B - excluded account determination - a Scheme Member’s Account in the NZAA Retirement Scheme
A Member’s Account in the NZAA Retirement Scheme is an excluded account for the purposes of the CRS applied standard and requirements under Part 11B of the Tax Administration Act 1994.
Determination CRS 2018/008b – A Member’s Account in the NZAA Retirement Scheme is an excluded account for the purposes of the CRS applied standard and requirements under Part 11B of the Tax Administration Act 1994
This determination is made under section 91AAW of the Tax Administration Act 1994.
In this determination, unless the context otherwise requires:
“AML Exemption Requirements” means the requirements of regulation 20A of the Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Regulations 2011, as modified by Part 3 of the Schedule to the Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2018.
“AML procedures” means anti-money laundering and countering the financing of terrorism procedures under the AML/CFT Act 2009.
“AML/CFT Act 2009” means the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
“Associated Company” has the same meaning as in the Scheme Trust Deed.
“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 to 31 March 2018 and any subsequent 12-month period from 1 April to the following 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 –
- developed by the Organisation for Economic Co-operation and Development and the Group of Twenty countries; and
- agreed by the Council for the Organisation for Economic Co-operation and Development on 15 July 2014; and
- contained in Part IIB of the CRS Publication.
“Employee” means (depending on the context) an employee or former employee of the Employer.
“Employer” means The New Zealand Automobile Association Incorporated and any Associated Company.
“ESCT” has the same meaning as in s YA 1 of the ITA 2007.
"Financial Account" has the same meaning as in Section VIII(C)(1) of the CRS standard.
“FMC Act 2013” means the Financial Markets Conduct Act 2013.
“ITA 2007” means the Income Tax Act 2007.
“Member” means an Employee, or former Employee, who holds an account in the Scheme.
“Member’s Account” means an account held by an Employee Member, or a former Employee Member, in the Scheme.
“Overseas Secondment” means the employment of an Employee overseas for a continuous period of up to one year.
“PAYE” has the same meaning as in s YA 1 of the ITA 2007.
“Permitted withdrawal” means a withdrawal that is permitted from a registered workplace savings scheme in terms of s 130 of the FMC Act 2013.
“Register of managed investment schemes” is defined in s 6 of the FMC Act 2013 and means the register of managed investment schemes kept under Schedule 2 of that Act.
“Retirement or pension account” means an excluded account that fully satisfies the requirements of subparagraph C(17)(a) of Section VIII of the CRS standard.
“Scheme” means the NZAA Retirement Scheme registered on the register of managed investment schemes as a workplace savings scheme under the FMC Act 2013.
“Scheme Trust Deed” means the Scheme Trust Deed dated 24 August 2016 as amended from time to time.
“Temporary Absence contribution” means a contribution made by a Member to a Member’s Account (in accordance with the Scheme Trust Deed) while on an absence from work agreed with their Employer.
“Work Visa” means a temporary visa granted under the Immigration Act 2009.
Discussion (which does not form part of the determination)
The trustees of the Scheme (in that capacity) primarily conduct a business of investing, administering, or managing financial assets or money on behalf of the Scheme and its Members. Therefore, in terms of the CRS standard, the Scheme is an investment entity and a reporting New Zealand financial institution.
The Scheme is registered as a restricted workplace savings scheme under the FMC Act 2013. The Scheme is a defined contribution scheme.
As a workplace savings scheme the Scheme has the purposes of providing retirement, disability and death benefits as well as benefits to Members on ceasing employment with the Employer (whether immediately on ceasing that employment or subsequently).
Scope of determination
A 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 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.
This determination is issued by the Commissioner of Inland Revenue and applies to a Member’s Account in the Scheme where all of the following conditions are satisfied:
- The Scheme continues to maintain the Member’s Account as part of a registered workplace savings scheme under the FMC Act 2013;
- The Scheme continues to be subject to the AML Exemption Requirements (and, if those requirements are not met, to AML procedures);
- The Member satisfies either of the following:
- The Member is an Employee that is working in New Zealand for the Employer or is an Employee of the Employer that is working overseas on an Overseas Secondment; or
- The Member is a former Employee that was working in New Zealand (and/or on an Overseas Secondment) at the time the Employer and the Member made contributions to the account;
- The Member is a natural person;
- The Member is not present in New Zealand on a Work Visa;
- All Employer contributions are or have been subject to tax at source where New Zealand law requires or has required (e.g. ESCT);
- All Employee contributions (including past employee contributions) are deducted from payroll (salary or wages), are capped at a percentage of the Member’s salary, and are subject to PAYE (or to equivalent source deduction payments made where the Employee is working overseas on an Overseas Secondment);
- All Temporary Absence contributions are capped at the frequency and amount of the Member’s contributions immediately prior to the start of the agreed absence from work;
- Annual contributions (including both Employer and Employee contributions) to the Member’s Account continue to be equal to or less than USD 50,000 per annum (including any applicable aggregation rules set out in the CRS);
- Investment income from the account is subject to income tax at the Scheme level and occurs at source (i.e. not subject to the Member filing a tax return);
- All such taxation is reported to Inland Revenue by the payer, and not the Member;
- The Scheme continues to only allow Members to make Permitted Withdrawals;
- Any transfers into the Member’s Account on or after 1 July 2017 from sources other than the Employer or Employee contributions referred to above are from entities or Financial Accounts that meet the requirements of subparagraph (C)(17)(a) or (b) of Section VIII of the CRS or from one or more retirement or pension funds that meet the requirements of any of subparagraphs B(5) through (7) of Section VIII of the CRS. Any transfers into the Member’s Account made prior to 1 July 2017 from sources other than the Employer or Employee contributions referred to above were from entities or Financial Accounts that would, based on a reasonable assessment by the Scheme, in conjunction with the Employer as necessary and based on information in their possession, have been exempt under the above provisions, as if the CRS had applied prior to 1 July 2017. A Member’s Account that otherwise satisfies the USD 50,000 contributions threshold outlined above will also not fail to satisfy this requirement solely because the Account may receive assets or funds transferred from such excluded accounts or excluded funds.
Determining that a Member’s Account in the Scheme is an excluded account, and specifying this under New Zealand law, does not frustrate the purposes of the CRS standard.
A Member’s Account in the 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. If any of the above conditions are not satisfied for a particular Member’s Account this determination will not apply to that account.
This determination applies for the reporting period beginning 1 July 2017, and subsequent reporting periods under the CRS applied standard.
Dated at Hamilton this 27th day of November 2018.
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