The Associate Minister of Justice has approved Chartered Accountants ANZ’s anti-money laundering class exemption application covering certain tax transfers carried out by accounting practices. This exemption has been granted under section 157 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act).

Exemption period

The exemption applies with effect from 15 July 2022 for a period of five years. It operates generally to exempt reporting entities from the requirements in the Act, except suspicious activity reporting, in relation to those tax transfers that are included in the exemption. For tax transfers that are not included in the exemption, the full requirements of the Act still apply.

Tax transfers prior to 15 July 2022

For tax transfers that are included in the exemption but were undertaken prior to the effective date, the Department of Internal Affairs (DIA), as AML supervisor for the accounting sector, provided an undertaking that it would not take any enforcement action against a tax agent for non-compliance with the Act in relation to tax transfers that are included in the exemption and carried out in good faith.

Suspicious activity reporting is still required

Tax transfers by a tax agent remain captured activities under the Act. Therefore, accounting practices that carry out tax transfers (including where this is their only captured activity) are still AML reporting entities. A condition of the exemption is that there remains an obligation to perform suspicious activity reporting (SAR) for the specific tax transfers that are included in the exemption.

Tax transfers included in the exemption

We strongly recommend that you read the exemption notice in its entirety. In particular, please note that only some transfers between third parties are included in the exemption.

For ease of reference, the following tax transfers are included in the exemption:

• Transfers of excess tax within a taxpayer's accounts - section 173L Tax Administration Act 1994 (TAA)
• Transfers to a company in the same group of companies - section 173M(2)(a) TAA where there is 50% or more commonality of shareholding of commonly owned groups of companies
• Transfers between shareholder-employees and companies - section173M(2)(b) and (c) TAA
• Transfers between partners in the same partnership - section 173M(2)(d) TAA
• Transfers to relatives as defined for the purposes of section 173M(2)(e) TAA
• Transfers from a beneficiary to a trustee of the family trust – section 173M(2)(f) TAA
• Transfers from trustee of family trust to beneficiary - section 173M(3) TAA
• Transfers from the taxpayer to a tax pooling intermediary - section 173M(2)(fb) TAA
• Transfers from a company to a shareholder (not being a trust) with at least 25% of the shareholding, and vice versa
• Transfer from a trustee to a beneficiary where they are the same person but acting in different capacities
• Transfers from a trust to a company in which the trust has a 100% shareholding and vice versa, or the trust has a majority shareholding with any other shares in the company being held by a shareholder-employee of the company, as that term is defined in section YA 1 of the Income Tax Act 2007, and vice versa
• Transfers between family trusts where settlors are relatives
• Certain transfers in connection with registered schemes (under the Financial Markets Conduct Act 2013)
• Transfers from an agent of a non-resident insurer to a non-resident insurer.

Chartered Accountants ANZ has recorded the below webinar to inform members about the exemption. In addition to the below, we encourage members to also work through the exemption notice, and the resources available on the DIA’s Information for Accountants page. (which includes both guidance and FAQs).

Please contact us if you have any questions.