Parliament’s Finance and Expenditure Committee reported back yesterday on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill which contains the enabling provisions for FATCA.
The Committee noted that around half of the submissions on the Bill related to FATCA. Those submissions generally included:
- Privacy and discrimination concerns;
- Views of some that the US tax system is unjust; and
- Support for the Bill from the financial services industry.
Comments were also made supporting global efforts to combat tax evasion and which will presumably also apply to the global information reporting framework being worked on by the OECD and G20.
Limits on reporting
The Bill as introduced included restrictions on identifying and reporting account holders for low value accounts (less than USD50,000 for individuals and USD250,000 for entities). The Committee listened to submissions and the Bill has been amended so that the financial institutions can identify low value account holders although, to prevent over-reporting, cannot report such accounts.
Extension for reporting
There is also a one-month extension to the reporting deadline which will be welcomed by financial institutions. Reporting to Inland Revenue will now not be due until 30 June each year (starting 30 June 2015).
Passage of the Bill and the Intergovernmental Agreement
The Bill is now back before Parliament and we understand it could be passed by the end of May. If so, this would be very welcome as financial institutions would have a clearer basis for complying with FATCA.
The Intergovernmental Agreement is now the key missing piece of the FATCA puzzle. Whilst the recent announcement that New Zealand will be treated as having an IGA in force will help with registration requirements, those organisations seeking to rely on one of the exemptions in Annex II of the IGA will want the certainty of a finalised IGA.