Australia

Details

  • Service: Tax, Corporate Tax, Topics, Financial Services Regulation, FATCA
  • Industry: Financial Services
  • Type: Regulatory update
  • Date: 26/06/2014

Jenny Clarke

Jenny Clarke
Partner, Tax

+61 2 9335 7213

jeclarke@kpmg.com.au

Jenny Wong

Jenny Wong
Director, Tax

+61 2 9335 8661

jywong@kpmg.com.au

Common Reporting Standard: an Australian version of FATCA? 

by Jenny Clarke, Financial Services Specialist and Jenny Wong, Australian Tax Centre

Treasury released a discussion paper on 19 June of what looks like an Australian version of the United States Foreign Account Tax Compliance Act (US FATCA). Essentially, the proposal is to have a Common Reporting Standard (CRS), endorsed by G20 Finance Ministers at their meeting on 22–23 February 2014, for the automatic exchange of tax information, a single global standard for financial institutions’ collection of financial account information on account holders who are residents in another jurisdiction.

Depository institutions, custodians, investment entities and insurance companies that issue or make payments to investment linked life insurance or annuity contracts will be required to collect and report information to the ATO under the CRS that they identify as being owned or controlled by a non-resident, unless the account or policies are exempt.

 

If implemented, these issues will need to be considered:

 

  • how to ‘look through’ (in trusts, for example) to the ultimate controlling entity
  • cases where individuals change their tax residence
  • compliance costs to smaller Australian financial institutions which are not currently part of the US FATCA regime
  • this scheme is based on the calendar year while the Australian tax year starts on July 1, leading to increased compliance costs
  • Australia uses Tax File Numbers, and is not part of the proposed global tax identifier regime
  • financial institutions may lack all the information necessary for the standards to work
  • the lack of any materiality criteria in the CRS
  • the concerns of confidentiality of taxpayer information.

 

As there is enhanced reporting under the proposals, it is likely financial institutions will need to consider changes to their systems to be able to provide the required information to the ATO. Internationally, there is significant political will to implement this standard. Thus, implementation of the CRS is a real possibility in Australia, which could lead to increased compliance costs for financial institutions going forward.

 

Share this

Share this

Financial services regulation

Financial services regulatory change
Regulation can involve change and complexity, however many organisations use regulatory to underpin business transformation and drive change.

Corporate Tax

At KPMG we combine an in-depth knowledge of corporate taxation issues with our understanding of how tax fits into the broader picture.

Financial Services

Our Financial Services practice can help financial institutions make better decisions about performance, growth, governance and prudential matters.