What is CRS / FATCA?

  • To help combat global tax evasion, New Zealand is a participating jurisdiction of the Common Reporting Standard (CRS) for the automatic exchange of information (AEOI), as well as Foreign Account Tax Compliance Act (FATCA).


What are the obligations?

  • Certain entities are required to obtain self-certification from all account holders. This process is called due diligence and enables the entity to identify account holders which are foreign tax residents, dual tax residents or undocumented accounts (undocumented accounts are where self-certification has not been obtained).

  • Entities which are considered an “NZFI” may have to report the results of the due diligence process (nil report) or they have to report the results of the due diligence if this process identifies a TIN (Tax Identification Number) from a reportable jurisdiction or they identify an undocumented account. Please note that undocumented accounts need to be frozen - a trustee would not be able to make a beneficiary distribution if the account is undocumented.  


What this means for your accounting firm

  • The risk lies for those accounting firms who are corporate trustees of a trust
    which is considered a NZFI. The CRS/FATCA workpaper should be used to determine
    the firm's obligations - see the CRS workflow diagram (click image to enlarge or
    click here to download PDF).

  • If your firm does not provide corporate trustee services, you may have clients who
    are considered NZFI and they may have CRS obligations.

  • From 1 April 2021, a higher level of disclosure will be required for Trusts' 2022 tax
    returns (regardless of if they are captured by CRS/FATCA rules). This includes
    information such as the name, date of birth, country of residence, tax identification
    number for settlors, beneficiaries and persons with power of appointment.


What is considered an NZFI?

  • A Trust, Company or Partnership is an NZFI if the trust, company or partnership derives more then 50% of its income from financial assets and the assets or the entity is managed by another financial institution. A Trust is an NZFI if a Trust uses a corporate trustee (law/accounting firm) or a portfolio bank to manage the trusts' financial assets. A natural person holding interests for themselves is not an NZFI.

  • Please note that the lawyer/accounting corporate trustee and the client are reporting entities for CRS/FATCA purposes. The Trust can agree with the corporate trustee that only the corporate trustee is fulfilling the due diligence and reporting requirements (trustee documented trust), but the Corporate Trustee can never contract out of CRS/FATCA responsibilities.

  • An NZFI Trust, Company or Partnership is to report undocumented accounts, accounts for foreign/dual tax residents of reportable jurisdictions or the U.S., or a nil disclosure if neither of these apply.

  • A Trust, Company or Partnership is also an NZFI if it is a custodial, depository, investment or specified insurance company.

  • Deceased estates are generally not financial institutions, so long as the administration of the estate is directed at the winding up and distributing of assets and not an indefinite activity of investing, reinvesting or trading financial assets, it will not be a financial institution.

What does "Managed by a financial institution" mean?

  • "Managed" means having the discretionary authority to buy and sell the entity's financial assets.

  • "Financial Institution" can include:

    • Discretionary Investment Management Services (DIMS)​

    • Financial advisors

    • Brokers

    • Corporate Trustees where services include investing, administering or managing financial assets and the fees charged for these services make up 50% or more of the income received from the trust

    • Investment Entities


Who is an Account Holder?

  • This is special language used for CRS/FATCA purposes.  It is not a "bank account holder", or someone in the accounts of the Trust or NZFI. 

  • An account holder can be:

    • Trustee​

    • Beneficiary (who has received a distribution in the past or will receive a distribution in the current income year)

    • Settlor

    • Persons with power of appointment

    • Persons with control

    • Director

    • Shareholder

    • Partner in a partnership

Is the family trust considered an NZFI?

  • The most likely scenario for CRS/FATCA is that you have a client who has a family Trust. How do you ensure the family trust is meeting its CRS/FATCA obligations?

  • The Aro Assistant template guides the user through 3 steps:

    • Due diligence on all client entities who hold investments in financial assets. This casts a wide net and ensures the due diligence obligations are met as well as gathers information which will be needed in future (for Trust tax returns).

    • Determine NZFI status

    • Reporting to IRD 

  • For reporting on foreign tax residents, the Reporting NZFI should obtain a GIIN. The GIIN is a Global Intermediary Identification Number. The GIIN might be a requirement if the RNZFI opens bank accounts or share portfolios. The GIIN is also needed if the NZFI is reporting to IRD. This needs to be applied through the IRS.

  • If there are no foreign/dual tax resident and self-certification is obtained for all account holders, the Trust is still considered a Reporting NZFI and should register with IRD as a reporting entity and submit a nil return.

  • However, reporting is required for foreign/dual tax residents who are resident of reportable jurisdiction or U.S. This list is constantly updated  at IRD and can be found here. (click the link then scroll down to "Full List of Reportable Jurisdictions")

  • Undocumented accounts (accounts for which the Trust has not obtained self-certifications) need for be frozen and the Trust is required to report these undocumented accounts to IRD.

  • IRD have published some useful flowcharts that illustrate this - check them out below in Useful Resources.

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CRS with Dr Peter Loerscher (48:00)


CRS / FATCA for Accountants (2:26)


CRS / FATCA in a Nutshell (4:04)