On 19 June 2014 the Commonwealth Treasury released a discussion paper on implementation in Australia of the Common Reporting Standard for the automatic exchange of tax information. Submissions on the discussion paper are invited; the closing date for submissions is Wednesday, 16 July 2014.
The Common Reporting Standard (CRS) for the automatic exchange of tax information is a single global standard for collection by financial institutions of financial account information on account holders who are residents in another jurisdiction, the reporting of it to the financial institutions’ tax authority and the exchange of it automatically with other jurisdictions’ tax authorities on an annual basis. The CRS draws on the US’ Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement (IGA) regime for due diligence procedures and reporting.
The CRS includes a requirement for financial institutions to look through certain entities and report on the relevant Controlling Persons.
The implementation of the CRS does not automatically result in information exchange between all countries. A jurisdiction wishing to automatically exchange tax information will still need to enter into an agreement with Australia.
To protect the confidentiality of Australians’ information, Australia does not enter into an agreement to automatically exchange information with another country unless the country has the legal framework and administrative capacity to ensure confidentiality. This would not change under the CRS. The ATO would also able to suspend the exchange of information with another jurisdiction’s tax authority if it determines that there is or has been significant non-compliance with the CRS by that jurisdiction’s tax authority.
The CRS was endorsed by G20 Finance Ministers and Central Bank Governors at their meeting on 22 and 23 February 2014. Over 60 jurisdictions have committed to implement it, including Switzerland, Singapore, Liechtenstein and the Cayman Islands.
The Australian government is yet to make final decisions on its implementation in Australia, and this discussion paper seeks stakeholder views on:
- financial institutions’ potential implementation and compliance costs, and
- suggestions on how to minimise the implementation and compliance costs.
The full text of the discussion paper is available here.