— Citizenship Lawyer (@ExpatriationLaw) April 18, 2014
Oh well. It appears that (at least for now), the anti- FATCA submissions to New Zealand were of little effect.* A comprehensive description of the rejection is here and New Zealand based commentary on the FATCA capitulation (calling it a crime) is here.
An interesting article by Gareth Vaughn – New Zealand based journalist – describing FATCA in the context of information exchange includes:
What’s a specified US person?
In terms of individuals in NZ who may be affected, a key definition is “Specified US Person.”
“The United States taxes on what is known as a citizenship basis, meaning that US citizens continue to have tax filing obligations irrespective of how long they have lived overseas,” IRD says.
“However, the number of people affected is not known because Inland Revenue does not keep statistics related to the potential offshore tax liability of individuals. The data released by Statistics New Zealand as part of Census 2013 recorded 21,462 people born in the United States that are ‘usually resident’ in New Zealand.”
However, as BNZ points out in a submission on NZ’s implementation of FATCA, many bank customers will be impacted.
“Although FATCA reporting is restricted to US persons/US specified persons whose account values exceed certain thresholds, in order to identify those customers there is an unavoidable impact on customers who are not US persons/US specified person who use New Zealand financial institutions. Specifically, those customers will still have to be asked various questions in order to determine that they are not US persons/US specified persons,” says BNZ.
Just what “US specified persons” means is raising concerns at how wide the net will be cast. Will it drag in just US citizens? Or will their spouses, partners, children and business partners also be included? And what about green card holders?
“The only individuals that are to be reported on for FATCA purposes are persons who have been identified as being “Specified US persons” that hold (or in certain circumstances control) US Reportable accounts,” IRD says. “It is expected that the definition of ‘Specified US Person’ will largely be synonymous with a person that is a United States taxpayer under US domestic legislation.”
“A spouse, partner, child, or business partner of such a Specified US Person will not be reported on merely because of their relationship to such as person,” says IRD.
“Various mechanisms are being put in place, both at the financial institution and Inland Revenue level that are designed to prevent over-reporting of spouses etc. who are not themselves specified US persons. This means that if, for example, a Specified US Person and their non-US person spouse have a joint account, only the information on the Specified US Person will be provided to Inland Revenue.”
It’s becoming increasingly clear, that when it comes to “U.S. persons” (primarily U.S. citizens) – the best thing is to NOT be one. Hardly a surprise that, as reported by journalists in Canada, relinquishments and renunciations of U.S. citizenship are increasing.
* As described by Osgood at the Isaac Brock Society: