By Brendon Ojala
If you get an email from your bank threatening to freeze your accounts, there are three likely explanations …
1) You are being spammed and if you click on the link and provide your details you will lose all your money. Moral of the story: don’t click the link and call your bank before doing anything else.
2) You have been very naughty and committed some outrageous breach of the bank or the IRD or the government’s rules/laws. You’ll have some explaining to do.
3) The bank needs you to reply to a request for information so they are not in breach of a new law.
Let’s go with number three for now…
If you have taken out a new bank product in the last year (like a home loan, credit card, or opened a new account), you would have been required to fill out a “tax form”. The reason for this is that since 1 July 2017 New Zealand has been part of an OECD Common Reporting Standard, which means that if you are a tax resident outside New Zealand, the bank is legally obliged to pass certain information on to the IRD who then may exchange this information with other countries.
It is my understanding that even if you haven’t taken out a new product (which from a banks perspective is a good time to ensure you do it—as you generally are motivated at this stage) banks are asking you to confirm the country in which you are a tax resident. If you don’t respond, they may freeze your accounts until you have. That seems draconian, however, they do have a legal obligation they are trying to meet.
So, if you have been threatened with bank account freezing …
1) Assume you are being spammed, until you’ve confirmed it directly with your bank.
2) Don’t drug traffic, launder money or commit tax fraud.
3) Fill out the bank form to confirm where you are a tax resident.
Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.