Not long ago, New Zealand media revealed a big news: new Zealand banks freeze hundreds of bank accounts in the future, the number is likely to reach thousands!
As soon as the news came out, many Australians, including many Chinese Australians, panicked!
Why?
Because New Zealand and Australia have always loved each other, New Zealand banks have sold, Australia`s banks will not lag behind.
And according to reliable sources in the industry: Australian banks have also begun to freeze a large number of accounts, including accounts opened in Australia by foreigners! In particular, over the past four years, a large amount of foreign capital flows into the housing market.
The purpose of the bank to freeze these accounts is to find out whether the holder of the account is a tax resident of a foreign country
If so, banks will hand over their account information to Australia`s tax authorities, which will then exchange this information with tax authorities in other countries.
For example, if you are a Chinese living in Australia, your bank account information in Australia will be handed over to China`s tax authorities.
In other words, how much assets you have in Australia and how much money you have in the bank will be known to China`s tax authorities!
In May, Kiwibank sent notifications to 3000 clients asking them to inform banks within 14 days of whether they belonged to taxpayers in other countries, New Zealand media reported.
The bank had to freeze their accounts as a result of the delay in the description of some customers.
At present, Kiwibank has frozen 180 bank accounts, and as the investigation deepens, the number of frozen accounts may increase to 1900
ANZ Bank and ASB Bank have also frozen 200 and 40 bank accounts, respectively.
Although Australia`s banks have frozen how many accounts they have, there are no exact figures yet, but in terms of population ratios, they should be just as big as they are.
Of course, the account is frozen just can`t be traded, there will be no less money in the account, as long as the tax identification information submitted in accordance with the rules, it can be unfrozen.
But this message still makes a lot of people sigh, CRS really is coming!
In the future, overseas assets will be "naked run"!
What is "CRS"?
The full name of "automatic Exchange Standard for tax-related Information in Financial accounts", referred to as "CRS", was launched by the Organisation for Economic Cooperation and Development (OECD) in July 2014.
To put it simply, tax authorities in various countries exchange financial account information on foreign tax residents.
For example: Australian tax residents in China account information, China will be handed over to Australia`s tax authorities;
Information about Chinese tax residents` accounts in Australia will also be handed over to China`s tax authorities.
Those who pay taxes in China and those who pay taxes in Australia.
Trying to evade taxes, there`s no door!
At present, hundreds of countries around the world have pledged to implement CRS.
Both Australia and China have been implemented since this year, and China`s first implementation took place in September 2018.
It is important to note that tax residents are not classified by nationality (passports), and that each country has a different definition of its own tax residents.
Tax residents of China:
- Chinese citizens and foreign nationals who have domiciled within the territory of China;
- An individual who has no domicile in China but has lived for a full year.
Australian tax resident:
Australia`s tax status is not necessarily associated with whether it is a permanent resident or a citizen of Australia, and is regarded as an Australian tax citizen in one of the following circumstances.
- Always living in Australia;
- Emigrate to Australia and reside permanently in Australia;
- A temporary departure from Australia and no permanent residence in other countries;
- Overseas students, registered in Australia for more than six months of courses;
- Live in Australia for more than six consecutive months, most of the time working in the same place, living in the same place;
What information will be collected and exchanged by tax authorities?
However, your property, yacht, sports car, antique calligraphy, jewelry, art, cash and other non-financial assets are outside the scope of the CRS, and will not be declared.
Who will be affected?
1. Chinese who have emigrated
If you are Chinese but have emigrated to Australia, the Chinese tax authorities will inform the Australian tax authorities of your hidden assets in China.
If you do not faithfully declare assets and taxes to the Australian tax authorities, you may face
Make up taxes, pay fines, or even take criminal responsibility
2. Chinese with financial assets overseas
Chinese, whether or not they emigrate, if they have financial assets abroad (including: deposit accounts, escrow accounts, cash value insurance policies, annuity contracts, securities accounts, futures accounts, equity / creditor`s rights and interests of financial institutions, etc.),
All of this asset information is available to the tax Administration of China.
For example, if you are a person with an mainland ID card and have a bank deposit of $5 million in Australia, the Australian bank will report your deposit to the Australian Inland Revenue Department, and the Australian Inland Revenue Department will report your deposit information to the China Inland Revenue Department.
You should be careful if your money isn`t legal income / it`s not legal to leave the country / it`s not legally taxed in China.
In addition, Chinese citizens who own shell companies overseas, Chinese citizens who buy high life insurance overseas and Chinese citizens who have set up family trusts overseas will also be affected by the CRS.
Will the exchange of information increase the tax burden on taxpayers?
No.
The automatic exchange of tax-related information in financial accounts is a means to strengthen the management of cross-border tax sources and will not increase the tax obligations that everyone should have fulfilled.
As long as you declare your taxes in good faith according to law, there is no need to worry.
If he is Chinese in Australia, will Australia ask him to pay tax on his assets in China?
Experts say this is the legal risk of a global exchange of information.
First, there are many categories of taxes: for example, property tax, real estate tax, China may soon be levied. There is also turnover tax, income tax.
If you`re an Australian resident, your income is to be paid to Australia, and there may be some property taxes and turnover taxes in China, as well as in China. That`s for income tax, and there may be a withholding tax in China, and it`s also going to pay taxes in Australia.
In short, the implementation of the CRS will be difficult for people who want to launder assets through various white gloves or who have not reported taxes when investing in overseas markets. Some corrupt officials or rich people want to hide their assets abroad. It`s unlikely.
