FATCA, or the Foreign Account Tax Compliance Act, is United States (US) legislation that has been brought into New Zealand law with effect from 1 July 2014. FATCA aims to reduce tax evasion by ‘US Persons’ using financial accounts outside of the US. It requires financial institutions around the world, such as Kiwi Wealth, to collect certain information to identify clients who may have US tax obligations and provide certain information about such clients to Inland Revenue, who will in turn pass this information on to the US Internal Revenue Service (IRS).
FATCA does not apply to our KiwiSaver or superannuation schemes.
A 'US Person' is someone who is a US citizen or resident for US tax purposes. Even if you are a resident taxpayer in a country outside of the US and regardless of how long you have been living outside of the US, the IRS may still consider you to be a US Person. US Persons can include persons who:
A US Person can also include US corporations, estates and trusts, and other entities controlled by US Persons.
If you are opening a Kiwi Wealth Private Portfolio Service account, we will be asking you some questions to help determine if you may be considered a US Person. If the account is for an entity (eg, a trust or company), we will be asking similar questions about the entity’s controlling persons and may need to ask further questions about the entity itself.
Other than responding to some questions, we expect there will be little or no impact for most Kiwi Wealth Private Portfolio Service clients as they are not US Persons. However, if you choose not to provide the information we have requested, we may be required to provide information about you and your Portfolio to Inland Revenue who will in turn provide it to the IRS.
The information about affected clients that is reported is their name, address, account numbers, US tax identification number (or date of birth if no US tax number), account balances, and certain payments.
Information about non-US Persons will not be reported (except where they do not provide information requested in relation to FATCA).
We will not be reporting any information to IRD unless we are required to.
We intend to contact all affected clients to let them know their information is going to be reported before it's sent to the IRD.
A withholding tax of 30% on certain US principal and income may be imposed on financial institutions that do not meet the FATCA documentation and reporting requirements. This is a significant tax which would impact all of our clients, meaning compliance with FATCA is very important to us.
The US requires its citizens and residents to file annual tax returns regardless of where they live or how long they’ve lived there.
An amnesty may be available for some US Persons living abroad who pose a low compliance risk. More information can be found on the IRS website.
If you fall into the category of a US Person, or if you are unsure if you do, we recommend you contact a tax or legal adviser to find out more about your US tax obligations and options.