The Common Reporting Standard (CRS) is
a standardised automatic exchange model established by the
Organisation for Economic Co-operation and Development which aims
to reduce international tax evasion by providing a global standard
for the reporting of financial account information of foreign tax
residents. It has been referred to as the "global version of
FATCA". The CRS comes into effect in Australia on 1 July
Which organisations will be affected by the CRS?
The CRS will apply to those Australian banks and other financial
institutions that are presently caught by FATCA.
These organisations will need to provide the ATO with financial
account information of foreign tax residents. The ATO will then
provide this information annually to participating tax authorities
in other jurisdictions in exchange for information on Australian
tax residents. Ideally, this will help in ensuring that Australians
with accounts held overseas are complying with Australian taxation
How does the CRS differ from FATCA?
The most significant and obvious difference is that financial
institutions will now need to comply with due diligence procedures
regarding all reportable accounts held by any foreign tax residents
rather than only those accounts held by US citizens. This will
significantly increase the compliance burden upon the organisations
affected. The CRS also has a wider scope in respect to the
individual accounts required to be reported on. For example, FATCA
does not require reports on individual accounts with a balance of
less than $50,000, whereas the CRS has not set a minimum
What will be required of reporting financial institutions?
Provide annual reports to the Commissioner of Taxation
regarding accounts held by foreign tax residents – first
reports will be due on 31 July 2018.
Retain for 5 years written records of these reports along with
the procedures by which the financial institution determines what
is a 'reportable account'.
What information will be included in these reports?
The information required by the ATO will depend on the type of
account, but in general it will include:
Name, address, Taxpayer Identification Number and date and
place of birth of account holder or controlling persons of entities
Name and identifying number of the reporting financial
Account balance or value as of the end of the reporting
Depending on the type of account – the total amount of
interest paid or credited to the account, total gross amount of
dividends, other income generated with respect to the assets held
in the account and proceeds from the sale or redemption of
Currently, financial institutions are obligated to continue
reporting to the Commissioner of Taxation under FATCA.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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ATO has released 2 draft fact sheets relating to the 2010 amendments to corporate law and tax in relation to dividends.
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