Law requires banks to freeze some accounts

28 June 2018

Some New Zealanders are having their bank accounts frozen because of OECD regulations reflected in New Zealand law, which requires banks to comply.

“If your bank has asked you about your foreign tax status, you should respond as soon as possible, regardless of your tax status,” says New Zealand Bankers’ Association deputy chief executive Antony Buick-Constable as compliance deadlines take effect.

“If you don’t respond, or if your response is incomplete, your bank is required to freeze or close accounts opened from 1 July 2017 to comply with the law. Banks have started freezing or closing affected accounts this week.”

The law, which is administered by Inland Revenue, is aimed at reducing global tax evasion by account holders or their controlling persons.

The law requires banks to verify the tax status of people who have opened accounts since 1 July 2017.

Banks need to report relevant customer and account information to Inland Revenue by 30 June 2018, and annually from that date.

Although banks may contact their customers seeking tax information to comply with this legislation, they’ll never ask for password or other security information, including access to accounts.

Banks and other financial institutions need to identify accounts held by foreign tax residents, and report relevant information to Inland Revenue, which in turn shares that information with other countries subject to the terms of international tax treaties.

Inland Revenue provides information for New Zealand bank account holders here:

http://www.ird.govt.nz/resources/f/2/f231e7fb-a118-4ff3-bbcd-5102b320f595/ir1033.pdf

ENDS

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