Against the backdrop of the Ministry of Foreign Affairs and Trade’s new Trade Agenda 2030, which is focussed on continuing to improve opportunities in export markets, NZ will soon effect changes to its commercial legislation.
The OECD’s Automatic Exchange of Financial Account in Tax Matters (AEOI) creates an international standard with the aim of reducing international tax evasion. It will bring about changes to NZ’s domestic tax legislation, applying to some categories of financial institutions (such as “investment entities”, including managed investment schemes) from 1 July 2017. However, there are exclusions, notably where an institution has a low risk of being used for tax evasion purposes.
The AEOI will impose obligations on financial institutions to follow vetting procedures on financial accounts and to make reports to the IRD as to aspects of their client’s information (such as tax residence and financial information). The OECD’s Common Standard on Reporting and Due Diligence for Financial Account Information prescribes these requirements. The first reporting period will be 1 July 2017 to 31 March 2018, and subsequently each reporting period will last from 1 April to 31 March of each year.
Another looming change is the Contract and Commercial Law Act 2017, which will come into force on 1 September 2017. The new Act contains no substantial overhaul of the law, but may necessitate amendments for some entities to their template documents, such as standard form contracts. The key change is to modernise the wording of older statutes, and the updated wording will apply to contracts entered into prior to 1 September 2017. On the other hand, where there are minor amendments to the law, these will apply only to contracts entered into after 1 September 2017. For contracts executed after 1 September 2017, all changes will apply.