Competent Authority Arrangement
The Competent Authorities of New Zealand and the United States of America have entered into a Competent Authority Arrangement (CAA) to establish and prescribe rules and procedures necessary to implement the Agreement between the Government of New Zealand and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA (the IGA).
See the full text of the arrangement: PDF (668 KB)
Competent Authority Arrangement for trusts
U.S. and New Zealand agree on meaning of the term “resident in New Zealand” under the IGA for a Financial Institution that is a trust (other than a unit trust)
The Competent Authorities of New Zealand and the United States have entered into a Competent Authority Arrangement (CAA) concerning the meaning of the term “resident in New Zealand” as that term applies to a Financial Institution that is a trust (other than a unit trust) under Article 1(1)(l) of the Agreement between the Government of New Zealand and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA, signed on 12 June 2014 (the IGA).
The CAA has been entered into pursuant to Article 1(2) of the IGA and paragraph 3 of Article 24 (Mutual Agreement Procedure) of the Convention between New Zealand and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, with Protocol, done at Wellington on 23 July 1982, as amended by a Second Protocol, done at Washington on December 1, 2008.
Background
Article 1(1)(l) of the IGA provides that the term "New Zealand Financial Institution" means "any Financial Institution resident in New Zealand, but excluding any branch of such Financial Institution that is located outside New Zealand" and "any branch of a Financial Institution not resident in New Zealand, if such branch is located in New Zealand."
The laws of New Zealand provide residency rules for income tax purposes for individuals and certain entities that have a separate legal personality. Trusts (with the exception of unit trusts) are not separate legal entities in New Zealand, and thus New Zealand does not have residency rules for income tax purposes for trusts (other than unit trusts).
Under Article 1(2) of the IGA, "[a]ny term not otherwise defined in this Agreement [the IGA] shall, unless the context otherwise requires or the Competent Authorities agree to a common meaning (as permitted by domestic law), have the meaning that it has at that time under the law of the Party applying this Agreement [the IGA], any meaning under the applicable tax laws of that Party prevailing over the meaning given to the term under the laws of that Party."
Pursuant to Article 1(2), the Competent Authorities of New Zealand and the United States have entered into a CAA, which sets out a common understanding of the meaning of the term “resident in New Zealand” as that term applies to a Financial Institution that is a trust (other than a unit trust) under the IGA.
Common meaning of the term “resident in New Zealand” for a Financial Institution that is a trust (other than a unit trust)
The CAA has an initial transitional period (prior to 1 April 2017) in which a trust (other than a unit trust) may rely on any reasonable definition of the term “resident in New Zealand” under the IGA including, for instance, in the context of a Financial Institution that is a trust (other than a unit trust), a trust that is established under the laws of New Zealand, whereby the trust is settled, executed, and governed by New Zealand law.
Beginning on or before 1 April 2017, the term "resident in New Zealand" under the IGA means, in the context of a Financial Institution that is a trust (other than a unit trust), a trust that has one or more trustees resident in New Zealand for New Zealand income tax purposes at any time during the reporting period, or is managed by a branch of a trustee located in New Zealand provided that the branch of the trustee is subject to regulatory supervision in New Zealand. However, a Financial Institution that is a trust (other than a unit trust) would not be considered "resident in New Zealand" if the trust is resident in a Partner Jurisdiction or in another jurisdiction that permits the trust to comply with the requirements of a participating Foreign Financial Institution under the United States Treasury Regulations, and the trust reports all the information required to be reported pursuant to the Partner Jurisdiction's IGA or the United States Treasury Regulations, as applicable, with respect to Financial Accounts maintained by the trust.
See the full text of the arrangement: PDF (111 KB)