Excluded account determination for i-Select Superannuation Scheme ROPS member’s account

Reference

This determination is made under section 91AAW of the Tax Administration Act 1994.

Interpretation

In this determination, unless the context otherwise requires:

“AML/CFT regulation” means anti-money laundering and countering the financing of terrorism regulation under the AML/CFT Act 2009.

“AML/CFT Act 2009” means the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

“CRS applied standard” means the CRS standard as modified by section 185O for the determination of requirements under the Tax Administration Act 1994.

“CRS publication” means the Standard for Automatic Exchange of Financial Account Information in Tax Matters, published by the Organisation for Economic Co-operation and Development.

“CRS standard” means the Common Standard on Reporting and Due Diligence for Financial Account Information, as amended from time to time, which is a standard—

1. developed by the Organisation for Economic Co-operation and Development and the Group of Twenty countries; and
2. agreed by the Council for the Organisation for Economic Co-operation and Development on 15 July 2014; and
3. contained in Part IIB of the CRS publication.

"Financial Account" has the same meaning as in Section VIII(C)(1) of the CRS standard.

“FMC Act 2013” means the Financial Markets Conduct Act 2013.

“FMCR 2014” means the Financial Markets Conduct Regulations 2014.

“HMRC” means Her Majesty's Revenue and Customs (United Kingdom).

“ITA 2007” means the Income Tax Act 2007.

“i-Select scheme” means the i-Select Superannuation Scheme, a managed investment scheme and a superannuation scheme under sections 127 and 129 of the FMC Act 2013, and subject to regulation 81 and schedule 12 of the FMCR 2014, which provides for rules relating to redemptions, withdrawals and benefits of superannuation schemes. It is also a recognised overseas pension scheme (ROPS) under the law of the Finance Act 2004 (UK).

“i-Select scheme account” means a ROPS account held by a personal member or legacy member.

“Legacy member” means a member who was admitted to membership of the i-Select scheme before 30 November 2016 (the date on which the i-Select scheme transitioned to the FMC Act 2013). A legacy account member must be a pre-existing member of the i-Select scheme under the legacy membership limb. Legacy membership is closed to new members from 30 November 2016.

“Manager” means i-Select Limited the manager of the i-Select scheme.

“A personal member” means a member who was admitted to membership of the i-Select scheme on or after 30 November 2016. (the date on which the i-Select scheme transitioned to the FMC Act 2013).

“Retirement or pension account” means an excluded account that satisfies the requirements of subparagraph C(17)(a) of Section VIII of the CRS standard.

“ROPS Scheme” means a recognised overseas pension scheme for the purposes of the Finance Act 2004 (UK).

“ROPS account” means an account maintained by the i-Select scheme that includes only:

• ROPS contributions that have been subject to reporting to HMRC; and
• Transfers from financial accounts that meet the requirements of subparagraph (C)(17)(a) or (b) of Section VIII of the CRS or from one or more retirement or pension funds that meet the requirements of any of subparagraphs B(5) through (7) of Section VIII of the CRS.

“ROPS contributions” means ROPS contributions (including ROPS transfers - to the i-Select scheme from another ROPS scheme) that have been subject to reporting to HMRC.

“Trust Deed” means the Deed of Amendment to the i-Select Superannuation Scheme trust deed dated 30 November 2016 as amended on 25 May 2017.

“UK” means the United Kingdom.

Discussion (which does not form part of the determination)

The trustees of the i-Select scheme primarily conduct a business of investing, administering, or managing financial assets or money on behalf of the Scheme and its Members. Therefore, in terms of the CRS standard, the Scheme is an investment entity and a reporting New Zealand financial institution.

The i-Select scheme is registered on the register of managed investment schemes as a managed fund and a registered superannuation scheme and legacy scheme, under the FMC Act.

The i-Select scheme is also a ROPS scheme for the purposes of the Finance Act 2004 (UK).

The ROPS withdrawal rules provide for withdrawals upon retirement (from the age of 55 - being the UK standard retirement age), upon death, or as a result of serious illness.

The Manager also requires the applicant to appoint a financial adviser that the Manager has approved, and completion of an application form.

An i-Select scheme account has substantially similar characteristics to a retirement or pension account in subparagraph (C)(17)(a) of Section VIII of the CRS standard, and has other substituting characteristics which indicate that such an account presents a low risk of being used to evade tax.

Determining that an i-Select scheme account is an excluded account, and specifying this under New Zealand law, does not frustrate the purposes of the CRS standard.

Scope of determination

An i-Select scheme account does not fully satisfy the requirements for, but has substantially similar characteristics to, a retirement or pension account in subparagraph (C)(17)(a) of the CRS standard.

This determination is issued by the Commissioner of Inland Revenue and applies to an i-Select scheme account where:

• The i-Select scheme is registered on the register of managed investment schemes as a managed fund and a registered superannuation scheme and legacy scheme, under the FMC Act;
• The i-Select scheme continues to maintain its registration on the register of managed investment schemes as a managed fund and a registered superannuation scheme and legacy scheme, and its Manager complies with the relevant on-going registration requirements under the FMC Act and schedule 12 of the FMCR 2014;
• The i-Select scheme continues to be subject to AML/CFT regulation;
• The i-Select scheme reports information to Inland Revenue for tax purposes in accordance with its statutory obligations. This includes the reporting of taxation paid by the scheme on investment income earned for the account;
• The account only accepts:
  • ROPS contributions; and
  • Transfers from:
    • Entities that meet the requirements of Section VIII(B)(5)-(7) of the CRS; and/or
    • Financial Accounts that meet the requirements of Section VIII(C)(17)(a) or (b) of the CRS;
• These contributions/transfers are reported to HMRC where required under the ROPS rules and under UK law;
• The member of the i-Select scheme is a natural person;
• The member’s annual contributions into the i-Select scheme’s account satisfies either of the following:
  • Contributions do not exceed United States $50,000 per annum (including any applicable aggregation rules set out in the CRS); or
  • Lifetime contributions do not exceed United States $1,000,000 (including any applicable aggregation rules set out in the CRS);
• Any transfers into the account from other entities or Financial Accounts comply with the following:
  • If the transfer occurs on or after 1 July 2017 it is from entities or Financial Accounts that meet the requirements of subparagraph (C)(17)(a) or (b) of Section VIII of the CRS or from one or more retirement or pension funds that meet the requirements of any of subparagraphs B(5) through (7) of Section VIII of the CRS; and
  • If the transfer occurred prior to 1 July 2017 it was, based on a reasonable assessment by the i-Select Scheme from information in its possession, from entities or Financial Accounts that meet the requirements of subparagraph (C)(17)(a) or (b) of Section VIII of the CRS or from one or more retirement or pension funds that meet the requirements of any of subparagraphs B(5) through (7) of Section VIII of the CRS.

An i-Select scheme account that otherwise satisfies the contribution threshold condition referred to above would not fail to satisfy that condition solely because the account receives transfers from such excluded entities or accounts.

• The i-Select scheme compiles with the following withdrawal rules:
  • The ROPS withdrawal rules including:
    • Withdrawals upon retirement (from the age of 55 - being the UK standard retirement age), upon death, or as a result of serious illness; and
    • The circumstances where withdrawals need to be reported to HMRC in the UK; and
  • Compliance with any applicable additional restrictions on withdrawals under New Zealand law; and
• i-Select remains on HMRC’s ROPS list¹.

Determining that an i-Select scheme account is an excluded account, and specifying this under New Zealand law, does not frustrate the purposes of the CRS standard.

Determination

An i-Select scheme account in the i-Select scheme, as outlined in the scope of this determination, is an excluded account for the purposes of the CRS applied standard and requirements under Part 11B of the Tax Administration Act 1994. If any of the above conditions are not satisfied for a particular i-Select scheme account this determination will not apply to that account.

Application date

This determination applies for the reporting period beginning 1 July 2017, and subsequent reporting periods under the CRS applied standard.

Dated at Wellington this 27th day of March 2019.

Tony Morris

Customer Segment Lead, Significant Enterprises Customer Segment

¹i-Select is currently on this list