The Bill introducing the Common Reporting Standard (CRS), introduced into the House of Representatives on 3 December 2015, is likely to be passed by Parliament soon. These rules will apply from 1 July 2017 (not 1 January 2017, as originally envisaged by the earlier Exposure Draft). Jenny Clarke and Martin Koeleman provide insight into the changes to the Bill not in the original Exposure Draft.
All Financial Institutions (including Depository Institutions, Custodial
Institutions, Investment Entities and Specified Insurers) need to prepare for
and understand these rules.
In addition to the push out of the expected implementation date, there have been some changes to the Bill before Parliament that were not in the original Exposure Draft:
Affected institutions should ensure that, at the very least, preparations are underway in order to be ready well before the go-live date of 1 July 2017.
Interestingly, the Explanatory Memorandum to the CRS Bill notes that the costs for Australian financial institutions to comply with CRS has been estimated at over $67 million per year. Clearly, the Government must be of the view that the increased tax collections as a result of signing up to the CRS, at least in the long run, will far outweigh the costs of compliance.
The emotional toll on the tax/compliance teams of our local Financial Institutions, however, cannot be quantified.