MHK Report on Global Automatic Exchange of Information (AEOI)

New Zealand is one of many jurisdictions that has committed to a global initiative led by the OECD on the automatic exchange of financial account information, and has effected this by way of a rather unsexily-named Act (The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017) which has just been passed into legislation. 

What this primarily provides for in 80 pages of law is for information to be collected by financial institutions around the world for reporting to tax authorities.  Tax authorities will exchange this information to ensure everyone pays the right amount of tax.

Ian Malcolm, Managing Director of MHK Chartered Accountants Auckland, comments that this is a great initiative that has been introduced in a very quiet manner, and is disappointed that the IRD has commenced writing to some New Zealand taxpayers without prior communications or alerts to their tax agents.  Some taxpayers are receiving letters warning them that if they are NZ tax residents holding offshore accounts with financial institutions, those businesses will share their financial information with the IRD, and alerting the NZ taxpayers in order that “you have the opportunity to ensure your tax affairs are in order” (IRD’s wording).  The IRD continue, “Once we receive this information we will be undertaking a risk assessment to consider whether the returns you have filed include the level of income we would expect given the nature and extent of your offshore investments”, and continue advising of the Voluntary Disclosure regime.” 

Scary stuff! Mr Malcolm comments that, “Although the IRD have every right to communicate with taxpayers as they wish, it would have been far more conducive to communicate with the taxpayers’ Tax Agents first to give them the opportunity to pre-alert taxpayers, and prevent the unnecessary stress that is placed on them when they see a letter addressed to them personally in an IRD envelope.”

MHK Chartered Accountants (a division of Green Lion Limited) are fringe CBD Auckland Chartered Accountants who specialise in business structuring and legally minimising all types of taxation obligations, and welcome a no-obligation discussion free of charge.  For more information please contact Ian Malcolm 09-917-2893 or 021456225, or Aaron Neels 09-917-2897. For more information on tax minimisation, chartered accountants Auckland, or business structuring please go to https://aucklandaccountant.net.nz/  .