Legislation enabling FATCA overrides Privacy Act
The Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill contains proposed legislative amendments to give effect to the intergovernmental agreement (IGA) New Zealand is currently negotiating with the United States in respect of the United States’s Foreign Account Tax Compliance Act (FATCA).
The Commentary to the Bill states that under the terms of the IGA, New Zealand financial institutions will be required to collect information on their customers that are United States taxpayers or entities controlled by United States taxpayers. This information must be sent to the Inland Revenue Department, which in turn will transmit it to United States tax authorities.
Under the Bill, the IGA will have the status of a double tax agreement. As such, the IGA will generally override the provisions of the Privacy Act 1993. However, any information provided to the United States will be subject to the existing protections that apply to information provided to the United States under the New Zealand-United States double tax agreement.