New Zealand’s (NZ) automatic exchange of information (AEOI) agreement with several countries ensures everyone pays the right amount of NZ tax for overseas income.
Following the introduction of the Common Reporting Standard (CRS) effective from 1 July 2017, more and more information is now automatically being shared across borders by various tax authorities worldwide. This means overseas assets and financial information are more transparent to the NZ Inland Revenue (IRD) than ever before.
It is often wrongly assumed that income arising in another country has no bearing on an individual’s tax position in NZ. This misplaced belief is particularly compounded when tax is paid, and a tax return is filed in the other jurisdiction. The AEOI and CRS give IRD a simple way to know whether NZ tax residents have complied with the NZ tax law.
As a rule, IRD is generally understanding of unintentional errors, and these can usually be rectified by voluntary disclosure to correct the mistake and settle the tax. However, these may expose the taxpayer to potential penalties and the use of money interest. In most cases prior to an audit notification, IRD may remit the penalties, but the use of money interest is likely to be imposed. For this reason, it’s always better to be on the front foot with any disclosure rather than having to play catch up in response to IRD’s action.
For those taxpayers who have recently received a letter from IRD, think carefully about whether you have missed anything. For those who haven’t yet received a letter, now is an excellent time to ensure everything is in order, and our experienced team can help you with that!
NZ International Tax & Property Advisors are a one-stop Chartered Accountant firm providing international tax, property tax & consulting, accounting and training services to locals, migrants/expats and businesses. If you would like to find out more about the automatic exchange of information or need tax assistance, contact us today!
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