The Tax Administration Act requires an offshore person to provide a current bank account number before issuing a NZ IRD number. This rule is aimed at meeting expectations around preventing NZ being used as a money laundering destination.
However, obtaining these bank accounts for non-residents have caused many headaches. In some cases, accounts have been set up for the sole purpose of applying for the IRD number, with no real intent to use them, and now we find that many banks are unwilling to open such accounts.
A new tax bill introduced at the start of April introduces some discretion for the Commissioner around this bank account requirement.
In particular, the need for a bank account number may be waived where the Commissioner “is satisfied that the information available to the Commissioner relating to the offshore person provides the Commissioner with an assurance of the identity and background of the offshore person”.
This is a positive change for non-residents genuinely intending to do business in NZ. We are not sure what information the Commissioner will accept to satisfy this test, but expect to see some guidance on this from the IRD on requirements once the legislation is enacted.