New tax law will force banks to provide Inland Revenue with tax data

A tax law coming into force today will require banks to provide IRD with tax information. Photo / File

A new tax law coming into force today will require banks to provide Inland Revenue with tax information for certain customers.

The new law, aimed at reducing global tax evasion, meant banks and other financial institutions would need to identify accounts held by foreign tax residents.

Deloitte Dunedin tax partner Phil Stevenson told the Otago Daily Times for most people, the announcement would be boring, but there were some relevant points.

The law provided Inland Revenue with data on migrants who had investments in New Zealand, making it easier to check if migrants were complying with their New Zealand obligations.

"Although it will add another layer of compliance cost, this is seen as being worthwhile to combat tax evasion."

New Zealand Bankers Association chief executive Karen Scott-Howman said the tax information sharing scheme was reciprocal and other countries would report to Inland Revenue on New Zealand tax residents in their jurisdictions.

"It means banks may ask existing customers to confirm if they are tax residents in countries other than New Zealand.

"It also means banks will ask new customers after July 1 to self-certify their country or countries of tax residence."

Under the law, customers identified as foreign tax residents would need to provide banks with their date of birth and foreign taxpayer identification number, she said.

At this stage, Inland Revenue would share information with 58 other jurisdictions. The information must be reported to Inland Revenue by June 30 every year. The first exchange of information will take place in 2018.