayer Advocate, the IRS training budget has been slashed by 80% since 2010, leaving agents less equipped to perform their jobs appropriately.

    The IRS receives more 100 million telephone calls and 10 million letters per year.

    http://www.americansoverseas.info/news/what-happens-at-the-irs

18. The Guardian notes that Johnson, in his capacity as mayor of London, has criticized the U.S. Embassy for not paying the city’s congestion charge. The U.K. government says U.S. Embassy owes the city about $12 million, but the Embassy says the charge is a tax from which its diplomats are immune.

    http://www.npr.org/sections/thetwo-way/2014/11/21/365690481/london-mayor-boris-johnson-owes-irs-money-wont-pay

19. FATCA Scam Targets Foreign Investors in US Securities

    http://www.nestmann.com/watch-out-for-these-3-offshore-scams?inf_contact_key=6c254feb59c1ebc385fb3a9a5acfc197bc65239d189e99bb7b0e07205e829be2#.Vi_tqX-qqko

20. NZ family trusts with NO US connection and NO US persons saddled with FATCA compliance burden.
    http://www.goodreturns.co.nz/article/976503566/trusts-caught-in-fatca-net.html

21. more of the same re FATCA and NZ family trusts
    http://www.chapmantripp.com/publications/Pages/Trustees-take-note-FATCA-and-the-family-trust.aspx

22. Thank you for pointing this article out @badger. There are a lot of family trusts in New Zealand that have no idea of the train wreck heading in their direction.

23. @osgood;
    that governments are allowing this burden to fall on ordinary local family trusts – many of whom have no US connection at all is unconscionable. Similar articles have appeared in the UK.
    Ex. https://www.lawsociety.org.uk/support-services/documents/fatca-practical-examples/
    which starts out by saying how trusts must proceed – even if there is NO US connection.

24. @osgood, this is the type of article that would highlight how the US and the colluding governments with IGAs have foisted the cost of US tax law enforcement onto people who don’t even have a US connection:
    http://www.telegraph.co.uk/finance/personalfinance/tax/11050777/British-families-billed-500-to-prevent-Americans-dodging-tax.html

25. Found a reference to an article by an NZ barrister/solicitor on the blog Let’s Talk About: US Tax http://blogs.angloinfo.com/us-tax/2016/01/16/the-us-and-its-reciprocal-igas-oh-really/

    The blog author Virginia La Torre Jeker J.D describes the author of the article below thus:
    “Peter A. Cotorceanu is a man of many talents — a US Tax Lawyer, a New Zealand barrister and solicitor, and a former US Law Professor. He is Founder and CEO of G&TCA (GATCA & Trusts Compliance Associates LLC) and Of Counsel to Anaford AG, a Zurich-based law firm. Peter was previously the Head of Product Management for Trusts and Foundations for UBS in Zurich, where he was responsible for UBS’s FATCA compliance for trusts, foundations, and other fiduciary structures. Peter has written and spoken extensively on FATCA and GATCA compliance for the fiduciary industry.”

    Abstract
    “This article addresses gaping holes in both FATCA
    and GATCA reporting when it comes to non-US
    persons. Holes where sensitive information can
    stay private and avoid prying eyes. Maybe these
    holes will close. But only if and when the USA—
    now, ironically, the greatest of all hiding places—
    chooses to do so.
    Do not hold your breath.”

    from;
    ‘Hiding in plain sight: how non-US persons
    can legally avoid reporting under both
    FATCA and GATCA’
    Peter A.Cotorceanu*
    Trusts & Trustees, Vol. 21, No. 10, December 2015
    http://tandt.oxfordjournals.org/content/21/10/1050.full.pdf?keytype=ref&ijkey=gNrzOlmwXk1HHmw
    doi:10.1093/tandt/ttv178
    Advance Access publication 21 October 2015