Article Source: www.tvnz.co.nz
Thousands of bank accounts are now frozen in New Zealand and at risk of being closed because customers aren't disclosing enough information.
New Zealand is one of 60 countries signed up to an Organisation for Economic Co-operation and Development (OECD) agreement to share customer information with other countries in an effort to combat tax evasion.
It is now a legal requirement for banks, some investment managers, managed trusts and certain brokers to identify their customers who are foreign tax residents and send their financial information to Inland Revenue.
IRD may then share that information with the country to which their tax residency belongs.
Likewise, New Zealanders with accounts opened overseas could have that information sent back to IRD.
An IRD spokesperson said the type of information shared included account details, the account's annual balance and gross income earned on any investments.
The Business Tax, Exchange of Information, and Remedial Matters Act came into effect on 1 July 2017.
As a result those who failed to provide enough information have been frozen.
Kiwibank said 1200 accounts were initially frozen, however only 800 remained.
"Over the past seven months Kiwibank has had more than 5000 customers make contact updating their foreign tax resident information."
From 1 July 2018 all other existing accounts may also be required to provide more information.
ANZ said "around 1000" accounts were currently frozen and this number was expected to increase as more customers were asked for information.
"The number of customers affected is expected to total a few thousand."
Westpac said it could not comment on how many accounts were frozen in total but 188 frozen were "dormant or had minimal funds in them".
"The funds in those accounts will remain the customers' and we will try to send it back to them."
ASB and BNZ said some of their customers had been affected but would not confirm how many.
New Zealand has been involved with information sharing agreements for tax evasion purposes in the past, including with the United States in 2014.
Under the agreement IRD could start collecting tax and penalties on behalf of the American tax authorities.