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Global Forum on Transparency and Exchange

of Information for Tax Purposes

Peer Review Report on the Exchange of Information
on Request

New Zealand
2018 (Second Round)
Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes: New Zealand
2018 (Second Round)
PEER REVIEW REPORT ON THE EXCHANGE
OF INFORMATION ON REQUEST

March 2018
(reflecting the legal and regulatory framework
as at January 2018)
This work is published under the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of OECD member countries or those of the
Global Forum on Transparency and Exchange of Information for Tax Purposes.

This document, as well as any data and any map included herein, are without
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area.

Please cite this publication as:
OECD (2018), Global Forum on Transparency and Exchange of Information for Tax Purposes:
New Zealand 2018 (Second Round): Peer Review Report on the Exchange of Information on Request,
OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264291171-en

ISBN 978-92-64-29116-4 (print)
ISBN 978-92-64-29117-1 (PDF)

Series: Global Forum on Transparency and Exchange of Information for Tax Purposes
ISSN 2219-4681 (print)
ISSN 2219-469X (online)

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TABLE OF CONTENTS – 3

Table of contents

Reader’s guide����������������������������������������������������������������������������������������������������������� 5

Abbreviations and acronyms����������������������������������������������������������������������������������� 9

Executive summary��������������������������������������������������������������������������������������������������11

Overview of New Zealand ������������������������������������������������������������������������������������� 19

Part A: Availability of information����������������������������������������������������������������������� 27
A.1. Legal and beneficial ownership and identity information����������������������������� 27
A.2. Accounting records��������������������������������������������������������������������������������������� 71
A.3. Banking information������������������������������������������������������������������������������������� 81

Part B: Access to information������������������������������������������������������������������������������� 87
B.1. Competent authority’s ability to obtain and provide information����������������� 87
B.2. Notification requirements, rights and safeguards����������������������������������������� 95

Part C: Exchanging information��������������������������������������������������������������������������101
C.1. Exchange of information mechanisms����������������������������������������������������������101
C.2. Exchange of information mechanisms with all relevant partners��������������� 109
C.3. Confidentiality����������������������������������������������������������������������������������������������110
C.4. Rights and safeguards of taxpayers and third parties����������������������������������118
C.5. Requesting and providing information in an effective manner������������������� 120
Annex 1: List of in-text recommendations����������������������������������������������������������131
Annex 2: List of Jurisdiction’s EOI Mechanisms ����������������������������������������������133
Annex 3: Methodology for the review������������������������������������������������������������������137
Annex 4: Jurisdiction’s response to the review report ������������������������������������� 140

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Reader’s guide– 5

Reader’s guide

The Global Forum on Transparency and Exchange of Information
for Tax Purposes (the Global Forum) is the multilateral framework within
which work in the area of tax transparency and exchange of information is
carried out by over 145 jurisdictions that participate in the Global Forum on
an equal footing. The Global Forum is charged with the in-depth monitoring
and peer review of the implementation of the international standards of trans-
parency and exchange of information for tax purposes (both on request and
automatic).Sources of the Exchange of Information on Request standards and
Methodology for the peer reviews

Sources of the Exchange of Information on Request standards and
Methodology for the peer reviews

The international standard of exchange of information on request (EOIR)
is primarily reflected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, Article 26 of the OECD
Model Tax Convention on Income and on Capital and its commentary
and Article 26 of the United Nations Model Double Taxation Convention
between Developed and Developing Countries and its commentary. The
EOIR standard provides for exchange on request of information foreseeably
relevant for carrying out the provisions of the applicable instrument or to the
administration or enforcement of the domestic tax laws of a requesting juris-
diction. Fishing expeditions are not authorised but all foreseeably relevant
information must be provided, including ownership, accounting and banking
information.
All Global Forum members, as well as non-members that are relevant
to the Global Forum’s work, are assessed through a peer review process for
their implementation of the EOIR standard as set out in the 2016 Terms of
Reference (ToR), which break down the standard into 10 essential elements
under three categories: (A) availability of ownership, accounting and ban-
king information; (B) access to information by the competent authority; and
(C) exchanging information.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
6 – Reader’s guide

The assessment results in recommendations for improvements where
appropriate and an overall rating of the jurisdiction’s compliance with the
EOIR standard based on:
1. the implementation of the EOIR standard in the legal and regulatory
framework, with each of the element of the standard determined to be
either (i) in place, (ii) in place but certain aspects need improvement,
or (iii) not in place.
2. the implementation of that framework in practice with each element
being rated (i) compliant, (ii) largely compliant, (iii) partially compli-
ant, or (iv) non-compliant.
The response of the assessed jurisdiction to the report is available in an
annex. Reviewed jurisdictions are expected to address any recommendations
made, and progress is monitored by the Global Forum.
A first round of reviews was conducted over 2010-16. The Global Forum
started a second round of reviews in 2016 based on enhanced Terms of
Reference, which notably include new principles agreed in the 2012 update to
Article 26 of the OECD Model Tax Convention and its commentary, the avai-
lability of and access to beneficial ownership information, and completeness
and quality of outgoing EOI requests. Clarifications were also made on a few
other aspects of the pre-existing Terms of Reference (on foreign companies,
record keeping periods, etc.).
Whereas the first round of reviews was generally conducted in two
phases for assessing the legal and regulatory framework (Phase 1) and EOIR
in practice (Phase 2), the second round of reviews combine both assessment
phases into a single review. For the sake of brevity, on those topics where
there has not been any material change in the assessed jurisdictions or in
the requirements of the Terms of Reference since the first round, the second
round review does not repeat the analysis already conducted. Instead, it sum-
marises the conclusions and includes cross-references to the analysis in the
previous report(s). Information on the Methodology used for this review is set
out in Annex 3 to this report.

Consideration of the Financial Action Task Force Evaluations and
Ratings

The Financial Action Task Force (FATF) evaluates jurisdictions for com-
pliance with anti-money laundering and combating terrorist financing (AML/
CFT) standards. Its reviews are based on a jurisdiction’s compliance with
40 different technical recommendations and the effectiveness regarding 11
immediate outcomes, which cover a broad array of money-laundering issues.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Reader’s guide– 7

The definition of beneficial owner included in the 2012 FATF standards
has been incorporated into elements A.1, A.3 and B.1 of the 2016 ToR. The
2016 ToR also recognises that FATF materials can be relevant for carrying
out EOIR assessments to the extent they deal with the definition of beneficial
ownership, as the FATF definition is used in the 2016 ToR (see 2016 ToR,
annex 1, part I.D). It is also noted that the purpose for which the FATF mate-
rials have been produced (combating money-laundering and terrorist finan-
cing) is different from the purpose of the EOIR standard (ensuring effective
exchange of information for tax purposes), and care should be taken to ensure
that assessments under the ToR do not evaluate issues that are outside the
scope of the Global Forum’s mandate.
While on a case-by-case basis an EOIR assessment may take into account
some of the findings made by the FATF, the Global Forum recognises that the
evaluations of the FATF cover issues that are not relevant for the purposes of
ensuring effective exchange of information on beneficial ownership for tax
purposes. In addition, EOIR assessments may find that deficiencies identified
by the FATF do not have an impact on the availability of beneficial ownership
information for tax purposes; for example, because mechanisms other than
those that are relevant for AML/CFT purposes exist within that jurisdiction
to ensure that beneficial ownership information is available for tax purposes.
These differences in the scope of reviews and in the approach used may
result in differing conclusions and ratings.

More information

All reports are published once adopted by the Global Forum. For
more information on the work of the Global Forum on Transparency and
Exchange of Information for Tax Purposes, and for copies of the published
reports, please refer to www.oecd.org/tax/transparency and http://dx.doi.
org/10.1787/2219469x.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Abbreviations and acronyms– 9

Abbreviations and acronyms

General terms

2010 Terms of Terms of Reference related to EOIR, as approved by
Reference the Global Forum in 2010.
2016 Assessment Assessment Criteria Note, as approved by the Global
Criteria Note Forum on 29-30 October 2015.
2016 Methodology 2016 Methodology for peer reviews and non-member
reviews, as approved by the Global Forum on
29-30 October 2015.
2016 Terms of Terms of Reference related to EOIR, as approved by
Reference the Global Forum on 29-30 October 2015.
AEOI Automatic Exchange of Information
AML Anti-Money Laundering
AML/CFT Anti-Money Laundering/Countering the Financing
of Terrorism
CDD Customer Due Diligence
CRS Common Reporting Standard
DTC Double Tax Convention
EOIR Exchange Of Information on Request
FATCA Foreign Account Tax Compliance Act
FATF Financial Action Task Force
Global Forum Global Forum on Transparency and Exchange of
Information for Tax Purposes
Multilateral Convention on Mutual Administrative Assistance in
Convention Tax Matters, as amended in 2010
PRG Peer Review Group of the Global Forum
TIEA Tax Information Exchange Agreement

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
10 – Abbreviations and acronyms

Terms specific to New Zealand

2011 Report 2011 Combined Phase 1 and Phase 2 Peer Review
Report for New Zealand
2018 Report 2018 Peer Review Report for New Zealand
AML/CFT Act The Anti-Money Laundering and Countering Financing
of Terrorism Act 2009
AML/CFT The Department of Internal Affairs, the Reserve Bank
supervisors of New Zealand and the Financial Markets Authority
Commissioner Commissioner of Inland Revenue
DIA Department of Internal Affairs
EOI Team The exchange of information team (part of International
Revenue Strategy at Inland Revenue)
FMA Financial Markets Authority
GST Act Goods and Services Tax Act 1985
ITA Income Tax Act 2007
LINZ Land Information New Zealand
LP Act Limited Partnerships Act 2008
LTC Look-Through Company
MBIE Ministry of Business, Innovation and Employment
MFAT Ministry of Foreign Affairs and Trade
NZX New Zealand Stock Exchange Ltd
RBNZ Reserve Bank of New Zealand
Registrar Registrar of Companies (unless the context dictates
otherwise)
TAA Tax Administration Act 1994
TCSP Trust and company service provider

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Executive summary– 11

Executive summary

1. This report analyses the implementation of the EOIR standard by
New Zealand in respect of the legal implementation of the EOIR standard as
well as its operation in practice in relation to EOI requests processed during
the period of 1 January 2014-31 December 2016 against the 2016 Terms of
Reference. This report concludes that New Zealand continues to be rated
Compliant overall. In 2011 the Global Forum evaluated New Zealand in a
similar review against the 2010 Terms of Reference (the 2011 Report) and
concluded that New Zealand was already Compliant overall.
2. The following table shows New Zealand’s results in this report as
compared to those in the 2011 Report:

Comparison of ratings for First Round Report (2011) and
Second Round Report (2018)

First Round Combined Second Round
Element Report (2011) EOIR Report (2018)
A.1 Availability of ownership and identity information LC LC
A.2 Availability of accounting information C C
A.3 Availability of banking information C C
B.1 Access to information C C
B.2 Rights and Safeguards C C
C.1 EOIR Mechanisms C C
C.2 Network of EOIR Mechanisms C C
C.3 Confidentiality C C
C.4 Rights and Safeguards C C
C.5 Quality and timeliness of requests and responses C C
OVERALL RATING C C

C = Compliant; LC = Largely Compliant; PC = Partially Compliant; NC = Non-Compliant

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
12 – Executive summary

Progress made since previous review

3. The 2011 Report found that New Zealand had a very strong perfor-
mance in exchange of information and very broad powers to obtain all types of
information maintained by any person under its jurisdiction. Recommendations
were made in the 2011 Report only in respect of two essential elements. Under
element A.1, availability of ownership and identity information, New Zealand
received recommendations concerning nominee shareholders and the effective-
ness of enforcement provisions where all directors were non-residents. Under
element A.2, New Zealand was recommended to require that accounting
records and underlying documentation be maintained for liquidated companies
for at least five years. New Zealand has addressed the two recommendations
on element A.1 but is still in the process of addressing the issue identified
in respect of the availability of records for liquidated companies under ele-
ment A.2. The present review finds that while the same issue exists for limited
partnerships, its impact in practice has been limited.
4. Since the 2011 Report, New Zealand continues to perform well in all
aspects of transparency and exchange of information. The organisation and
procedures remain complete and coherent and peers have been very satis-
fied with the quality and timeliness of the information provided under New
Zealand’s EOI mechanisms.
5. Over the new review period, New Zealand received a total of
194 requests from more than ten exchange of information partners. Australia
was substantively New Zealand’s largest partner for EOIR, both inbound
and outbound, due to their close geographical location and economic ties.
However, a number of jurisdictions reported that the requests they sent to
New Zealand were, albeit limited in number, very important in terms of the
amount of tax expected to be assessed. Information requested from New
Zealand included information on tax avoidance schemes, information on
employment, residency status, travel movements, property ownership and
general tax information. While New Zealand does not have an offshore finan-
cial centre, New Zealand non-resident settlor trusts and corporate entities
have been used by foreign residents.
6. In respect of the new aspects of the 2016 ToR, particularly with
respect to the availability of beneficial ownership information, New Zealand
aimed at addressing most offshore tax evasion risks by imposing specific tax
reporting obligations on entities and arrangements that are owned and con-
trolled overseas. This review finds that New Zealand’s legal framework and
practice in relation to beneficial ownership largely meet the standard and a
small gap was identified in terms of coverage of legal entities. New disclosure
requirements were introduced for trusts with non-resident settlors, which
came as a response to tax abuse and anti-money laundering risks identified.

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Executive summary– 13

7. The 2016 ToR now evaluates the quality of requests made and in this
regard New Zealand has a comprehensive system to ensure that its requests
meet the requirements of its EOI mechanisms. Peers appreciated the quality
of New Zealand’s requests, the positive working relationship and the feedback
received concerning the use of the information.

Key recommendation(s)

8. This report recommends that New Zealand ensures that beneficial
ownership information is available for all legal entities and partnerships, in
particular the ones that do not fall within the obligations established for off-
shore persons as defined by the law.
9. Also, since a number of legal obligations are new or have not been
fully implemented, such as (i) the AML obligations for lawyers, accountants
and trust and company service providers to identify their customers when
providing services such as trustee, nominee and other corporate services;
(ii) the tax reporting requirements imposed on offshore persons and non-
resident settlor trusts; this report recommends that New Zealand ensures that
they are adequately implemented in practice.

Overall rating

10. New Zealand has achieved a rating of Compliant in relation to all ele-
ments, with the exception of Element A.1, which is rated Largely Compliant.
New Zealand’s overall rating is Compliant based on a global consideration of
New Zealand’s compliance with the individual elements.
11. This report was approved at the PRG meeting on 26 February-1 March
2018 and was adopted by the Global Forum on 30 March 2018. A follow up
report on the steps undertaken by New Zealand to address the recommenda-
tions made in this report should be provided to the PRG no later than 30 June
2019 and thereafter in accordance with the procedure set out under the 2016
Methodology.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
14 – Executive summary

Summary of determinations, ratings and recommendations

Determination Factors underlying recommendations Recommendations
Jurisdictions should ensure that ownership and identity information, including information on
legal and beneficial owners, for all relevant entities and arrangements is available to their
competent authorities (ToR A.1)
The legal and Offshore persons must, as of New Zealand should
regulatory 1 October 2015, inform upon tax ensure that beneficial
framework is in registration (i) a fully functional New ownership information
place, but certain Zealand bank account or (ii) the details in accordance with the
aspects of the legal of a New Zealand AML reporting international standard is
implementation of entity that has conducted customer available for all relevant
the element need due diligence on them. Moreover, entities and partnerships.
improvement. any person who already has a tax
number and becomes an offshore
person must inform a current bank
account to the Commissioner. Finally,
income tax return forms applicable
to both offshore and non-offshore
persons (except partnerships and
look through companies) contain a
field for a current bank account to be
provided, but the law does not contain
explicit requirements for all persons to
maintain a current bank account. New
Zealand estimates that the universe
of entities which do not have a bank
account with a New Zealand registered
bank is small.
EOIR rating: AML obligations requiring a number New Zealand
Largely Compliant of professionals such as lawyers, should monitor the
accountants and trust and company implementation of
service providers to identify their new legal provisions
customers when providing services to ensure that relevant
such as trustee, nominee and other professionals maintain
corporate services were recently beneficial ownership
enacted and their implementation could information as required
not yet be assessed. under the standard.

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Executive summary– 15

Determination Factors underlying recommendations Recommendations
EOIR rating: Tax reporting requirements supporting New Zealand should
Largely Compliant the availability of beneficial ownership monitor the compliance
(continued) information are relatively new (as of with the recently
October 2015, for offshore persons and introduced legal
February 2017, for non-resident settlor requirements to ensure
trusts). No programme is currently in that beneficial ownership
place to ensure that offshore persons information is being
that were registered before the new maintained in practice.
requirements came into force comply
with them.
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
and arrangements (ToR A.2)
The legal and Accounting records and underlying New Zealand should
regulatory framework documentation for a liquidated require that accounting
is in place. company and a liquidated limited records and underlying
partnership are not required to be documentation be
maintained for a period of 5 years or maintained for liquidated
more. companies and liquidated
limited partnerships for at
least 5 years.
EOIR rating:
Compliant
Banking information and beneficial ownership information should be available for all account-
holders (ToR A.3)
The legal and
regulatory framework
is in place.
EOIR rating:
Compliant
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information) (ToR B.1)
The legal and
regulatory framework
is in place.
EOIR rating:
Compliant

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16 – Executive summary

Determination Factors underlying recommendations Recommendations
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information (ToR B.2)
The legal and
regulatory framework
is in place.
EOIR rating:
Compliant
Exchange of information mechanisms should provide for effective exchange of information
(ToR C.1)
The legal and
regulatory framework
is in place.
EOIR rating:
Compliant
The jurisdictions’ network of information exchange mechanisms should cover all relevant
partners (ToR C.2)
The legal and
regulatory
framework is in
place.
EOIR rating:
Compliant
The jurisdictions’ mechanisms for exchange of information should have adequate provisions
to ensure the confidentiality of information received (ToR C.3)
The legal and
regulatory
framework is in
place.
EOIR rating:
Compliant
The exchange of information mechanisms should respect the rights and safeguards of
taxpayers and third parties (ToR C.4)
The legal and
regulatory
framework is in
place.
EOIR rating:
Compliant

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Executive summary– 17

Determination Factors underlying recommendations Recommendations
The jurisdiction should request and provide information under its network of agreements in
an effective manner (ToR C.5)
Legal and This element involves issues of practice. Accordingly no
regulatory determination on the legal and regulatory framework has
framework been made.
determination
EOIR rating:
Compliant

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Overview of New Zealand– 19

Overview of New Zealand

12. This overview provides some basic information about New Zealand
that serves as context for understanding the analysis in the main body of the
report. This is not intended to be a comprehensive overview of New Zealand’s
legal, commercial or regulatory systems.

Legal system

13. New Zealand is a constitutional monarchy with a parliamentary
democracy. The head of state is Queen Elizabeth II. The Queen’s personal
representative in New Zealand is the Governor-General. The system of gov-
ernment provides for a separation of powers between the legislature (New
Zealand Parliament, also called the House of Representatives), the execu-
tive and the judiciary. By convention, the Governor-General is bound, with
rare exception, to act on the advice of ministers who have the support of the
House of Representatives.
14. New Zealand has no separately represented sub-national entities such
as provinces, states or territories, apart from local government (i.e. city and
district councils, and regional councils). A local government has the power
to make bylaws affecting its area, but may be overruled by the judiciary if it
exceeds those powers (Local Government Act 2002 and Bylaws Act 1910).
This is in contrast to central government: when the legislature passes legisla-
tion it may not be struck down by the judiciary.
15. As a former British colony, New Zealand inherited the English
system of common law.
16. The court structure consists of (in order of precedence) the Supreme
Court of New Zealand, the New Zealand Court of Appeal, the High Court
and over 60 regional district courts. There are also a number of specialised
courts and tribunals. The Taxation Review Authority (established under the
Taxation Review Authorities Act 1994) is a specialised tribunal for hearing
tax matters. Appeals from these courts and tribunals generally go to the High
Court. Decisions of higher courts on issues of law are generally binding on
lower courts. Legal counsel and judges frequently refer to analogous case law

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
20 – Overview of New Zealand

from the United Kingdom and other Commonwealth jurisdictions; such case
law is not binding precedent, but can be highly persuasive.
17. Treaties cannot be directly applicable or self-executing. Where
a proposed treaty action will create obligations for New Zealand that are
inconsistent with existing domestic law, domestic law must authorise the
Government to enter into that treaty obligation. Section BH 1 of the Income
Tax Act 2007 (“ITA”) provides this authority in relation to EOI agreements.
18. Tax treaties, including EOI agreements, are given effect by Orders in
Council (made under subsection BH 1(4) of the ITA). The treaty provisions
are included in full in a schedule appended to the Order in Council, and are
thereby directly incorporated into (and form part of) New Zealand law. Once
given effect, the tax treaty provisions generally override the Inland Revenue
Acts (defined at Schedule 1 of the Tax Administration Act 1994, and essen-
tially encompassing all New Zealand tax legislation), the Official Information
Act 1982, and the Privacy Act 1993.
19. All New Zealand legislation is available online at www.legislation.
govt.nz/.

Tax system

20. Under section 22 of the Constitution Act 1986, taxes may only be
levied by or under an act of Parliament. The general administration of taxes
in New Zealand is governed by the Tax Administration Act 1994 (“TAA”).
However, taxes are imposed by means of separate, dedicated acts. New
Zealand taxes include an income tax, a goods and services tax (“GST”),
excise taxes and certain duties (such as customs duties and gaming duty). The
various acts that comprise the tax legislation administered by IR are referred
to as “the IR Acts”, and these are listed in a schedule appended to the TAA. 1
21. Broadly, the statutory tax collection powers and functions are con-
ferred in the first instance on the Commissioner of Inland Revenue (the
“Commissioner”), who may then delegate those powers and functions to officers
of IR. IR reports to the Minister of Revenue. However, the Commissioner has a
role that is statutorily independent of the Minister.
22. All income tax is imposed under the ITA. The rules for determining
taxable income are generally the same for both individuals and companies –
residents are taxed on their worldwide income, and non-residents are taxable

1. The Local Government (Rating) Act 2002 gives local governments the power to
levy “rates” on land. Local body rates in New Zealand are generally thought of
as a charge for services rather than a tax. The definition of “tax” at section 3 of
the TAA does not include rates.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Overview of New Zealand– 21

only on their New Zealand sourced income. The tax year for both individu-
als and companies is 1 April to 31 March, but non-standard balance dates/
accounting periods can be requested (for example, for a subsidiary to match
the balance date of its parent). The company tax rate is 28%, and has been
since the income year commencing on 1 April 2011. Individuals are taxed
at progressive rates which, from 1 April 2011, range from 10.5% on the first
dollar earned to 33%, which is the top marginal rate. Tax for salary and wage
earners is generally deducted at source under a system referred to as “PAYE”
or “Pay As You Earn”. All taxpayers (whether individual or non-individual)
are allocated a unique taxpayer identification number, known as an “IRD
number”.
23. The tax base is broad, but New Zealand generally does not tax capital
gains (with some exceptions, such as capital gains from loan arrangements,
from trading in “capital” items or from sale of real property within two years
of purchase). There are a number of concessionary rules that pertain to par-
ticular activities – such as mining, farming, forestry and films. There are also
some concessionary rules for venture capital investment into New Zealand.
An individual who becomes resident for tax purposes, having previously been
non-resident for at least 10 years, will enjoy a four year exemption from taxa-
tion of most categories of foreign-sourced income (provided they satisfy the
“transitional resident” criteria). There are no allowances for individuals, but
some tax credits are allowed – such as for foreign taxes paid.
24. Companies are resident in New Zealand for tax purposes if they
are incorporated or have their head office or centre of management in New
Zealand. They are also resident if control of the company by its directors is
exercised in New Zealand. Tax is paid at the company level, and again at
the shareholder level when profits are distributed, except for the so-called
Look-Through Companies (see paragraph below). A full imputation system
operates to prevent double taxation by providing that a credit for the company
tax paid is allowed against the shareholder’s tax liability.
25. A Look-Through Company (LTC) is a tax structure for New Zealand
companies with limited liability, which allows the company in question to
transfer its income and expenditure to its shareholders directly. The share-
holders of an LTC are liable for income tax on the LTC’s profits, while being
able to offset the LTC’s losses against their other income. Under the general
company law, an LTC retains its corporate obligations and benefits, such as
limited liability. New Zealand advises that LTCs were not intended to be used
as conduit vehicles for international investment by non-residents whereby
funds are invested through New Zealand rather than into New Zealand. To
restrict the use of LTCs in a conduit manner, as of 1 April 2017 the foreign
income that can be earned by a LTC that is controlled by foreign LTC hold-
ers is now limited to the greater of NZD 10 000 (EUR 6 000) and 20% of

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
22 – Overview of New Zealand

the LTC’s gross income in the relevant income year. A definition of “foreign
LTC holder” provides the rule for determining how the foreign ownership of
LTCs is tested when applying the new foreign income restriction. It is defined
as “ownership interest held more than 50% by non-residents”. These changes
to the eligibility criteria were made in the Taxation (Annual Rates for 2016-
17, Closely Held Companies, and Remedial Matters) Act 2017 and apply for
income years beginning on or after 1 April 2017. There must be five or fewer
look-through counted owners (look-through counted owners who are relatives
or co-trustees are treated as one person). Look-through counted owners must
be either natural persons or trustees (including corporate trustees) (s. YA 1 of
the Income Tax Act 2007). As at 19 February 2018, there were 55 760 com-
panies with a LTC status in New Zealand.
26. General partnerships are treated as transparent for tax purposes
(section HG 2 of the ITA). Therefore, tax obligations and liabilities generally
fall on the partners rather than the partnership. Limited partnerships (other
than listed limited partnerships) are legal entities but are taxed as general
partnerships. A “listed limited partnership” (that is, a limited partnership
that is listed on a recognised stock exchange) is treated as a company for tax
purposes.
27. New Zealand tax law features rules such as controlled foreign com-
pany rules and a consolidation regime for companies. New Zealand’s tax
legislation also includes both a general anti-avoidance rule and a number
of specific anti-avoidance regimes (such as thin capitalisation and transfer
pricing rules).

Financial services sector

28. New Zealand’s financial markets are small and highly concentrated.
New Zealand advised that, generally, the size of the local consumer base
does not support a large number of market participants. Approximately 75%
of money invested in financial system assets is held by New Zealand’s four
major banks. New Zealand has one major stock exchange, operated by the
New Zealand Stock Exchange (NZX). The top 10 equity stocks traded on
NZX’s main board make up 51% of the “S&P/NZX50” index. The most liquid
stocks are large infrastructure businesses such as airports, electricity genera-
tors and construction and telecommunications companies.
29. A large number of New Zealand companies are dual listed on the
Australian Securities Exchange (ASX), including many of the S&P NZX50
top 10 businesses. One reason for this is that many Australian funds cannot
invest in New Zealand entities under their investment mandate unless they
are also listed on the ASX.

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Overview of New Zealand– 23

30. The NZX Main Board (covering equity securities) has a market capi-
talisation of NZD 117.2 billion 2 (EUR 70.3 billion), which is approximately
45% of GDP (NZD 260 billion, as at Q4 2016). New Zealand advises that the
reasons for the low levels of capitalisation to GDP ratio include the follow-
ing factors: (i) retail investors have a low appetite to directly invest in stocks
and shares, as a consequence of relatively higher saving/investment in bank
deposits, unlisted equity (their own businesses) and residential housing;
(ii) local markets are small and therefore it is difficult for many businesses to
scale up to a size whereby listing becomes an attractive proposition; (iii) even
when businesses list, the NZX market exhibits low levels of liquidity outside
of the major stocks (which deters many businesses from listing); (iv) many
larger New Zealand companies are subsidiaries of overseas entities.
31. There are 24 registered banks in New Zealand. As well as being
regulated by the RBNZ for their banking activities, banks are also regulated
by the FMA for other financial markets activities in which they participate.
32. The table below indicates the value of assets and funds under man-
agement by financial institutions in New Zealand as at 31 December 2016.

Assets/funds under management per type of financial institution

Institution Assets/funds under management % of GDP
Registered banks NZD 510.6 billion 196.4%
(EUR 306.4 billion)
Managed funds NZD 106.8 billion 41.1%
(incl. KiwiSaver and superannuation schemes)* (EUR 64.1 billion)
Non-bank lending institutions NZD 13.3 billion 5.1%
(EUR 8 billion)

*A KiwiSaver scheme is a specialised form of a superannuation scheme governed by the
provisions of the KiwiSaver Act 2006. A superannuation scheme is a scheme which is
not a KiwiSaver scheme, but is established principally to provide retirement benefits, and
is registered under the FMC Act. Section 129 of the Act requires that a superannuation
scheme be a trust (among other registration requirements). Superannuation trusts are trusts
formed for the purpose of managing retirement benefits for employees.

33. The table below provides indicators in relation to New Zealand’s
investment market.

2. As at 29 August 2017, 1 New Zealand dollar (NZD) equalled EUR 0.60.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
24 – Overview of New Zealand

New Zealand Investment market: Market value

Market Market value % of GDP
NZX NZD 117.2 billion 45.1%
(EUR 70.3 billion)
NZDX (Debt Market) NZD 26.4 billion 10.2%
(EUR 15.8 billion)
Government bonds NZD 81 billion 31.2%
(EUR 48.6 billion)
Kauri bonds* NZD 29 billion 11.2%
(EUR 17.4 billion)

*A Kauri bond is a bond denominated in New Zealand dollars that is issued by a foreign
(i.e. non New Zealand) issuer.

34. There are approximately 112 registered trust and company service
providers, 3 12 800 registered lawyers 4 and 5 500 5 tax agents (including tax
advisors) registered in New Zealand.

FATF Evaluation
35. New Zealand is a member of both the Financial Action Task Force
(FATF) and the Asia-Pacific Group on Money Laundering (APG). The FATF
and the APG last published a Mutual Evaluation Report (MER) for New
Zealand in 2009. 6 The 2009 MER placed New Zealand in a regular follow-up
process. New Zealand first reported back to the FATF in October 2011 (first
follow-up report). It was directed to report back in October 2013 on the basis
that relevant legislation had been promulgated but would not come fully into
force until 30 June 2013, and further initiatives being undertaken were not
expected to come to fruition until the end of 2012/early 2013.
36. In October 2013, the FATF approved the 2nd Follow-up Report of
New Zealand 7 recognising the significant progress it made in addressing the
deficiencies identified in the 2009 report and considered New Zealand could

3. This refers to the number of TCSPs registered with the Department of Internal
Affairs as at November 2017.
4. Source: New Zealand Law Society, as at March 2016.
5. Source: Inland Revenue, External Provider Relations, as at November 2017.
6. www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20New%20
Zealand%20ful.pdf.
7. www.fatf-gafi.org/media/fatf/documents/reports/mer/FUR-New-Zealand-2013.
pdf.

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Overview of New Zealand– 25

be removed from the regular follow-up process. The 2013 follow-up report
considered that New Zealand’s level of compliance with Recommendation 5
(Customer Due Diligence) was essentially equivalent to a level of Largely
Compliant. The level of compliance with Recommendations 33 (Transparency
and beneficial ownership of legal persons) and 34 (Transparency and ben-
eficial ownership of legal arrangements) were not yet equivalent to Largely
Compliant, because at the time, it could not be determined that information
on the ultimate beneficial owners of legal entities and arrangements were
accessible and/or up-to-date in all cases. It was also noted in that report
that New Zealand was in the process of passing additional legislation to
strengthen company registration requirements and requirements regarding
companies’ directors.
37. New Zealand’s next FATF evaluation under the 4th Round of Mutual
Evaluations is scheduled to commence in 2020.

Recent developments

38. In August 2017, the Anti-Money Laundering and Countering Financing
of Terrorism Amendment Act 2017 (AML/CFT Amendment Act 2017) was
passed. Among other measures, the Act extends the application of customer
due diligence (CDD) obligations to law firms, conveyancing practitioners or
firms, accounting practices, and real estate agents providing certain services.
The Act also expands the circumstances where a trust and company service
provider will be required to conduct CDD.
39. New disclosure requirements for trusts with non-resident settlors
and a New Zealand resident trustee as per amendments to the TAA and the
ITA came into force on 21 February 2017. New Zealand advised that these
requirements came as a response to a government inquiry into the adequacy
of the previous rules. This inquiry was established to consider whether the
previous disclosure rules were fit for purpose, in light of the release of the
Panama Papers. Media reports at the time alleged that New Zealand foreign
trusts were used extensively in structures that were established to hide assets
and evade or avoid tax. The inquiry did not find any clear evidence of misuse.
However, to better align to the world of increasing transparency the inquiry’s
conclusion was that the existing disclosure rules were not fit for purpose, and
to address the risks identified, authorities took measures to enhance oversight
of these arrangements. Details are provided under section A.1.4 of this report.
40. In 2014, the Companies Act was amended (Companies Amendment
Act 2014 (2014 No. 46)) to include a requirement for a company to have one
or more directors, of which at least one must live in New Zealand or live in
an enforcement country (currently only Australia) and be a director of a com-
pany that is registered (except as the equivalent of an overseas company) in

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26 – Overview of New Zealand

that enforcement country. A similar residency requirement was also added to
the Limited Partnerships Act 2008 (LP Act).
41. A requirement that accounting records and underlying documenta-
tion be maintained for liquidated companies and limited partnerships for at
least six years is being included as part of the Insolvency Practitioners Bill. It
is expected that this Bill will be enacted by June 2019.
42. A Trusts Bill is under consideration by New Zealand’s Parliament.
Generally, the Bill aims to clarify core trust concepts, such as what constitutes
a trust and the duties of a trustee. Some of the proposed changes include: (i) a
description of the key features of a trust; (ii) mandatory and default trustee
duties (based on established legal principles); (iii) requirements for managing
trust information and disclosing it to beneficiaries, (iv) flexible trustee powers,
allowing trustees to manage and invest trust property in the most appropriate
way: (v) provisions to support cost-effective establishment and administration
of trusts; (vi) options for removing and appointing trustees without the need
of a court. The Trusts Bill was introduced in Parliament on 1 August 2017 and
had its first reading on 5 December 2017. The Bill is currently before a select
Committee (the Justice Committee) which has invited public submissions.
Public submissions are due by 5 March 2018.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Part A: Availability of information– 27

Part A: Availability of information

43. Sections A.1, A.2 and A.3 evaluate the availability of ownership and
identity information for relevant entities and arrangements, the availability of
accounting information and the availability of bank information.

A.1. Legal and beneficial ownership and identity information
Jurisdictions should ensure that legal and beneficial ownership and identity information
for all relevant entities and arrangements is available to their competent authorities.

44. The 2011 Report concluded that Element A.1 was in place, but in
need of improvement and a rating Largely Compliant was assigned. A Phase 1
recommendation was made for New Zealand to ensure that ownership and
identity information was available for owners of companies where shares were
held by nominees. In addition, it was found that, while enforcement provi-
sions existed to ensure the accuracy of information provided to the Registrar
of Companies, they might not necessarily be effective for companies with
non-resident directors. A Phase 2 recommendation was added in this respect.
45. New Zealand has taken legislative action to address the two recom-
mendations referenced above.
46. The first recommendation on nominees has been adequately
addressed by the enactment of the AML/CFT Amendment Act 2017 in
August 2017. This act imposes customer due diligence obligations on law
firms, conveyancing practitioners or firms, accounting practices, real estate
agents and trust and company service providers (TCSPs), who, in the ordi-
nary course of business, act as, or arrange for a person to act as, a nominee
shareholder in relation to legal persons or legal arrangements. The CDD
obligations for persons acting as nominees will only start to apply as of:
1 July 2018 (for trust and company service providers, law firms, conveyanc-
ing practitioners and firms); 1 October 2018 (for accounting practices) and
1 January 2019 (for real estate agents). As such, a recommendation is added
to this report for New Zealand to monitor the implementation of the obliga-
tions established on persons acting as nominee shareholders to ensure that
they maintain information identifying the persons they act for.

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28 – Part A: Availability of information

47. It is noted that prior to the enactment of AML/CFT Amendment
Act 2017, TCSPs were already subject to CDD obligations as of 30 June 2013
when they arranged for a person to act as a nominee shareholder (but not
when they act as nominees themselves). The TCSPs covered by the original
AML/CFT Act were subject to AML supervision, which encompassed out-
reach activities, monitoring and on-site and off-site inspections.
48. With regard to the Phase 2 recommendation to tighten the require-
ments around company directors to ensure the enforceability of legal
obligations, this recommendation has been fully addressed by New Zealand.
The Companies Amendment Act 2014 requires that a New Zealand company
have at least one director that lives in New Zealand or an enforcement coun-
try (currently only Australia) and be a director of a company that is registered
in that enforcement country. This requirement became effective as of 1 May
2015 for newly incorporated companies and 28 October 2015 for existing
companies. All directors need to be natural persons. A similar residency
requirement was also added to the LP Act in 2015.
49. No other issues were identified in the 2011 Report with respect to
the availability of ownership and identity information in practice. During
the period of 2007-09, New Zealand received a number of requests each year
relating to the ownership of New Zealand companies and was able to fully
respond to those requests. That was confirmed by peer input.
50. Since the last review, New Zealand has also strengthened the disclo-
sure requirements applicable to trusts which have a New Zealand resident
trustee and a non-resident settlor, following an internal inquiry on the use of
such trusts. New Zealand is recommended to monitor the application of these
new requirements in practice.
51. In respect of those new aspects of the 2016 ToR that were not
evaluated in the 2011 Report, particularly with respect to the availabil-
ity of beneficial ownership information, New Zealand mainly relies on a
combination of requirements under the AML framework and tax reporting
obligations, in particular the ones established for “offshore persons” and the
disclosure rules for non-resident settlor trusts mentioned above. Legal enti-
ties and arrangements are considered to be “offshore persons” if they are
(a) incorporated outside New Zealand (b) incorporated in New Zealand and
are 25% or more owned or controlled, directly or indirectly, as defined in
the law, by (other) offshore persons. New Zealand believes that most entities
about which it will receive EOI requests will fall within the definition of off-
shore persons. As of 1 October 2015, offshore persons must inform upon tax
registration (i) a fully functional New Zealand bank account or (ii) the details
of a New Zealand AML reporting entity that has conducted customer due
diligence on them (accompanied by a declaration of the AML reporting entity
attesting that CDD has been conducted). Moreover, any person who already

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Part A: Availability of information– 29

has a tax number (as at 1 October 2015) and becomes an offshore person
must inform a current bank account to the Commissioner. After registration,
companies, trusts and partners of partnerships must file tax returns which
contain a field for a current bank account number to be provided. Returns
are generally pre-populated including information already provided by the
taxpayer. As such a taxpayer would be required to confirm if a bank account
indicated in the pre-populated return remains current or if a new account
should be indicated. It is possible to file a return without indicating a bank
account number if a taxpayer does not have one.
52. Legal entities, trusts and partners of partnerships that are not off-
shore persons are not legally required to provide bank account details or
details of an AML obligated person upon tax registration. The tax registra-
tion form contains a field for a bank account number to be provided but there
is no language implying that this is a mandatory field (the relevant field can
be read as a suggestion to expedite refunds). Legal entities are, nonetheless,
requested to include information on their current bank accounts (if they have
one) in their annual income tax return, as there is a field in the return for
that end and returns must be delivered complete. During the review period,
approximately 86% to 88% of companies and 93% to 95% of partnerships
complied with their income tax filing requirements. Of those, approximately
90% of companies and 78% of partnerships have informed the number of a
New Zealand bank account in their return in the years covered by the review
period (2014-16).
53. Moreover, there are a number of situations that contribute to the avail-
ability of beneficial ownership information in New Zealand. GST returns also
include a field for GST taxpayers to include bank account details (although
there is no explicit language included indicating that a bank account number
is mandatory). Also, in relation to legal entities which have their full legal
ownership chain within New Zealand, the information on the chain is required
to be available on the basis of company law filing requirements, in addition
to information on directors. Finally, many legal entities in New Zealand will
have a relationship with an AML obligated person (such as a bank or profes-
sionals – lawyers, accountants and TCSPs providing certain services). As a
result, the materiality of the legal gap concerning the availability of beneficial
ownership information for entities in New Zealand is considered to be small at
the present stage, and it will be even smaller when the provisions of the AML/
CFT Amendment Act 2017 come into force later in 2018.
54. During the current peer review period, New Zealand received
194 requests, of which approximately 14% related to beneficial ownership
information for relevant entities and arrangements, in particular trusts. New
Zealand advised that it receives very few EOI requests that seek only legal
ownership details, presumably because legal ownership information for
companies is publicly available on New Zealand’s Companies Office website

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30 – Part A: Availability of information

based on companies’ annual returns. Input from five EOI partners noted that
beneficial ownership information in relation to trusts or corporations has
been requested to and provided by New Zealand. No issues were raised by
peers concerning the availability of this type of information in New Zealand.
New Zealand reports that it has never been unable to respond to a request for
information due to the fact that information was not available in accordance
with the law.
55. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Underlying factor Recommendation
Deficiencies identified Offshore persons must, as New Zealand should ensure
in the implementation of 1 October 2015, inform that beneficial ownership
of the legal and upon tax registration (i) a fully information in accordance
regulatory framework functional New Zealand bank with the international standard
account or (ii) the details of a is available for all relevant
New Zealand AML reporting entities and partnerships.
entity that has conducted
customer due diligence
on them. Moreover, any
person who already has a
tax number and becomes an
offshore person must inform
a current bank account to the
Commissioner. Finally, income
tax return forms applicable
to both offshore and non-
offshore persons (except
partnerships and look through
companies) contain a field for
a current bank account to be
provided, but the law does not
contain explicit requirements
for all persons to maintain a
current bank account. New
Zealand estimates that the
universe of entities which do
not have a bank account with a
New Zealand registered bank
is small.
Determination: The element is in place, but certain aspects of the legal
implementation of the element need improvement

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Part A: Availability of information– 31

Practical implementation of the standard
Underlying factor Recommendation
Deficiencies identified
in the implementation AML obligations requiring a New Zealand should monitor
of EOIR in practice number of professionals such the implementation of new
as lawyers, accountants and legal provisions to ensure
trust and company service that relevant professionals
providers to identify their maintain beneficial ownership
customers when providing information as required under
services such as trustee, the standard.
nominee and other corporate
services were recently enacted
and their implementation could
not yet be assessed.
Tax reporting requirements New Zealand should monitor
supporting the availability the compliance with the
of beneficial ownership recently introduced legal
information are relatively requirements to ensure
new (as of October 2015, for that beneficial ownership
offshore persons and February information is being
2017, for non-resident settlor maintained in practice.
trusts). No specific programme
is currently in place to ensure
that offshore persons that
were registered before the new
requirements came into force
comply with them.
Rating: Largely Compliant

A.1.1. Availability of legal and beneficial ownership information for
companies
56. The 2011 Report analysed the legal framework with regard to company
formation in New Zealand (see 2011 Report, paras. 53-56). The Companies
Act 1993 (Companies Act) was and continues to be the main piece of legisla-
tion regarding company formation. Amendments to the Companies Act that are
relevant to element A.1 were made in 2014.
57. The Companies Act provides that a company must have: a name; one
of more shares; one or more shareholders, limited or unlimited liability for
the obligations of the company; and one or more directors. A number of cat-
egories of companies of a specialised nature exist: these are generally subject
to the Companies Act, but also receive special legislative treatment in other

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32 – Overview of the different types of companies in New Zealand

enactments (as listed in the table below). Unlimited liability companies exist
but are rare in New Zealand. They are typically used for purposes such as
nominee companies, where the persons depositing securities with the com-
pany wish to have certainty as to the liability of the company’s shareholders.
58. The table below identifies the different types of companies in New
Zealand, their governing laws, and the numbers at the end of the last review
and at the end of the present review period.

Overview of the different types of companies in New Zealand

Numbers as at Numbers as reported
31 December in the 2011 Report
Type of company Governing law 2016 (as at 30 June 2009)
Limited liability companies Companies Act 576 950 520 777
Unlimited liability companies Companies Act 392 N/A
Co-operative companies Companies Act 118 N/A
Co-operative Companies Act 1996
Other specific acts per type of co-operative
Insurance companies Companies Act 94 N/A
Insurance (Prudential Supervision) Act 2010
State-owned enterprises Companies Act 15 N/A
State Owned Enterprises Act 1986 and
associated orders and exemption notices
Mixed-ownership enterprises Companies Act 4 N/A
Crown entity companies Companies Act 6 N/A
Crown Entities Act 2004
Overseas companies* Companies Act 1 931 1 221

* An “overseas company” is defined in the Companies Act as a body corporate that is incorporated
outside New Zealand. An overseas company that commences to carry on business in New Zealand must
apply for registration with the Companies Office.

Legal Ownership and Identity Information Requirements
59. As described in the 2011 Report in section A.1 (see 2011 Report,
paras. 57-95), legal ownership and identity requirements for companies are
mainly found in New Zealand’s company law. This continues to be the case.
While New Zealand’s AML/CFT laws will apply in some circumstances to
ensure the availability of legal ownership information, those rules are more
applicable to the maintenance of beneficial ownership information and are

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Overview of the different types of companies in New Zealand– 33

described in more detail in that section, further below. The following table 8
shows a summary of the legal requirements to maintain legal ownership
information in respect of companies:

Legislation regulating legal ownership information of companies

Type (number) Company law Tax law AML law
New Zealand companies All Some Some
Foreign companies Some Some Some

Company law requirements
60. Information on the full name and address of each shareholder of a
New Zealand company; the number of shares to be issued to each share-
holder; and registered office of the ultimate holding company must be
provided to the Companies Office upon incorporation (Companies Act sec-
tion 12 and Schedule 1 of the Companies Act Regulations 1994 (Companies
Act Regulations)). Annual returns must be filed by New Zealand companies
with the Companies Office (s. 214) and must include, if the company is
not listed, the names and addresses of shareholders and details of shares
(Fourth Schedule to the Companies Act, and Schedule 1 of the Companies
Act Regulations). New Zealand companies are also obliged to notify the
Companies Office within 20 days of changes to information registered, such
as changes of a company’s ultimate holding company (Companies Act s. 94B)
and changes of the details of directors (Companies Act s. 159). Ownership
information is maintained indefinitely by the Registrar (even for companies
that have been removed or have been liquidated) as a matter of practice and
this is also in line with the Public Register Act 2005, which requires (i) public
registrars to maintain records in accordance with prudent business practice
and (ii) any disposal of records to be done only through the Chief Archivist
(ss. 17 and 18). Records are as rule required to be transferred to the Chief
Archivist after 25 years of existence (s. 21, Public Register Act 2005).
61. Failure to advise a change of details to the Registrar is an offence
(s. 159(3)), as is failure to file an annual return (s. 214(10)). On convic-
tion, a director in either case can be liable to a fine of up to NZD 10 000
(EUR 6 000) (s. 374). In addition, the Registrar may remove (strike off) from

8. The table shows each type of entity and whether the various rules applicable
require availability of information for “all” such entities, “some” or “none”.
“All” in this context means that every entity of this type created is required to
maintain ownership information for all its owners and that there are sanctions
and appropriate retention periods. “Some” in this context means that an entity
will be required to maintain information if certain conditions are met.

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34 – Overview of the different types of companies in New Zealand

the registry a company which has failed to make an annual return (s. 371
and 318). The Registrar also has the authority to compel a person to comply
with the Act, with discretion to remove a company from the register for a
number of reasons, including failing to comply with the essential elements
under section 10 (s. 317 and s. 318). Where the annual return is delivered late,
a late filing penalty can be applied (Companies Act 1993 Regulations 1994
(s. 6 and Schedule 2)). Section 377 of the Companies Act also provides that
any person who, with respect to a document required by or for the purpose of
that Act, (a) makes, or authorises the making of, a statement in it that is false
or misleading in a material particular knowing it to be false or misleading;
or b) omits, or authorises the omission from it of any matter knowing that
the omission makes the document false or misleading in a material particu-
lar commits an offense and is liable on conviction to a fine not exceeding
NZD 200 000 or imprisonment for a term not exceeding five years (s. 373(4)).
62. New Zealand companies, including publicly traded companies, must
maintain a share register (s. 87). Entries in the share register are prima facie
evidence as to the legal title to shares (s. 89). The share register must record,
for all current shareholders and those that have been shareholders within the
last 10 years, an alphabetical list of the: (i) name(s); (ii) last known address;
and (iii) number of shares of each class held (s. 87(2)).
63. Failure to correctly maintain a share register is an offence (s. 87(4))
and, on conviction, a company can be liable to a fine of up to NZD 10 000
(EUR 6 000) (s. 373) and a director can also be liable to a fine of up to
NZD 10 000 (EUR 6 000) (s. 374). Section 190 of the Companies Act requires
the board of directors of a company to ensure that adequate measures exist
to prevent the records being falsified and detect any falsification of them.
Failure to comply with section 190 is an offence and, if convicted, a director
can be liable to a fine of up to NZD 10 000 (EUR 6 000) (s. 374).

Tax law requirements
64. In general, all taxpayers are required to furnish a return of income
(sections 33 and 43A of the TAA). 9 However, there is no requirement to
identify shareholders on the return, except in certain cases (such as when
remuneration has been paid by the company with no PAYE deducted).
Various sanctions apply for non-compliance. In particular, failure to furnish a
return of income is an offence against the TAA and, on conviction, can result
in a fine of up to NZD 4 000 (EUR 2 400) for a first offence, NZD 8 000
(EUR 4 800) for a second offence, and NZD 12 000 (EUR 7 200) for a third
or successive offence (s. 143).

9. A non-active company is not required to furnish a return of income, but must file
a Non-active Company Declaration.

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Overview of the different types of companies in New Zealand– 35

Foreign companies
65. As noted in the overview to this report, a foreign incorporated com-
pany will be resident in New Zealand for tax purposes if its head office or
centre of management is in New Zealand, or if control of the company by its
directors is exercised in New Zealand (Section YD 2 of the ITA). Such com-
panies are not expressly required to keep a share register in New Zealand or
to provide shareholder information to the Companies Registrar. However, as
noted in the 2011 Report, these foreign companies would need to maintain
information about their shareholders to meet a number of tax obligations. In
particular, shareholding information must be maintained in order to assess:
whether income tax losses can be carried forward to future income years;
whether income tax losses can be offset to other group companies; whether
imputation credits can be carried forward and distributed; whether thin
capitalisation interest denials are required; and whether other entities are
associates. New Zealand’s IR reported having a comprehensive monitoring
programme for foreign-owned companies/multinational companies andthat
shareholder information is routinely checked by means of field audits or desk
reviews, to ensure foreign companies are complying with their New Zealand
tax obligations.
66. Moreover, since October 2015, companies which are incorporated
outside New Zealand but are resident in New Zealand for tax purposes (as
well as companies that are not resident but have income tax liability in New
Zealand) must inform in their tax registration form (i) a fully functional
New Zealand bank account or (ii) the name of a New Zealand AML report-
ing entity that has conducted customer due diligence on them (more details
on this requirement are provided in the subsection on beneficial owner-
ship). For foreign companies that already had a tax registration number as
at 1 October 2015, they are required to inform a current bank account to the
Commissioner. Foreign companies that are resident in New Zealand for tax
purposes must also file tax returns which contain a field for a current bank
account number to be provided (if they have one). In the process of identify-
ing the beneficial owner of a customer, AML reporting entities must identify
who owns more than 25% of the customer. AML reporting entities will be
required to understand the ownership structure of the customer, subject to a
risk-based approach. Documentation identifying the legal owners of custom-
ers is likely to be retained in this process.
67. The 2011 Report included an in-text recommendation for New
Zealand to continue to monitor the availability of ownership and identity
information for foreign incorporated but tax resident companies, in particular
any exchange of information requests that cannot be satisfied because the
information is not maintained (para. 83 of the 2011 Report).

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36 – Overview of the different types of companies in New Zealand

68. New Zealand reports that it has continued to monitor the availabil-
ity of ownership and identity information for foreign incorporated but tax
resident companies. In the course of New Zealand’s EOI programme, New
Zealand informed that it has never been unable to satisfy an information
request because information was not maintained and made available as and
when required.

Nominee Shareholders
69. Nominee shareholders are permitted in New Zealand. The 2011
Report noted that nominees were not required to maintain ownership and
identity information in respect of all persons for whom they act as legal
owners. That report recommended that an obligation should be established
for all nominees to maintain relevant ownership information where they act
as the legal owners on behalf of any other person.
70. This report finds that this recommendation has been addressed by
New Zealand. The Anti-Money Laundering and Countering Financing of
Terrorism Amendment Act 2017 imposes customer due diligence obligations
on law firms, conveyancing practitioners or firms, accounting practices, real
estate agents and trust and company service providers (TCSPs), who, in the
ordinary course of business, act as, or arrange for a person to act as, nominee
shareholder in relation to legal persons or legal arrangements. The CDD obli-
gations for persons acting as nominees will start to apply as of: 1 July 2018
(for trust and company service providers, law firms, conveyancing practition-
ers and firms); 1 October 2018 (for accounting practices) and 1 January 2019
(for real estate agents).
71. The 2017 amendments broadly cover professionals that would be
performing nominee services by way of business. The CDD obligations do
not apply to persons acting as nominees not by way of business. New Zealand
is recommended to monitor the impact of this on EOI in practice on an on-
going basis.
72. In addition to the AML framework, the Companies Act provides
(pursuant to the Companies Amendment Act 2014) that the Registrar may
require the disclosure details of a person who has a control interest in a
share (s. 365F Companies Act). The powers attributed to the Registrar do not
explicitly require a nominee to maintain ownership and identity information
concerning the nominator. A nominee shareholder would be required to dis-
close the control interests of the nominator only to the extent to which it is
known to the nominee. As such, information on the identity of the nominator
may not be available in all instances (see in-text recommendation added in
the paragraph above).

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Overview of the different types of companies in New Zealand– 37

Legal ownership information – Enforcement measures and oversight
73. The 2011 Report found that the penalties for failure to maintain or
report information were proportional and dissuasive, that there was a strong
culture of compliance and that there was active oversight of the obligations to
maintain ownership information of companies carried out by the Companies
Registrar and IR.
74. One issue was, however, identified. While enforcement provisions
existed to ensure the accuracy of information provided to the Companies
Office, they might not necessarily be effective for companies with non-res-
ident directors. The 2011 Report further noted that New Zealand authorities
had recently become aware of evidence that some individuals and groups
(particularly offshore interests) had been misusing the New Zealand company
incorporation process. This highlighted the need for measures to be intro-
duced in the company registration process to protect against the use of New
Zealand incorporated companies in criminal activity.
75. This review finds that the issue has been adequately addressed by
New Zealand. The Companies Amendment Act 2014 requires that a New
Zealand company have at least one director that lives in New Zealand or an
enforcement country (currently Australia) and be a director of a company
that is registered in that enforcement country (s. 10(d) of the Companies Act).
This requirement became effective as of 1 May 2015 for newly incorporated
companies and 28 October 2015 for existing companies. All directors need to
be natural persons. During the 2015-16 financial year, the Companies Office
assisted companies and directors to comply with the resident director require-
ment through a programme of education and contact. From December 2015,
companies that did not have a director who satisfies the new director require-
ments have been progressively removed from the register (s. 318(1)(aaa) of
the Companies Act). There were 1 684 companies removed on this ground
in 2015 and 104 in 2016. The Companies Office reports that it is continually
assessing the register to ensure compliance.
76. Moreover, at the time of incorporation the Registrar performs checks
to ensure that proposed directors are not disqualified on the basis of having
been bankrupt or convicted of dishonesty offences. In addition, section 365 of
the Companies Act confers on the Registrar wide powers of inspection over
the company’s records, and section 190 requires the board of directors of a
company to ensure that adequate measures exist to: (i) prevent the company’s
records from being falsified; and (ii) detect any falsification of them.

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38 – Overview of the different types of companies in New Zealand

Oversight by the Registrar
77. The Companies Office assists companies to comply with their
obligations through education, reminders and compliance initiatives. An
example of a proactive compliance programme is in relation to the filing of
annual returns. The Companies Office e-mail and text message reminders in
advance of deadlines, as well as overdue reminders. Should the annual return
still be outstanding following these reminders, a “Notice of Intention to
Remove” letter is sent to the company four weeks after the overdue reminder.
This allows a 20 working day objection to the removal. Approximately
6 000 companies per month are publicly advertised resulting in the removal
of approximately 2 000 companies. The compliance rate with annual filings
averages 96%. The following table sets out the number of removals from the
Companies Office Register during the review period.

Company removals

2014 2015 2016
New Zealand companies 39 197 39 995 51 031
Overseas companies 281 274 140

78. A document verification process is also in place whereby, based on a
risk-based selection, certain new company incorporations, director appoint-
ments, change of director appointments and changes of address are subject to
a verification system. The verification system is not focused on the verifica-
tion of ownership information filed or maintained by companies. It focuses
primarily on gaining certified proof of identity and proof of address, prin-
cipally for overseas directors. If the required documentation is not received
then proceedings for removal of the company from the register are initiated.
79. On-site visits to registered company office addresses are also used
to help ensure compliance with the Companies Act, particularly in the keep-
ing of company books and records, including a share register. The addresses
visited are generally those that a high volume of companies have provided as
their registered office; these will often be “virtual offices” or the addresses
of company registration services. In the 2016/2017 year to date, 54 site
visits were conducted. If companies at those addresses are found to be non-
compliant with the record-keeping requirements, the Registrar is also able to
commence proceedings to remove the company from the register.
80. The Registrar advises that where non-compliance with legislative
obligations is serious, prolific, has caused substantial financial loss, or there
are persistent failures, it will consider further enforcement measures. As an
initial step, this may include formal warnings but could extend to the issuing
of infringement notices, the suspension or cancellation of the registration

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Overview of the different types of companies in New Zealand– 39

of an entity, or ultimately prosecution. The Registrar may also take further
action regarding directors, including prohibiting a person from acting as
director or manager of a registered company for a period not exceeding
10 years (s. 385 of the Companies Act). A table summarising the relevant con-
victions over the review period is included below. There were range of fines
and penalties imposed by the court across the convictions listed below. They
ranged from home detention, community work, imprisonment and fines, or a
combination of these penalties.

Details of convictions that were obtained by the Companies Office

2014 2015 2016
Section 189 of the Companies Act – Failing to keep company documents and records required 1
under the Act
Section 261 of the Companies Act – Not delivering to the liquidator such books, records, or 2 2
documents of the company in that person’s possession or under that person’s control as
the liquidator requires
Section 273(1)(b) of the Companies Act – Concealing property from the liquidator 1
Section 274(1)(b) of the Companies Act – Not delivering property to the liquidator 1
Section 377 of the Companies Act – Making a false statement to the Registrar 4 22 2
Section 378(a) of the Companies Act – Fraudulently taking or applying property of the 2
company for one’s own benefit
Section 380(1) of the Companies Act – Carrying on a business with intent to defraud creditors 2
Section 382 of the Companies Act – Being a director of a company while being prohibited from 2 1
doing so
Section 385(9) of the Companies Act – Managing a company whilst prohibited by the Registrar 1 5
from doing so
Section 386A of the Companies Act – Taking part in the management of a phoenix company* 1 1
Section 386A of the Companies Act – Acting as the director of a phoenix company 1
Section 220 of the Crimes Act 1961 (representative charges) – Theft by a person in a special 2
relationship
Section 228(b) of the Crimes Act – Using a document for pecuniary advantage 1
Section 256 of the Crimes Act – Forgery 1
Section 257(1)(b) of the Crimes Act – Using a forged document 5
* Section 386B of the Companies Act defines “phoenix company” as follows: “a ‘phoenix company’ means,
in relation to a failed company, a company that, at any time before, or within 5 years after, the commencement
of the liquidation of the failed company, is known by a name that is also (a) a pre-liquidation name of the failed
company; or (b) a similar name”.

Oversight by IR
81. New Zealand does not specifically rely on the filing requirements
with IR for the availability of legal ownership and identity information. IR
has a comprehensive compliance programme which includes a strong focus

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40 – Overview of the different types of companies in New Zealand

on taxpayer compliance with their registration and filing obligations. Legal
ownership and identity information may be checked in the context of tax
investigations. As the oversight by IR is of particular relevance for beneficial
ownership as well as Element A.2, a detailed description of the oversight
programme is provided under those sections, further below.

Availability of legal ownership information in practice
82. New Zealand advised that it receives very few EOI requests that seek
only legal ownership details, presumably because legal ownership informa-
tion for companies is publicly available on the Companies Office’s website.
One EOI partner advises having requested and received legal ownership
information from New Zealand. No issues regarding the availability of this
information were identified in practice.

Availability of beneficial ownership information
83. Under the 2016 ToR, a new requirement of the EOIR standard is that
beneficial ownership information on companies should be available. In New
Zealand, this aspect of the standard is mainly met through a combination
of tax law and AML/CFT law requirements. While IR does not specifically
hold the beneficial ownership information on its internal systems, as part
of the application and annual tax return filing processes, it gathers in many
instances information which links IRD numbers (and hence taxpayers) to a
particular reporting entity for AML/CFT purposes (most commonly a regis-
tered bank), as further detailed below. Legal entities and arrangements which
are considered to be “offshore persons” must inform upon tax registration
(i) a fully functional New Zealand bank account or (ii) the details of a New
Zealand AML reporting entity that has conducted customer due diligence on
them. Moreover, any person who already has a tax number (as at 1 October
2015) and becomes an offshore person must inform a current bank account
to the Commissioner. After registration, offshore companies, similar to
other companies (except LTCs to which the same tax filing obligations as
partnerships apply), must file tax returns which contain a field for a current
bank account number to be provided. Returns are generally pre-populated
including information already provided by the taxpayer. As such a taxpayer
would be required to confirm if a bank account indicated in the pre-populated
return remains current or if a new account should be indicated. It is possi-
ble to file a return without indicating a bank account number if a taxpayer
does not have one. During the review period, approximately 86% to 88%
of all companies (including offshore and non-offshore) complied with their
income tax filing requirements. Of those, approximately 90% of companies
informed the number of a New Zealand bank account in their return.AML
reporting entities are required to hold beneficial ownership information on

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Overview of the different types of companies in New Zealand– 41

their customers, and their processes for obtaining, verifying and maintaining
this information is supervised by their respective AML supervisor. Moreover,
in relation to legal entities which have their full ownership chain within New
Zealand, information on the chain as well as directors is required to be avail-
able on the basis of company law filing requirements. The following table 10
shows a summary of the legal requirements to maintain beneficial ownership
information in respect of companies.

Legislation regulating beneficial ownership information of companies

Type (number) Company law Tax law AML law
New Zealand companies Some Some Some
Foreign companies with a relationship None Some All
with an AML-obligated person

Tax law
84. Since 1 October 2015, tax law provides for special tax registration
requirements for offshore persons. The following companies are considered
to be offshore persons (ss. 24BA and 3 TAA and s. 7(2) of the Overseas
Investment Act 2005):
• a company that is incorporated outside New Zealand or is a 25% or
more subsidiary of a company incorporated outside New Zealand, or
• a company (A) if an overseas person or persons (which can be indi-
viduals or non-individuals, as defined in s. 7(2) of the Overseas
Investment Act 2005) have:
i. 25% or more of any class of A’s securities, or
ii. the power to control the composition of 25% or more of A’s gov-
erning body, or
iii. the right to exercise or control the exercise of 25% or more of the
voting power at a meeting of A.
85. Companies that fall within those categories must inform upon registra-
tion (i) a fully functional New Zealand bank account; or (ii) information on a

10. The table shows each type of entity and whether the various rules applicable
require availability of information for “all” such entities, “some” or “none”.
“All” in this context means that every entity of this type created is required to
maintain ownership information for all its owners and that there are sanctions
and appropriate retention periods. “Some” in this context means that an entity
will be required to maintain information if certain conditions are met.

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New Zealand AML reporting entity that has conducted customer due diligence
on them (s. 24BA TAA and form IR744). Persons that are already registered for
tax purposes (as at 1 October 2015) and become an offshore person are required
to provide a current bank account to the Commissioner (s. 24BA(2) TAA).
Moreover, tax returns also require that a company provide their bank account
number (if they have one) or correct their bank account number on the form
(where a person completes their tax returns electronically, their bank account
number is generally pre-populated on the electronic form (IR4)).
86. In relation to LTCs, their shareholders must be either natural persons
or trustees (including corporate trustees). Pursuant to the Income Tax Act,
there must be five or fewer look-through counted owners (section YA 1). The
look-through counted owner test determines the number of look-through
owners a company has for the purposes of the LTC rules. The test does this
by identifying the relationships between individual shareholders, and by
looking through trustee shareholders to the natural person beneficiaries of
the trust, or through a shareholding LTC to the ultimate natural person or
trustee shareholders. 11 In this process, the chain of ownership is disclosed.
The LTC’s income tax return (IR7 form) does not collect information on bank
accounts. However, the shareholders must file separate returns of income
which include their IRD number (along with details of attributed income/
losses), as well as a field to provide a bank account. If a LTC or one of its
shareholders is an offshore person, this person would be required to inform
a current bank account to the Commissioner. New Zealand advises that the
overall purpose of the LTCs rules is to allow shareholders to access start-up
losses and restrictions have been put in place on their use by non-residents
which means they are mainly confined to small business/investment activities
carried on in New Zealand.
87. Companies that are resident in New Zealand for tax purposes but do
not fall within the definition of an offshore person are not legally required to
provide information on a New Zealand bank account or an AML reporting
entity upon registration. However, those companies are required to file tax
registration forms which contain a field for a bank account number to be pro-
vided but there is no language in those forms providing that providing bank

11. If a company is the beneficiary of a trust and has received income from the
LTC as beneficiary income in that income year, or in any of the three preceding
income years, the company itself is not seen as a look-through counted owner.
Instead, every natural person who has a voting interest (or market value interest,
if a market value circumstance exists) in relation to that company is counted as a
separate look-through counted owner. This test will no longer apply by the 2020-
21 income year because after the 2016-17 income year when a trustee owner
makes a distribution to a beneficiary which is a company the LTC no longer
meets the eligibility criteria.

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Overview of the different types of companies in New Zealand– 43

account details is mandatory (the provision could be as a suggestion to expe-
dite refunds). Legal entities are, nonetheless, requested to include information
on their current bank accounts (if they have one) in their annual income tax
return, as there is a field in the return for that end and tax returns must be
complete (ss. 4A, 15B and 35 TAA). A combination of requirements estab-
lished in the TAA (s. 3(1)), Income Tax Act (s. YA1) and the Reserve Bank
of New Zealand Act 1989 would ultimately require that the bank account to
be indicated (if any) is a bank account with a New Zealand registered bank.
The income tax return form (IR4) also provides that the bank account to be
indicated in the form should be a bank account of the company.
88. For companies that are GST taxpayers, bank account information
may also be collected in the GST return (although there is no express legal
obligation to provide it).
89. Failure to furnish an annual tax return is an offence and may result
in civil and/or criminal penalties (for civil penalties, see: s. 33, and s. 106
TAA (default assessments) and s. 139A TAA (late filing penalties) and for
criminal penalties, see: s. 33 and s. 143, s 143A, and s. 143B TAA)). In rela-
tion to criminal penalties a person can be liable, on conviction, to a fine not
exceeding NZD 50 000 (EUR 30 000) and/or up to five years imprisonment
depending on the level of culpability.

Company law
90. In relation to New Zealand incorporated companies owned by New
Zealand entities, arrangements or individuals, full information on the legal
ownership chain is required to be available with the Companies Office or
other information holders in New Zealand, in accordance with the law. Also
New Zealand will have information on the directors of all New Zealand
incorporated companies.
91. Moreover, pursuant to the Companies Amendment Act 2014, the
Registrar may require a company or limited partnership to provide information
on persons that have control interests in the company or limited partnership
(s. 365F(1)(c) Companies Act). The company and partnership only need to
make such a disclosure where this information is known to the company or
limited partnership (s. 365F(2)). Moreover, the Registrar may require a person
to disclose the control interests that the specified person has in shares of a
company and of the circumstances that give rise to those interests (s. 365F(1)
(a)). A person has a control interest in a share if the person (a) is a shareholder;
or (b) is a beneficial owner of the share; or (c) has the power to exercise, or to
control the exercise of, a right to vote attached to the share; or (d) has the power
to acquire or dispose of, or to control the acquisition or disposal of, the share
(s. 365B). The Registrar may request this information only when requested to
do so by a domestic or international government agency for law enforcement

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44 – Overview of the different types of companies in New Zealand

purposes. This includes the detection, investigation and prosecution of tax
offences, money laundering and financing of terrorism. The application of this
legal requirement in the context of EOI is likely to be limited.

AML/CFT law requirements
92. Reporting entities under the AML/CFT Act are required to conduct
customer due diligence (CDD) on a customer, any beneficial owner of a cus-
tomer and any person acting on behalf of a customer (section 11). Varying
levels of CDD apply based on the risk of the business relationship (ss. 14
(standard), 18 (simplified) and 22 (enhanced)). Additionally reporting entities
are required to conduct on-going CDD in accordance with section 31. This
information must be maintained for a period of not less than five years after
the end of the relevant business relationship (s. 50).

Reporting Entity under the AML/CFT Act
93. Reporting entities include financial institutions as well as law firms,
conveyancing practitioners, incorporated conveyancing firms, accounting
practices, real estate agents, and trust and company service providers, who, in
the ordinary course of business, carry out one or more of the following activi-
ties: (i) acting as a formation agent of legal persons or legal arrangements;
(ii) acting as, or arranging for a person to act as, a nominee director or nomi-
nee shareholder or trustee in relation to legal persons or legal arrangements;
(iii) providing a registered office or a business address, a correspondence
address, or an administrative address for a company, or a partnership, or for
any other legal person or arrangement, unless the office or address is provided
solely as an ancillary service to the provision of other services (being services
that do not constitute an listed activity under this section); (iv) managing client
funds (other than sums paid as fees for professional services), accounts, securi-
ties, or other assets; (v) providing real estate agency work; and (vi) engaging in
or giving instructions on behalf of a customer to another person with respect
to certain transactions listed in the law (AML/CFT Act, s. 5).

Definition of beneficial owner under the AML/CFT Act
94. A beneficial owner is defined in section 5 of the AML/CFT Act as the
individual who “has effective control of a customer or person on whose behalf
a transaction is conducted; or owns a prescribed threshold of the customer or
person on whose behalf a transaction is conducted”. The definition of benefi-
cial owner is supplemented by the Anti-Money Laundering and Countering
Financing of Terrorism (Definitions) Regulations 2011 (AML Regulations)
wherein the prescribed threshold is “more than 25%” (s. 5). The beneficial
owner definition contains all elements of the international standard.

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95. To assist AML reporting entities in meeting the CDD requirements,
in December 2012 the AML/CFT supervisors released non-binding guidance
on beneficial ownership (the Beneficial Ownership Guideline or Guideline)
which builds on the statutory requirements 12. The guideline is provided for
information only and cannot be relied on as evidence of complying with
the requirements of the Act. New Zealand advises that the guidance is sup-
ported by engagement by supervisors with reporting entities (for instance, on
a one on one basis) to help them understand the various scenarios in which
beneficial ownership is exercised (see more details on the section on AML
Supervision further in this report).
96. Pursuant to the Beneficial Ownership Guideline, each time a report-
ing entity applies the test of beneficial ownership to a customer, the reporting
entity must apply three elements, being:
• identifying who owns more than 25% of the customer
• identifying who has effective control of the customer
• identifying the person on whose behalf a transaction is completed.
97. A beneficial owner is an individual who satisfies any one element, or
a combination of the three elements. Accordingly, more than one individual
can be identified as the beneficial owner of a customer. While the identifica-
tion requirements to identify the beneficial owner do not apply as cascading
measures, they apply as cumulative requirements. As such, they can be con-
sidered as in line with the standard in this aspect.
98. The Guideline gives further guidance on identifying (i) that the own-
ership threshold is met; (ii) effective control; and (iii) identifying the person
on whose behalf a transaction is conducted.
99. With regard to ownership threshold, the Guideline notes that:
You will need to understand the ownership structure of your cus-
tomer. You should consider that it is possible for ownership to be
split into parcels of 25 percent or less, but relationships between
the parties may give an individual aggregated ownership of the
customer that amounts to more than 25 percent.

12. The Beneficial Ownership Guideline is available online at: https://www.dia.govt.
nz.
In April 2013, this guideline was supplemented with “fact sheets” containing
specific details on how to conduct CDD, including beneficial ownership, for
clubs and societies, companies, co-operatives, sole traders and partnerships, and
trusts as well as on how to determine whether a person is acting on behalf of a
customer.

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46 – Overview of the different types of companies in New Zealand

100. With regard to effective control, the Guideline provides that:
Effective control of a customer is part of the beneficial own-
ership definition. An example is an individual who exercises
responsibility for senior management decisions, or similar, of the
customer.
Understanding the management and governance structure of your
customer will assist you to establish those persons with effective
control of the customer. In deciding the effective controller(s)
in relation to a customer who is not an individual, you should
consider:
- those individuals with the ability to control the customer and/or
dismiss or appoint those in senior management positions;
- those individuals holding more than 25 percent of the customer’s
voting rights;
- those individuals (for example, the CEO) who hold senior man-
agement positions;
- trustees (where applicable).
101. The Guideline does not elaborate on circumstances where control
could be exercised by other means such as personal connections to the
persons that possess ownership or by participating in the financing of the
enterprise, the possibility that shareholders could exercise control together
with other shareholders (majority interest approach) or that the company
has issued convertible stock or has any outstanding debt that is convertible
into voting equity (see FATF Guidance on Transparency and Beneficial
Ownership (October 2014), para. 33).
102. Regarding the third part of the definition of beneficial owner – i.e. a
person on whose behalf a transaction is conducted, the Guidelines note that
“this may be the individual who is an underlying client of your customer.
This concept is important when considering the relationship between manag-
ing intermediaries and their underlying clients”. This could potentially cover
nominee shareholders, although this is not made explicit in the Guideline.
103. New Zealand should ensure that there is sufficient effective guidance
to assist reporting entities in interpreting the obligations under the AML/CFT
Act to identify the beneficial owners of customers in line with the standard.

New Zealand’s risk-based approach
104. The AML/CFT Act provides that, before conducting customer due
diligence or establishing an AML/CFT programme, reporting entities must
first undertake an assessment of the risk of money laundering and the financing

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Overview of the different types of companies in New Zealand– 47

of terrorism that it may reasonably expect to face in the course of its business
(s. 58). The Act provides further guidance on the factors to be considered when
assessing risk. The risk assessment must be in writing and must identify the
risks faced by the reporting entity in the course of its business; and describe
how the reporting entity will ensure that the assessment remains current.
105. If a reporting entity is unable to conduct CDD, it must not establish
a business relationship with the customer (or it must terminate any existing
business relationship with the customer) and should consider whether to make
a suspicious activity report (s. 37 AML/CFT Act).
106. Except in relation to simplified due diligence (see below), identify-
ing the beneficial owner of a customer is an obligation that must be satisfied,
regardless of the level of risk associated with that customer (Beneficial
Ownership Guideline). However, when deciding what reasonable steps to take
to satisfy themselves that the customer’s identity and information is correct,
reporting entities may vary their approach depending on the risk assessment
of the customer (Beneficial Ownership Guideline).
107. Section 13 of the AML Act allows some flexibility in terms of the
documentation to verify the beneficial owner of a customer. It provides that
verification of identity must be done on the basis of (i) documents, data, or
information issued by a reliable and independent source; or (ii) any other basis
applying to a specified situation, customer, product, service, business relation-
ship, or transaction prescribed by regulations. New Zealand advised that there
is enough detail and flexibility in the AML Act and there was no need to issue
regulations to cover specific situations, customers, products etc. As the Act
does refer to the prescription of regulations, it remains unclear the circum-
stances where AML reporting entities can rely on other sources than a reliable
and independent source. New Zealand is recommended to clarify this aspect.
108. The Beneficial Ownership Guideline further notes that “It is good
practice to keep detailed records of all decisions and retain customer due
diligence and relevant records in a readily auditable manner. It is important
for you to record the rationale behind any decision that you make. Anyone
reading the notes years later should be able to understand why you made a
risk-based decision”.

Standard CDD under the AML/CFT Act
109. Standard CDD involves the collection of identity information of
the customer, any beneficial owner of the customer or any person acting on
behalf of the customer. It also includes the verification of that information.
For beneficial owners or persons acting on behalf, this verification is accord-
ing to the level of risk involved. New Zealand assesses that standard CDD is
likely to apply to most New Zealand customers.

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110. Under section 15 of the AML/CFT Act, a reporting entity must
obtain the following information on those persons identified in section 11
(customer, beneficial owner of customer or person acting on behalf of cus-
tomer): (i) the person’s full name; (ii) the person’s date of birth; (iii) the
person’s relationship to the customer, if the person is not a customer; (iv) the
person’s address or registered office; (v) the person’s company identifier or
registration number; and (vi) any other information prescribed by regulations.
111. Under section 16, a reporting entity must take reasonable steps to
satisfy itself that the information obtained under section 15 is correct and
according to the risk involved, must take reasonable steps to verify any ben-
eficial owner’s identity so that the reporting entity is satisfied that it knows
who the beneficial ownership is.

Enhanced CDD under the AML/CFT Act
112. Enhanced CDD includes standard CDD (s. 15) and requires that a
reporting entity obtain information relating to the source of the funds or
wealth of the customer (s. 23). In most circumstances, where enhanced CDD
must be undertaken, the reporting entity must complete verification before
establishing a business relationship or conducting an occasional transaction.
A reporting entity must conduct enhanced CDD where (s. 22), inter alia, the
reporting entity establishes a business relationship with a customer that is:
(i) a trust or another vehicle for holding personal assets; (ii) a non-resident
customer from a country that has insufficient anti-money laundering and
countering financing of terrorism systems or measures in place; (iii) a com-
pany with nominee shareholders or shares in bearer form.

Simplified CDD under the AML/CFT Act
113. Simplified CDD can be conducted in instances such as when the
customer is a company that is (i) listed on a stock exchange that has suffi-
cient disclosure requirements and (ii) located in a country that has sufficient
AML/CFT systems in place (s. 18). The AML/CFT Act expressly provides
that, in the instances where simplified due diligence are permitted, there is
no requirement for the identification or verification of identity of a beneficial
owner of a customer. This is in line with the international standard. 13

13. Section 6 of FATF’s Interpretative Note to Recommendation 10 (Customer Due
Diligence) provides that “Where the customer or the owner of the controlling
interest is a company listed on a stock exchange and subject to disclosure require-
ments (either by stock exchange rules or through law or enforceable means) which
impose requirements to ensure adequate transparency of beneficial ownership, or

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Overview of the different types of companies in New Zealand– 49

On-going CDD under the AML/CFT Act
114. Section 31 of the AML/CFT Act requires reporting entities to conduct
on-going CDD on their customers to ensure that the business relationship and
the transactions relating to that business relationship are consistent with the
reporting entity’s knowledge about the customer, and the customer’s business
and risk profile. Section 31 also provides that the on-going CDD obligation
requires regular review of any customer information obtained under the CDD
provisions of the AML/CFT Act or, in relation to an existing customer, any
customer information the reporting entity holds about the customer.
115. There is no further guidance in the AML/CFT Act or in regula-
tions on how often CDD should be updated. One of the AML supervisors,
the Reserve Bank of New Zealand (RBNZ) suggested in its December 2016
Newsletter that CDD be updated every 36-60 months for low-risk customers,
18-48 months for medium risk customers and 12-18 months for high risk cus-
tomers. The RBNZ Newsletter also provides that, using a risk based approach,
the entities reporting to the RBNZ would be expected to have conducted at
least one on-going CDD review on their high and medium risk customers after
three years of the AML/CFT Act being in place (i.e. by 30 June 2016). New
Zealand should ensure that sufficient guidance is issued for all reporting enti-
ties on what the obligation to perform on-going CDD entails.

Entry into force of CDD obligations in New Zealand
116. For financial institutions and certain company and trust service pro-
viders the obligations provided in the AML/CFT Act entered into force on
30 June 2013. CDD in accordance with the Act is conducted for new custom-
ers as of such date and existing customers in accordance with the risk-based
approach described below.
117. Section 14 (1) of the AML/CFT Act provides that a reporting entity
must conduct customer due diligence on (a) a customer; (b) any beneficial
owner of a customer; and (c) any person acting on behalf of a customer. This
general obligation is understood to apply to both new and existing custom-
ers. Section 11(4) specifies that a reporting entity is not required to obtain or
verify any documents, data or information previously obtained and verified
for the purpose of carrying out CDD unless there are reasonable grounds for
the reporting entity to doubt the adequacy or veracity of the documents, data
or information previously obtained (s. 11(4)). When in doubt, the reporting
entity must renew the CDD and identity verification. In addition, stand-
ard CDD should be undertaken in relation to an existing customer where,

is a majority-owned subsidiary of such a company, it is not necessary to identify
and verify the identity of any shareholder or beneficial owner of such companies.”

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according to the level of risk involved: (i) there has been a material change
in the nature and purpose of the business relationship, and (ii) the reporting
entity considers that it has insufficient information about the customer (s. 14).
Reporting entities are required to regularly review the CDD information that
they hold in accordance with the on-going due diligence requirements in s. 31
(see on-going CDD above). If the AML obligated entity has not collected
beneficial ownership at the time of client on boarding (or collected informa-
tion under a lower standard as per requirements under previous legislation),
there is no explicit obligations for the AML obligated entity to collect ben-
eficial ownership information as defined under the AML Act in the course
of on-going monitoring in all cases; however, New Zealand supports that
this is required and done in practice on the basis of the paramount obligation
to identify beneficial owners provided under section 14(1) described above.
New Zealand should monitor on an on-going basis that beneficial ownership
information is available for all New Zealand incorporated companies and all
foreign companies that are resident for tax purposes in New Zealand.
118. Pursuant to the 2017 amendments to the AML/CFT Act, the obliga-
tion to perform CDD and identify beneficial owners will commence on:
• 1 July 2018 for law firms, trust and company service providers pro-
viding certain services (such as nominee services) and conveyancing
practitioners and firms
• 1 October 2018 for accounting practices
• 1 January 2019 for real estate agents.

Third Party Reliance under the AML/CFT Act
119. Section 33 permits a reporting entity to rely on another person to
conduct the CDD procedures required. The conditions are that:
• The person relied on is either a reporting entity or a person who is
resident in a country with sufficient anti-money laundering and coun-
tering financing of terrorism systems and measures in place and who
is supervised or regulated for AML/CFT purposes.
• The person has a business relationship with the customer concerned.
• The person has conducted relevant CDD procedures to at least the
standard required by the Act and regulations and has provided to the
reporting entity:
a. Relevant identity information before the reporting entity estab-
lishes a business relationship or an occasional transaction is
conducted, or

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Overview of the different types of companies in New Zealand– 51

b. relevant verification information as soon as practicable, but no
later than five working days, after the business relationship is
established or the occasional transaction is conducted.
• The person consents to conducting the CDD procedures for the report-
ing entity and to providing all relevant information to the reporting
entity.
• Any other conditions prescribed by regulations are complied with.
120. These conditions meet the requirements of the international standard.
121. The reporting entity relying on a third party is responsible for ensur-
ing that CDD carried out by the third-party is in accordance with the AML/
CFT Act (s. 33(3)). The 2017 amendments to the AML/CFT Act introduce an
exception: the New Zealand reporting entity is not responsible for ensuring
that CDD is in accordance with the AML/CFT Act if (a) the reporting entity
is acting in good faith when relying on a third party; (b) the reporting entity
has reasonable cause to believe the reporting entity that is relied on has con-
ducted relevant customer due diligence procedures to at least the standard
required by the AML/CFT Act and regulations; and (c) the reporting entity
being relied on is an approved entity or is within an approved class of entities;
and (d) the conditions (if any) prescribed by regulations are complied with.
This exception is not in line with the standard, which requires that where
third-party reliance is permitted, the ultimate responsibility for CDD meas-
ures remains with the AML reporting entity relying on the third party. 14 As
New Zealand has not issued a list or class of approved entities, the exception
is not yet in effect. It is recommended that New Zealand ensure that its Third
Party Reliance regime is in line with the international standard before any
exceptions are granted.

Penalties under the AML/CFT Act
122. Non-compliance with record keeping requirements may be subject
to different responses. Section 79 of the Act provides that the relevant AML/
CFT supervisor may:
• issue a formal warning under section 80
• accept an enforceable undertaking under section 81 and seek an order
in the court for breach of that undertaking under section 82
• seek an injunction from the High Court under section 85 or 87, or
• apply to the court for a pecuniary penalty under section 90.

14. FATF Recommendations 17 and 22.

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123. The potential pecuniary penalty under section 90 for non-compliance
with the record keeping requirements under the AML/CFT Act is:
• in the case of an individual, a penalty of up to NZD 200 000
(EUR 120 000)
• in the case of a body corporate, a penalty of up to NZD 2 million
(EUR 1.2 million).

Beneficial ownership information – Enforcement measures and oversight
124. The beneficial ownership aspect of the 2016 ToR is new and was
not specifically evaluated in the 2011 Report. As described above, the main
requirements to maintain beneficial ownership information arises under tax
law and AML/CFT law. The oversight of these laws is described below.

Tax compliance
125. IR has a comprehensive compliance programme which includes
a strong focus on taxpayer compliance with their registration and filing
obligations. These obligations are particularly relevant in relation to the avail-
ability of beneficial ownership information, as certain taxpayers (that are
incorporated outside New Zealand or have at least 25% non-resident owner-
ship or control) must inform upon registration a New Zealand bank account
number or the name of a reporting entity which has conducted CDD on them.
Moreover, the tax registration forms and tax returns for other taxpayers also
contain a field for a bank account, although providing this information is not
mandatory.
126. Over the last decade, IR has moved from predominantly enforcing
compliance to facilitating compliance. This has meant greater focus on a
“right from the start approach”, involving various preventative interventions
including process/systems improvements, increasing awareness and education.
127. All persons, natural or otherwise, require a tax identification number
(known as an IRD number in New Zealand) if they earn income from any
source, apply for a particular benefit, file tax returns or buy sell or transfer
New Zealand property. In addition to the information obtained on registra-
tion from legal entities and arrangements registered with IR, all taxpayers are
required to, as part of their respective annual return processes, inform a bank
account should they wish to expedite refunds.
128. The table below includes statistics on the number of companies
applying for an IRD Number by year, the number of companies registered/
incorporated with the Companies Office per year.

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Overview of the different types of companies in New Zealand– 53

Annual registration with IR and the Companies Office

YE 31 December 2014 YE 31 December 2015 YE 31 December 2016
Inland Revenue 45 346 49 990 56 626
Companies Office 48 903 52 337 58 130
% of companies with 92.73% 95.52% 97.41%
an IRD number

129. New Zealand explained that the variance in numbers above can be one
or a combination of any of the factors below: (i) timing variance (where the
company has registered in one calendar year with the Companies Office and
applies for an IRD number in the next calendar year); (ii) the situation where
companies registered in New Zealand, but are yet to carry out any taxable
activity in New Zealand; and (iii) the situation of companies that register in
New Zealand purely for name protection purposes and have not yet obtained an
IRD number. Conducting any significant business in New Zealand is unlikely
without obtaining an IRD number. New Zealand explained that companies
need their IRD number in order to, among other activities, sell goods and ser-
vices from New Zealand (GST registration), register as an employer, buy, sell
or transfer property in New Zealand, engage in the property rental business.
130. Annual return filing rates by companies for the years covered within
the review period were: 87.8% for year 2014, 88.2% for 2015 and 85.9% for
2016. Non-filers are subject to IR’s enforcement programme.In terms of
enforcement with filing obligations, IR reports that it has dedicated funding
from government to specifically chase unfiled returns. This corresponds to
160 full time equivalent staff.
131. The review of tax returns showed that at least approximately 90%
(90.3% in 2014, 90.4% in 2015 and 89.7% in 2016) of the companies indi-
cated having a bank account. New Zealand advises that 94.3% of these bank
accounts are with New Zealand registered banks. New Zealand further
advises that it is in the process of clarifying and correcting the issue found
with approximately 5.7% of taxpayers that informed a non-New Zealand bank
account in their returns. New Zealand further notes that IR holds information
on other New Zealand bank accounts of these taxpayers due to disclosures in
other returns/registrations.
132. For the “offshore companies”, to evidence the existence of the bank
account, the company must also provide to the IRD the information described
in form IR984 being: (a) a New Zealand bank statement showing the company’s
name as customer’s name, the bank account number and at least one deposit
and one withdrawal of different amounts; or (b) a letter from the bank showing
the company’s name as customer’s name, the bank account number and stat-
ing that the account is (i) a fully functional bank account; or (ii) is an active

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bank account; or (iii) has had due diligence completed. Therefore it is theo-
retically possible that, although the company indicates having a bank account,
the bank has not actually performed CDD under the terms of the AML/CFT
Act and identified the beneficial owner as defined under that Act. This would
be particularly the case where a company had opened a bank account before
the AML/CFT entered into force in 30 June 2013. Banks have nonetheless an
obligation to conduct on-going due diligence, but it is not known at the present
stage if, in practice, this on-going CDD obligation has effectively led to banks
to obtain beneficial information of all non-individual customers that were
on-boarded before the entry into force of the AML Act. The AML supervisor
issued non-binding guidance expecting that at least one on-going CDD review
was conducted by banks on their high and medium risk customers by 30 June
2016. New Zealand should monitor on an ongoing basis that beneficial owner-
ship information is available for all New Zealand incorporated companies and
all foreign companies that are resident for tax purposes in New Zealand.
133. For the cases where no bank account number is provided, the com-
pany must confirm that CDD was completed by a New Zealand reporting
entity and include a statement and stamp of the entity confirming that CDD
has been performed. The company would not be required to inform that it
has ended the relationship with the AML obligated persons, but the company
would be required to file annual returns which contain a field for a New
Zealand bank account to be inserted.

AML supervision
134. The Ministry of Justice is the lead policy agency for New Zealand’s
implementation of the AML standards and is responsible for drafting and
administering the AML legislation. The three supervisors tasked with super-
vision of the AML regime are:
• the Reserve Bank of New Zealand (RBNZ), which supervises banks,
life insurers and non-bank deposit takers
• the Financial Markets Authority (FMA), which supervises, among
others, issuers of securities, derivatives issuers and dealers, fund
managers, brokers and custodians, financial advisers, equity crowd-
funding platforms and peer-to-peer lenders
• the Department of Internal Affairs (DIA), which supervises, among
others, trust and company service providers. In August 2017, the
DIA was appointed to supervise lawyers, accountants, conveyancing
practitioners and real estate agents.
135. Another key government agency is the FIU. The FIU provides finan-
cial intelligence relating to suspicious transactions, money laundering, the
financing of terrorism and other serious offences.

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Overview of the different types of companies in New Zealand– 55

136. The AML/CFT Act has been in force since 30 June 2013. Since then,
the AML/CFT supervisors have undertaken a wide range of supervisory and
enforcement activities, and monitored compliance with obligations estab-
lished in the Act. Supervision by the three AML/CFT supervisors is focused
on evaluating the systems reporting entities have in place to capture and
retain the information required. The reviews involve evaluations of:
• reporting entities’ risk assessments
• AML/CFT programmes
• whether a compliance officer has been appointed to administer the
AML/CFT programme
• CDD processes and customer identification and verification
• the reporting entities’ suspicious transaction reporting, auditing and
annual reporting systems and processes.
137. The AML/CFT supervisors have a range of tools available including:
• Desk based reviews: all supervisors use desk-based reviews as a
tool to monitor compliance and inform subsequent supervision. In
essence, a desk-based review will involve the supervisor requesting
information, documents and records, relevant to one or more AML
obligation from a reporting entity. These documents and records
are reviewed and analysed against a reporting entity’s AML obliga-
tions and the outcome used to determine what subsequent action
needs to take place. For instance, a desk-based review may highlight
inadequacies in a reporting entity’s processes for establishing the
beneficial ownership of a customer.
• On site reviews: All supervisors use on-site reviews as a tool to
monitor compliance and inform subsequent supervision. This gener-
ally involves staff of the relevant supervisor reviewing documents
and records, testing controls and meeting with the reporting entity’s
employees, particularly those involved in the day-to-day operations
of ensuring the reporting entity is compliant with its AML/CFT
obligations.
• Guidance and education: the supervisors have produced a large
amount of education materials to assist reporting entities comply with
their obligations under the AML/CFT Act, including CDD and the
identification of beneficial owners.
• Baseline monitoring: Each reporting entity must prepare an annual
report based on its risk assessment and AML/CFT programme fol-
lowing a prescribed form.
• AML/CFT audits: Section 59 of the AML/CFT Act requires that
each reporting entity review its risk assessment and AML/CFT

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56 – Overview of the different types of companies in New Zealand

programme to ensure the risk assessment and programme remain
current, and to identify deficiencies and make changes as necessary.
Moreover, every reporting entity must ensure its risk assessment and
AML/CFT programme are audited every two years. This audit must
be carried out by an independent person appointed by the reporting
entity who is appropriately qualified to conduct the audit. These
audits must be provided to AML/CFT supervisors on request.

Supervision by RBNZ
138. The RBNZ supervises 24 registered banks, 14 life insurance provid-
ers, 27 non-bank deposit takers and 45 entities who are the members of a
designated business group. Of the 24 registered banks, the five largest banks
were responsible for handling approximately 90% of the volume and value of
transactions during the year. The RBNZ’s AML/CFT supervision team has
four full time employees.
139. Banks are considered higher risk reporting entities, as such, have
a dedicated relationship manager within RBNZ’s AML/CFT team and are
subject to an on-going cycle of proactive engagement. They also receive more
frequent and targeted reviews.
140. The RBNZ has completed over 50 assessments since the AML/
CFT supervision commenced on 30 June 2013. The vast majority of on-site
reviews have been on registered banks, with each registered bank being
reviewed at least once, 18 registered banks visited twice, and six registered
banks being reviewed three times. New Zealand reports that there exists
generally a good level of compliance response in the New Zealand bank-
ing sector. Whilst matters of varying severity are uncovered in each onsite
review, most are minor in nature and are dealt with via internal supervisory
action or, occasionally, formal warnings. None have reached the level of
severity that they would require the imposition of a fine.
141. In November 2016, the RBNZ formally and publicly warned one
bank under section 80 of the AML/CFT Act. The RBNZ had reasonable
grounds to believe that between 30 June 2013 and 9 June 2016, the bank
was not reviewing and keeping up to date its AML/CFT risk assessment as
required under section 59 of the Act, despite being advised it was required
to do so by the RBNZ following an on-site review in 2013. The bank has
accepted the RBNZ’s findings, and has taken immediate steps to review its
risk assessment and amend deficiencies. A follow-up review carried out by
the RBNZ in October 2017 attested that sufficient progress was made.
142. In December 2016, the RBNZ also issued a formal public warning
to a credit union that had, inter alia, failed to meet the obligation to conduct
on-going CDD and account monitoring (section 31(2)) and the obligation to

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Overview of the different types of companies in New Zealand– 57

comply with CDD requirements, including on-going CDD and account moni-
toring (section 57(c)).

Supervision by DIA
143. As at 31 December 2016, the DIA had 953 reporting entities listed,
including 111 TCSPs. 15 There is no licensing requirements for TCSPs in New
Zealand and the DIA has to identify relevant reporting entities. In practice,
the DIA informs that this work is facilitated by the fact that reporting entities
are very willing to report to the DIA who their competitors are that should
also be supervised. The DIA’s supervision team has 20 full time employ-
ees. Additional 40 to 50 employees are expected to be hired, following the
increased responsibilities concerning the supervision of lawyers, accountants,
conveyancing practitioners and real estate agents.
144. Within the 14 sub-sectors the DIA supervises, there are three high-
risk subsectors, being casinos, TCSPs and remitters who transfer funds
internationally. These three sub-sectors are the focus of DIA’s supervisory
attention.
145. In its most recent surveys, the DIA found that there is a good level of
awareness across the sector of the obligations under the AML/CFT Act. From
1 July 2015 to 20 May 2016, the DIA conducted 80 desk-based reviews and 21
on-site inspections. Four formal warnings were issued under section 80 of the
AML/CFT Act including one public formal warning (discussed below). There
were three enforceable undertakings completed in the same period.
146. On 2 September 2015, the DIA published its first public summary of
a formal warning, issued to a TCSP following an investigation. The investiga-
tion identified that the TCSP had failed to conduct CDD as required, failed
to adequately monitor accounts and transactions, failed to keep adequate
records and failed to ensure that its branches complied with all relevant
AML/CFT obligations. DIA reports that it will continue to monitor the TCSP
in question and consider further enforcement action, including the imposition
of penalties, if compliance standards are not improved.

Supervision by FMA
147. The FMA supervises around 800 reporting entities which are required
to comply with the AML/CFT Act. Roughly two-thirds define themselves as

15. The DIA maintains a list of its AML/CFT reporting entities, classified by sector,
on its website: https://www.dia.govt.nz/diawebsite.nsf/wpg_URL/Services-
Anti-Money-Laundering-List-of-Reporting-Entities?OpenDocument. The list of
reporting entities is not exhaustive or conclusive and is the subject to change.

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financial advisors. FMA’s AML/CFT supervisory activities are primarily con-
ducted by its supervision team, which has 24 full time employees. 16
148. In its first year of monitoring (the 2013-14 year), the FMA concen-
trated on ensuring a spread of monitoring visits and desk-based reviews
across the various sub-sectors of FMA’s reporting entities. Overall, in the
2014 year, the FMA undertook 36 monitoring reviews, primarily consisting
of on-site reviews.
149. In the 2014-15 year, FMA issued three formal warnings under
section 80 of the AML/CFT Act (including one public warning), for signifi-
cant breaches. Further, it completed a total of 16 monitoring activities and
reviewed 112 AML/CFT audit reports. In the 2015-16 year, the FMA issued a
formal warning to an intermediary for failing to conduct adequate enhanced
due diligence, and failing to terminate its business relationship with a client
when it had been unable to complete the required level of CDD on that client.
The intermediary has since taken steps to significantly improve its AML/
CFT compliance programme. Further, in the 2015-16 year, the FMA com-
pleted 53 focused monitoring activities, including reviews of audit reports,
desk-based reviews and on-site reviews across the various sub-sectors of
reporting entities.

Availability of beneficial ownership information in Practice (Peer
Experience)
150. The availability of beneficial ownership information was not evalu-
ated under the 2010 ToR. During the current review period New Zealand
was expressly requested to provide beneficial ownership information in
approximately 14% of the requests received. New Zealand advises that this
information was always available when requested. At least four of its EOI
partners reported having asked and received beneficial ownership informa-
tion from New Zealand (mainly in relation to trusts).

A.1.2. Bearer shares
151. The 2011 Report found that there was no express prohibition against
bearer shares in the Companies Act. However, the ability to issue bearer
shares in New Zealand was precluded (indirectly) by the requirements relat-
ing to the issue and transfer of shares, and the requirement that companies

16. FMA has produced numerous documents highlighting both its supervisory
and enforcement measures, and efforts undertaken to evaluate the level of
compliance under the AML/CFT. These reports are available online at https://
fma.govt.nz/news/reports-and-papers/monitoring-and-compliance-reports/
amlcft-monitoring-report/

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maintain a share register containing the names of shareholders in the
Companies Act (particularly sections 35 to 40 and 84 to 87) and section 215
of the Financial Markets Conduct Act 2013). This review finds that bearer
shares were unable to be issued as at New Zealand’s last review.

A.1.3. Partnerships
152. The 2011 Report (see paras. 97-117) found that there were three types
of partnerships in New Zealand: general partnerships, limited partnerships
and special partnerships. Information on each type of partnership as well as
on overseas limited partnerships is included in the table below.

Overview of the different types of partnerships in New Zealand

Numbers as
Numbers as at reported in the
Type of Governing 31 December 2011 Report (as
Partnership Description law 2016 at 30 June 2009)
General A Partnership is the relation which subsists between Partnership 113 696 N/A
partnerships persons carrying on a business in common with a Act 1908
view to profit (s. 4(1) of the Partnership Act 1908).
A partnership is not a legal entity nor is it separate
from the individual partners that comprise the
partnership. However, a partnership is a distinct
commercial entity for accounting purposes, with each
partner jointly and severally liable for the liabilities of
the partnership.
A partnership relationship is typically formalised by a
partnership agreement, but a written agreement is not
essential and the existence of a partnership can be
determined based on facts and a consideration of all
surrounding circumstances.
Limited Limited partnerships are a form of partnership LP Act 2 174 200
partnerships involving general partners (who are liable for all the
debts and liabilities of the partnership) and limited
partners (who are liable to the extent of their capital
contribution to the partnership).
Overseas An overseas limited partnership is a limited LP Act 13 Overseas limited
limited partnership that has been formed in a country other partnerships
partnerships than New Zealand, but because it is engaged in
business activities in New Zealand it must register as
an overseas limited partnership.

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Numbers as
Numbers as at reported in the
Type of Governing 31 December 2011 Report (as
Partnership Description law 2016 at 30 June 2009)
Special Prior to the passage of the LP Act, the Partnership N/A N/A N/A
partnerships Act 1908 made provision for a special type of
partnership known as a special partnership. These
typically comprised a general partner that carried on
the partnership business and several special partners
who contributed capital. The special partners were
only liable for partnership debts to the extent of the
capital they contributed.

153. The same record keeping requirements regarding partnerships
described in the 2011 Report remain applicable. In summary, information on
the identity of partners must be maintained and filed as follows:
• Any partnership carrying on a business in New Zealand (be it a gen-
eral partnership, a limited or special partnership, domestic or foreign)
must furnish a joint return of income, stating the amount of taxable
income and the entitlement of each partner to a share of it (TAA,
s. 42). The partners must also include their share of the income on
their separate returns of income and the tax is assessed on the part-
ners rather than on the partnership. The partnership annual return
form (IR7P form) requires each partner’s name and IRD number
to be provided along with details of attributed income/losses. This
necessitates that each partner of a partnership operating in New
Zealand has an IRD number, and this information is reconciled
against the individual partners in Inland Revenue’s system.
• Limited partnerships are required to provide updated information on
the identity of general partners and limited partners to the Registrar
at the time changes occur and also by means of the annual returns.
(LP Act, ss. 59, 76).
• An overseas limited partnership that carries on business in New
Zealand is obliged to register with the Companies Office (LP Act
s. 104), and provide updated information on its general partners.
• Limited partnerships are required to maintain a list of the names and
addresses of each current partner and of each person who has ceased
to be a partner within the last seven years. These records must be
maintained at the limited partnership’s registered office (LP Act s. 74).

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154. The 2011 Report (see paras. 109-112) concluded that information
on the identity of the partners in a partnership was available and must be
maintained for at least 5 years in all cases and that there were adequate penal-
ties for failure to maintain this information. Since the 2011 Report the legal
framework regarding partnerships is unchanged.

Oversight and enforcement

Companies Registrar
155. The Companies Office has oversight of New Zealand and overseas
limited partnerships, generally in a similar way as it does in relation to
companies. The Companies Office maintains publicly-available registers of
limited partnerships and overseas limited partnerships. Details of limited
partners are not publically available on the Limited Partnerships Register but
are accessible by IR.
156. On formation, checks are performed to ensure that proposed gen-
eral partners are not disqualified on the basis of having been bankrupt or
convicted of dishonesty offences. Where an application for incorporation
involves a general partner or limited partner that is not domiciled or incor-
porated in New Zealand, or the application involves New Zealand persons/
bodies corporate that are acting as a trustee for an overseas entity, the
Registrar will require the additional information (where applicable) in order
to be satisfied that the application has been properly completed, includ-
ing (i) evidence of the existence of all general and limited partners that
are companies, incorporated trusts or some other legal entity (i.e. copies of
original trust deeds and certificates of incorporation in their home country);
(ii) evidence that the entities named as general or limited partners have their
registered office or business address at the addresses given in the partnership
agreement (or on the limited partnership application if different).
157. Limited partnerships and overseas partnerships which failed to file
annual returns are removed from the Registrar. The procedure is the same
one that applies to company. The following table sets out the number of
removals from the Companies Office Register in the year 2015-16 and the
year 2016-17.

Partnership removals

2015-16 2016-17 (year to June 2017)
Limited partnerships 205 188

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Inland Revenue
158. All partnerships that carry on business in New Zealand are required
to file tax returns. The partnership return includes a list of the names of all
partners in the partnership (including limited partners) and their addresses.
IR monitors compliance and chase late-filers. During the review period, the
compliance rate with tax filing obligations by partnerships was as follows:
94.9% in 2014, 94.2% in 2015 and 92.8% in 2016.

Beneficial ownership information with respect to partnerships
159. Partnerships that are considered to be an overseas person are required
to inform upon tax registration a fully active New Zealand bank account or
details of a reporting entity which has performed CDD on the partnership.
A partnership, unincorporated joint venture, or other unincorporated body
is considered to be an overseas person if (i) 25% or more of its partners or
members are overseas persons; or (ii) an overseas person or persons have a
beneficial interest in or entitlement to 25% or more of its profits or assets
(including on its winding up); or (iii) an overseas person or persons have the
right to exercise or control the exercise of 25% or more of the voting power
at its meeting (ss. 24BA and 3 TAA and s. 7(2) of the Overseas Investment
Act 2005). Moreover, any partnership which already has an IRD number (as
at 1 October 2015) and becomes an offshore person must inform a current
bank account to the Commissioner.
160. There is no legal obligation for partnerships that fall outside the
definition of an overseas person to provide a bank account number or engage
an AML reporting entity. However, as a matter of practice, New Zealand
advised that most of them are likely to do so in the course of carrying on
business in New Zealand.
161. In New Zealand a partnership is generally treated as “transpar-
ent” for income tax purposes. In addition to the returns of the partnership,
the partners are also obliged to include their allocable share of partnership
income on their own separate returns of income, and tax is assessed on the
partners rather than on the partnership. Partnership’s income tax returns (IR7
form) do not collect information on bank accounts. However, the partnership
income tax return must be filed with separate returns of income from the
partners (IR 7P forms) which include the identification of each partner and
their IRD number (along with details of attributed income/losses). If part-
ners are offshore persons, they would be required to inform a current bank
account to the Commissioner.
162. IR reports that during the review period the following percentage of
partnerships indicated a bank account number: 77.9% in 2014, 78% in 2015
and 77.8% in 2016, based on a query in IR’s system for all partnerships to see
how many of them had bank accounts.

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163. The availability of beneficial information in respect of partnerships
in practice is supported by the oversight and enforcement activities of the
AML supervisory authorities, as described in detail under A.1.1.
164. It is noted that when all partners are New Zealand entities and
arrangements, full information on the (legal) ownership chain should be
available with the Companies Office or with other information holders in
New Zealand such as IR, in accordance with the law. IR would also be able to
use its investigative powers against any of the partners, each of which would
necessarily be registered for tax purposes.

Availability of partnership information in practice
165. The 2011 Report did not note if requests had been received in the
period 2007-09 that asked for information on the partners of a partnership.
Similarly, during the current review period, specific statistics on this regard
were not maintained. Input from New Zealand partners did not indicate any
such requests.

A.1.4. Trusts
166. New Zealand, as a common law jurisdiction and former colony of
Britain, inherited the English concept of trusts.
167. The 2011 Report (paras. 118-138) found that New Zealand law
required the maintenance of information that identified the settlor, trustee,
and beneficiaries of trusts. Trustees were obliged to furnish a return of
income to IR if the trust derived New Zealand taxable income or made a
taxable distribution to beneficiaries. The return detailed the taxable income
distributed and required the identification of the beneficiaries. Where no
return was required (e.g. when no taxable income or distributions were made),
New Zealand trust disclosure and record keeping requirements ensured the
maintenance of identity information of trustees, settlors and beneficiaries.
Trusts with a foreign resident settlor and a New Zealand resident trustee were
required to register with IR. Moreover, some types of trusts could elect to be
registered to obtain certain benefits (i.e. charitable trusts that can register
under Charitable Trusts Act 1957 or the Charities Act 1995). Moreover, IR
had broad powers under the TAA to require a resident settlor or trustee to
provide particulars regarding the New Zealand trust.
168. The 2016 ToR contains an additional requirement concerning the
availability of beneficial ownership information. This would generally
include, in addition to information on the identity of the settlor, the trustee(s),
the beneficiaries or class of beneficiaries, information on the identity of the

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protector (if any) 17 and any other natural person exercising ultimate effective
control over the trust.
169. Since the 2011 Report, New Zealand has completely revamped the
regime applicable to trusts having a New Zealand resident trustee and non-
resident settlor. 18 After media reports and commentaries on the Panama
Papers asserted that New Zealand foreign trusts were being used by wealthy
individuals in structures that facilitated tax evasion, aggressive tax plan-
ning and money laundering and hiding of assets, New Zealand conducted an
extensive government inquiry to examine the existing rules. The inquiry, 19
published in June 2016, concluded that, while, in theory, New Zealand’s pre-
vious tax disclosure combined with exchange of information arrangements
could have been sufficient to deter tax abuse and its anti-money laundering
rules ensured that funds held by foreign trusts are from legitimate sources,
under the law enforcement practices at the time the level of detection by
authorities was low. As such, the inquiry considered that a significant
increase in information disclosed when a trust sets up, annual reporting and
increased enforcement, would satisfactorily address the issues identified.
Those measures have been taken by New Zealand and a new regime came
into effect in February 2017.
170. In summary, the combination of tax disclosure rules, AML obliga-
tions introduced on professional trustees and common law obligations ensure
that information that identifies settlors, trustees and beneficiaries and other
beneficial owners of trusts. Since the tax and AML rules have been enacted
recently, their effectiveness in practice has not been fully ascertained and
recommendations have been added in in the box of A.1 for New Zealand to
ensure their implementation in practice.

Tax and other disclosure obligations
171. In summary, the following disclosure requirements apply to the dif-
ferent category of trusts having a New Zealand resident trustee.

17. In trust law, a protector is a person appointed under the trust instrument to direct
or restrain the trustees in relation to their administration of the trust.
18. The regime applies to foreign trusts defined in the TAA as follows: a foreign
trust is one established in New Zealand for which no settlor has been a New
Zealand resident. New Zealand’s rules for taxing the income of trusts are largely
based on the residence of the settlor regardless of the residence of trustee(s).
19. Available at www.treasury.govt.nz/publications/reviews-consultation/foreign-
trust-disclosure-rules/pdfs/report-giftdr-27jun2016.pdf.

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Disclosure rules in New Zealand

Number of trusts as at
Type of trust December 2016 Current disclosure rules
Trusts created under 332 751 (based on the number The trustee(s) must furnish a return of income if the trust
New Zealand or of such trusts filing tax returns in derives taxable income or makes a taxable distribution to
foreign law with New New Zealand) beneficiaries (s. 59 TAA).
Zealand trustee The return requires the identification of the beneficiaries.
and resident settlor In general, for trusts with a resident settlor, both New
(non-charitable) Zealand and foreign sourced income are taxable in New
Zealand.
Trusts created 11 750 (this number refers to trusts Tax registration requirements apply (s. 59B-D of the TAA).
under New Zealand that have registered with IR under As of February 2017, they require identity information
or foreign law the previous regime; since the of: (i) settlor, (ii) each person with a power to appoint or
with new Zealand new regime has been established dismiss a trustee, to amend the trust deed or remove a
trustee and a non- 3 489 foreign trusts registrations beneficiary; (iii) each person with a power to control the
resident settlor have been received) exercise of a power referred in (ii) above; (iv) each person
(non-charitable) with a power to control a trustee in the administration of the
trust; (v) each trustee; (vi) for fixed trusts, each beneficiary
and each nominee for a beneficiary; (vii) for discretionary
trusts, each beneficiary or class of beneficiary sufficient
for the Commissioner to determine, when a distribution is
made under the trust, whether a person is a beneficiary
(s. 59B). Those details must be provided regardless of
whether the trust has tax liability in New Zealand. A copy of
the trust deed must also be provided. An annual return on
settlements received (identifying the name of settlors) and
distributions made (identifying the name of beneficiaries,
their physical residential address, their jurisdiction of tax
residence, and their taxpayer identification number) is also
required (form IR900).
Charitable trusts 24 009 (this refers to the number Charitable trusts registered with the Registrar of
with a New Zealand of charitable trust boards Incorporated Societies: file trust deed and all changes to
resident trustee registered with the Registrar trust deed, name of the charitable trust board and changes
of Incorporated Societies as at to the address of the charitable trust board (Charitable
31 December 2016). As at 1 March Trusts Act 1957).
2017, there were 27 915 registered Charitable trusts registered with the Department of Internal
charities in New Zealand (including Affairs: file trust deed and to file annual returns including
a range entities and arrangements up to date details of all officers, and beneficiaries (Charities
that can be registered as charities Act 1995).
under the Charities Act – such
as companies, charitable trusts,
societies).

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172. The tax disclosure and record-keeping requirements described above
apply to both professional and non-professional trustees. They provide suf-
ficient information to identify trustees, settlors and beneficiaries of trusts.
Moreover, with respect to trusts with a resident trustee and a non-resident
settlor, there are requirements to identify protectors and/or persons exercis-
ing control over the trust – i.e. the TAA requires the identification of (i) each
person with a power to appoint or dismiss a trustee, to amend the trust deed
or remove a beneficiary; (ii) each person with a power to control the exercise
of a power referred in (i) above; (iii) each person with a power to control a
trustee in the administration of the trust. Further to this, the New Zealand
resident trustee of a non-resident settlor trust is required to provide IR with
a declaration that each person referred to on the form has agreed to pro-
vide information relating to the trust and persons connected with the trust
imposed by the: the TAA; the AML/CFT Act; and the regulations made under
the AML/CFT Act (s. 59B(4)(c), TAA). While there is no explicit requirement
to provide IR, at registration, with details of persons beyond the immediate
beneficiaries, IR considers that this information is available through the trus-
tee as a result of the signed declaration. Additional information on beneficial
owners of trusts will be available if the trustee is a professional trustee or
the trust has otherwise a relationship with an AML obligated person in New
Zealand, as per the AML regime described further below.
173. For trusts with a resident settlor, information on protectors and per-
sons exercising control over the trust is not explicitly required to be available.
This information will be available to the extent that is mentioned in the trust
deed or otherwise known by the resident trustee. Moreover, as mentioned fur-
ther below, specific requirements provided under the AML regime also apply
to trustees that are professional trustees (as they are reporting entity under
the revised AML regime) or may also apply if the trust otherwise engages the
service of another AML reporting entity such as a bank (see further below).
174. Failure to furnish a return of income is an offence against the TAA
and, on conviction, can result in a fine of up to NZD 4 000 (EUR 2 400) for a
first offence, NZD 8 000 (EUR 4 800) for a second offence, and NZD 12 000
(EUR 7 200) for a third or successive offence (s. 143). Depending on the
level of culpability, the penalties can extend to a fine of up to NZD 50 000
(EUR 30 000) and/or imprisonment of up to five years (ss. 143A and 143B).
175. The main sanction for non-compliance with sections 59B (registra-
tion and disclosure of trusts having a non-resident settlor and a resident
trustee) and 22(7) (records to be kept) of the TAA is the knowledge offence
in section 143A. It applies if a resident trustee “knowingly” fails to disclose
information, or keep or provide records, as required by law. If a trustee of a
non-resident settlor trust has failed to comply with the disclosure and record
keeping requirements but was not aware of these rules, sanctions will not

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apply. IR reports that it is working closely with trustees to ensure that they
fully understand the new requirements to register and file annual returns.
Whether the trustee is aware of his or her tax responsibilities is a question
of fact and is determined on a case-by-case basis. If a resident trustee has
failed to comply with these rules and the trustee knew or ought to have
known about his or her tax responsibilities as a trustee of a foreign trust, the
trustee will be in breach of section 143A and, if convicted, will be subject to
a fine not exceeding NZD 50 000 (EUR 30 000) and/or imprisonment. New
Zealand is recommended to monitor that enforcement provisions are effective
to ensure the availability of information in all cases.
176. Finally, a tax registration requirement applies to trusts that are con-
sidered to be overseas trusts and have taxable income in New Zealand. Those
trusts would be required to report a New Zealand bank account or the details
of a reporting entity that has conducted CDD on the trust. This information is
also required to be provided if a trust already has an IRD number, and, after
1 October 2015, it becomes an offshore trust. A trust would be an overseas
trust if: (i) 25% or more of its governing body are overseas persons; or (ii) an
overseas person or persons have a beneficial interest in or entitlement to
25% or more of the trust property; or (iii) 25% or more of the persons having
the right to amend or control the amendment of the trust deed are overseas
persons; or 25% or more of the persons having the right to control the com-
position of A’s governing body are overseas persons. Trusts having taxable
income in New Zealand are also required to file tax returns which contain a
field for the trust to provide a bank account number or correct a bank account
number that may have been already pre-populated in the form (IR6).

AML/CFT obligations
177. Trust formation can be completed by professionals such as TCSPs,
lawyers and accountants; however, engaging a service provider is not a
requirement to form a trust. The August 2017 amendments to the AML/CFT
Act will require CDD to be conducted by law firms, conveyancing practition-
ers, incorporated conveyancing firms, accounting practices, real estate agents,
and TCSPs, who, in the ordinary course of business: (i) act as a formation
agent of legal persons or legal arrangements; (ii) acting as, or arranging for
a person to act as, a trustee in relation to legal arrangements; (iii) manage
client funds (other than sums paid as fees for professional services), accounts,
securities, or other assets (AML/CFT Act, s. 5). A TCSP is broadly defined as
a person (other than the other listed professionals) that carries out one of the
listed activities, including acting as a trustee (AML/CFT Act, s. 5). The CDD
requirements will enter into force as of 1 July 2018 (for law firms, TCSPs pro-
viding trustee services and conveyancing practitioners and firms); 1 October
2018 for accounting practices; and 1 January 2019 for real estate agents.

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178. Pursuant to section 22 of the AML/CFT Act, AML obligated persons
must conduct enhanced due diligence when the customer is a trust or another
vehicle for holding personal assets. This will involve the identification of the
name and the date of birth of each beneficiary of the trust (except in case
of certain trusts having more than ten beneficiaries) (s. 23). New Zealand
considers that if trust beneficiaries are not individuals, the beneficial owner-
ship inquiry required under the AML/CFT Act will continue until a natural
person is identified. Section 31 of the AML/CFT Act requires reporting enti-
ties to conduct on-going CDD on their customers to ensure that the business
relationship and the transactions relating to that business relationship are
consistent with the reporting entity’s knowledge about the customer and the
customer’s business and risk profile. This on-going CDD requires regular
review of any customer information obtained under the CDD provisions of
the AML/CFT Act or, in relation to an existing customer, any customer infor-
mation the reporting entity holds about the customer.
179. AML/CFT supervisors have released a fact sheet on the CDD
requirements in relation to trusts. 20 It provides that the following information
should be collected in relation to customers that are trusts:
• Information on the trust, including information on the name and date
of birth of the individuals who are the trust’s beneficiaries. However,
if the trust has more than ten beneficiaries, reporting entities are only
required to must obtain a description of each class or type of ben-
eficiary, and in the case of a charitable trust, the objects of the trust
(Regulation 6 of Anti-Money Laundering and Countering Financing
of Terrorism (Requirements and Compliance) Regulations 2011).
• Information on the beneficial owner of the trusts which may include:
trustees; and any other individual who has effective control over the
trust, specific trust property, or with the power to amend the trust’s
deeds, or remove or appoint trustees. This might include a protector
or a special trustee (if there are any), or one or more of the beneficiar-
ies of the trust.
• Information on persons acting on behalf of the trust. This includes
persons who have authority to act on behalf of the trust, for example
trustees or other persons who are able to give instructions about the
trust’s assets.

20. Available at: https://www.dia.govt.nz/Pubforms.nsf/URL/AMLCFT_FactSheet_
Trusts_Dec2017.pdf/$file/AMLCFT_FactSheet_Trusts_Dec2017.pdf and https://
www.dia.govt.nz/pubforms.nsf/URL/AMLCFT_FactSheet_TrustLetter_
Aug2013.pdf/$file/AMLCFT_FactSheet_TrustLetter_Aug2013.pdf.

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Common Law obligations
180. The first and most commonly known duty of a trustee is the duty to
know the terms of the trust. This includes documentation relating to or affect-
ing the trust property as it comes under their control. Identity information
of settlor and beneficiaries (or the identification of a class of beneficiaries)
would normally be known to trustees in order for them to perform their
duties. Also, trustees would need to know who has the ability to direct/sug-
gest, to remove and replace and veto trustees and their decisions as well as
those persons who have the ability to add/remove beneficiaries. A commonly
accepted precedent for this in New Zealand is the case Hallows v Lloyd
(1888) ChD 686. 21

Oversight and enforcement
181. The oversight and enforcement of rules requiring the maintenance
of beneficial ownership information on trusts is generally fulfilled by tax
reporting requirements and AML supervision of TCSPs. These activities are
described above in relation to the availability of legal and beneficial owner-
ship information of companies and apply equally in this context. Moreover,
the AML coverage in New Zealand has been extended by the 2017 AML
amendments as effective as of 2018 will be covering professional trustees.

Inland Revenue
182. During the review period, New Zealand conducted an extensive
inquiry in its foreign trust regime, resulting in the introduction of a more
demanding disclosure regime, which is administered by the International
Revenue Strategy team of IR (which also takes care of EOI and ensures that
relevant trust information can be shared with EOI partners). During this
period, IR also carried out audits of major TCSPs. As the government inquiry
on foreign trusts 22 noted at paragraph 6.14, these audits have resulted in a
number of spontaneous exchanges of information:

21. Available online at: www.lawcom.govt.nz/sites/default/files/projectAvailableFor-
mats/NZLC%20IP26.pdf.
22. In April 2016, following the release of the “Panama Papers”, the New Zealand
Government announced an independent inquiry into New Zealand’s disclo-
sure rules relating to foreign trusts. The inquiry recommended a number of
amendments to the disclosure requirements for foreign trusts. These amend-
ments came into force on 21 February 2017. More information on the inquiry,
including the report, is available online: www.treasury.govt.nz/publications/
reviews-consultation/foreign-trust-disclosure-rules.

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Over the past seven years there have been 142 exchanges of
information between IRD and foreign tax authorities across 23
countries in relation to foreign trusts. Of these, about 80% have
been proactive releases (known as ‘spontaneous exchanges’)
where IRD identifies a matter that may be of interest to an off-
shore authority and sends information to them. About 20% are in
response to requests from foreign tax authorities.
183. As at 23 December 2016, there were 11 750 foreign trusts (trusts
with a non-resident settlor and a resident trustee) in existence and eight
major TCSPs who administer more than 60% of the foreign trusts in New
Zealand. The revised Foreign Trust Registration Regime has been in force in
New Zealand since 21 February 2017. As such, no supervisory enforcement
measures were applied during the peer review period in respect of this new
regime. IR reports that it has been working closely with trustees to ensure
they understand fully the new requirements to register and to file annual
returns. IR has examined each registration application received and its inten-
tion is to carry out a range of risk-based compliance activities during 2018,
including a full reconciliation between disclosures received previously and
new registrations, as well as engaging with the DIA and FIU with whom IR
is sharing registration information.

Department of Internal Affairs
184. The DIA is the supervisor of TCSPs, for AML purposes, and has 111
TCSPs listed as reporting entities. This is not an exhaustive list because some
TCSPs have identified as primarily providing legal or accounting services
and were not currently captured under the AML legislation. As noted under
A.1.1., the TCSP sector was identified as high-risk. On-site and off-site super-
vision of this sector was conducted during the review period.

Availability of trust information in practice
185. During the current review period New Zealand received requests
for information concerning trusts and did not report any difficulties with
providing the information requested. Five EOI partners reported requesting
trust information, including identity information relating to trustees, settlors,
beneficiaries, protectors and service providers. Similarly, peers did not raise
any concerns with requests for this type of information.

A.1.5. Foundations
186. New Zealand’s law does not allow for the creation of foundations.

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Other relevant entities and arrangements
187. The 2011 Report identified a number of entities other than companies.
These are: Incorporated societies, Building societies, Industrial and Provident
societies, Friendly societies and Credit Unions. The 2011 Report found that the
Companies Office also maintained registers for each one of these entities. All
of these registers are similar to the Companies Register. Moreover, all of these
entities, except credit unions, are charged to tax as companies and, therefore,
all the tax law provisions that apply to companies apply to these entities. In
summary, while legal ownership information is available for those entities,
the same gap identified in section A.1.1 in relation to beneficial ownership for
companies generally applies to those entities.
188. As at 31 December 2016, there were 23 729 Incorporated societies, 10
Building societies, 83 Industrial and Provident societies, 117 Friendly socie-
ties and 15 Credit Unions. No requests have been received by New Zealand
in respect of these entities during the current review period.

A.2. Accounting records
Jurisdictions should ensure that reliable accounting records are kept for all relevant
entities and arrangements.

189. The 2011 Report concluded that any legal entity or arrangement
which carried on business in New Zealand, carried on any other activity
for the purpose of deriving assessable income, or made, held, or disposed
of any investment (for the purpose of deriving any assessable income) was
obliged to maintain a full range of accounting records, including underlying
documentation, for a minimum of seven years. Information received from
New Zealand’s peers noted that in all cases New Zealand had been able to
provide the requested accounting records. Element A.2 was determined to
be “in place” and rated Compliant. A recommendation was made for New
Zealand to require that accounting records and underlying documentation be
maintained for liquidated companies for at least five years.
190. This review finds New Zealand is in the process of addressing the
above-mentioned recommendation and that it equally applies to liquidated
limited partnerships. A requirement that accounting records and underly-
ing documentation be maintained for these entities for at least six years is
included in the Insolvency Practitioners Bill. It is expected that this Bill be
enacted sometime between March 2018 and June 2019. In the meantime, the
recommendation is retained. The gap identified had no practical impact on
EOI during the review period.

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191. Accounting requirements have not substantially changed since the
2011 Report, with the exception of additional requirements applicable to
foreign trusts as defined under the TAA (meaning trusts with a New Zealand
resident trustee for which no settlor has been a New Zealand resident).
192. Information is required to be maintained by the relevant entities/
arrangements under tax law and under the general laws governing the
particular entity/arrangement. The oversight of relevant entities and arrange-
ments was satisfied through a combination of tax compliance and the
supervision by other bodies such as the Companies Office.
193. During the current review period, approximately 17% of the 194 EOI
requests received by New Zealand contained inquiries for accounting infor-
mation. New Zealand did not report any issues in obtaining such information
in practice. Information requested included audited balance sheets, financial
statements, annual reports including profit and loss accounts and tax returns.
Three peers expressly reported having asked for and received accounting
information from New Zealand. No peers raised issues in respect of requests
for accounting information.
194. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Underlying factor Recommendation
Deficiencies identified Accounting records New Zealand should
in the implementation and underlying require that accounting
of the legal and documentation for a records and underlying
regulatory framework liquidated company documentation
and a liquidated be maintained for
limited partnership liquidated companies
are not required to be and liquidated limited
maintained for a period partnerships for at least
of 5 years or more. 5 years.
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

A.2.1. General requirements
195. Accounting obligations in New Zealand are primarily governed by
the TAA, which has a very wide scope, as well as specific Acts governing
particular types of legal entities and arrangements, such as the Companies
Act and the LP Act (please also refer to the 2011 Report paras. 154-182).
Where some changes were made in those acts, they are noted below.

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General Tax Law
196. As noted in the 2011 Report, the TAA contains provisions requiring
the maintenance of accounting records that correctly explain all transactions,
enable the financial position of entities and arrangements to be determined
with reasonable accuracy at any time, and allow financial statements to be
prepared. In addition, the 2011 Report also notes that the Goods and Services
Tax Act (1985) also imposes specific record-keeping requirements on a reg-
istered person (generally, a person who makes supplies of goods or services
in New Zealand and who is required to register under the Act) in respect of
the goods or services that they supply in New Zealand (see paras. 159 and 160
of the 2011 Report).
197. Records are required to be held for at least seven years after the
end of the income year to which they relate (s. 22(7)). Failure to keep books
and documents is an offence and, on conviction, can result in a fine of up
to NZD 4 000 (EUR 2 400) for a first offence, NZD 8 000 (EUR 4 800) for
a second offence, and NZD 12 000 (EUR 7 200) for a third or successive
offence (TAA s. 143).
198. The Commissioner may, by notice published in the Gazette, dispense
certain classes of taxpayer from the need to retain records, or any class of
records, for more than 12 months (s. 22(6)). There are two requirements for
this provision to be applied: the taxpayer cannot be a provisional taxpayer 23
and the records must relate to payments from which tax has been withheld
or deducted at source. New Zealand explained that the purpose of this provi-
sion was to reduce the tax compliance burden borne by small taxpayers. The
Commissioner has not published any such exemptions during the review
period and New Zealand advises that there are no relevant exemptions pub-
lished before the review period that are still applicable.
199. In addition to the requirements described in the 2011 Report, addi-
tional requirements for companies to prepare financial statements came
into force on 1 April 2014, pursuant to the Tax Administration (Financial
Statements) Order 2014). The requirements include: (i) a balance sheet set-
ting out the assets, liabilities, and net assets of the company as at the end of
the income year; (ii) a profit and loss statement showing income derived, and
expenditure incurred, by the company during the income year; (iii) a state-
ment of accounting policies setting out: (a) the policies and assumptions that

23. A provisional taxpayer means a person who is liable to pay provisional tax
under section RC 3 of the ITA. Provisional taxpayers generally include a person
whose residual income for the tax year is more than NZD 2 500 (EUR 1 500) or
a person who chooses to pay provisional tax. However, a company that does not
have a fixed establishment in New Zealand and is not treated as a resident in New
Zealand does not pay provisional tax (ITA s. RC 3).

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have been applied or changed, and (b) description of the effect of any material
changes in accounting policies used since the previous income year. 24

Company law
200. The requirements under the Companies Act are the ones explained in
the 2011 Report. Section 194 of the Companies Act requires that the board of
a company ensure that accounting records are kept at all times that: (i) cor-
rectly record the transactions of the company; (ii) will enable the company to
ensure that the financial statements or group financial statements of the com-
pany comply with generally accepted accounting practice (if the company is
required to prepare such statements under this Act or any other enactment);
and (iii) will enable the financial statements or group financial statements
of the company to be readily and properly audited (if those statements are
required to be audited).
201. Large New Zealand companies must prepare financial statements
under sections 200 and 201 of the Companies Act. “Large” overseas com-
panies that have more than 25% overseas ownership are required to register
their financial statements with the Companies Office under section 207D.
202. Section 190 of the Companies Act requires that the board of direc-
tors of a company ensure that adequate measures exist to prevent the records
being falsified and detect any falsification of them. Failure to comply with
section 190 is an offence and, if convicted, a director can be liable to a fine of
up to NZD 10 000 (EUR 6 000) (s. 374).

Companies that cease to exist
203. Companies may cease to exist in New Zealand by two processes:
(i) removal from the register; and (ii) liquidation (which at the time of its
completion will also result in the removal of the company from the register).
204. Directors can apply to the Registrar to remove a company from
the register if a number of conditions are met, such as that the company
is no longer in business, all business debts are paid and the company has
distributed its assets on the terms of its constitution and the Companies Act
(s. 318(2)(a) Companies Act). Moreover, the Registrar may also remove a
company where an annual return is not filed or the Registrar has reasonable

24. Small companies are exempt from the minimum requirements. A company is
small in respect of an income year if both of the following apply: (a) the com-
pany is not part of a group of companies; and (b) the company has not derived
income in excess of NZD 30 000, and has not incurred expenditure in excess of
NZD 30 000, during the income year.

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grounds to believe that the company, or one or more of its directors or share-
holders, has intentionally provided the Registrar with inaccurate information
(s. 313(1)). If a company has been removed from the register and has not been
liquidated there is no exception to the standard record keeping requirements
under the TAA (which is described further below). As a result, business and
other records set out in section 22 of the TAA must be retained for seven
years. Moreover, section 326 of the Companies Act provides that the removal
of a company from the New Zealand register does not affect the liability
of any former director or shareholder of the company or any other person
in respect of any act or omission that took place before the company was
removed from the register and that liability continues and may be enforced
as if the company had not been removed from the register. In relation to
accounting records, it is the board of a company which is accountable and
the failure to comply with these requirements is an offence committed by
every director (s. 194 of the Companies Act). As a result, the removal of a
company does not have any effect on director’s obligations to maintain com-
pany records.
205. Regardless of the reasons the company has been removed, an appli-
cation can be made for the company to be restored based on the following
reasons, among others: at the time the company was removed from the regis-
ter, (i) the company was carrying on business or a proper reason existed for
the company to continue in existence; (ii) the applicant was a creditor, or a
person who had an undischarged claim against the company; (iii) any other
reason it is just and equitable to restore the company to the New Zealand reg-
ister (s. 328 of the Companies Act). The restoration application can be made
by, among others, a creditor, a person who had an undischarged claim against
the company or, with the leave of the court, any other person (ss. 328 and 329
of the Companies Act). When a company is restored, the legal obligations
continue to apply to the companies as if the company had never ceased to
exist (s. 330). This would generally apply to the obligation to maintain books
and records, although even in the absence of restoration directors can be held
liable for the accounting records of the company.
206. The 2011 Report identifies a gap with respect to the requirements
to maintain accounting records and underlying documentation for liqui-
dated companies. The 2011 Report noted that, although the TAA and the
Companies Act require companies to maintain those records for a minimum
of seven years, the TAA contains an exception to the retention of records
requirements in case the company has been liquidated (s. 22(4)). Moreover,
the Companies Act provides that the liquidator appointed in relation to a
company is required to retain the accounts and records of the company for
a minimum of one year after the liquidation of the company (s. 256(1)(a)).
The Registrar of Companies may, however, require the liquidator to retain
the records for a longer period (s. 256 (1)(b)). However, this has not been the

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current practice of the Registrar. As a result, there was no legal requirement
to ensure that records for liquidated companies were kept for a minimum
period of five years as required under the standard.
207. New Zealand reports that it is in the process of addressing this gap
in the Insolvency Practitioners Bill which is expected to be enacted by June
2019 (see Recent Developments sections). Notwithstanding the above, New
Zealand advises that the gap identified has limited impact in practice for the
following reasons: (i) most companies cease to exist by the removal process
without liquidation (during the review period, only approximately 7% of
company removals were removals following a liquidation process); (ii) most
liquidations take more than one year to be completed. The average time that
a company spends in liquidation is two years; (iii) the Registrar of Companies
can require any accounts or records held by a liquidator to be retained for
longer than one year after the completion of the liquidation under sec-
tion 256(2)(b) of the Companies Act, as mentioned above; (iv) tax returns and
financial statements filed with IR for these companies will be retained for at
least seven years, and that information would be available for EOI purposes:
(v) New Zealand has not been unable to reply to an EOI request because of
the records had been destroyed by a liquidator. The recommendation remains
(see box of recommendation) and considering the limited materiality at the
present stage, the rating of the element remains unchanged.
208. If the company’s removal followed completion of the company’s
liquidation, the company can only be restored based on an order by the High
Court under section 336(6), 304 or 329, as the case may be.

Partnership Law
209. The LP Act obliges all limited partnerships to maintain accounting
records that correctly record and explain transactions and at any time enable
the financial position of the limited partnership to be determined for the last
seven completed accounting periods of the limited partnership (ss. 74 and
75). Moreover, effective as of 1 April 2014, the LP Act has been modified to
require the general partner of a limited partnership to prepare certain finan-
cial statements (ss. 75-75G).
210. Effective as of 1 April 2014, new accounting requirements were
introduced in relation to general partnerships that are considered large
partnerships 25. Section 34B of the Partnership Act 1908 requires that (i) the

25. Large partnerships are partnerships “in respect of an accounting period if at least
one of the following applies (combination of s. 34D of the Partnership Act and
s. 45 of the Financial Reporting Act 2013): (1) as at the balance date of each of the
2 preceding accounting periods, the total assets of the entity and its subsidiaries

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partners of a large partnership must ensure that there are kept at all times
accounting records that (a) correctly record the transactions of the part-
nership; and (b) will enable the partnership to ensure that the financial
statements of the partnership comply with generally accepted accounting
practice; and (c) will enable the financial statements of the partnership to be
readily and properly audited (if those statements are required to be audited).
211. In addition, as noted in the 2011 Report (paras. 159 and 167), both
general partnerships and limited partnerships who supply goods or services
in New Zealand may be registered persons for purposes of the Goods and
Services Tax Act, and therefore the GST record-keeping requirements 26
would also apply directly to the partnership in these circumstances.

Partnerships that cease to exist
212. The same gap on retention of records identified for companies that
undergo a liquidation process applies to limited partnerships as they are also
legal entities in New Zealand. Similarly to companies, most partnerships
cease to exist based on the removal process and not the liquidation process,
so the impact of this gap in practice is limited. During the review period,
similarly to companies, very few partnerships were removed from the register
following the completion of liquidation (1 out of 205 in the 2015-16 period
and 2 out of 188 during the 2016-17 period).
213. A general partnership, being a legal arrangement, cannot be liq-
uidated. A partnership may be dissolved but the dissolution does not have
any impact on a partner’s record keeping obligations which will remain
applicable.

(if any) exceed NZD 60 million (EUR 36 million); (2) in each of the two preced-
ing accounting periods, the total revenue of the entity and its subsidiaries (if any)
exceeds NZD 30 million (EUR 18 million).
26. As noted in the 2011 Report, section 75 of the Goods and Services Tax Act (1985)
also imposes specific record-keeping requirements on a registered person (gener-
ally, a person who makes supplies of goods or services in New Zealand and who
is required to register under the Act) in respect of the goods or services that they
supply in New Zealand. Generally, the records required to be maintained pursu-
ant to section 75 of the Goods and Services Tax Act include (s. 75(2)): (i) a record
of all goods and services supplied by or to that registered person showing the
goods and services, and the suppliers or their agents, in sufficient detail to enable
the goods and services, the suppliers, or the agents to be readily identified by the
Commissioner, and all invoices, tax invoices, credit notes, and debit notes relating
thereto; and (ii) the charts and codes of account, the accounting instruction manu-
als, and the system and programme documentation which describes the accounting
system used in each taxable period in the supply of goods and services.

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Trusts
214. Trusts have no legal personality. However, the record-keeping
requirements contained in Part III of the TAA and section 75 of the Goods
and Services Tax Act (explained above in relation to partnerships) apply to
the trustee(s) of a trust.
215. In relation to foreign trusts (trusts with non-resident settlors and a
resident trustee), there are particular requirements under section 22(7) (d) of
the TAA, that “records” includes a record of (i) the assets and liabilities of the
foreign trust; (ii) all entries from day to day of all sums of money received and
expended by the trustee in relation to the foreign trust and the matters in respect
of which the receipt and expenditure take place; and (iii) if the trust caries on a
business, the charts and codes of accounts, 27 the accounting instruction manuals,
and the system and programme documentation which describes the accounting
system used in each income year in the administration of that trust.
216. As noted under A.1.4, the main sanction for non-compliance with
22(7) (records to be kept) of the TAA is the knowledge offence in sec-
tion 143A. It applies if a resident trustee “knowingly” fails to disclose
information, or keep or provide records, as required by law. If a resident
foreign trustee has failed to comply with the disclosure and record keeping
requirements but was not aware of these rules, sanctions will not apply. As a
matter of practice, IR notifies the trustee of his or her tax responsibilities as
a trustee of a foreign trust (meaning a trust with a non-resident settlor), seeks
the required information disclosure and outlines the recordkeeping require-
ments. New Zealand is recommended to monitor that enforcement provisions
are effective to ensure the availability of information in all cases.

A.2.2. Underlying documentation
217. The 2011 Report found that both company law and tax law require
that underlying documentation in accordance with the standard be maintained
to support the accounting records.

Oversight and enforcement of requirements to maintain accounting
records

Inland Revenue
218. IR has approximately 800 investigators, 1000 debt collectors, and
almost 300 community compliance officers who form the majority of the

27. A “chart of accounts” is a listing of every account in an accounting system.
Individual accounts within an accounting system may be designated by numbers
and/or letters – these designators are “codes of accounts”.

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compliance staff working in the field. These staff are also closely supported
by almost 200 lawyers and legal support officers. There are comprehensive
registration and filing requirements, followed by educational efforts and
investigation and auditing work, as described under A.1.1 above.
219. The following table provides the number of companies, partnerships
and trusts registered as at 31 December in each of the years in the peer review
period.
Number of registered taxpayers per type of entity or arrangement

2014 2015 2016
Companies 606 973 621 054 577 369
Trusts excluding non-resident settlor trusts 361 188 340 120 332 751
Partnerships 120 043 116 795 113 696
Non-resident settlor trusts 8 890 10 317 11 750
Overseas companies 5 279 5 375 5 373
Limited partnerships 1 607 1 850 2 084
Overseas limited partnerships 140 121 103

220. IR has run a wide range of educative and informative campaigns
in various communities and different industries around New Zealand. One
major underlying programme that has been active since 2010 is the Hidden
Economy Programme. The programme comprises a ten-year strategy to
help improve IR’s ability to detect and address those operating in the hidden
economy – comprising of monetary and non-monetary transactions intention-
ally not declared or not accurately reported.
221. Investigators take the lead in detecting and addressing taxpayer’s
non-compliance across the range of laws and policies administered by IR.
Their primary role is to detect, address and deter non-compliance using risk
profiles generated and prioritised in partnership with IR analysts.
222. Generally speaking, except for very serious offences, IR applied
civil penalties to foster compliance. The New Zealand tax system relies on
taxpayer’s voluntarily meeting the IR obligations, for example, by filing tax
returns by the due date. Late payment penalties apply as well as penalties for
failure to comply with filing obligations. In year 2016, IR imposed late filing
penalties on 53 715 companies, partnerships and trusts. Tax returns include
a summary of the financial statements of a business. The late filing penalties
were applied in circumstances where a return was not provided at all, and as
such we are unable to provide a percentage of penalties that relate specifi-
cally to accounting obligations. Details on compliance with tax returns are
included in section A.1 of this report.

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223. Criminal penalties are imposed after a successful prosecution by IR
in court. The table below contains the number of successful prosecutions for
those offences most relevant to the failure to register and provide information
to IR when require: 28

Criminal penalties imposed in connection with the failure to
register and provide information to IR

1 July 2013- 1 July 2014- 1 July 2015- 1 July 2016‑
Statutory 30 June 30 June 30 June 31 December
Relevant offence reference 2014 2015 2016 2016
Failure to provide information/returns Section 143(1)(b) 3 2 4
Failure to register for GST Section 143(1)(c) 3
Knowledge offences
Knowingly fails to keep books or records Section 143A(1)(a)
Knowingly fails to provide information/ Section 143A(1)(b) 2 4 1 3
returns
Knowingly provides false information/ Section 143A(1)(c) 2 2 1
returns
Evasion Offences
Fails to keep books or records, intending Section 143B(1)(a) 4 1
to evade
Fails to provide information/returns, Section 143B(1)(b) 18 9 20 4
intending to evade
Provides false information/returns, Section 143B(1)(c) 24 19 27 7
intending to evade

Companies Office
224. The oversight and enforcement efforts carried out by the Companies
Office are described in section A.1.

Availability of accounting information in practice
225. No issues arose during the period 2007-09 with respect to the avail-
ability of accounting information. In the current review period, New Zealand
advises that it has been able to provide the requested accounting records in
all cases. In the current review period New Zealand received inquiries for
accounting information in approximately 17% of the requests received. Peer
input confirms that the information was provided to the satisfaction of the
peers.

28. Only statistics relating to offences relevant to IR’s ability to obtain information
on request have been provided.

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Overview of the different types of companies in New Zealand– 81

A.3. Banking information
Banking information and beneficial ownership information should be available
for all account holders.

226. The 2011 Report concluded that financial institutions operating in
New Zealand were obliged to maintain information on all account-holders
and related financial and transactional information. Element A.3 was
determined to be in place and rated Compliant. All requests for banking
information had been answered.
227. The EOIR standard now requires that beneficial ownership informa-
tion (in addition to legal ownership) in respect of accountholders be available.
In this regard the AML/CFT law in New Zealand requires that banks, as
reporting entities for the purposes of the AML/CFT Act, conduct CDD on a
customer, any beneficial owner of a customer and any person acting on behalf
of a customer. Varying levels of CDD apply based on the risk of the business
relationship. A bank is required to conduct on-going CDD on a business
relationship and must retain these records for a period of at least five years.
228. During the previous review period New Zealand had no issues in
respect of the availability of bank information. During the current review
period 27% of the requests received by New Zealand contained inquiries for
banking information.
229. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

A.3.1. Record-keeping requirements
230. The 2011 Report noted that financial institutions operating in New
Zealand were obliged to maintain information on all account-holders and
related financial and transactional information The 2011 Report referred to
provisions of the Financial Transactions Reporting Act 1996 (FTR Act), which
was in force at the time, as well as to some provisions of the AML/CFT Act
that were going to enter into force with respect to banks in 30 June 2013.

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231. Substantively, the obligations on banks, previously under the FTR
Act, 29 relating to account records, financial and transactional information,
are now provided only for under the AML/CFT Act.
232. Under section 49 of the AML/CFT Act, banks (as reporting entities),
in relation to every transaction conducted through them, must keep records
that are reasonably necessary to enable that transaction to be readily recon-
structed at any time. Records must contain, among others, the following
information: (i) the nature of the transaction; (ii) the amount of the transac-
tion and the currency in which it was denominated; (iii) the date on which the
transaction was conducted; (iv) the parties to the transaction; (v) the name
of the officer or employee or agent of the reporting entity who handled the
transaction. Those requirements are in line with the standard.

Beneficial ownership information on account-holders
233. The 2016 ToR specifically require that beneficial ownership infor-
mation be available in respect of all account-holders. As explained in detail
under A.1.1, all AML reporting entities, including banks, are required to
conduct customer due diligence (CDD) on a customer, any beneficial owner
of a customer and any person acting on behalf of a customer (section 11).
Varying levels of CDD apply based on the risk of the business relationship
(ss. 14 (standard), 18 (simplified) and 22 (enhanced)). Additionally reporting
entities are required to conduct on-going CDD in accordance with section 31.
This information must be maintained for a period of not less than five years
after the end of the relevant business relationship (s. 50).
234. The beneficial owner definition under the AML/CFT Act contains all
elements of the international standard.
235. Third party reliance is permitted under certain conditions, including
that the relied person has conducted relevant CDD procedures to at least the
standard required by the AML/CFT Act and regulations and has provided
to the reporting entity: (i) relevant identity information before the reporting
entity establishes a business relationship or an occasional transaction is con-
ducted; or (ii) relevant verification information as soon as practicable, but no
later than five working days, after the business relationship is established or
the occasional transaction is conducted (s. 31). The reporting entity relying
on a third party is responsible for ensuring that CDD carried out by the third-
party is in accordance with the AML/CFT Act (s. 33(3)). As referenced under
A.1.1, the 2017 amendments to the AML/CFT Act introduce an exception to
the responsibility of the New Zealand reporting entity (s. 33(3A)) if certain

29. The FTR Act still covers real estate agents, the NZRB, lawyers and incorporated
firms, conveyancing practitioners and accountants.

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conditions are met. This is not in line with the standard, which requires that
where third-party reliance is permitted, the ultimate responsibility for CDD
measures remains with the AML reporting entity relying on the third party. 30
As New Zealand has not issued a list or class of approved entities, the excep-
tion is not yet in effect. It is recommended that New Zealand ensure that its
Third Party Reliance regime is in line with the international standard before
any exceptions are granted.
236. Non-compliance with record keeping requirements under the AML/
CFT Act is subject to significant penalties as described under A.1.1.
237. A small gap is noted in respect of information relating to trusts.
The Anti-Money Laundering and Countering Financing of Terrorism
(Requirements and Compliance) Regulations 2011 allow reporting entities
to satisfy the requirement to identify the beneficiaries of the trust, if the
customer is a trust that is a discretionary trust or a charitable trust or that has
more than ten beneficiaries, by obtaining a description of each class or type
of beneficiary; and if the trust is a charitable trust, the objects of the trust
(s. 6(2)). It is noted as, detailed under A.1.4, pursuant to the AML supervisors’
Fact Sheet on Trusts, CDD obligations in relation to trusts would also include
the identification of (in addition to beneficiaries of trusts): (i) the beneficial
owner of the trust which may include trustees; and any other individual who
has effective control over the trust, specific trust property, or with the power
to amend the trust’s deeds, or remove or appoint trustees (such as a protector
or a special trustee or one or more of the beneficiaries of the trust); (ii) per-
sons acting on behalf of the trust (including persons who have authority to act
on behalf of the trust, such as trustees or other persons who are able to give
instructions about the trust’s assets).
238. The guidance on CDD of trusts issued by AML supervisors notes
that the trust structure should be verified using documents, data or informa-
tion issued by a reliable and independent source, and this may require the
provision of relevant extracts from a trust deed, subsequent deeds of appoint-
ment and amendment. It is not clear if that is required when the exception
provided under section 6(2) applies (i.e. regarding the identification of ben-
eficiaries of trusts).
239. The international standard requires that, for beneficiary(ies) of trusts
that are designated by characteristics or by class, financial institutions should
obtain sufficient information concerning the beneficiary to satisfy the finan-
cial institution that it will be able to establish the identity of the beneficiary
at the time of the pay-out or when the beneficiary intends to exercise vested
rights. 31 It is not clear that this will be the case in New Zealand, in particular

30. FATF Recommendations 17 and 22.
31. FATF’s Interpretative Note to Recommendation 10 (Customer Due Diligence).

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where beneficiaries have not been identified solely for the reason that there
are more than ten of them.
240. New Zealand explained that the decision to set a threshold for the
identification of beneficiaries to a trust is grounded in the different varie-
ties of trusts that exist in the New Zealand context. New Zealand advises
that trusts with more than ten beneficiaries in the New Zealand context are
rare and are most often “iwi trusts” which result from settlements of historic
disputes between New Zealand and its indigenous population under the New
Zealand founding document, the Treaty of Waitangi. As a treaty settlement
is intended to cover an entire iwi (or tribe), an iwi trust giving effect to that
settlement could have hundreds or thousands of named beneficiaries. For this
reason, a policy decision was taken to set a threshold to acknowledge that, for
some New Zealand trusts, it is impracticable to identify every named benefi-
ciary. New Zealand considers that this policy decision is consistent with its
risk profile and understanding of the types of trusts likely to have more than
ten beneficiaries.
241. New Zealand advises that all trusts are subject to enhanced due
diligence under the AML/CFT Act (section 22(1)(a)(i)), including iwi trusts
or any other trusts involving more than ten beneficiaries. This requires the
reporting entity to identify and take reasonable steps to verify not only the
beneficial owners of the trust, but also its purpose and source of funds (sec-
tions 23-24 of the AML/CFT Act). In order to understand who has effective
control or ownership of the trust per the AML/CFT Act’s definition of benefi-
cial owner (section 5), the reporting entity will need to understand the trust’s
structure, including who are the beneficiaries. In practice, banks satisfy this
requirement by obtaining and retaining a copy of the trust deed, among other
documentation. New Zealand thus considers that beneficiaries are identified
through the enhanced due diligence process.
242. New Zealand also notes that a copy of the trust deed (and all
amending deeds/functional equivalents) is provided to Inland Revenue on
registration of trusts having a non-resident settlor and a resident trustee.
Further, in relation to these trusts, trustees are required to provide details of
all fixed beneficiaries and details of discretionary beneficiaries/beneficiary
classes sufficient for the Commissioner to determine, when a distribution is
made under the trust, whether a person is a beneficiary.
243. New Zealand considers that the combination of these factors means
that any gap in the identification of beneficiaries under the AML/CFT Act is
theoretical or minor. New Zealand should monitor the use of trusts with more
than ten beneficiaries to ensure that the risk level remains low and review its
regime to bring it in line with the standard if the risk profile of iwi trusts or
any other trusts with more than ten beneficiaries changes.

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Overview of the different types of companies in New Zealand– 85

244. As also noted under A.1.1, a few aspects of New Zealand’s obliga-
tions to identify beneficial ownership could be enhanced, as summarised
below:
• Some aspects of New Zealand’s framework are clarified by means
of guidelines, which are provided for AML obligated persons to
assist them in interpreting the AML/CFT Act and cannot be relied
on as evidence of complying with the requirements of that Act. New
Zealand considers that the guidance to AML obligated persons is
supported by engagement by supervisors with reporting entities (for
instance, on a one on one basis) to help them understand the various
scenarios in which beneficial ownership is exercised. New Zealand
should ensure that there is sufficient effective guidance to assist
reporting entities in interpreting the obligations under the AML/
CFT Act to identify the beneficial owners of customers in line with
the standard.
• If the AML obligated entity has not collected beneficial ownership
at the time of the client on boarding (or collected information under
a lower standard as per requirements under previous legislation),
there is no explicit requirement for the AML obligated entity to col-
lect beneficial ownership information as defined under the AML
Act in the course of on-going monitoring in all cases; however,
New Zealand supports that this is required and done in practice on
the basis of the paramount obligation to identify beneficial owners
provided under section 14(1) which applies to customers on-boarded
before and after the entry into force of the AML Act. New Zealand
should monitor on an on-going basis that beneficial ownership infor-
mation is available for all New Zealand incorporated companies
and all foreign companies that are resident for tax purposes in New
Zealand.
• Section 13 of the AML Act allows some flexibility in terms of
the documentation to verify the beneficial owner of a customer. It
provides that verification of identity must be done on the basis of
(i) documents, data, or information issued by a reliable and independ-
ent source; or (ii) any other basis applying to a specified situation,
customer, product, service, business relationship, or transaction
prescribed by regulations. New Zealand advised that there is enough
detail and flexibility in the AML Act and there was no need to issue
regulations to cover specific situations, customers, products etc.
As the Act does refer to the prescription of regulations, it remains
unclear the circumstances where AML reporting entities can rely on
other sources than a reliable and independent source. New Zealand is
recommended to clarify this aspect.

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86 – Overview of the different types of companies in New Zealand

Enforcement provisions to ensure availability of banking information
245. In New Zealand banks are supervised by the RBNZ. Of its 110
reporting entities, the RBNZ supervises 24 registered banks, 14 life insurance
providers, 27 non-bank deposit takers and 45 entities who are the members
of a designated business group. Of the 24 registered banks, the five larg-
est banks were responsible for handling approximately 90% of the volume
and value of transactions during the year. A comprehensive overview of the
RBNZ’s oversight and enforcement activities is provided under section A.1.1
above.

Availability of bank information in practice
246. During the previous review period New Zealand had no issues in
respect of the availability of bank information. During the current review
period 27% of the requests received by New Zealand contained inquiries for
banking information. New Zealand has never encountered a situation where
records were unavailable. Peers were satisfied with New Zealand’s response
to their requests for banking information and did not raise any issue with
respect to the availability or quality of bank information.

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Part B: Access to information– 87

Part B: Access to information

247. Sections B.1 and B.2 evaluate whether competent authorities have
the power to obtain and provide information that is the subject of a request
under an EOI arrangement from any person within their territorial jurisdic-
tion who is in possession or control of such information, and whether rights
and safeguards are compatible with effective EOI.

B.1. Competent authority’s ability to obtain and provide information
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information).

248. The 2011 Report found that New Zealand’s IR had broad powers
to access ownership, accounting, banking and other types of information
in order to respond to exchange of information requests and had adequate
powers to compel the production of such information. Moreover, there were
no statutory bank secrecy or other secrecy provisions in place that would
unduly restrict exchange of information. During the previous review period,
there were no instances where New Zealand did not provide information to its
EOI partners due to difficulties in obtaining requested information.
249. Since the 2011 Report, no significant changes have been made to
New Zealand’s access powers and they have continually proven to allow
timely and adequate access to all types of information requested by New
Zealand’s EOI partners.
250. In the current review period, New Zealand received 194 requests and
IR has not encountered any difficulties in obtaining information from various
sources in all but one case where there has been an application for judicial
review by the information holder. A final decision on this case is currently
pending.

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88 – Part B: Access to information

251. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

B.1.1. Ownership, identity and bank information
252. The 2011 Report analysed New Zealand’s exchange of information
powers (paras. 197 to 211) to obtain information. The same rules continue
to apply.

Powers to obtain information
253. IR has wide-ranging information gathering powers conferred on it
under the TAA. The two key provisions in the Act are at section 17 (access to
information) and section 16 (access to premises). Both sections confer powers
to IR to obtain information for a number of express purposes, and also more
generally “for the purpose of carrying out any other function lawfully con-
ferred on the Commissioner”. Exchange of information is a function lawfully
conferred on the Commissioner.
254. Section 17 provides that “every person … shall, when required by the
Commissioner, furnish in writing any information in a manner acceptable
to the Commissioner, and produce for inspection any documents which the
Commissioner considers necessary or relevant …”. The use of the term “doc-
ument” subsumes the previous use of the term “book” which was present in
section 17 at the time of the 2011 Report. Documents are broadly defined 32 to
remove references to redundant technology and to future proof the definition
against new advances in technology.
255. Section 16 gives “the Commissioner or any officer [of IR] author-
ised by the Commissioner in that behalf” the power to have “full and free
access to all lands, buildings and places and to all documents, whether in the
custody or under the control of a public officer or a body corporate or any
other person whatever, for the purpose of inspecting any documents and any
property, process, or matter which the Commissioner or officer considers

32. The definition refers to (a) a thing that is used to hold, in or on the thing and
in any form, items of information; (b) an item of information held in or on a
thing referred to in (a); (c) a device associated with a thing referred to in (a) and
required for the expression, in any form, of an item of information held in or on
the thing (s. 3 of the TAA).

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Part B: Access to information– 89

necessary or relevant”. However, for entry to a private dwelling, a warrant
must first be issued by a judicial officer (section 16(3)). Documents may be
removed to make copies (section 16B). Subject to the issue of a warrant (or
by consent of the occupier), documents may be retained for inspection for as
long as is necessary (section 16C).
256. IR may also apply to the District Court for an inquiry (including
examination of witnesses under oath) to be held before a District Court Judge
(section 18). IR may also obtain information by requiring any person to attend
and give evidence under oath before the Commissioner or an authorised
officer (section 19).
257. The use of IR’s powers in the context of EOI has been confirmed in
the case of Avowal Administrative Attorneys Ltd v District Court at North
Shore & Anor (Avowal). Avowal concerned challenges by way of judicial
review to the legality of searches ordered by IR of private and commercial
properties occupied by Avowal and others under section 16 of the TAA. In
this case, it was argued that IR could not use its powers of inspection or inter-
view to collect information solely for the Australian Taxation Office (ATO).
The High Court found that IR could use its search powers even if the purpose
had been purely to assist the ATO. As long as the information was obtainable
under the law of Australia, it was of a kind that was required to be disclosed.
Article 26(2)(b) of the relevant treaty provided that the Commissioner had
no obligation to disclose information that would not be accessible under
Australia’s tax laws or administrative processes by a broadly analogous
process. The Commissioner was not required to undertake a process that not
only complied with section 16 of the TAA, but also the relevant Australian
legislation and guidelines relating to searches in operations in Australia.
The case was affirmed on appeal on 11 May 2010. A current case where the
Commissioner’s powers have been challenged is discussed under section B.2
of this report (Chatfield litigation).

In practice
258. In practice, in order to collect any type of information or document,
IR advised that it will approach the source of information most likely to
hold the requested information. Generally, the competent authority will first
search IR’s internal systems before going externally, either to a government
authority (typically the business register), third-party information holders
(e.g. banks, tax agents, companies, individuals).
259. IR’s internal systems are an important source of information and
contain information collected from general disclosure requirements as well
as domestic inquiries already carried out (e.g. an audit of a taxpayer). Before
making external inquiries that may potentially alert the subject of an EOI

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90 – Part B: Access to information

request of the existence of that request/investigation (despite no notification
or information about the request is shared), New Zealand will normally con-
firm with the requesting jurisdiction if this approach can be followed.
260. When IR needs to collect information from third parties, it will com-
monly use the powers under section 17 of the TAA (access to information). In
the New Zealand environment, the normal approach to request information
from information holders is an informal one and that is done with the inten-
tion to promote voluntary compliance (in the spirit set in s. 6A of the TAA).
That is usually done by means of a telephone conversation or a letter without
the need of issuing a formal notice with reference to penalties and a hard
deadline. A reasonable time to provide the information is agreed. Normally,
that ranges from 14 to 28 days. Where co-operation does not occur on the
basis of informal requests, a formal notice will promptly be issued.
261. Generally section 17 notices will contain a reference to the requested
information; the full name of the person about whom information is being
asked (where available) and other information such as date of birth, address
and/or bank account number (where available); the name of the person that
the information is to be returned to (i.e. the IR official managing the case);
the date by which the information must be sent in to IR; a reference to legal
professional privilege; a reference to non-disclosure right for tax advice docu-
ments (where appropriate); the penalties for non-compliance. In some cases, a
reference to the EOI instrument has been added to the notices to demonstrate
that the information was necessary and relevant in the circumstances when
for instance a domestic audit had already been conducted in the taxpayer
(covering for instance the same years where information has been requested).
262. Prior to 2015, it was the practice that IR field staff would be involved
in accessing information for EOI in most instances via s. 17 notices, s. 19
interviews, or s. 16 access to premises where required in order to reply to
requests. This system generally worked well in practice. Since 2015, however,
the EOI Team has incorporated officers with experience in investigations and
that has permitted the team to have a more significant role in the access to
information. As a result, since then access to information for EOI is in most
instances performed by the EOI Team without the need of resorting to field
staff. This has allowed a greater control of the access part of the EOI work as
well as the use of a broader range of the skills of the EOI staff.
263. Field officers involved in EOI are located in different parts of the
country (e.g. Auckland, Christchurch, and Wellington). The EOI Team has
created a network of field officers across the country who have been working
in EOI and are familiar with procedures to be followed (in particular in rela-
tion to ensuring confidentiality). The EOI Team also works closely with the
field staff in the process of obtaining information.

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Part B: Access to information– 91

264. IR also has the powers to conduct an audit to solely collect informa-
tion for purposes of EOI. There are no legal or procedural limitations on how
a person may be audited or the number of times they may be audited that
would limit the ability of the New Zealand competent authority or field staff
to use their access powers for the purpose of EOI requests.

Accessing legal ownership information
265. The main sources of information utilised by the competent authority
to obtain legal ownership information are the business register (Companies
Office), IR’s internal systems and requesting the information from the entity
itself. As noted in section A.1, New Zealand receives very few exchange
requests that seek only legal ownership details, presumably because legal
ownership information for companies is publicly available on New Zealand’s
Companies Office website. The EOI Team will normally be able to collect
legal ownership directly and occasionally where there is the need to contact a
legal entity or arrangement, IR field staff may be involved.

Accessing beneficial ownership information
266. Generally, the main source of beneficial ownership information
utilised by the competent authority is the entities themselves. In the case of
trusts, a trustee is required under trust law to know the terms of the trust
and, in practice, IR has been able to obtain beneficial ownership informa-
tion on a trust from trustees where required for EOI purposes. The AML/
CFT Act requires that due diligence be undertaken by reporting entities on
their customers and, as such, AML obligated entities can also bean important
source of beneficial ownership information. New Zealand considers that sec-
tion 17 powers can be used to collect beneficial ownership information and
no impediment is provided for it to do so in the AML/CFT Act.

Accessing accounting information
267. For accounting information, the main source of information used by
the competent authority is the entity/arrangement itself. Accounting informa-
tion is required to be maintained by the relevant entities/arrangements under
tax law and under the general laws governing the particular entity/arrange-
ment. Moreover, “large” overseas companies 33 that have more than 25%
overseas ownership are required to register their financial statements with the

33. Under the FR Act, an overseas company is large if either of the following applies:
• as at the balance date of each of the two preceding accounting periods, the
total assets of the entity and its subsidiaries (if any) exceed NZD 20 million

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92 – Part B: Access to information

Companies Office under section 207D of the Companies Act, and resultantly
this information is available to the competent authority by consulting the
Companies Office. Balance sheet and other information filed with tax returns
can be directly accessed by the competent authority from IR’s databases.

Accessing bank information
268. Bank information can be directly requested from a bank under
section 17 of the TAA. From a legal perspective, no special procedures are
required for the competent authority to obtain information held by banks
or other financial institutions. IR has entered into an arrangement with the
New Zealand Bankers’ Association (NZBA) through a memorandum of
understanding signed by the Commissioner and the Chief Executive of the
NZBA for, and on behalf of its member banks (consisting of the main banks
operating in New Zealand). The memorandum of understanding sets out a
particular process whereby notices issued to banks for information can take
three priority levels, being “standard”, “urgent” and “exceptional”. These
priority levels dictate the timeframe a bank has to comply with the notice.
269. Under the procedures agreed with the banks, the banks nominate
liaison officers to deal with IR requests. The “standard” deadline to provide
the information will be 21 days/28 days. In most cases, even if this deadline
is provided, information is often provided quicker by the bank. For very
voluminous requests additional time can be given. New Zealand is able to
access bank information on the basis of a name and other identifier (such as
date of birth), a bank account number etc. IR can request all banks to check
if a given person has a bank account and access the relevant banking records.
Those are standard procedures in New Zealand and have been used in the
context of EOI.

B.1.3. Use of information gathering measures absent domestic tax
interest
270. New Zealand has no domestic tax interest with respect to its infor-
mation gathering powers Information gathering powers provided to New
Zealand’s tax authority under the TAA can be used to provide exchange of
information assistance regardless of whether New Zealand needs the infor-
mation for its own domestic tax purposes. There were no issues in this regard
during the 2007-09 review period and no such issues have arisen in the cur-
rent review period.

• in each of the two preceding accounting periods, the total revenue of the
entity and its subsidiaries (if any) exceeds NZD 10 million.

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B.1.4. Effective enforcement provisions to compel the production of
information
271. IR generally has the power to compel production either through the
imposition of a fine or by obtaining an order of District Court to produce the
information in the case of failure to comply with a notice.
272. Pursuant to sections 143 or 143A of the TAA, an offence is com-
mitted where a person does not provide, or knowingly, does not provide,
information to the Commissioner when required to do so by a tax law: sec-
tions 143 or 143A. However, a person cannot be convicted of an offence for
not providing information or knowingly not providing information (other
than tax returns and tax forms) if the person proves that they did not have
that information in their knowledge, possession or control (sections 143(2)
(a) and (b) and 143A(2)(a) and (b)). However, in such circumstances, if the
person was required to hold that information, he or she will have committed
a different offence (s. 143A(1)(a)), for failing to keep documents required to
be kept under a tax law.
273. Specific exemptions from liability are also provided for trustees of
non-resident settlor trusts that fail to keep business and other records required
to be kept under section 22 of the TAA if they can prove that they did not
know the requirements of section 22. As noted in A.1.4, IR reports that it has
been working closely with trustees to ensure they understand fully the new
requirements to register and to file annual returns. New Zealand is recom-
mended to monitor that enforcement provisions are effective to compel the
production of information in all cases.
274. It is also an offence under section 143H of the TAA to obstruct the
Commissioner or an officer acting in the lawful discharge of their duties or
in the exercise of the Commissioner’s or officer’s powers under a tax law.
275. A conviction under section 143 (absolute liability offences) in rela-
tion to the failure to comply with a section 17 notice results in a liability
in the first instance of a fine of NZD 4 000 (EUR 2 400), in the second
instance NZD 8 000 (EUR 4 800), and in subsequent instances NZD 12 000
(EUR 7 200).
276. A conviction under section 143A (knowledge offences) in relation to
the failure to comply with a section 17 notice results in a liability to a fine not
exceeding NZD 25 000 (EUR 15 000) in the first instance and NZD 50 000
(EUR 30 000)for subsequent instances of the same type of offence.
277. An alternative remedy is available under section 17A of the TAA. This
section allows the Commissioner to apply to the District Court for an order to
produce information in the event of non-compliance with a section 17 notice. In
such circumstances, the District Court has the power to order the information

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94 – Part B: Access to information

be produced for the Commissioner. The failure to comply with a court order
wilfully and without lawful excuse is an offence resulting in penalties include
imprisonment for up to three months or a fine not exceeding NZD 1 000
(EUR 600) (s. 143G of TAA and s. 212 of the District Court Act 2016).

B.1.5. Secrecy provisions
278. The 2011 Report found that there were no provisions under New
Zealand’s laws relating to the secrecy of ownership, identity or accounting
information. The situation remains the same.
279. The Privacy Act 1993 imposes a general obligation on any “agency”
(defined as meaning any body of persons, whether corporate or unincorpo-
rated, and whether in the public sector or private sector) that holds personal
information to maintain secrecy in relation to that information. However,
section 7 of that Act provides that disclosure of information is permitted
if authorised by any other enactment. As such, information required to be
disclosed under an EOI instrument may be exchanged despite any confiden-
tiality requirement of any other enactment (TAA s. 88), including the Privacy
Act.
280. The Court of Appeal has ruled that, while banks owe a general
obligation of confidentiality to their customers, this obligation is subject to
limits and that there is no confidence preventing the disclosure of iniquity:
R v Harris [2000] 2 NZLR 524. Furthermore, the Code of Banking Practice,
agreed to by the NZBA, provides that “Certain circumstances require us to
disclose your confidential information, for example under the TAA 1994 the
IR Department may request certain information from us”(s. 2.1.8).

Professional secrecy
281. As noted in the 2011 Report, among the situations in which New
Zealand is not obliged to supply information in response to a request is when
the requested information would disclose confidential communications pro-
tected by attorney-client privilege (as described in section 20 of the TAA).
282. As also noted in the 2011 Report, the TAA also provides a statutory
right enabling taxpayers to claim non-disclosure for certain tax advice con-
tained in documents prepared by tax advisors (ss. 20B to 20G of the TAA).
The statutory right also extends to certain documents created by taxpayers
for the purpose of seeking tax advice from tax advisors. The right does not
apply to tax contextual information (s. 20F).
283. Generally, IR seeks tax contextual information in order to establish
the facts relating to a transaction or series of transactions (though information
demands may relate to wider matters) including relevant information such

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as whether the transaction took place, who were the parties, the purpose of
the transaction, relevant dates, amounts, conditions, formulae, etc. In prac-
tice, it is worth noting that IR officers are generally not concerned with the
substance of tax advice contained in tax advice documents, but rather with
relevant facts which relate to a taxpayer’s tax position. Those facts can be
ascertained by means of reviewing the tax contextual information which is
required to be provided on request.
284. During the previous and the current review period, legal professional
privilege and tax advice non-disclosure right were not an impediment to
obtaining information to respond to an EOI request. No issues were raised
by peers either.

B.2. Notification requirements, rights and safeguards
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information.

285. The 2011 Report found that there were no issues regarding rights and
safeguards applicable to persons in New Zealand. The element was deter-
mined to be in place and rated Compliant.
286. The 2016 ToR have introduced a new requirement in circumstances
where an exception to notification has been granted – in those cases there
must also be an exception from time-specific post-notification. As New
Zealand law does not require the person who is the subject of a request for
information to be notified, the changes made to the ToR do not have an
impact in New Zealand. Under New Zealand law, there is no appeal right of
the person who is the subject of a request for information or of the person
who holds the information. Notwithstanding the above, persons affected by
an information request are not prevented from seeking judicial review of the
Commissioner’s decision to utilise her powers to gather and exchange infor-
mation. During the review period, rights and safeguards in New Zealand
have not unduly delayed or prevented exchange of information. In one case
the information holder has sought judicial review. The case is still subject to
appeal by the Commissioner and is referenced in sections B.2, C.1 and C.3
of this report.
287. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

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96 – Part B: Access to information

B.2.1. Rights and safeguards should not unduly prevent or delay
effective exchange of information
288. The 2011 Report noted that and it remains the case that New Zealand
domestic law does not require the person who is the subject of a request to
be notified.
289. Where information must be obtained from an information holder
there is no additional information that is required to be included in the
section 17 notice on top of what would be required to be included in the
notice addressed to the subject of an investigation or information request
in a domestic context. Enough information must be provided to the person
in order for he or she to correctly identify the information required to be
provided. There is no requirement for the notice to include a reference to an
EOI instrument or any information about the request. Generally, a section 17
notice may include a statement that the notice is issued “in order to exercise
the Commissioner’s statutory functions”; however, there is no requirement to
describe the particular function. In some cases a notice will be issued to state
that the information requested is “necessary or relevant to establish the tax-
payer’s current tax positon” or to “establish their taxation lability”. In practice
a reference to a EOI instrument is not included on a notice in an EOI context.
290. Under New Zealand law, there is no appeal right of the person who
is the subject of a request for information or of the person who holds the
information. On some rare occasions, the judicial review process has been
utilised to, in essence, challenge the Commissioner’s use of her information
gathering powers. The judicial review process in New Zealand has been
formalised through the Judicial Review Procedure Act 2016 (previously by
the Judicature Amendment Act 1972). The purpose of this act is to set out
the procedural provisions for the judicial review of the exercise of a statutory
power, the failure to exercise a statutory power or the proposed or purported
exercise of a statutory power.
291. Although New Zealand has no appeals process in relation to the
exercise of the Commissioner’s access to information powers, the decision to
utilise the search or access power can be subject to judicial review, which is
a means to hold those who exercise public power accountable for the manner
of its exercise. 34
292. The subject of an information request in an EOI context has sought
judicial review of the Commissioner’s decision to utilise her information
gathering powers on one occasion during the review period (Chatfield litiga-
tion). The Chatfield case is also discussed under section C.3 concerning the
aspects related to the confidentiality of an EOI request. Prior to the review

34. Judicial Review Procedure Act 2016.

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Part B: Access to information– 97

period, there have been two other judicial review cases Squibb (see sec-
tion C.3) and Avowal (see section B.1) which confirmed the adequacy of New
Zealand’s powers of access to information to reply to EOI requests.

Chatfield litigation
293. In terms of background to this case, IR issued notices for the produc-
tion of information to Chatfield, the registered tax agent of the companies
that were subjects of an EOI request. Chatfield resisted compliance with
the notices, querying the basis on which the Commissioner had issued the
notices. Chatfield’s various claims were rejected by the Commissioner.
On 13 May 2015, Chatfield commenced an application for review of the
Commissioner’s decision to issue the s. 17 notices under the Judicature
Amendment Act 1972. Chatfield’s application for review was on two princi-
pal grounds:
a. That the Commissioner’s actions in the present case were inconsist-
ent with IR’s Operational Statement 13/02, which is intended to
offer guidance on the exercise of the Commissioner’s power under
section 17. Chatfield said the Commissioner’s actions were incon-
sistent with the statement, and were issued in breach of Chatfield’s
legitimate expectation and were invalid.
b. That in issuing the section 17 notices the Commissioner failed to
take into account relevant considerations, namely :
1. the terms of IR’s Operational Statement 13/02;
2. the “limited nature of the tax agent/client relationship”; and
3. the DTA and, in particular, the terms of article 25. 35
294. By judgment dated 27 September 2016 (Chatfield & Co Ltd v
Commissioner of IR [2016] NZHC 2289), the High Court struck out
Chatfield’s first cause of action and the first two particulars of the second
cause of action on the basis that they were not reasonably arguable. This left
as the sole remaining cause of action the contention that the Commissioner
failed to consider the terms of the DTA in the decision to issue the section 17
notices. In relation to this point, Chatfield alleged that the Commissioner
erred in law in issuing the notices, and broadly, that she: (a) failed to fully
and/or accurately evaluate the EOI request and its consequences; (b) had
insufficient information to accurately assess the lawfulness of the request;
(c) purported to make an exchange of information decision where the relevant
decision-maker was not a competent authority as defined in article 3(1)(i) of

35. Article 25 of New Zealand’s DTA with the requesting jurisdiction is the equiva-
lent of article 26 of the OECD Model Convention.

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the DTC; (d) did not take into account the terms of the DTC, and in particu-
lar, articles 2 and 25, various provisions in the Tax Administration Act, and
the limitation period for tax investigations in the treaty partner; (e) failed
to take into account that some of the information sought is available in the
ordinary course of administration in the treaty partner; (f) failed to take into
account the need for the NTS to exhaust all local remedies; and (g) failed to
appreciate that some of the taxes in respect of which information is sought,
may not be covered by the DTA. Chatfield alleges that the notices were
issued pursuant to mistakes of fact, that the Commissioner failed to apply
independent judgment or independently exercise her discretion in issuing the
notices, and that the decision to issue the notices was one that no reasonable
Commissioner could properly make. The Commissioner denies that she had
erred in law in any of those respects.
295. On 22 December 2017, a decision was made by the High Court of
New Zealand (Chatfield & Co Ltd v the Commissioner of IR [2017] NZHC
3289). In summary, the court concluded that the New Zealand competent
authority did not present to the court evidence as to how he had satisfied him-
self that it would be lawful for IR to respond to the EOI requests. As such, the
judge considered that the Commissioner’s decision to issue the s. 17 notices
against Chatfield was invalid, and made an order quashing the s. 17 notices.
296. In the judgement, the court clearly established that the Commis­
sioner’s decision to issue the s. 17 notices is a decision susceptible to judicial
review:
Administrative decisions, including decisions made by the
Commissioner or her delegates, must be made in accordance with
the law. As I have already noted, this case involves a relatively
straightforward analysis of the provisions of the DTA – which
is part of domestic law – and s. 17 of the Tax Administration
Act. The power to make the decision to invoke the s. 17 power
is conferred by the legislation onto the Commissioner, and the
Commissioner, when exercising that power, must exercise it
properly, and in accordance with the law. There is no need for
deference to the Commissioner as the decision-maker when
inquiring what either the Tax Administration Act, or the DTA,
require. Review in this context can and should be hard-edged,
and a “correctness standard” should apply.
297. The judge’s decision noted relevant background papers, in particular
the EOI request, file notes that the New Zealand competent authority may have
made, and any correspondence between New Zealand’s competent authority
and the EOI partner regarding the request, had not been disclosed to the Court.
Therefore, it was difficult for the court to fully assess the measures that had
been taken by the competent authority to assess the validity of the request.

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298. According to decision, New Zealand’s competent authority needed
to “satisfy himself, by clear and specific evidence, that all of the informa-
tion requested” by the EOI partner “was needed or required in relation to an
investigation into, or other action being taken” by the EOI partner against a
domestic taxpayer, and that the information was in regard to one of the taxes
covered by the DTC. According to the decision, the New Zealand competent
authority also had to be satisfied that any information exchanged under the
EOI agreement would only be used in relation to those taxes, and that the
EOI partner had been unable to obtain the information in its jurisdiction. The
court was not satisfied that there was sufficient evidence that New Zealand’s
competent authority correctly interpreted or applied either article 2 (taxes
covered) or article 25 (EOI provision) of the DTC in question, or that he prop-
erly scrutinised the EOI’s request as required.
299. New Zealand’s competent authority advises that it plans to appeal
the decision in the New Zealand Court of Appeal and that it considers that
the implications of this judgment would be limited to the specific facts and
circumstances relating to the particular EOI request.

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Part C: Exchanging information

300. Sections C.1 to C.5 evaluate the effectiveness of New Zealand’s
network of EOI mechanisms – whether these EOI mechanisms provide for
exchange of the right scope of information, cover all New Zealand’s relevant
partners, whether there were adequate provisions to ensure the confidentiality
of information received, whether New Zealand’s network of EOI mechanisms
respects the rights and safeguards of taxpayers and whether New Zealand can
provide the information requested in a timely manner.

C.1. Exchange of information mechanisms
Exchange of information mechanisms should provide for effective exchange
of information.

301. The 2011 Report concluded that New Zealand’s network of EOI
mechanisms was “in place” and was rated Compliant. At that time, New
Zealand had 37 Double Tax Conventions (DTCs) and New Zealand had an
emerging network of 18 TIEAs. Apart from a few exceptions, the exchange
of information articles of New Zealand’s DTCs generally followed Article 26
of the OECD Model Taxation Convention wording that prevailed at the time
each DTC was entered into. Moreover, New Zealand’s closely follows the
OECD Model TIEA for most of its TIEAs.
302. Three DTCs (with Japan, Malaysia and Switzerland) and one TIEA
(with Bermuda) were identified in the text of the 2011 Report as containing
wording that was not in accordance with the standard. The Report also noted
that whilst New Zealand did not require provisions akin to Article 26(4) and
(5) of OECD Model Taxation Convention to exchange information in line
with the standard, some limitations may exist in the domestic laws of some
of its treaty partners. In-text recommendations were therefore given for New
Zealand to continue to renegotiate its older DTCs to included provisions
similar to Article 26(4) and (5) where necessary. Finally, an in-text recom-
mendation was given to New Zealand to continue to bring EOI agreements
into force expeditiously.

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303. Since the last review, New Zealand has made significant progress in
updating the EOI provision in its old DTCs and in entering into new EOI instru-
ments. Nine new bilateral EOI instruments were signed including new DTCs,
protocols to DTCs and TIEAs. Moreover, on 26 October 2012, New Zealand
signed the Multilateral Convention on Mutual Administrative Assistance
(Multilateral Convention), as amended, and ratified it on 21 November 2013
and it entered into force on 1 March 2014. As a result, all EOI relationships
entered by New Zealand are currently in line with the standard.
304. New Zealand has also made great progress in bringing EOI instru-
ments into force. However, there have been considerable delays in bringing
into force some TIEAs. Although the problem seems to have been addressed
now, the in-text recommendation for New Zealand to continue to bring EOI
agreements into force expeditiously is retained. New Zealand’s interpreta-
tion of “foreseeable relevance” is in line with the standard and its approach
is to allow exchange of information to the widest extent possible. No peers
have raised issues regarding the New Zealand’s application of the foreseeable
relevance standard.
305. The EOIR standard now includes a reference to group requests in line
with paragraph 5.2 of the Commentary to Article 26 of the OECD Model Tax
Convention. In addition, the foreseeable relevance of a group request should
be sufficiently demonstrated, and that the requested information would assist
in determining compliance by the taxpayers in the group. New Zealand has
never received group requests but advised that it is in a positon to process
such requests. Neither New Zealand’s EOI instruments nor its domestic laws
exclude the possibility for making and responding to group requests.
306. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

C.1.1. Foreseeably relevant standard
307. Exchange of information mechanisms should allow for exchange of
information on request where it is foreseeably relevant to the administration and
enforcement of the domestic tax laws of the requesting jurisdiction. The 2011
Report found that, apart from a few exceptions, the exchange of information arti-
cles of New Zealand’s DTCs generally followed Article 26 of the OECD Model
Taxation Convention wording that prevailed at the time each DTC was entered
into. New Zealand’s closely follow the OECD Model TIEA for most of its TIEAs.

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308. The 2011 Report noted that New Zealand’s DTCs with Japan (1963),
Malaysia (1976), and Switzerland (1980) incorporated additional language
that limited the exchange of information article to information at the par-
ties’ disposal under taxation laws, not covering information at their disposal
under other laws, and it limited the exchange of information to informa-
tion which is at their disposal in the normal course of administration. The
2011 Report noted, however, that in practice this wording did not limit New
Zealand’s ability to respond to a request from these jurisdictions. Since then,
New Zealand entered into a new DTC with Japan and a protocol to DTC
with Malaysia, bringing their EOI relationships in line with the standard.
Moreover, New Zealand can exchange information in line with the stand-
ard under the Multilateral Convention with all the three jurisdictions as the
Convention is in force in all of them.
309. New Zealand’s. 1976 DTC with Fiji is limited to exchanging infor-
mation for the purposes of the DTA “or for the prevention of fraud or for the
administration of statutory provisions against the avoidance of taxes”. New
Zealand advises that this DTC is currently under renegotiation. Moreover,
New Zealand interprets the scope of this provision as being wide enough to
allow for EOI up to the “foreseeably relevant” standard.
310. The 2011 Report also concluded that all but one of New Zealand’s
TIEAs met the foreseeably relevant standard. New Zealand’s TIEA with
Bermuda contained additional language that may limit the scope of infor-
mation that may be exchanged. Notwithstanding the above, New Zealand
and Bermuda can exchange information in line with the standard under the
Multilateral Convention.
311. New Zealand continues to interpret and apply its DTCs and TIEAs
consistent with the international standard. All of the nine new EOI arrange-
ments which New Zealand has signed since the 2011 Report included the
term “foreseeably relevant” in their EOI Article. Those are the DTCs with
Canada, Japan, Papua New Guinea, Samoa and Viet Nam; protocols to DTC
with India and Malaysia; and TIEAs with Niue and San Marino.
312. Interpretation of DTCs and the impact of the OECD Commentary
have been discussed in some judicial decisions in New Zealand. Justice
Ellis in Chatfield & Co Ltd v The Commissioner of IR 36 discussed the cor-
rect interpretation of DTCs. In her judgment, Ellis J confirms the relevance
of the OECD Commentary in interpreting DTCs, particularly that the later
commentaries are intended by member states to be used in interpreting and
applying DTCs concluded before their adoption, except where the commen-
taries relate to areas in which substantive changes have been made to the
Model Convention itself. The issue related to the Korean DTC, which in its

36. Chatfield & Co Ltd v The Commissioner of Inland Revenue [2015] NZHC 2099.

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104 – Part C: Exchanging information

EOI article (article 25), does not include the words “or the oversight of the
above” in paragraph 1. Justice Ellis considered the effect of the commentaries
is that the Korean DTC should be read as if those words are included.
313. A decision in Chatfield (Chatfield & Co Ltd v the Commissioner
of IR [2017] NZHC 3289) also provides some context on how New Zealand
court viewed the interpretation of the term “necessary” used in EOI article
of the Korean DTC. According to the decision, the term “necessary” would
require New Zealand’s competent authority to “satisfy himself, by clear and
specific evidence, that all of the information requested” by the EOI partner
“was needed or required in relation to an investigation into, or other action
being taken” by the EOI partner against a domestic taxpayer, and that,
among others, the EOI partner had been unable to obtain the information in
its jurisdiction. The standard requires that New Zealand is able to reply to
requests where the requesting jurisdiction has pursued all means available
in their territory to obtain the information, except those that would give rise
to disproportionate difficulties. New Zealand advised that it plans to appeal
the Chatfield decision. Moreover, New Zealand considers that the decision is
unlikely to be used as precedent due to the specific facts and circumstances
relating to the particular EOI request. New Zealand also advises that the out-
come of the case will be considered carefully and appropriate action will be
taken to ensure that it does not have a negative impact on effective exchange
of information.
314. From a practical perspective, New Zealand advises that it requires
that the requesting jurisdiction provide sufficient information to demonstrate
the foreseeable relevance of their request. New Zealand approaches inbound
requests on a holistic basis, evaluating the request as a whole. Its approach is
to allow exchange of information to the widest extent possible. New Zealand
does not require any particular information to be provided by the requesting
jurisdiction in determining whether the foreseeably relevant standard applies
and as such does not provide a template for the formulation of such requests.
If the information provided is insufficient, then, depending on the circum-
stances, New Zealand advises that it will contact the requesting competent
authority to discuss the request and seek to address any concerns.
315. Peer input did not raise any concerns regarding New Zealand’s inter-
pretation of the foreseeable relevance standard.

Group requests
316. The EOIR standard now includes a reference to group requests in
line with paragraph 5.2 of the Commentary. Neither New Zealand’s EOI
instruments nor its domestic laws exclude the possibility for making and
responding to group requests. New Zealand’s competent authority advised
that it is in a position to process group requests. New Zealand considers that

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the type of information that must be provided by the requesting jurisdic-
tion is consistent with the information that must be provided in relation to a
standard EOI request, i.e. foreseeable relevance must be established. More
information may be needed to practically comply with a group request, how-
ever New Zealand does not have a list of information that must be provided
to ensure the validity of a group request. During the review period, New
Zealand has not received group requests.

C.1.2. Provide for exchange of information in respect of all persons
317. The 2011 Report found that none of New Zealand’s EOI agreements
restricts the jurisdictional scope of the exchange of information provisions to
certain persons, for example those considered resident in one of the contract-
ing parties. No issues arose in the period 2007-09 in this regard.
318. The 2011 Report noted New Zealand’s TIEA with Bermuda, however,
provided additional requirements on the applicant State where it sought infor-
mation relating to a non-resident. As mentioned above, Bermuda and New
Zealand can now exchange information under the Multilateral Convention
which is in force in both jurisdictions.
319. The additional agreements that New Zealand has entered into since
the 2011 Report similarly do not have such restrictions. Peers have not raised
any issues in practice during the current review period.

C.1.3. Obligation to exchange all types of information
320. The 2011 Report noted that it is New Zealand’s policy is to include
a provision equivalent to Article 26 (5) in all of its new agreements. It was
also noted that, although New Zealand’s older DTCs do not include such a
provision, 37 there are no limitations in New Zealand’s laws with respect to
access to bank information, information held by nominees, and ownership
and identity information absent a provision equivalent to Article 26 (5). There
may be, however, such limitations in place in the domestic laws of some of its

37. This is currently the case of the DTCs entered with Austria, Belgium, Chile,
Denmark, Fiji, Finland, France, Germany, Indonesia, Ireland, Italy, Korea, the
Netherlands, Norway, the Philippines, Russia, South Africa, Spain, Sweden,
Switzerland, Chinese Taipei, Thailand and the United Arab Emirates. New
Zealand can also exchange information under the Multilateral Convention
with Austria, Belgium, Chile, Denmark, Finland, France, Germany, Indonesia,
Ireland, Italy, Korea, the Netherlands, Norway, the Philippines (once in force
in the Philippines), Russia, South Africa, Spain, Sweden, Switzerland and the
United Arab Emirates (once in force in the United Arab Emirates).

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treaty partners. 38 This is not a concern in practice as New Zealand’s powers
to access and provide the relevant information are not constrained by a reci-
procity requirement and New Zealand will provide all types of information
requested regardless of whether the treaty partner can provide such information
reciprocally.
321. During the new review period, New Zealand exchanged information
held by financial institutions persons acting in a fiduciary capacity and no
problems were encountered in practice. Peers have not raised any issues either.

C.1.4. Absence of domestic tax interest
322. The 2011 Report found that all EOI instruments signed by New
Zealand after 2006 included a provision equivalent to Article 26 (4) of the
OECD Model Taxation Convention, obliging the contracting parties to use
information-gathering measures to exchange requested information without
regard to a domestic tax interest. New Zealand’s older DTCs do not contain
such a provision. 39 A domestic tax interest requirement may exist for some
of New Zealand’s treaty partners. 40 This is however not a concern in prac-
tice as New Zealand does not require reciprocity in respect of provision of
information regardless of domestic tax interest and will provide the requested
information to the treaty partner. New Zealand is also able to exchange infor-
mation, including in cases where the information is not publicly available or
already in the possession of the governmental authorities. No issues have
arisen in practice in the current review period.

38. Three jurisdictions (Fiji, Chinese Taipei and Thailand) have not yet been reviewed
by the Global Forum and whether they require a provision akin to Article 26(5) of
the OECD Model Taxation Convention to exchange information in line with the
standard is not known. The DTC between New Zealand and Fiji is currently under
renegotiation.
39. This is currently the case of the DTCs entered with Belgium, Chile, Denmark, Fiji,
Finland, France, Germany, Indonesia, Ireland, Italy, Korea, the Netherlands, Norway,
the Philippines, Russia, South Africa, Spain, Sweden, Switzerland, Chinese Taipei,
Thailand and the United Arab Emirates. New Zealand can also exchange information
under the Multilateral Convention with Belgium, Chile, Denmark, Finland, France,
Germany, Indonesia, Ireland, Italy, Korea, the Netherlands, Norway, the Philippines
(once in force in the Philippines), Russia, South Africa, Spain, Sweden, Switzerland
and the United Arab Emirates (once in force in the United Arab Emirates).
40. Three jurisdictions (Fiji, Chinese Taipei and Thailand) have not yet been
reviewed by the Global Forum and whether they require a provision akin to
Article 26(4) of the OECD Model Taxation Convention to exchange information
in line with the standard is not known. The DTC between New Zealand and Fiji
is currently under renegotiation.

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C.1.5. Absence of dual criminality principles
323. The 2011 Report did not identify any issues with New Zealand’s network
of agreements in respect of dual criminality and no issues arose in practice.
324. The additional agreements that New Zealand has entered into since
then do not include dual criminality provisions. Peers have not raised any
issues in practice.

C.1.6. Exchange information relating to both civil and criminal tax
matters
325. The 2011 Report found that New Zealand’s network of EOI instru-
ments provided for exchange in both civil and criminal matters and no issues
arose in practice.
326. The additional agreements that New Zealand has entered into since
then provide for exchange of information in both civil and criminal tax
matters. No issues arose in practice in the new review period.

C.1.7. Provide information in specific form requested
327. There are no restrictions in New Zealand’s EOI instruments that
would prevent New Zealand from providing information in a specific form,
as long as this is consistent with its own administrative practices. Wherever
possible, New Zealand’s competent authority will endeavour to accommodate
the evidential requirements of the other competent authority as to the form in
which information is best obtained or presented for the purposes of proceed-
ings in the other jurisdiction. The 2011 Report noted positive experience with
this in the period 2007-09. Similarly no issues were raised by peers during
the current review period.

C.1.8. Signed agreements should be in force
328. The domestic process to bring EOI instruments into force in New
Zealand involves the following steps:
• Following signature, Cabinet is asked to consider and approve a
national interest analysis which must be prepared for every EOI
instrument and to approve the signing of the treaty.
• The treaty is then submitted for parliamentary examination. This
process involves tabling the treaty and the associated national inter-
est analysis in the House of Representatives, and referral to Select
Committee (e.g. the Foreign Affairs, Defence and Trade Committee,
the Finance and Expenditure Committee).

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• The Select Committee considers the treaty and the national inter-
est analysis and reports back to the House. The report must note
whether it has identified any matters to be drawn to the attention of
the House.
• Parliament cannot veto the treaty. However, any adverse comments
or recommendations must be considered by Cabinet, and a decision
made whether to progress the treaty. In practice, it is very rare that
Parliament raises concerns on EOI instruments.
• The next step is to incorporate the tax treaty into New Zealand
domestic law by Order in Council. This requires a submission to
Cabinet, seeking their approval for the referral of a draft Order to the
Executive Council, for signature by the Governor-General.
• Once the Governor-General has made the Order, it is published in the
New Zealand Gazette. As a rule, there is then a 28 day waiting period
before the Order enters into force.
• The entry into force of the Order in Council completes New Zealand’s
domestic procedures for entry into force of the treaty. The require-
ments of the Entry into Force Article of the treaty then apply.
Generally this requires an exchange of diplomatic notes confirming
the conclusion of all domestic procedures, with the treaty entering
force on the date of the last note.
329. The 2011 Report noted that the ratification of some of New Zealand
agreements that were signed in 2009/2010 was taking longer than usual due
to a significant number of agreements that were signed around that time.
While the 2011 Report noted that the timeframe was not of concern at the
time, it was nonetheless recommended that New Zealand continue to bring
agreements into force expeditiously.
330. New Zealand explains that on average its domestic procedures to
bring EOI instruments into force take approximately six months. There are
circumstances which may cause delays such as when the EOI instrument
needs to be signed in different languages. In addition, some delays were
observed in relation to the ratification of TIEAs as during some years the
position of High Commissioner of New Zealand for the region was vacant
or occupied in conjunction with other regions, causing delays in the com-
pletion of the entry into force process. As a result the ratification of some
EOI instruments have taken more than two years (TIEAs with Anguilla,
Bahamas, Bermuda, British Virgin Islands and Dominica and the DTC with
South Africa) Moreover, the TIEA with Saint Kitts and Nevis was signed in
2010/2011 and New Zealand still needs to complete the domestic processes
to bring it into force. It is noted that New Zealand can also exchange infor-
mation with Saint Kitts and Nevis under the Multilateral Convention. New

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Zealand is nonetheless recommended to ensure that it brings its signed EOI
instruments into force expeditiously.
331. The table below summarises the status of New Zealand’s bilateral
treaties.
Bilateral EOI Mechanisms
A Total Number of DTCs/TIEAS A = B+C 60
B Number of DTCs/TIEAs signed (but pending ratification), i.e. not in force B = D+E 1
C Number of DTCs/TIEAs signed and in force C = F+G 59
D Number of DTCs/TIEAs signed (but pending ratification) and to the Standard D 1
E Number of DTCs/TIEAs signed (but pending ratification) and not to the Standard E 0
F Number of DTCs/TIEAs in force and to the Standard F 59
G Number of DTCs/TIEAs in force and not to the Standard G 0*

*Two EOI instruments (the DTCs with Switzerland and TIEA with Bermuda) contain language
that is not in line with the standard. However, New Zealand and these jurisdictions can also
exchange information under the Multilateral Convention which allows EOI to the standard.

332. In addition to New Zealand’s bilateral mechanisms, New Zealand
signed the Multilateral Convention on Mutual Administrative Assistance
(Multilateral Convention), as amended, on 26 October 2012 and ratified it on
21 November 2013. The Convention entered into force in New Zealand on
1 March 2014.

C.1.9. Be given effect through domestic law
333. New Zealand has in place the legal and regulatory framework to
give effect to its EOI mechanisms. Under section BH 1(4) of the ITA, an EOI
instrument will then be paramount over the tax law which has been enacted
in New Zealand. An EOI instrument will also explicitly override anything in
the Official Information Act (1982) and the Privacy Act (1993). More gener-
ally, information required to be disclosed under an EOI instrument may be
exchanged despite any confidentiality requirement of any other enactment
(Tax Administration Act s. 88).

C.2. Exchange of information mechanisms with all relevant partners
The jurisdiction’s network of information exchange mechanisms should cover
all relevant partners.

334. The 2011 Report noted that New Zealand had a very active treaty
negotiation programme and that its network of EOI instruments covered
all relevant partners, meaning all those partners who were interested in

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110 – Part C: Exchanging information

entering into an EOI instrument with New Zealand. Element C.2 was rated
“Compliant”.
335. Since that review, New Zealand has continued to expand its EOI
network. Notably, it signed the Multilateral Convention on 26 October 2012
and ratified it on 21 November 2013. The Multilateral Convention entered
into force on 1 March 2014 with respect to New Zealand. New Zealand has
also signed five new DTCs (with Canada, Japan, Papua New Guinea, Samoa
and Viet Nam), two TIEAs (with Niue and San Marino), and two protocols to
DTCs (with India and Malaysia).
336. Comments were sought from Global Forum members in the prepa-
ration of this report and no jurisdiction advised that New Zealand refused
to negotiate or sign an EOI instrument with it. As the standard ultimately
requires that jurisdictions establish an EOI relationship up to the standard
with all partners who are interested in entering into such relationship, New
Zealand should continue to conclude EOI agreements with any new relevant
partner who would so require.
337. New Zealand currently has eight DTC and four TIEA negotiations
on-going.
338. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Underlying factor Recommendation
Deficiencies identified
in the implementation
of the legal and
regulatory framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

C.3. Confidentiality
The jurisdiction’s information exchange mechanisms should have adequate
provisions to ensure the confidentiality of information received.

339. The 2011 Report concluded that the applicable treaty provisions and
statutory rules that apply to officials with access to treaty information and the
practice in New Zealand regarding confidentiality were in accordance with
the standard. No issues in practice were found.

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340. There have been no changes in the legal framework and practice
since the 2011 Report. A recent court case confirmed that an EOI request
would not need to be disclosed to the information holder in the course of the
judicial review proceeding and the treaty confidentiality provisions remain
paramount (Chatfield & Co Ltd v Commissioner of IR [2016] NZHC 1234).
341. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

C.3.1. Information received: disclosure, use and safeguards
342. With three exceptions, all New Zealand’s EOI instruments have con-
fidentiality provisions modelled after Article 26 (2) of the OECD Model Tax
Convention or Article 8 of the OECD Model TIEA. The three exceptions are
New Zealand’s DTCs with Fiji; Hong Kong, China; and Switzerland, which
impose even greater restrictions on the disclosure of exchanged information.
New Zealand is also a party to the Multilateral Convention. The Multilateral
Convention replicates the model DTA and TIEA restrictions on the use and
disclosure of exchanged information.
343. Moreover, the DTCs entered into by New Zealand with Australia
and Samoa authorise the use of exchanged information for non-tax purposes.
344. As described in the 2011 Report, the confidentiality provisions of New
Zealand’s EOI instruments are backed by general confidentiality provisions
in New Zealand’s domestic tax legislation. Section 81 of the TAA imposes an
obligation on IR to maintain strict confidentiality in respect of any informa-
tion it holds. Any breach of section 81 is, pursuant to section 143C of the TAA,
an offence and on conviction the offender is liable to up to six months impris-
onment, a fine of NZD 15 000 (EUR 9 000), or both. There are, however, a
number of specific instances where IR may disclose information.
345. Section 81(1B) of the TAA contains a general exception from secrecy
if the disclosure is for the purpose of executing or performing a duty of the
Commissioner or for the purpose of supporting the execution or performance
of such a duty and the Commissioner considers that such communication is
reasonable (as further explained in the Act).
346. Section 81(3) of the TAA provides that no officer of IR shall be
required to produce in any Court or tribunal any document or to divulge or
communicate to any court or tribunal any matter or thing coming under the
officer’s notice in the performance of the officer’s duties as an officer of IR,

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except when it is necessary to do so for the purpose of carrying into effect the
IR Acts and other associated acts. According to New Zealand, the purpose of
section 81(3) is to reinforce IR’s tax secrecy obligations by creating a privi-
lege in respect of tax secret information.
347. However, where IR conducts any litigation in the exercise of its func-
tions, powers or duties then that is both “necessary” and for the purpose of
“carrying into effect” the IR Acts. As a litigant, section 81(3) does not protect
IR from being subject to ordinary rules relating to discovery and the produc-
tion of documents for inspection.
348. Section 81(4) of the TAA provides a number of specific exceptions
to the secrecy rule imposed by section 81(1) that authorises IR to disclose
taxpayer information in specific situations. 41
349. The confidentiality of communications between jurisdictions
including the EOI request was recently discussed by the High Court in New
Zealand in Chatfield & Co Ltd v Commissioner of IR [2016] NZHC 1234.
Here, the issue for the High Court was whether it should order discovery of
material exchanged pursuant to the DTA between New Zealand and a treaty
partner. The Court considered that generally, this question is governed by
section 81 of the TAA. 42 The Court considered it was faced with competing
section 81 obligations, being that:
• compliance with the Commissioner’s discovery obligations in the
course of defending court proceedings against her involves carrying
into effect the IR Acts and
• maintaining a properly founded duty of confidence (whether owed
to a taxpayer or to a foreign state) also involves the pursuit of such a
purpose.
350. The court considered that the integrity of the tax system depends
both upon taxpayers not being unfairly disadvantaged when litigating against

41. Most of them are irrelevant in the context of EOI, except section 81(4)(k) which
authorises the Commissioner “communicating any information to any author-
ised officer of the Government of any country or territory outside New Zealand
where the application of a provision of any of the Inland Revenue Acts affecting
the incidence of tax or duty is expressed to be conditional on the existence of a
reciprocal law or concession in any such country or territory, or where under a
provision in any of the Inland Revenue Acts a reciprocal arrangement has been
made with the Government of any such country or territory affecting the inci-
dence of tax or duty”.
42. This was based on the Supreme Court’s decision in Westpac Banking
Corporation Ltd v Commissioner of Inland Revenue [2008] NZSC 24, [2008]
NZLR 709.

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the Commissioner and upon the Commissioner not disclosing information
provided to her in confidence. Notably, the documents sought by discovery
order were only potentially relevant to one aspect of Chatfield’s claim, whether
the Commissioner of IR failed to have regard to the EOI provision of the EOI
instrument between New Zealand and its treaty partner. Ultimately, the High
Court considered that any weighing of the claim for confidentiality against
the fair and proper conduct of judicial review proceedings must come down
firmly in favour of confidentiality. 43 This decision was subsequently appealed
to the Court of Appeal, where the Court of Appeal agreed that the documents
were not required to be disclosed. 44 Chatfield attempted to appeal the Court of
Appeal’s judgment to the Supreme Court, but was declined leave. 45
351. The matter of disclosure of information between competent authori-
ties had also been considered by the New Zealand Court of Appeal in CIR v
ER Squibb & Sons (NZ) Ltd (1992) 14 NZTC 9146 (CA). The Court held that
the treaty confidentiality obligations remain paramount.

C.3.2. Confidentiality of other information
352. The 2011 Report notes that confidentiality provisions in New
Zealand’s exchange of information agreements and domestic law do not draw
a distinction between information received in response to requests or infor-
mation forming part of the requests themselves. As such, these provisions
apply equally to all requests for such information, background documents to
such requests, and any other document reflecting such information, includ-
ing communications between the requesting and requested jurisdictions and
communications within the tax authorities of either jurisdiction.

Confidentiality in practice
353. The 2011 Report noted that New Zealand has internal administrative
guidelines regarding confidentiality of information exchanged. In addition,
New Zealand’s competent authority used encrypted e-mail in exchanging
information to tax treaty partners wherever possible. Only International
Audit Unit staff involved in exchange of information work had access to the
exchange of information database of cases.
354. This review finds that New Zealand has a comprehensive set of
policies and practices to ensure confidentiality of the EOI request and all
information exchanged.

43. Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZHC 1234, at
[22].
44. Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614.
45. Chatfield & Co Ltd v Commissioner of Inland Revenue [2017] NZSC 48.

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114 – Part C: Exchanging information

Disclosure of information contained in EOI notices and other
communications with information holders
355. There are no legal requirements for notices requesting information to
contain information identifying an EOI request, a foreign competent authority
or providing information on the background of the request. In practice, New
Zealand only discloses in the notices the minimum information in an EOI request
as necessary for it to obtain the requested information (e.g. details on the informa-
tion request). As noted under section B.1, as a matter of practice in New Zealand,
before the issuance of a formal EOI notice under section 17 of the TAA, the tax
authority may approach the information holder/taxpayer in a more informal way
as it is the policy to encourage voluntary compliance. In those circumstances,
New Zealand may disclose to the information holder/taxpayer that information is
being requested under a given EOI instrument, unless the requesting jurisdiction
expresses concerns that this approach could harm its investigation.

Inclusion of the EOI request in taxpayer’s files
356. It is New Zealand’s policy not to include inbound or outbound
requests in taxpayer’s files. In the context of domestic tax investigations,
the information gathered abroad by means of outbound EOI requests can
be disclosed to the taxpayers in the course of tax assessment proceeding or
other proceedings, but not the competent authority letter itself (see subsection
breach of confidentiality below for more information).

Hiring and departure polices
357. IR has a pre-employment check policy which is applied to all pro-
spective employees and contractors. When they begin employment, IR
officers are legally obligated to sign a declaration of fidelity and secrecy. This
requires them to declare that they know and understand the TAA secrecy
provisions; andthat they will maintain secrecy while they are an officer of IR
and after they cease to be an officer.
358. Similarly, contracted individuals and service providers are required
to sign a certificate of secrecy or a contact containing secrecy clauses in
which they acknowledge having understood their secrecy obligations.
359. The safeguards in domestic law and those outlined above are rein-
forced by IR’s Code of Conduct. Departure policies also ensure that that
access to confidential information is effectively terminated for departing
employees and contractors.

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Training
360. A number of IR’s online learning modules educate officers on infor-
mation confidentiality policies, expectations and rules.
361. The EOI Team receives, in addition to on-the-job training, training
on internal processing of requests and confidentiality requirements.

Physical security
362. Various policies and practices ensure physical security over confi-
dential information. IR has a dedicated corporate security team and has also
issued guidelines on visitor management, security of keys and the use of
personal recognition systems (identity cards).
363. IR has a data classification policy which requires all information
and documents be labelled with its classification and handled in a specific
manner. Exchange data is classified as “IN CONFIDENCE” (information
that could prejudice law and order, impede government business and/or affect
citizens privacy) and is labelled as such. Data is only released in specified
circumstances to officers with a need to use it.
364. The EOI Team closely manages the receipt, storage and disposal of
hard copy exchange information. Furthermore, the EOI Team has imple-
mented the following principles:
• All of the information received by the EOI Team is confidential
and should be stored securely. The EOI Team’s files must be stored
in either the secure storage room or the locked cabinets, and only
retrieved when they are being worked on. Inactive physical records
are held in a secure offsite storage facility.
• Access to passwords and keys is restricted to staff working in the
EOI Team.
• Only the EOI Team should have access to the EOI Register and elec-
tronic folders that the EOI register and soft copy folders sit in.
• Hard copies of incoming information should only be made by the
EOI Team if strictly necessary. Any hard copies should be disposed
of in a secure manner when no longer needed.
• Members of the public are restricted from entering in the EOI Team’s
office area.
• A clear desk policy is enforced.

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116 – Part C: Exchanging information

Communication with other areas of the IR
365. The EOI Team will often need to send confidential information
to other areas of IR. This would include information received pursuant to
New Zealand’s outbound request or documentation associated with inbound
requests where the assistance of other areas is needed to be collected the infor-
mation requested by a treaty partner. Clear procedures are set to ensure that:
• A record is kept on file showing to whom the information has been
disclosed.
• When the EOI Team forwards confidential information to other areas
of IR, it should make it clear to the person receiving that information
that it is treaty-protected confidential information.
• On occasion, in response to outbound requests, a large quantity of
information regarding many taxpayers may be received. Normally,
only a portion of that information is required by a particular officer.
The EOI Team is responsible for ensuring that only the specific infor-
mation needed by the particular auditor is forwarded.

Communication with EOI partners
366. All documents related to an exchange of information case must bear
a clearly visible confidentiality stamp.

Electronic Security
367. Secure encrypted e-mail is used for communication within the New
Zealand government. In addition, IR implemented a tool which detects and
alerts IR staff where their email contains information that may be in breach
of the IR Code of Conduct, or legislative secrecy requirements.

Monitoring confidentiality breaches
368. IR monitors confidentiality breaches. Access to IR systems and data-
bases are controlled. Breaches of confidentiality and/or security are subject to
monitoring controls and reported to relevant authorities (internally or exter-
nally depending on the gravity of the breach). A system is in place to assess
breaches, evaluate risks associated with the breach, notify relevant authorities
and prevent future breaches.

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369. IR reports each year in its annual report on the number and type of
privacy breaches that have been recorded, including those that involve disclo-
sure of personal information. 46
370. In particular with regard to EOI, there have been no known breaches
in relation to EOI requests received by New Zealand or information related
to such requests.

Disclosure of EOI competent authority letters received in response to
outgoing EOI requests
371. It is New Zealand’s policy not to release competent authority letters
received in response to EOI requests to taxpayers, except in court cases. In
the course of substantiating an assessment or collection matter before a New
Zealand court, disclosure of the relevant competent authority correspondence
may be required as part of the discovery process. New Zealand noted that in
the context of court cases it would normally disclose the full EOI response
letters received. Redaction of the letters would not take place unless a specific
request was made by the treaty partner to do so and that had been authorised
by the court. The information received can be released in the context of tax
investigations (without a court case) but not the competent authority letter
itself. There has been one instance in 2014 where there was a failure by an IR
officer to protect the confidentiality of a competent authority letter. Due to a
misunderstanding by the officer concerned between his domestic law powers
and New Zealand’s international treaty obligations, rather than releasing the
information contained in a letter from an EOI partner as part of an adminis-
trative dispute with a taxpayer, the investigator released the entire competent
authority letter submitted by the foreign competent authority. Following this
case, New Zealand advised having followed the normal procedure set for
when breaches occurred and the matter was corrected through better train-
ing and awareness of the expectations of EOI partners. A discussion was held
with the staff member involved to ensure that confidentiality obligations were
understood and a component was added to training/presentations to field staff
as to the importance of not disclosing competent authority letters. The treaty
partner was also informed of the undue disclosure.

46. The annual reports are publicly available at www.ird.govt.nz/aboutir/reports/
annual-report/.

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C.4. Rights and safeguards of taxpayers and third parties
The information exchange mechanisms should respect the rights and safeguards of
taxpayers and third parties.

372. The 2011 Report concluded that New Zealand’s information exchange
mechanisms allow the parties to decline to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information the disclosure of which would be contrary to
public policy (ordre public). The new EOI mechanisms entered into by New
Zealand contain the same provisions. In practice, during the current review
period New Zealand authorities confirmed that they did not experience any
practical difficulties in responding to EOI requests due to the application of
rights and safeguards in New Zealand.
373. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: The element is in place.
Practical implementation of the standard
Rating: Compliant

C.4.1. Exceptions to provide information
374. Each of New Zealand’s exchange of information agreements, includ-
ing the ones entered into after the 2011 Report, ensures that the parties are
not obliged to provide information which would disclose any trade, business,
industrial, commercial or professional secret or information which is the sub-
ject of attorney client privilege or information the disclosure of which would
be contrary to public policy.
375. Attorney-client privilege is known as solicitor client privilege in New
Zealand. While the privilege is recognised in relation to the Commissioner’s
search powers in the TAA (section 20), the substantive privilege is codified
in the Evidence Act 2006 (Evidence Act). Solicitor-client privilege is pri-
marily split into what is commonly known as “legal professional privilege”
(section 54) and “litigation privilege” (section 56). Certain other types of
privilege are provided for in the Evidence Act, including privilege in relation
to solicitors’ trust accounts (section 55) and privilege for settlement negotia-
tions, mediation or plea discussions (section 57).
376. While disclosure of information which would disclose a trade, busi-
ness, commercial or professional secret, or that would be contrary to public
policy (ordre public) is not explicitly defined in the context of EOI, sec-
tion 70 of the Evidence Act provides some guidance as to how this would

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be interpreted. Section 70 grants a judge the discretion to order that a com-
munication or information not be disclosed that relates to matters of state in
a proceeding if the judge considers that the public interest in the communi-
cation or information being disclosed in the proceeding is outweighed by
the public interest in withholding the communication or information. This
would include situations where making available the information would
prejudice (i) the international relations of the Government of New Zealand;
(ii) entrusting of information to the Government of New Zealand on a basis
of confidence by the Government of any other country; (iii) the maintenance
of the law, including the prevention, investigation, and detection of offences,
and the right to a fair trial; (iv) to endanger the safety of any person (Evidence
Act, s. 70 and Official Information Act 1982, s. 6).
377. Moreover, under the Evidence Act, information could also be with-
held from disclosure if the withholding of the information is necessary to
protect information that, among other listed circumstances, (i) would disclose
a trade secret; (ii) would be likely unreasonably to prejudice the commercial
position of the person who supplied or who is the subject of the information
(i) which is subject to an obligation of confidence or which any person has
been or could be compelled to provide under the authority of any enactment,
where the making available of the information would be likely to prejudice
the supply of similar information, or information from the same source, and
it is in the public interest that such information should continue to be supplied
(Evidence Act, s. 70(2)(b) and the Official Information Act 1982, s. 9(2)).
378. Notwithstanding the above, the question of disclosure in a tax con-
text would be governed by section 81(3) of the TAA. As noted under C.3,
Section 81(3) of the TAA provides that no officer of IR shall be required to
produce in any Court or tribunal any document or to divulge or communicate
to any court or tribunal any matter or thing coming under the officer’s notice
in the performance of the officer’s duties as an officer of IR, except when it
is necessary to do so for the purpose of carrying into effect the IR Acts and
other associated acts.

In practice
379. To date, New Zealand has not experienced any practical difficulties
in responding to EOI requests due to the application of rights and safeguards.
It is open for a New Zealand person asked to supply information to satisfy a
request from a treaty partner to object to that information being exchanged
on the basis of trade or secrecy grounds. However, the information must still
be supplied to IR in the first place. Once the information has been supplied,
it is then up to the New Zealand competent authority, taking into account the
objections made, to determine whether to exchange the information.

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120 – Part C: Exchanging information

C.5. Requesting and providing information in an effective manner
The jurisdiction should request and provide information under its network of
agreements in an effective manner.

380. In order for exchange of information to be effective, jurisdictions
should request and provide information under its network of EOI mechanisms
in an effective manner. In particular:
• Responding to requests: Jurisdictions should be able to respond
to requests within 90 days of receipt by providing the information
requested or provide an update on the status of the request.
• Organisational processes and resources: Jurisdictions should have
appropriate organisational processes and resources in place to ensure
quality of requests and quality and timeliness of responses.
• Restrictive conditions: EOI assistance should not be subject to unrea-
sonable, disproportionate, or unduly restrictive conditions
381. The 2011 Report concluded that New Zealand had an effective
system for exchanging information and element C.5 was rated Compliant. It
was found that there was a sufficient number of professional staff with clear
responsibilities for processing requests and retrieving information; the staff
had adequate expertise and training; and New Zealand had adequate financial
and technical resources dedicated to its EOI programme. Peer input generally
suggested that New Zealand’s EOI practices were of a very high standard.
Finally, the review found that New Zealand received a relatively high volume
of requests per year for which it had been capable of responding to in a timely
manner.
382. This review finds that New Zealand continues to show a very high
performance in exchange of information. The organisation and procedures
remain complete and coherent and peers were satisfied with the quality and
completion of the responses sent by New Zealand. Peers also appreciated
New Zealand’s responsive approach, the timeliness of responses and that the
competent authority was easy to reach.
383. The 2016 ToR includes an additional requirement to ensure the quality
of requests made by assessed jurisdictions. Resources and procedures are in
place to ensure the quality of New Zealand’s outgoing requests. New Zealand
sent more than twice as many requests than it received during the review
period. Peers appreciated the quality of New Zealand’s requests, the positive
working relationship with New Zealand, the courtesy in communication and
the feedback received concerning the use of the information.

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384. New Zealand advised that it also tries to reciprocate the assistance
it receives from peers by sharing information spontaneously with its EOI
partners. IR officers are encouraged to share findings with the EOI Team that
may be foreseeably relevant to other jurisdictions. Generally, spontaneous
exchanges of information relate to specific tax evasion risks. Within the peer
review period, information was spontaneously exchanged with treaty partners
on 164 distinct occasions (88 in 2014, 38 in 2015, and 38 in 2016).
385. New Zealand also actively engaged with assistance in collection
with treaty partners. It engaged in 2 such cases in 2014; 50 in 2015 and 49 in
2016. New Zealand exchanges withholding tax data from interest, dividend
and royalty income with 39 jurisdictions as part of its automatic exchange of
information programme. New Zealand has exchanged FATCA data annually
with the United States since September 2015. It commenced exchanging land
information automatically with treaty partners in 2016 and will be exchang-
ing foreign trust information automatically in 2018 to treaty partners that
express an interest in receiving such details and can demonstrate foresee-
able relevance. New Zealand will start exchanging financial information
automatically under the Common Reporting Standard in 2018.
386. The new table of determinations and ratings is as follows:

Legal and Regulatory Framework
Determination: This element involves issues of practice. Accordingly no
determination on the legal and regulatory framework has been made.
Practical implementation of the standard
Rating: Compliant

C.5.1. Timeliness of responses to requests for information
387. Over the period under review (1 January 2014-31 December 2016), New
Zealand received a total of 194 requests for information exchange. Approximately
17% of the information requests received related mainly to ownership informa-
tion, 17% related mainly to accounting information and 27% mainly to banking
information. Other requests received by New Zealand include aggressive tax
planning, tax avoidance schemes, information on employment, residency status,
travel movements, property ownership and general tax information.
388. Australia was substantively New Zealand’s largest partner for EOIR,
both inbound and outbound. By way of comparison, New Zealand had more
exchanges of information with Australia than all other jurisdictions com-
bined. New Zealand has a strong EOI relationship with Australia, commonly
engaging in spontaneous exchanges of information as well as on-going inves-
tigations spread between both jurisdictions. Many subsidiaries and branches
of Australian companies are based in New Zealand. Other important EOI

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122 – Part C: Exchanging information

partners include the United Kingdom, and the United States, reflecting the
trade, investments and/or migration of individuals.
389. For years 2014 to 2016, the number of requests where New Zealand
answered within 90 days, 180 days, one year or more than one year, are tabu-
lated below (as at 2 October 2017).

Statistics on response times

2014 2015 2016 Total
Num. % Num. % Num. % Num. %
Total number of requests received 36 100 83 100 75 100 194 100
Full response: ≤90 days 23 64 54 65 51 68 128 66
≤180 days (cumulative) 28 78 69 83 64 85 161 83
≤1 year (cumulative) 32 89 79 95 74 99 185 95
>1 year 1 3 2 2.5 0 0 3 2
Status update provided within 90 days (for responses sent 7 64 19 66 20 83 46 7%
after 90 days)*
Declined for valid reasons 0 0 0 0 0 0 0 0
Failure to obtain and provide information requested 0 0 0 0 0 0 0 0
Requests withdrawn by the requesting jurisdiction 2 6 2 2.5 1 1 5 2.5
Requests still pending at date of review 1 3 0 0 0 0 1 0.5
* New Zealand counts each written request from an EOI partner as one EOI request even where more
than one person is the subject of an inquiry and/or more than one piece of information is requested.
Note: The time periods in this table are counted from the date of receipt of the request to the date on
which the final and complete response was issued.

390. New Zealand explained that requests that are not fully dealt with
within the 90 days do not typically relate to a particular type of information
(e.g. bank information, accounting information). As a rule, requests that take
longer than 90 days to be replied to involve contacting third party informa-
tion holders in particular in relation to voluminous or complex requests;
although in many circumstances New Zealand can still reply to these requests
within the 90-day timeframe. Another circumstance where requests may not
be fulfilled within 90 days are situations where New Zealand’s competent
authority is required to seek clarification from the requesting competent
authority in order to action the request and the requesting competent author-
ity takes some time to reply to the clarification request.
391. With respect to the three requests that have taken more than one year
to be replied to, the following circumstances have arisen:
• The record keeping requirements for certain information had elapsed
and the information was no longer available or

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• New Zealand had replied to all questions from the treaty partner a
couple of days after the receipt of the request. However, the request
also raised some New Zealand domestic risks which could also have
been relevant to the requesting jurisdiction’s audit. In light of this, the
status of EOI requests was left as active.
392. The one pending request is related to the on-going Chatfield litiga-
tion, described under elements B.1, B.2 and C.3 above. The information
yet to be provided to the requesting authorities includes copies of financial
statements, agreements for sale and purchase, settlement statements relating
to property sales, share transfer documents, bank remittance certificates for
share and property sales, and the reasons for the change in ownership of cer-
tain properties in relation to 15 corporate entities in New Zealand. 47 A partial
reply with information that was available within IR and other government
authorities has been sent to the treaty partner.
393. With respect to the five requests withdrawn by the requesting juris-
dictions, the following details have been provided by New Zealand:
• Three of those cases referred to requests for banking information and
New Zealand would need to seek the requested information from banks
in New Zealand. In those cases, the requesting competent authority
advised that it did not want to risk the taxpayer finding out that there
was an investigation and it requested that the bank not to be contacted
for information and withdrew the request. As noted under element B.2
and C.3, there are no notification requirements in New Zealand and
New Zealand is not required to include information about the request
on the notice sent to the information holder. However, as there are no
anti-tipping off provisions, banks are not prohibited from informing
accountholders that information about them has been provided to IR.
• I n relation to one request that also related to banking information,
New Zealand considered that, based on the background information
provided, the request should have been focused on a different entity
than the one referred to in the request. New Zealand provided advice
on which entity within the structure the partner should focus on to get
the desired outcome. The treaty partner appreciated the advice and
agreed with New Zealand. The partner withdrew the initial request
and subsequently (in 2017) sent a new request for the other entity.
• In relation to one request received at the beginning of the review
period, New Zealand files noted that the previous EOI manager in
New Zealand had a phone discussion with the requesting jurisdiction

47. Chatfield & Co Limited v Commissioner of Inland Revenue [2016] NZCA 614,
at [5].

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124 – Part C: Exchanging information

and subsequently the requesting jurisdiction withdrew the request.
No background information on the reasons for withdrawing were
included in the file. Input provided by the EOI partner in question did
not express any concerns.
394. On one occasion, in 2016, New Zealand’s competent authority
advised that it withheld certain documents identified as relevant to satisfy
an EOI request. This was on the basis that to exchange these documents
would be to carry out administrative measures at variance with the laws and
administrative practices of New Zealand, and, therefore, withholding infor-
mation in such circumstances would not be against the international standard.
Specifically, the documents were provided to IR as part of the discovery/
inspection process in relation to legal proceedings which had recently settled.
As the documents were provided to IR through the discovery/inspection pro-
cess, their use was governed by the High Court Rules 2016, specifically High
Court Rule 8:30, “use of documents”. This rule provides a party who obtains
a document by way of inspection must not make it available to any other
person except for the purposes of the proceeding (unless it has been read out
in open court). New Zealand’s competent authority provided those documents
that had been referred to in open court, and informed the requesting juris-
diction of the reasons the remaining documents could not be provided. New
Zealand’s competent authority also identified the entity within the requesting
jurisdiction that held those particular documents.

Requests for clarification
395. New Zealand does not maintain statistics on the number of requests
for clarification sought in relation to inbound EOI requests. All formal letters
sent to EOI partners are recorded as interim letters on the EOI register, how-
ever, not all requests for clarification are made by formal letter. Depending on
the circumstances, such as the complexity of a request and the New Zealand’s
EOI relationship with the requesting jurisdiction, a request for clarification
may be completed by phone call. Peers did not express concerns regarding
clarifications asked by New Zealand.

Status updates
396. During the review period, New Zealand sent status updates in approxi-
mately 70% of the cases where requests could not be replied within 90 days.
New Zealand explained that it did not always send a status updates where a
response was going to be provided just after the 90-day time frame (within for
instance 100 days from the date of the request). Most peers that did not receive
updates on the status of the requests noted having received interim replies or
that there were on-going consultations. Since July 2016, New Zealand has taken

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steps to ensure that status updates are provided invariably within 90 days when
a request has not been responded. This involved enhancing its EOI register
in September 2017, which now includes reminders for status updates. New
Zealand is recommended to monitor that it systematically provides an update
or status report to its EOI partners in situations when the competent authority
is unable to provide a substantive response within 90 days.

C.5.2. Organisational processes and resources

EOI organisation
397. New Zealand’s competent authorities relevant to the EOI mechanisms
are:
• Manager, International Revenue Strategy (Principal competent
authority)
• Strategy and Intelligence Manager, International Revenue Strategy
(Principal competent authority)
• Two senior advisors, International Revenue Strategy (Competent
authority contacts for matters pertaining to exchange of information
generally).
398. The EOI Team also encompasses an additional senior advisor and an
advisor. New Zealand advises that it has flexibility to obtain further human
resources, if needed.
399. New Zealand provides updated lists of competent authorities to all
treaty and EOI partners. Additionally, New Zealand keeps its competent
authority details up to date in the OECD’s list of competent authorities. New
Zealand has frequent telephone and encrypted email contact and at least one
annual face-to-face meeting with the competent authority of its main EOI
partner, Australia. Regular exchange of emails and telephone calls are also
maintained with other treaty partners to discuss on-going cases.
400. All exchanges of information are managed centrally by the EOI
Team. A central email mailbox is used. Due to the small size of the team, the
capacity of each individual member can be closely monitored by the Strategy
and Intelligence Manager. Team meetings are held monthly.

Training
401. Each individual member is able to receive specialist one-on-one
training with the Manager, International Revenue Strategy. An EOI manual
is also available as well as various resources on IR’s intranet. Members of
the EOI Team also participate in Global Forum training events and seminars.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
126 – Part C: Exchanging information

Registering EOI Activity
402. The competent authority maintains a register (the EOI register)
recording details of all information exchanges (e.g. on request, spontaneous)
except where there is a dedicated IT solution to facilitate the exchange, such
as the FATCA and CRS exchange tools. The EOI register is a spreadsheet
maintained on the secure area of IR’s electronic database. Access to the reg-
ister is limited to members of the EOI Team.
403. Each inbound and outbound request is included in the EOI register,
assigned a reference number and all correspondence on that reference number
is tracked and recorded. In relation to inbound requests, the register contains,
inter alia, information on the nature of the request, EOI officer(s) and IRD
auditor (s) assigned to the case, date of receipt, date of acknowledgment, date
of interim responses, date of final responses and date the requesting jurisdic-
tion acknowledged receiving the final response. The EOI Team is planning
to expand the EOI register to collect additional information and allow for a
range of statistics to be generated monthly.

EOI process
404. Requests are assigned by the Strategy and Intelligence Manager to
one of the senior advisor (EOI officers) in the EOI Team. On being assigned a
request, the EOI officer will have primary responsibility for the case; however
the manager also monitors that requests are actioned. A final check of every
EOI correspondence is completed either by one of the EOI Team’s managers.
405. The EOI officer assigned to the case will verify the validity of
the request, in consultation with the Strategy and Intelligence Manager on
receipt. If the information provided is insufficient to process the case, then,
New Zealand’s competent authority will contact the requesting competent
authority to discuss the request and seek to address any concerns regarding
the request. Where a request is considered to be invalid or incomplete, the
requesting jurisdiction will be notified of the deficiency within 60 days of
receipt of the request. If the request is incomplete in part, the case will be
worked to provide information for the part of the request that is valid. In
terms of timeliness, the EOI Team endeavours to action all non-complex
requests within two months and all complex requests within the maximum
period of six months, and manages to achieve this standard in the great
majority of cases. Priority is given to urgent requests received.

Internal process for status updates
406. The process for providing status updates is set out in the EOI Team’s
manual. In essence, it is the EOI officer’s responsibility to ensure that

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
Part C: Exchanging information– 127

acknowledgement of receipt of a request and status updates are provided.
The format of status update will depend on the requesting jurisdiction and a
time‑frame will be provided where possible (see also section C.5.1).

Procedure for obtaining requested information which are in the hands
of the tax authorities
407. The EOI Team has direct access to IR databases as well as databases
of the Companies Office and Land Information New Zealand (LINZ), for
real estate ownership. IR has a memorandum of understanding with Customs
giving IR staff, including the EOI Team, access to travel movements, which
can be obtained on short notice. The EOI Team is able to obtain legal and
technical advice from the wider IR when required.

Procedure for obtaining requested information which are in the hands
of third parties
408. As noted under section B.1, prior to 2015, EOI Team would normally
contact field staff to collect information from third parties (including tax-
payers, third party information holders or other government agencies where
required). The EOI Team has developed a network of contacts within IR field
staff, who is familiar with the sensitivities involved in EOI cases in particu-
lar with regard to confidentiality. The EOI Team also has full access to an
experienced computer forensics unit for collection of data from computers of
New Zealand parties.
409. Since 2015, however, the EOI Team has incorporated officers with
a background in investigation and that has allowed the EOI Team to have
a more significant role in the access to information. As a result, since then,
access to information for EOI is in most instances performed by the EOI
Team without the need of resorting to field staff.

Verification of the information gathered
410. The EOI officer assigned to the case is responsible for reviewing the
requested information. Once the EOI officer is satisfied that the information
covers all or some of the request they will draft a response to the request-
ing jurisdiction. The response is reviewed by the Strategy and Intelligence
Manager before being sent.

Outgoing requests
411. All outbound EOI requests are managed through the EOI Team. The
process is as set out in the EOI manual. In summary, the EOI officer assigned

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
128 – Part C: Exchanging information

to the potential request discusses the file with the tax auditor/IR officer
seeking to make the request. Before the request is drafted by the tax auditor/
IR officer, the EOI officer assesses foreseeable relevance of the information
being sought. The EOI officer checks the completeness of the request in
accordance with the checklist provided in the EOI manual and reviews and
amends where necessary. One of the two managers of the EOI Team always
conducts a final check of the outgoing requests before they are sent.
412. New Zealand’s competent authorities accommodate any jurisdic-
tion’s requirements to have information requested according to a particular
template (all of which are located on the IR’s intranet site).
413. During the review period, New Zealand sent a total of 466 requests
to its EOI partners

Number of outbound requests

1 January 2014- 1 January 2015- 1 January 2016-
31 December 2014 31 December 2015 31 December 2016
Total number of requests sent 136 160 170

414. Statistics on the number of clarification requests received and the
time to reply to those were not maintained. Peer input indicate, however,
that New Zealand’s outbound requests were of a high quality: they met the
foreseeable relevance standard, were supported by appropriate elements and
communicated effectively. Fourteen peers provided input in relation to New
Zealand’s requests and five indicated that some type of clarification was
requested. According to peers clarification requests related to:
• complex requests (complex trust schemes, complex dividend with-
holding tax schemes)
• additional information was required to correctly identify the taxpayers
• information on the scope of New Zealand’s domestic information
gathering powers
• additional background information required to support the requested
jurisdiction’s administrative practices
• missing information such as information income years to which the
tax debts were related.
415. All peers indicated that clarifications were provided in a timely
manner and did not cause delays.

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Part C: Exchanging information– 129

Providing feedback
416. The EOI Team reports that it always provide feedback on the use
and usefulness of a response received to an outbound request, in addition to
a thank-you letter. The EOI officer in charge will maintain regular contact
with the IR officer using the requested information to ensure that it is used
appropriately and that feedback can be provided to the responding jurisdic-
tion once the information has been fully utilised.

C.5.3. Unreasonable, disproportionate or unduly restrictive conditions
for EOI
417. Exchange of information should not be subject to unreasonable, dis-
proportionate or unduly restrictive conditions. There are no factors or issues
identified that could unreasonably, disproportionately or unduly restrict
effective EOI.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
ANNEXES – 131

Annex 1: List of in-text recommendations

The assessment team or the PRG may identify issues that have not had
and are unlikely in the current circumstances to have more than a negligible
impact on EOIR in practice. Nevertheless, there may be a concern that the
circumstances may change and the relevance of the issue may increase. In
these cases, a recommendation may be made; however, such recommenda-
tions should not be placed in the same box as more substantive recommen-
dations. Rather, these recommendations can be mentioned in the text of the
report. A list of such recommendations is reproduced below for convenience.
Section A.1.1 – The 2017 amendments broadly cover professionals that
would be performing nominee services by way of business. The CDD obliga-
tions do not apply to persons acting as nominees not by way of business. New
Zealand is recommended to monitor the impact of this on EOI in practice on
an on-going basis.
Section A.1.1 and A.3 – New Zealand should ensure that there is suffi-
cient effective guidance to assist reporting entities in interpreting the obliga-
tions under the AML/CFT Act to identify the beneficial owners of customers
in line with the standard.
Section A.1.1 – As the Act does refer to the prescription of regulations, it
remains unclear the circumstances where AML reporting entities can rely on
other sources than a reliable and independent source. New Zealand is recom-
mended to clarify this aspect.
Section A.1.1 – New Zealand should ensure that sufficient guidance is
issued for all reporting entities on what the obligation to perform on-going
CDD entails.
Section A.1.1 and A.3 – It is recommended that New Zealand ensure that
its Third Party Reliance regime is it in line with the international standard
before any exceptions are granted.
Section A.1.1 and A.3 – New Zealand should monitor on an ongoing
basis that beneficial ownership information is available for all New Zealand
incorporated companies and all foreign companies that are resident for tax
purposes in New Zealand.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
132 – ANNEXES

Sections A.1.4 and A.2 – New Zealand is recommended to monitor that
enforcement provisions are effective to ensure the availability of information
in all cases.
Section A.3 – New Zealand should monitor the use of trusts with more
than ten beneficiaries to ensure that the risk level remains low and review its
regime to bring it in line with the standard if the risk profile of iwi trusts or
any other trusts with more than ten beneficiaries changes.
Section C.1.8 – New Zealand is nonetheless recommended to ensure that
it brings its signed EOI instruments into force expeditiously.
Section C.2 – As the standard ultimately requires that jurisdictions
establish an EOI relationship up to the standard with all partners who are
interested in entering into such relationship, New Zealand should continue
to conclude EOI agreements with any new relevant partner who would so
require.
Section C.5 – New Zealand is recommended to monitor that it systema-
tically provides an update or status report to its EOI partners in situations
when the competent authority is unable to provide a substantive response
within 90 days.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
ANNEXES – 133

Annex 2: List of Jurisdiction’s EOI Mechanisms

1. Bilateral international agreements for the exchange of information

Type of Date entered
EOI partner agreement Date signed into force
1. Anguilla TIEA 11-Nov-09 06-Jan-17
2. Australia DTC 26-Jun-09 19-Mar-10
3. Austria DTC 21-Sep-06 01-Dec-07
4. The Bahamas TIEA 18-Nov-09 10-Jan-17
5. Belgium DTC 15-Sep-81 08-Dec-83
6. Bermuda TIEA 16-Apr-09 15-Dec-17
7. British Virgin Islands TIEA 13-Aug-09 23-Dec-16
8. Canada DTC 3-May-12 26-Jun-15
9. Cayman Islands TIEA 13-Aug-09 30-Sep-11
10. Chile DTC 10-Dec-03 21-Jun-06
11. China (People’s Republic of) DTC 16-Sep-86 17-Dec-86
12. Cook Islands TIEA 09-Jul-09 13-Dec-11
13. Curaçao TIEA 01-Mar-07 02-Oct-08
14. Czech Republic DTC 26-Oct-07 29-Aug-08
15. Denmark DTC 10-Oct-80 22-Jun-81
16. Dominica TIEA 16-Mar-10 7-Sep-17
17. Fiji DTC 27-Oct-76 11-Feb-77
18. Finland DTC 12-Mar-82 22-Sep-84
19. France DTC 30-Nov-79 19-Mar-81
20. Germany DTC 20-Oct-78 21-Dec-80
21. Gibraltar TIEA 13-Aug-09 13-May-11
22. Guernsey TIEA 21-Jul-09 08-Nov-10

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
134 – ANNEXES

Type of Date entered
EOI partner agreement Date signed into force
23. Hong Kong, China DTC 01-Dec-10 09-Nov-11
DTC 17-Oct-86 03-Dec-86
24. India
DTC Protocol 26-Oct-16 7-Sep-17
25. Indonesia DTC 25-Mar-87 23-Jun-88
26. Ireland DTC 19-Sep-86 26-Sep-88
27. Isle of Man TIEA 27-Jul-09 27-Jul-10
28. Italy DTC 06-Dec-79 23-Mar-83
29. Japan DTC 10-Dec-12 25-Oct-13
30. Jersey TIEA 27-Jul-09 27-Jul-10
31. Korea DTC 06-Oct-81 22-Apr-83
DTC 19-Mar-76 02-Sep-76
32. Malaysia
DTC protocol 06-Nov-12 12-Jan-16
33. Marshall Islands TIEA 4-Aug-10 10-Apr-15
34. Mexico DTC 16-Nov-06 16-Jun-07
35. Netherlands DTC 15-Oct-80 18-Mar-81
36. Niue TIEA 29-Aug-12 31-Oct-13
37. Norway DTC 20-Apr-82 31-Mar-83
38. Papua New Guinea DTC 29-Oct-12 21-Jan-14
39. Philippines DTC 29-Apr-80 14-May-81
40. Poland DTC 21-Apr-05 16-Aug-06
41. Russia DTC 05-Sep-00 04-Jul-03
42. Saint Christopher and Nevis TIEA 24-Nov-09 Not in force
43. Saint Vincent and the
TIEA 16-Mar-10 17-Oct-16
Grenadines
44. Samoa DTC 08-Jul-15 23-Dec-15
45. San Marino TIEA 01-Apr-16 8-Sep-2017
46. Singapore DTC 21-Aug-09 12-Aug-10
47. Sint Maarten TIEA 01-Mar-07 02-Oct-08
48. South Africa DTC 18-Feb-02 23-Jul-04
49. Spain DTC 28-Jul-05 31-Jul-06
50. Sweden DTC 21-Feb-79 14-Nov-80
51. Switzerland DTC 06-Jun-80 21-Nov-81
52. Chinese Taipei DTC 11-Nov-96 15-Dec-97

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
ANNEXES – 135

Type of Date entered
EOI partner agreement Date signed into force
53. Thailand DTC 22-Oct-98 14-Dec-98
54. Turkey DTC 22-Apr-10 28-Jul-11
55. Turks and Caicos Islands TIEA 11-Dec-09 23-Dec-16
56. United Arab Emirates DTC 22-Sep-03 29-Jul-04
57. United Kingdom DTC 04-Aug-83 16-Mar-84
58. United States DTC 01-Dec-08 12-Nov-10
59. Vanuatu TIEA 4-Aug-10 27-Oct-16
60. Viet Nam DTC 05-Aug-13 05-May-14

2. Convention on Mutual Administrative Assistance in Tax Matters (as
amended)

The Convention on Mutual Administrative Assistance in Tax Matters
was developed jointly by the OECD and the Council of Europe in 1988
and amended in 2010 (the Multilateral Convention) 48. The Multilateral
Convention is the most comprehensive multilateral instrument available for
all forms of tax cooperation to tackle tax evasion and avoidance, a top prio-
rity for all jurisdictions.
The 1988 Multilateral Convention was amended to respond to the call of
the G20 at its April 2009 London Summit to align it to the international stan-
dard on exchange of information on request and to open it to all countries,
in particular to ensure that developing countries could benefit from the new
more transparent environment. The amended Multilateral Convention was
opened for signature on 1 June 2011.
New Zealand signed the Multilateral Convention on Mutual Administrative
Assistance (Multilateral Convention), as amended, on 26 October 2012 and
ratified it on 21 November 2013. The Convention entered into force in New
Zealand on 1 March 2014.
Currently, the amended Convention is in force in respect of the following
jurisdictions: Albania, Andorra, Anguilla (extension by the United Kingdom),
Argentina, Aruba (extension by the Netherlands), Australia, Austria,
Azerbaijan, Barbados, Belgium, Belize, Bermuda (extension by the United

48. The amendments to the 1988 Convention were embodied into two separate
instruments achieving the same purpose: the amended Convention which inte-
grates the amendments into a consolidated text, and the Protocol amending the
1988 Convention which sets out the amendments separately.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
136 – ANNEXES

Kingdom), Brazil, British Virgin Islands (extension by the United Kingdom),
Bulgaria, Cameroon, Canada, Cayman Islands (extension by the United
Kingdom), Chile, China (People’s Republic of), Colombia, Cook Islands,
Costa Rica, Croatia, Curacao (extension by the Netherlands), Cyprus 49,
Czech Republic, Denmark, Estonia, Faroe Islands (extension by Denmark),
Finland, France, Georgia, Germany, Ghana, Gibraltar (extension by the
United Kingdom), Greece, Greenland (extension by Denmark), Guatemala,
Guernsey (extension by the United Kingdom), Hungary, Iceland, India,
Indonesia, Ireland, Isle of Man (extension by the United Kingdom), Israel,
Italy, Japan, Jersey (extension by the United Kingdom), Kazakhstan, Korea,
Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta,
Marshall Islands, Mauritius, Mexico, Moldova, Monaco, Montserrat (exten-
sion by the United Kingdom), Nauru, Netherlands, New Zealand, Nigeria,
Niue, Norway, Pakistan, Panama, Poland, Portugal, Romania, Russia, Saint
Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, San
Marino, Saudi Arabia, Senegal, Seychelles, Singapore, Sint Maarten (exten-
sion by the Netherlands), Slovak Republic, Slovenia, South Africa, Spain,
Sweden, Switzerland, Tunisia, Turks and Caicos Islands (extension by the
United Kingdom), Uganda, Ukraine, United Kingdom and Uruguay.
In addition, the following are the jurisdictions that have signed the
amended Convention, but where it is not yet in force: Bahamas, Bahrain,
Brunei Darussalam, Burkina Faso, Dominican Republic, El Salvador, Gabon,
Jamaica, Kenya, Kuwait, Morocco, Peru, Philippines, Qatar, Turkey, United
Arab Emirates and the United States (the 1988 Convention in force on 1 April
1995, the amending Protocol signed on 27 April 2010).

49. Note by Turkey: The information in this document with reference to “Cyprus”
relates to the southern part of the Island. There is no single authority represent-
ing both Turkish and Greek Cypriot people on the Island. Turkey recognises the
Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable
solution is found within the context of the United Nations, Turkey shall preserve
its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European
Union: The Republic of Cyprus is recognised by all members of the United
Nations with the exception of Turkey. The information in this document relates to
the area under the effective control of the Government of the Republic of Cyprus.

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
ANNEXES – 137

Annex 3: Methodology for the review

The reviews are conducted in accordance with the 2016 Methodology for
peer reviews and non-member reviews, as approved by the Global Forum in
October 2015 and the 2016-21 Schedule of Reviews.
The evaluation was based on information available to the assessment
team including the exchange of information arrangements signed, laws and
regulations in force or effective as at 8 January 2018, New Zealand’s EOIR
practice in respect of EOI requests made and received during the three year
period from 1 January 2014 until 31 December 2016, New Zealand’s res-
ponses to the EOIR questionnaire, information supplied by partner jurisdic-
tions, as well as information provided by New Zealand’s authorities during
the on-site visit that took place from 12-15 September 2017 in Wellington,
New Zealand.

List of laws, regulations and other material received

Commercial laws
Companies Act (1993), as amended
Partnership Act (1908), as amended
Limited Partnerships Act (2008), as amended
Overseas Investment Act 2005
Trustee Act (1956), as amended
Trustee Companies Act (1967), as amended

Taxation laws
Income Tax Act (2007), as amended
Tax Administration Act (1994), as amended
Goods and Services Tax Act (1985), as amended

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
138 – ANNEXES

Anti-money laundering laws
Anti-Money Laundering and Countering Financing of Terrorism Act (2009),
as amended

Other laws
Constitution Act (1986)
Privacy Act (1993)
Official Information Act (1982)

Authorities interviewed during on-site visit

Inland Revenue (New Zealand)
Crown Law Office
Department of Internal Affairs
Financial Markets Authority
Ministry of Business, Innovation and Employment
Ministry of Justice
New Zealand Police Financial Intelligence Unit
Reserve Bank of New Zealand

Current and previous review(s)
This report provides the outcomes of the second peer review of New
Zealand’s implementation of the EOIR standard conducted by the Global
Forum. New Zealand previously underwent an EOIR Combined review in
2011 of both its legal and regulatory framework and the implementation of
that framework in practice (the 2011 Report). The 2011 Report containing the
conclusions of the first review was first published in June 2011 (reflecting the
legal and regulatory framework in place as of December 2010).
The 2011 Report was conducted according to the terms of reference
approved by the Global Forum in February 2010 (2010 ToR) and the
Methodology used in the first round of reviews. The 2011 Report was initially
published without a rating of the individual essential elements or any overall
rating, as the Global Forum waited until a representative subset of reviews
from across a range of Global Forum members had been completed in 2013
to assign and publish ratings for each of those reviews. New Zealand’s. 2011

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
ANNEXES – 139

Report was part of this group of reports. Accordingly, the 2011 Report was
republished in 2013 to reflect the ratings for each element and the overall
rating for New Zealand.
Information on New Zealand’s reviews is included in the table below.

Period under Legal Framework Date of adoption
Review Assessment team review as of (date) by Global Forum
2011 Ms Alexandra Storckmeijer Sansonetti, Swiss 1 January 2007 December 2010 June 2011
Report Federal Tax Administration, Switzerland; to 31 December (republished in
Mr Kamlesh Varshney, Ministry of Finance, 2009 November 2013
India; and Mr Stewart Brant of the Global Forum with ratings)
Secretariat
2018 Mr Shinji Kitadai, National Tax Agency, Japan; 1 January 2014 8 January 2018 March 2018
Report Ms Yean Tze Wai, Inland Revenue Authority of to 31 December
Singapore; and Ms Renata Teixeira, Global Forum 2016
Secretariat

PEER REVIEW REPORT – SECOND ROUND – NEW ZEALAND © OECD 2018
140 – ANNEXES

Annex 4: Jurisdiction’s response to the review report 50

New Zealand welcomes this second round peer review report from the
Global Forum. New Zealand fully endorses the international standards for
transparency and exchange of information and we have supported the work
of the Global Forum since its inception.
New Zealand has a very active and successful exchange of information
programme. We have embraced exchanges in all forms over many years,
recognising the real benefits that arise from such mutual co-operation.
The work of the assessment team in evaluating New Zealand has been
very thorough and we especially appreciate all the positive feedback provided
by peer jurisdictions as well as the Peer Review Group.
Overall, we consider this report to be a fair and reasonable reflection of
New Zealand law and practice. The report has concluded that New Zealand
is performing well across all the essential elements for transparency and
exchange of information.
The report also identifies a few matters which require further attention
in respect of New Zealand’s legal and regulatory framework. We accept the
recommendations that have been made in the report on these issues. We will
proceed to deal with them constructively and take further action as appropriate.

50. This Annex presents the Jurisdiction’s response to the review report and shall not
be deemed to represent the Global Forum’s views.

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Global Forum on Transparency and Exchange
of Information for Tax Purposes
Peer Review Report on the Exchange of Information
on Request New Zealand 2018 (Second Round)

The Global Forum on Transparency and Exchange of Information for Tax Purposes is a
multilateral framework for tax transparency and information sharing, within which over
140 jurisdictions participate on an equal footing.
The Global Forum monitors and peer reviews the implementation of international standard
of exchange of information on request (EOIR) and automatic exchange of information. The
EOIR provides for international exchange on request of foreseeably relevant information for
the administration or enforcement of the domestic tax laws of a requesting party. All Global
Forum members have agreed to have their implementation of the EOIR standard be assessed
by peer review. In addition, non-members that are relevant to the Global Forum’s work are also
subject to review. The legal and regulatory framework of each jurisdiction is assessed as is the
implementation of the EOIR framework in practice. The final result is a rating for each of the
essential elements and an overall rating.
The first round of reviews was conducted from 2010 to 2016. The Global Forum has agreed
that all members and relevant non-members should be subject to a second round of review
starting in 2016, to ensure continued compliance with and implementation of the EOIR
standard. Whereas the first round of reviews was generally conducted as separate reviews
for Phase 1 (review of the legal framework) and Phase 2 (review of EOIR in practice), the EOIR
reviews commencing in 2016 combine both Phase 1 and Phase 2 aspects into one review.
Final review reports are published and reviewed jurisdictions are expected to follow up on any
recommendations made. The ultimate goal is to help jurisdictions to effectively implement the
international standards of transparency and exchange of information for tax purposes.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, please visit www.oecd.org/tax/transparency.
This report contains the 2018 Peer Review Report on the Exchange of Information on Request of
New Zealand.

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