CRS 2018/007
Issued
26 Jul 2018

– Foundation North

Determination CRS 2018/007 – Foundation North is a non-reporting financial institution for the purposes of the CRS applied standard and requirements under Part 11B of the Tax Administration Act 1994

Determination CRS 2018/007 – Foundation North is a non-reporting financial institution 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.

Interpretation

In this determination, unless the context otherwise requires:

"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 reporting period” means the period from 1 July 2017-31 March 2018 and any subsequent period from 1 April-31 March.

"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.

“Charitable Trusts Act” means the Charitable Trusts Act 1957.

“Community Trusts Act” means the Community Trusts Act 1999.

Discussion (which does not form part of the determination)

Foundation North is one of 12 community trusts that were originally established under the Trustee Banks Restructuring Act 1988 to be vested in the ownership of the then government-owned shares in each regional trustee bank.

Most of these community trusts have sold their trustee bank shares and now manage significant and diversified portfolios of investments for the community public benefit in their local area or region in New Zealand. They are regulated by the Community Trusts Act, and are subject to the terms of their trust deeds (which are also regulated by that Act).

The statutory purpose of the community trusts is to hold property (and property vested in them) on trust to be applied for charitable, cultural, philanthropic, recreational, and other purposes that are beneficial to their communities, principally in their area or region (see section 12 of the Community Trusts Act).

Foundation North is also an incorporated charitable trust under the Charitable Trusts Act.

As a community trust providing grant funding to a range of Auckland and Northland based community organisations and entities, Foundation North has substantially similar characteristics to a “governmental entity” that is a “controlled entity”, as described in subparagraphs B(2) and B(2)(b) of Section VIII of the CRS Standard, and has sufficient substituting characteristics which indicate that such a community trust presents a low risk of being used to evade tax.

Foundation North is an investment entity under Section VIII(A)(6)(b) of the CRS Standard as its gross income is primarily attributable to investing, reinvesting, or trading in financial assets, and it is managed by another entity that is a financial institution.

Foundation North:

  • While not wholly government owned and controlled, the Crown effectively is its settlor and protector, and is responsible (along with its trustees) for its governance and operational oversight;
  • Is regulated under the Community Trusts Act, Charitable Trusts Act, and other New Zealand law, including Crown governance and oversight;
  • Has objects that are solely for public benefit purposes within its specific area or region (under the Community Trusts Act and its trust deed);
  • Only provides grant benefits to community based organisations and entities, in terms of the Community Trusts Act and its trust deed;
  • Does not seek external funding for investment, but derives its income from the investment of its original Crown endowment;
  • Derives investment income that is not derived from the carrying on of a commercial business providing financial services to private persons; and
  • As an incorporated charitable trust, if it was ever liquidated or dissolved, the treatment of any surplus assets would be determined by the High Court of New Zealand.

Scope of determination

Foundation North does not fully satisfy the requirements for, but has substantially similar characteristics to, a “governmental entity” that is a “controlled entity”, as described in subparagraphs
B(2) and B(2)(b) of Section VIII of the CRS Standard.

This determination is issued subject to the following conditions being satisfied by Foundation North, that:

  • It continues to not operate a commercial business that provides financial services to private persons;
  • It continues to be a community trust that is subject to the Community Trusts Act;
  • It continues to be an incorporated charitable trust under the Charitable Trusts Act; and
  • Because of its status as also being an incorporated charitable trust, if ever liquidated or dissolved, the High Court of New Zealand will decide how any of its surplus assets are vested, and that such a decision will be consistent with the objects of its trust deed and the scheme of the Community Trusts Act.

Determination

Foundation North, as outlined in the scope of this determination, is a non-reporting financial institution for the purposes of the CRS Applied Standard and the requirements under Part 11B of the Tax Administration Act 1994.

Application date

This determination applies for the CRS reporting period 1 July 2017 to 31 March 2018, and subsequent CRS reporting periods under the CRS Applied Standard.

Dated at Hamilton this 26th day of July 2018

Tony Morris
Customer Segment Lead, Significant Enterprises Customer Segment