AEOI Guidance and Timelines

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

Policy and Strategy
Te Wāhanga o te Rautaki me te Kaupapa
taxpolicy.ird.govt.nz
Overview
1. Quick Recap
2. Legislation Progress
3. Timeframes
4. Key Themes from Submissions
5. IR Guidance
6. Questions

Policy and Strategy
1. Quick Recap

Policy and Strategy
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

Policy and Strategy
Shared responsibilities
CRS
 due diligence
 reporting
Common Reporting
Standard
AEOI
 exchange
Automatic Exchange
of Information

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

Policy and Strategy
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)

Policy and Strategy
Passive NFE
Entity
Financial
Institution (FI)
Non Financial
Entity (NFE)
Passive
NFE
Active
NFE

Policy and Strategy
2. Legislation Progress

Policy and Strategy
Taxation Bill*
 Update
– 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

Policy and Strategy
3. Timeframes

Policy and Strategy
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)
After enactment
Final IR guidance issued After enactment
Order in Council (Reportable jurisdictions) After enactment
CRS start date 1 July 2017

Policy and Strategy
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
Reviews of high value pre-existing
individual accounts
Reviews of all other pre-existing accounts
1st reporting period
(9 months)
2nd reporting period
(12 months)
Reporting
deadline
Exchange
of data
1st
period
Reporting
deadline
Exchange
of data
2nd
period
Start date
for new
accounts

Policy and Strategy
4. Key Themes
from Submissions

Policy and Strategy
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

Policy and Strategy
Sovereignty
 Incorporation by reference
– 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)

Policy and Strategy
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

Policy and Strategy
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

Policy and Strategy
Four Lists
 Exclusion Lists
1. NRFIs*
2. Excluded Accounts
 Jurisdiction Lists
3. Reportable Jurisdictions
– Dependent on Global Forum, end of 2016?
4. Participating Jurisdictions
 List submissions
– NRFIs, Excluded Accounts, Reportable Jurisdictions
– No submissions for Participating Jurisdictions
– Process
*NRFI = Non Reporting Financial Institution

Policy and Strategy
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

Policy and Strategy
5. IR Guidance

Policy and Strategy
IR Guidance
 Draft 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

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

Policy and Strategy
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

Policy and Strategy
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

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

Policy and Strategy
6. Questions

Policy and Strategy
 Email AEOI questions to global.aeoi@ird.govt.nz
 Email FATCA questions to fatca@ird.govt.nz
 IR Webpage
http://taxpolicy.ird.govt.nz/topical-issues/implementing-aeoi
 AEOI Consultation paper
http://taxpolicy.ird.govt.nz/publications/2016-ip-implementing-
aeoi/overview
 OECD AEOI Portal
http://www.oecd.org/tax/automatic-exchange/about-automatic-
exchange/
Contact us

Policy and Strategy
Thank you!
 For your time today
 Please continue to give us your feedback

AEOI Guidance and Timelines

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