Are you an American living in NZ?


If so, you should immediately take the time to understand how the new Foreign Account Tax Compliance Act (FATCA) legislation could impact you and your investments.

What is FATCA and why was it introduced?

The Foreign Account Tax Compliance Act (FATCA) was introduced to prevent offshore tax evasion by United States persons (includes citizens, tax residents and entities) whether they reside in the US or not.

The rules will require non-U.S. financial institutions, investment entities and insurance companies report back to the United States Internal Revenue Service (IRS) on their US clients and owners if their financial assets exceed certain thresholds.


New Zealand Financial Institutions (NZFI)

NZFI’s (who are not exempted) are required to register with the IRS before the 31 December 2014; NZFI’s include:

  • banks

  • insurance companies

  • custodial institutions

  • hedge funds

  • mutual funds

  • superannuation funds, and

  • private equity firms.

NZFI’s will be required to report financial details of account holders (who’s assets exceed pre-determined thresholds) back to the IRS annually. This will include the details of:

  • U.S. citizens

  • U.S. tax residents

  • U.S. entities that are specified U.S. persons

  • certain non-U.S. entities that are controlled by U.S. tax residents or U.S. citizens, and

  • certain financial institutions that are "non-participating".


Are Family Trusts included

The NZ Law Society has recently written to all law firms warning that it might be possible for some family trusts to be classed as Financial Institutions under this law – generally any entity that primarily invests in securities will be included.


NZ IRD’s role

To reduce the FATCA compliance burden for individual New Zealand financial institutions, and to create specific exemptions from reporting, New Zealand has signed an Intergovernmental Agreement (IGA) with the U.S.

The completed agreement, and supporting changes to domestic legislation, requires NZFI’s to send their FATCA reports directly to the NZ Inland Revenue Department to exchange with the IRS, instead of dealing individually with the IRS. The IRD will provide the secure electronic system to receive and send on the FATCA reports.

Cavell Leitch does not directly provide specialist taxation advice, however if you have any questions regarding FATCA and how it might apply to you, please feel free to contact our specialist Banking Team and they can recommend an appropriate tax specialist who will be able to assist.


More information

You can also email the NZ IRD at

A useful guide explaining it all in more detail can also be found here:

For more information please visit:

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Copyright © Cavell Leitch. All rights reserved. Redistribution is only permitted with express written permission. For enquiries please contact us. This article by its nature cannot be comprehensive and cannot be relied on by clients as advice. It is provided to assist clients to identify legal issues on which they should seek legal advice. Please consult the professional staff of Cavell Leitch for advice specific to your situation.