New Zealand spouses of United States citizens in this country would not have their financial records passed to American tax authorities under controversial rules that take effect this year, the banking industry assured MPs yesterday.
The Government is negotiating an Intergovernmental Agreement (IGA) with the US to enable local banks to forward account information about New Zealand-based US citizens and tax residents to the IRD, which will then pass it on to the US Inland Revenue Service (IRS).
Banks are required by the IRS to provide the information from June this year as part of its "Fatca" crackdown on tax evasion. If banks and other financial institutions do not comply they face a 30 per cent tax on their US investments.
However because an IGA will require financial institutions to collect data on consumers and pass relevant information on to the IRD, "it will impair the privacy rights of the customers concerned", as the Treasury noted last year.
Parliament is considering changes to the Taxation Bill to get around the Privacy Act, the Human Rights Act, and the NZ Bill of Rights Act which would otherwise block the IGA.
