Plain language law

New Zealand law explained for everyone

Tax Administration Act 1994

Information, record-keeping, and returns - Investment income information

25MB: Information from custodial institutions

You could also call this:

"Telling the government about investment income held for others"

Illustration for Tax Administration Act 1994

When you get investment income, you must tell the Commissioner. You are a custodial institution if you hold money for someone else. You must give the Commissioner information about the investment income you get. If you are a custodial institution, you can ask someone else to give the information to the Commissioner for you. But if they do not do it, you still have to do it. A custodial institution is supervised by laws like the Banking (Prudential Supervision) Act 1989 or the Financial Markets Authority Act 2011. An end investor is someone who gets the investment income, like you. If you are a non-resident custodial institution, you might not have to give all the information. But if you have a branch in New Zealand, you will have to give the information. You can find out more about what information you need to give in section 25E(1) and schedule 6.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS337495.

Topics:
Money and consumer rights > TaxesBusiness > Industry rules
Previous

25M: Information from emigrating companies, or

"Telling the tax office about money when a company leaves New Zealand"

Next

25N: Information from payers with no withholding obligation, or

"Telling the tax office about investment income when you don't take tax out"

Part 3Information, record-keeping, and returns
Investment income information

25MBInformation from custodial institutions

  1. This section applies when—

  2. a person who is a custodial institution receives a payment of investment income; and
    1. the institution pays on or transfers the amount received to an end investor.

      1. Despite subsection (1) and section 25E(1), the rules in this subpart do not apply to a custodial institution that is the specified operator of a designated settlement system under the Banking (Prudential Supervision) Act 1989. The exclusion extends to a nominee or agent of the specified operator.

      2. The custodial institution must provide investment income information relating to the payment of investment income to the Commissioner under section 25E(1).

      3. The custodial institution may, before the date on which the payment is received by the institution, enter into an agreement with another person (person B) for person B to provide to the Commissioner the information referred to in subsection (3). However, if person B does not provide the information to the Commissioner, the reporting obligation remains with the custodial institution.

      4. When a payment of investment income is paid on or transferred through interposed custodial institutions before being paid to an end investor, the custodial institution that is last in the chain may enter into an agreement with another custodial institution that precedes them in the chain, for the latter institution to provide to the Commissioner the information referred to in subsection (3). In this case, the reporting obligation passes to the latter institution, and the final custodial institution’s obligation is discharged.

      5. Despite subsection (3),—

      6. when an end investor is a non-resident custodial institution, the information required under section 25E may be aggregated:
        1. the investment income information set out in schedule 6, rows 9 (in relation to approved issuer levy), 17, and 20 that a custodial institution is required to provide is limited to information held by the institution.

          1. For the purposes of this subpart, a custodial institution means an entity—

          2. that holds financial assets or financial instruments as a bare trustee on account for another person; and
            1. whose activities are supervised or regulated under the Financial Markets Conduct Act 2013, the Financial Markets Authority Act 2011, the Financial Advisers Act 2008, or the Banking (Prudential Supervision) Act 1989, or are supervised or regulated under corresponding legislation in another jurisdiction.

              1. For the purposes of this subpart, an end investor —

              2. means an investor to whom a payment of investment income is made who is—
                1. a direct investor, whether resident or non-resident, who is the beneficial owner of the investment:
                  1. a custodial institution that is not resident in New Zealand; and
                  2. includes a trustee, PIE, or PIE proxy if the person or entity has an obligation to provide investment income information to the Commissioner under this subpart.

                    1. For the purposes of subsection (8)(a)(ii), if the non-resident custodial institution has a branch located in New Zealand that receives a payment of investment income, the branch is treated as the person who must provide investment income information relating to the payment under subsection (3).

                    Notes
                    • Section 25MB: inserted, on , by section 201 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                    • Section 25MB(2): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
                    • Section 25MB(7)(b): replaced (with effect on 1 April 2020), on , by section 157 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                    • Section 25MB(7)(b): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
                    • Section 25MB(8)(a)(ii): replaced (with effect on 1 April 2020), on , by section 189(1) (and see section 189(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                    • Section 25MB(9) heading: inserted (with effect on 1 April 2020), on , by section 188(2) (and see section 189(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                    • Section 25MB(9): inserted (with effect on 1 April 2020), on (applying for 2020–21 and later income years), by section 188(2) (and see section 189(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).