Foreign Account Tax Compliance Act (FATCA)
OVERVIEW
The Foreign Account Tax Compliance Act (FATCA) is a US tax law designed to identify US citizens and US tax residents who use offshore financial accounts to evade their US tax responsibilities. FATCA was passed into US law in March 2010 and came into force internationally on 1 July 2014. FATCA requires ‘foreign financial institutions’ (FFIs), which are those financial institutions that are foreign to the US, to identify and report annually on any accounts held by US Persons or foreign entities that have US Persons as beneficial owners. Many financial institutions, including CEE Investments and our related entities, fall under the definition of an FFI under FATCA. To ease the burden of compliance on New Zealand FFIs, the New Zealand Government has negotiated an Inter-Governmental Agreement (IGA) with the US Treasury and US Internal Revenue Service (IRS). The IGA and the FATCA requirements on New Zealand FFIs have been incorporated into New Zealand law by amendments to the Income Tax Act 2007 and the Tax Administration Act 1994. In accordance with this agreement, all FATCA reporting will be done via the New Zealand Inland Revenue. WHY HAS FATCA BEEN BROUGHT ABOUT? As part of global measures to counter tax evasion, all New Zealand financial institutions are required to collect information about US citizens and US tax residents tax residency. Personal and account information is then passed onto New Zealand Inland Revenue, which may then be exchanged with the IRS. WHY ARE NZ FINANCIAL INSTITUTIONS DOING THIS FOR THE US? The New Zealand Government made a policy decision to implement FATCA and came to an agreement with the US (IGA) to implement FATCA in New Zealand. The key reasons for this decision were: to ease the burden of each New Zealand financial institution having to negotiate an individual agreement with the IRS; to provide for specific New Zealand exemptions from reporting; and to align with the majority of New Zealand’s major trading partners who are entering into similar agreements with the US. Therefore, to implement FATCA in New Zealand in accordance with the IGA, the New Zealand Government introduced legislation which requires New Zealand financial institutions to comply with FATCA or face penalties. WHO DOES THIS AFFECT? Investors of any CEE Investments’ Managed Fund who are US Persons, which includes individual and entity investors. As part of this process, we are required to confirm the FATCA status of all potential US Persons (individuals or entities), which is primarily based on information stored in our records about you or your entity. We also have to confirm the FATCA status of certain entities that are controlled by US Persons. Any such identified accounts may be reported to New Zealand Inland Revenue, subject to the relevant minimum thresholds. I’M A NEW ZEALANDER (AND/OR MY ENTITY IS BASED IN NEW ZEALAND), SO WHY DOES THIS AFFECT ME? FATCA requires that we contact investors to confirm their non-US status, even if we have no reason to believe they are US Persons. This is especially the case for many entity investors – as we are not permitted to rely on our existing individual investor information and as such must confirm with you whether the entity is controlled by US Persons. Please don’t be offended if we contact you for this reason. WHAT IF I HAVEN’T LIVED IN THE US SINCE I WAS A CHILD? Even if you’ve been living in New Zealand or anywhere else outside of the US for a while, you could still be a US Person if you were born in the US or you have lived or worked there during your lifetime. There are other reasons too, so if you’re unsure, we recommend you check the IRS website or get independent professional advice to confirm your FATCA status. WHEN DID IT COME INTO EFFECT? FATCA came into effect on 1 July 2014. WHY ARE YOU REPORTING MY ACCOUNTS? Under FATCA, we’re required to report accounts held by US Persons (or entity accounts controlled by US Persons) to New Zealand Inland Revenue if the account balances exceed relevant thresholds. If your record contains indicators of you being a US Person, we will need to contact you to confirm your FATCA status, and if we don’t hear from you, we may be required to report your accounts. WHAT INFORMATION WILL BE PASSED ON? For those accounts that we must report, the following investor and account information is sent to New Zealand Inland Revenue (who passes this on to the US IRS): • Name; • Address; • US Taxpayer Identification Number; • Aggregate account balance as at 31 March each year; and • Total relevant income and proceeds generated by accounts for the relevant tax year ending 31 March.
For Entity investors, we also need to report: • Name, address, US Taxpayer Identification Number of each US beneficial owner.
For investors who are Financial Institutions: • Global Intermediary Identification Number (GIIN). WHAT IS AN AGGREGATE ACCOUNT BALANCE? An aggregate account balance is the sum total of the value of units held in your (or your entity’s) name that are in-scope for FATCA. We also refer to this as your "account". WHAT ARE THE THRESHOLDS FOR REPORTING? For all unit holders, there is generally no minimum threshold for reporting. Note that this only applies to those financial accounts that are in-scope for FATCA. WHAT PRODUCTS DOES FATCA IMPACT? All units issued by us and funds managed by us are within the scope of FATCA. WHAT HAPPENS TO MY INFORMATION ONCE IT’S REPORTED TO NEW ZEALAND INLAND REVENUE? Inland Revenue will forward all reported accounts to the US IRS by 30 September of the relevant year. DO I HAVE TO FILE A TAX RETURN IN THE US WHEN I’M LIVING IN NEW ZEALAND? Unfortunately, we can’t give investors tax advice. You will need to get independent professional advice from a lawyer or accountant to determine your US tax obligations or visit the IRS website. DOES THAT MEAN CEE INVESTMENTS WILL PASS MY INFORMATION ONTO NEW ZEALAND INLAND REVENUE OR WHEN IT ASKS? Yes. The Privacy Act allows us to share information with an external agency for a lawful purpose. This might include collecting and sharing information to uphold or enforce the law, or to assist court or tribunal proceedings. CEE Investments must comply with all relevant laws and regulations. This sometimes means we have to disclose investor information to external agencies. However, we will only share investor information when we’re legally obliged to disclose it and in accordance with our Privacy Policy. WHAT CONTROL DO INVESTORS HAVE OVER WHO SEES THEIR PERSONAL INFORMATION? Under the Privacy Act, you are entitled to see and request correction of any personal information about you held by CEE Investments. HOW WILL I KNOW MY DETAILS ARE BEING SHARED AND WHAT IS PROVIDED TO NEW ZEALAND INLAND REVENUE? If you declare that you are confirming a US tax status, then your personal and account details will be provided to New Zealand Inland Revenue. If you declare that the entity is not an Exempt US Entity and/or (if required) controlling persons have confirmed a US tax status, then personal and account details will be provided to New Zealand Inland Revenue. WHY IS MY COMPANY REPORTABLE? If your entity has a US director, then they may be regarded as a controlling person of the company under FATCA. They will need to confirm whether they are a US Person or not and subsequently the company’s accounts may be reportable to New Zealand Inland Revenue. WHAT IF I AM A US CITIZEN THAT IS TRUSTEE OF A TRUST THAT IS AN INVESTOR - I DO NOT OWN THE ASSETS? Trustees are considered controlling persons under FATCA.
The Foreign Account Tax Compliance Act (FATCA) is a US tax law designed to identify US citizens and US tax residents who use offshore financial accounts to evade their US tax responsibilities. FATCA was passed into US law in March 2010 and came into force internationally on 1 July 2014. FATCA requires ‘foreign financial institutions’ (FFIs), which are those financial institutions that are foreign to the US, to identify and report annually on any accounts held by US Persons or foreign entities that have US Persons as beneficial owners. Many financial institutions, including CEE Investments and our related entities, fall under the definition of an FFI under FATCA. To ease the burden of compliance on New Zealand FFIs, the New Zealand Government has negotiated an Inter-Governmental Agreement (IGA) with the US Treasury and US Internal Revenue Service (IRS). The IGA and the FATCA requirements on New Zealand FFIs have been incorporated into New Zealand law by amendments to the Income Tax Act 2007 and the Tax Administration Act 1994. In accordance with this agreement, all FATCA reporting will be done via the New Zealand Inland Revenue. WHY HAS FATCA BEEN BROUGHT ABOUT? As part of global measures to counter tax evasion, all New Zealand financial institutions are required to collect information about US citizens and US tax residents tax residency. Personal and account information is then passed onto New Zealand Inland Revenue, which may then be exchanged with the IRS. WHY ARE NZ FINANCIAL INSTITUTIONS DOING THIS FOR THE US? The New Zealand Government made a policy decision to implement FATCA and came to an agreement with the US (IGA) to implement FATCA in New Zealand. The key reasons for this decision were: to ease the burden of each New Zealand financial institution having to negotiate an individual agreement with the IRS; to provide for specific New Zealand exemptions from reporting; and to align with the majority of New Zealand’s major trading partners who are entering into similar agreements with the US. Therefore, to implement FATCA in New Zealand in accordance with the IGA, the New Zealand Government introduced legislation which requires New Zealand financial institutions to comply with FATCA or face penalties. WHO DOES THIS AFFECT? Investors of any CEE Investments’ Managed Fund who are US Persons, which includes individual and entity investors. As part of this process, we are required to confirm the FATCA status of all potential US Persons (individuals or entities), which is primarily based on information stored in our records about you or your entity. We also have to confirm the FATCA status of certain entities that are controlled by US Persons. Any such identified accounts may be reported to New Zealand Inland Revenue, subject to the relevant minimum thresholds. I’M A NEW ZEALANDER (AND/OR MY ENTITY IS BASED IN NEW ZEALAND), SO WHY DOES THIS AFFECT ME? FATCA requires that we contact investors to confirm their non-US status, even if we have no reason to believe they are US Persons. This is especially the case for many entity investors – as we are not permitted to rely on our existing individual investor information and as such must confirm with you whether the entity is controlled by US Persons. Please don’t be offended if we contact you for this reason. WHAT IF I HAVEN’T LIVED IN THE US SINCE I WAS A CHILD? Even if you’ve been living in New Zealand or anywhere else outside of the US for a while, you could still be a US Person if you were born in the US or you have lived or worked there during your lifetime. There are other reasons too, so if you’re unsure, we recommend you check the IRS website or get independent professional advice to confirm your FATCA status. WHEN DID IT COME INTO EFFECT? FATCA came into effect on 1 July 2014. WHY ARE YOU REPORTING MY ACCOUNTS? Under FATCA, we’re required to report accounts held by US Persons (or entity accounts controlled by US Persons) to New Zealand Inland Revenue if the account balances exceed relevant thresholds. If your record contains indicators of you being a US Person, we will need to contact you to confirm your FATCA status, and if we don’t hear from you, we may be required to report your accounts. WHAT INFORMATION WILL BE PASSED ON? For those accounts that we must report, the following investor and account information is sent to New Zealand Inland Revenue (who passes this on to the US IRS): • Name; • Address; • US Taxpayer Identification Number; • Aggregate account balance as at 31 March each year; and • Total relevant income and proceeds generated by accounts for the relevant tax year ending 31 March.
For Entity investors, we also need to report: • Name, address, US Taxpayer Identification Number of each US beneficial owner.
For investors who are Financial Institutions: • Global Intermediary Identification Number (GIIN). WHAT IS AN AGGREGATE ACCOUNT BALANCE? An aggregate account balance is the sum total of the value of units held in your (or your entity’s) name that are in-scope for FATCA. We also refer to this as your "account". WHAT ARE THE THRESHOLDS FOR REPORTING? For all unit holders, there is generally no minimum threshold for reporting. Note that this only applies to those financial accounts that are in-scope for FATCA. WHAT PRODUCTS DOES FATCA IMPACT? All units issued by us and funds managed by us are within the scope of FATCA. WHAT HAPPENS TO MY INFORMATION ONCE IT’S REPORTED TO NEW ZEALAND INLAND REVENUE? Inland Revenue will forward all reported accounts to the US IRS by 30 September of the relevant year. DO I HAVE TO FILE A TAX RETURN IN THE US WHEN I’M LIVING IN NEW ZEALAND? Unfortunately, we can’t give investors tax advice. You will need to get independent professional advice from a lawyer or accountant to determine your US tax obligations or visit the IRS website. DOES THAT MEAN CEE INVESTMENTS WILL PASS MY INFORMATION ONTO NEW ZEALAND INLAND REVENUE OR WHEN IT ASKS? Yes. The Privacy Act allows us to share information with an external agency for a lawful purpose. This might include collecting and sharing information to uphold or enforce the law, or to assist court or tribunal proceedings. CEE Investments must comply with all relevant laws and regulations. This sometimes means we have to disclose investor information to external agencies. However, we will only share investor information when we’re legally obliged to disclose it and in accordance with our Privacy Policy. WHAT CONTROL DO INVESTORS HAVE OVER WHO SEES THEIR PERSONAL INFORMATION? Under the Privacy Act, you are entitled to see and request correction of any personal information about you held by CEE Investments. HOW WILL I KNOW MY DETAILS ARE BEING SHARED AND WHAT IS PROVIDED TO NEW ZEALAND INLAND REVENUE? If you declare that you are confirming a US tax status, then your personal and account details will be provided to New Zealand Inland Revenue. If you declare that the entity is not an Exempt US Entity and/or (if required) controlling persons have confirmed a US tax status, then personal and account details will be provided to New Zealand Inland Revenue. WHY IS MY COMPANY REPORTABLE? If your entity has a US director, then they may be regarded as a controlling person of the company under FATCA. They will need to confirm whether they are a US Person or not and subsequently the company’s accounts may be reportable to New Zealand Inland Revenue. WHAT IF I AM A US CITIZEN THAT IS TRUSTEE OF A TRUST THAT IS AN INVESTOR - I DO NOT OWN THE ASSETS? Trustees are considered controlling persons under FATCA.