Radio New Zealand - Te Reo Irirangi o Aotearoa

US move could affect KiwiSaver returns

Updated at 10:31 pm on 11 February 2012

Efforts by American authorities to catch tax dodgers operating accounts in foreign countries could end up slicing tens of millions of dollars off KiwiSaver returns through increased fees.

New Zealand experts say new exemptions from the global crackdown do not include KiwiSaver or local super funds.

Legislation passed in the United States in 2010 compelled foreign financial institutions to provide information about its citizens to American tax authorities.

Following an international backlash, the US government said on Friday that it would exempt some - mainly smaller financial institutions - from the dragnet.

But a tax partner at PricewaterhouseCoopers tax, Mark Russell, says the exemptions do not include KiwiSaver or local super funds.

"If the KiwiSaver schemes can't change the rules and get an exemption, then that's going to be an additional cost of managing a KiwiSaver fund."

Mr Russell says it could cost the funds tens of millions of dollars to comply with the new rules and these costs could be passed on to investors in higher fees.

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