Editorial - Spring 2017
“FATCA”, “CRS” & our Agreement for Legal Services
As you are aware, we require each client (for each new transaction) to sign our Agreement for Legal Services (“Agreement”), to comply with our obligations pursuant to the Lawyers and Conveyancers Act.
When completing our Agreement, clients have for several years been asked to indicate whether they are United States Citizens or tax residents. This is to enable us to comply with our obligations under the United States Foreign Account Tax Compliance Act (“FATCA”). So far, this had only had any practical impact on the relatively small proportion of clients who are United States citizens or tax residents.
With effect from 1 July 2017, the OECD Common Reporting Standard (“CRS”) is now incorporated into New Zealand law. CRS imposes similar obligations as FATCA in terms of obtaining information about clients and providing that information to the Inland Revenue Department and/or our Bank. As a result of the above, we have introduced a new form of Agreement for Legal Services in which the information that we are required to collect under both FATCA and CRS is set out. The Agreement has been designed in a way to ensure the minimum of inconvenience for clients whilst at the same time allowing us to collect the information that we are required by law to obtain from clients.
For most clients FATCA & CRS will not apply, although they will still need to sign our Agreement. However, clients who are unsure of their tax status in relation to overseas jurisdictions will need to seek advice from an accountant/tax advisor qualified to give such advice in the relevant country.