The Australian Treasury released an exposure draft of legislation that would require Australia to implement the Organisation for Economic Co-operation and Developments (OECD) Common Reporting Standard (CRS) for the automatic exchange of financial account information. If implemented, CRS would have broader reach than the FATCA regime.
First, CRS is not simply a different version of the FATCA regime, and simply because entities are not affected by FATCA does not mean that they will not be affected by CRS. The scope of CRS is much more far reaching than FATCA. Whereas FATCA imposes an obligation on Australian financial institutions to report information of U.S. account holders, CRS is a global regime. When implemented, CRS would require financial entities to report, to the Australian Taxation Office, information about almost all foreign tax residents. Financial institutions in other countries would do the same, and the various tax authorities then would exchange this information automatically.
Second, financial institutions may be exempt from complying with FATCA but may not be excluded under CRS (for example, credit unions, building societies, custodial institutions or insurance companies with certain life insurance operations). All financial institutions subject to CRS would need to plan and implement appropriate due diligence and on-boarding procedures in order to identify the tax residency of account holders, in line with the CRS guidance, and to make sure that the reporting obligations under CRS are understood and managed appropriately.
At this stage, more than 90 countries have already signed up to CRS, with Australia undertaking first exchanges by mid-2018 based on account information from the 2017 calendar year. Submissions on the Australian draft legislation are due by 9 October 2015.
Read an October 2015 report prepared by the KPMG member firm in Australia: Common Reporting Standard: proceed with caution
Submissions on the draft legislation can be made to Treasury by Friday, 9 October 2015.
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