Implementation of FATCA and CRS by Austraclear

Background

The Australian and U.S. governments signed an intergovernmental agreement (IGA) in respect of the U.S. Foreign Account Tax Compliance Act (FATCA) on 28 April 2014. The IGA is available here. The IGA is intended to assist U.S. efforts to improve compliance with U.S. tax laws.

The Common Reporting Standard (CRS) is a global standard for the collection, reporting and exchange of financial account information of foreign residents, to combat tax evasion. CRS obligations commenced in Australia on 1 July 2017. The CRS is available here.

The IGA and CRS impose certain due diligence and reporting obligations on Financial Institutions (comprising Custodial Institutions, Depository Institutions, Investment Entities and Specified Insurance Companies).

Austraclear’s framework for IGA and CRS compliance

Austraclear is a Financial Institution under the IGA and CRS because it holds financial assets in its role as a central securities depository. Accordingly, Austraclear must collect and report financial account information about a Participant who holds Deposited Securities in the Austraclear System to the Australian Taxation Office if the Participant or individuals controlling the Participant are foreign tax residents, unless an exception applies.

In order to support compliance with the IGA and CRS, Austraclear requires Participants that hold Deposited Securities in the Austraclear System to:

  • meet eligibility criteria that align with the IGA and CRS; and
  • certify their status under the IGA and CRS and to notify Austraclear of any change in that status.

Austraclear has the benefit of an exemption for IGA reporting in respect of financial accounts held by or through other Financial Institutions. This exemption is set out in the Memorandum of Understanding released with the IGA. The MOU is available here.

Reporting obligations of third parties

Austraclear does not fulfil IGA or CRS reporting obligations on behalf of Issuers or Participants. However, Austraclear makes available the following reports to enable Issuers and Participants to undertake IGA and CRS identification and reporting themselves:

Issuers: Issuer Representative’s Holding Report
  Issuer Representatives 1st and 2nd Run FIS Payments Report
Participants: Holding Report
  Income Receivable Report

Issuers and Participants should store reports at relevant times in order to undertake their reporting; alternatively archived reports are available from Austraclear.

Austraclear self-certification

Issuers and other third parties who require a certification in relation to Austraclear’s tax residency and status for the purpose of the IGA and CRS should refer to the ‘self-certification’ available here.