Did you receive a CRS letter?

The IRD has begun issuing letters detailing both their powers to gather information from foreign jurisdictions and your responsibilities as a tax payer. This can be a very difficult letter to receive even if you as a tax payer have been compliant for your economic history.

What does it mean?

The Common Reporting Standards (CRS) are an international agreement to share information across jurisdictions. In the context of the IRD, this means that they are able to request details from foreign banks, investment agencies and other private institutions about tax payers’ information.

Previously where it was possible to not report certain kinds of foreign income, the IRD now has the capacity to request thousands of records from foreign institutions and compare them with tax payer’s records in New Zealand.

What do I need to do?

If you have received a letter from the IRD you need to take the following steps:

1. Complete a review of you tax residency history. Just because the IRD now has access to details of your overseas investments, doesn’t mean they know when you became tax resident in New Zealand. It is essential to know the date when you became tax resident in New Zealand.
2. Gather all information from the past several years to build a full picture of your earnings both in New Zealand and overseas. If you have completed tax returns this may have already been done.
3. Once both of the above has been done, reply to the letter from IRD. You’ll need to detail any missing income, or explain that everything has already been fully reported in prior year’s returns.

If you need any help with items mentioned in this article, please get in touch with me, Robert, or your accountant/business advisor.