CRS 2017/004
Issued
22 Jun 2017

– excluded account determination – a Whai Rawa Unit Trust Fund member’s account

CRS 2017/004 (22 Jun 2017) determines that a Whai Rawa Unit Trust Fund member's account is excluded for the purposes of the Common Reporting Standard requirements.

Determination CRS 2017/004 – A member’s account in the Whai Rawa Unit Trust Fund is an excluded account for the purposes of the CRS applied standard and requirements under Part 11B of the Tax Administration Act 1994

Reference

This determination is made under section 91AAW of the Tax Administration Act 1994. This power has been delegated by the Commissioner of Inland Revenue to the position of Group Manager, Investigations and Advice, under section 7 of that Act.

Interpretation

In this determination, unless the context otherwise requires:

“AML/CFT” means anti-money laundering and countering the financing of terrorism.

“CRS applied standard” means the CRS standard as modified by section 185O for the determination of requirements under the Tax Administration Act 1994.

“CRS publication” means the Standard for Automatic Exchange of Financial Account Information in Tax Matters, published by the Organisation for Economic Co-operation and Development.

“CRS standard” means the Common Standard on Reporting and Due Diligence for Financial Account Information, as amended from time to time, which is a standard—

  1. developed by the Organisation for Economic Co-operation and Development and the Group of Twenty countries; and
  2. agreed by the Council for the Organisation for Economic Co-operation and Development on 15 July 2014; and
  3. contained in Part IIB of the CRS publication.

“Eligible to be registered as a tribal member” means other persons or groups of persons other than registered TRONT members awaiting confirmation of TRONT registration can be admitted if approved by TRONT and subject to TRONT’s terms of approval.

“FMC Act 2013” means the Financial Markets Conduct Act 2013.

“ITA 2007” means the Income Tax Act 2007.

“Ngāi Tahu Whanui” has the same meaning as in the Te Rūnanga o Ngāi Tahu Act 1996.

“Permitted withdrawal” means a withdrawal that is permitted under clause 10 of the Whai Rawa Unit Trust Fund Deed dated 6 September 2016.

“Registered as a tribal member” means any member of Ngāi Tahu Whanui who is registered as a tribal member with TRONT in accordance with the Te Rūnanga o Ngāi Tahu Act 1996.

“Register of managed investment schemes” is defined in section 6 of the FMC Act, and means the register of managed investment schemes kept under Schedule 2 of that Act.

“Retirement or pension account” means an excluded account that satisfies the requirements of subparagraph C(17)(a) of Section VIII of the CRS standard.

“RSCT” means Retirement Scheme Contribution tax.

“Savings account” means an excluded account that satisfies the requirements of subparagraph C(17)(b) of Section VIII of the CRS standard.

“TRONT” means Te Rūnanga o Ngāi Tahu, a board established by Ngāi Tahu Whanui to collectively manage assets returned to settle historic Treaty of Waitangi Settlement grievances with the Crown.

“Whai Rawa member” in relation to the Whai Rawa scheme, means a natural person who has been admitted to membership of the scheme and who is, or may become, entitled to benefits under the scheme.

“Whai Rawa member’s account” in relation to a member of the Whai Rawa scheme, includes any account held by that member in the Whai Rawa scheme.

“Whai Rawa scheme” means the Whai Rawa Unit Trust Fund which is a scheme that is registered on the register of managed investment schemes as a managed fund under the FMC Act.

Discussion (which does not form part of the determination)

As outlined above, the Whai Rawa scheme is a scheme that is registered on the register of managed investment schemes as a managed fund under the FMC Act. The register is maintained by the Financial Markets Authority. In order to be included on the register, Whai Rawa must fully meet the registration requirements as set out in section 127, and other relevant provisions, of the FMC Act.

The Whai Rawa scheme was established to encourage long-term savings habits for members of the Ngāi Tahu Whanui.

A Whai Rawa member must meet the following registration requirements. They must be:

  • An individual (natural person) or parent, guardian or other relation of the applicant if the applicant is a minor, provided that the person is less than 65 years at date of entry.
  • Registered (or eligible to be registered) as a tribal member with TRONT; and
  • Able to provide a valid birth certificate.

Whai Rawa members can make voluntary contributions into their own, or into another, Whai Rawa member’s account. TRONT also matches the savings of certain members up to a maximum of currently $200 per year or an additional $100 for newborns enrolled on their first birthday.

All Whai Rawa scheme contributions are locked in until the member reaches the age of 65 years; or unless a member makes another type of permitted withdrawal in accordance with the requirements of the Whai Rawa Unit Trust Deed. The member is not able to withdraw funds from Whai Rawa for any purpose other than tertiary education, first home purchase, retirement from age 55 years onwards, for special circumstances due to significant financial hardship, or hardship due to serious illness, or due to the member’s death (where amounts can be withdrawn on behalf of the member).

A Whai Rawa member’s account:

  • Is subject to regulation under the Financial Markets Authority Act 2011, the FMC Act 2013, the ITA 2007 and the Tax Administration Act 1994;
  • Is subject to regulation under the ITA 2007 as a retirement account, with Whai Rawa administering taxation obligations on behalf of its members for RSCT payable on TRONT contributions at the individual member’s personal RSCT rate, and with Māori Authority tax credits available as a subsidy (partial or full – depending on the member’s marginal tax rate) against the RSCT that is payable on TRONT contributions.
  • Is subject to AML/CFT procedures under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009;
  • Has information reported to Inland Revenue; and
  • Only allows members to make permitted withdrawals. The member is not able to withdraw funds from Whai Rawa for any purpose other than tertiary education, first home purchase, retirement from age 55 years onwards, for special circumstances due to significant financial hardship, or hardship due to serious illness, or due to the member’s death (where amounts can be withdrawn on behalf of the member).

A Whai Rawa member’s account has substantially similar characteristics to a retirement or pension account in subparagraph C(17)(a) of Section VIII of the CRS standard and a savings account in subparagraph C(17)(b) of Section VIII of the CRS standard, and has other substituting characteristics which indicate that such an account presents a low risk of being used to evade tax.

Determining that a Whai Rawa member’s account is an excluded account, and specifying this under NZ law, does not frustrate the purposes of the CRS standard.

Scope of determination

A Whai Rawa member’s account does not fully satisfy the requirements for, but has substantially similar characteristics to, a retirement or pension account in subparagraph (C)(17)(a) of the CRS standard and an investment/savings account in subparagraph C(17)(b) of Section VIII of the CRS standard.

This determination is issued by the Commissioner of Inland Revenue and applies to a member’s account in the Whai Rawa scheme where:

  • The Whai Rawa scheme is registered on the register of managed investment schemes as a managed fund, under the FMC Act; and
  • The Whai Rawa scheme continues to maintain its registration on the register of managed investment schemes as a managed fund, and its manager complies with the relevant on-going registration requirements under the FMC Act; and
  • The member of Whai Rawa is a natural person; and
  • The member’s annual contributions into the Whai Rawa account do not exceed United States $50,000 per annum (including any applicable aggregation rules set out in the CRS); and
  • The member is not able to withdraw funds from Whai Rawa for any purpose other than tertiary education, first home purchase, retirement from age 55 years onwards, for special circumstances due to significant financial hardship, or hardship due to serious illness, or due to the member’s death (where amounts can be withdrawn on behalf of the member).

Determination

A Whai Rawa member’s account in the Whai Rawa scheme, as outlined in the scope of this determination, is an excluded account for the purposes of the CRS applied standard and requirements under Part 11B of the Tax Administration Act 1994.

Dated at Wellington on the 22th day of June 2017.

Patrick Goggin
Group Manager, Investigations and Advice