FATCA

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is United States (US) legislation, enacted to improve compliance with US tax laws.

Under FATCA, financial institutions are required to identify clients that are US persons or entities with substantial US owners. Information about these clients will be reported to the US Internal Revenue Service (IRS), via local tax agencies (such as the ATO).

Further information on FATCA can be found in the IRS FATCA site

Why does this US legislation apply to Australians?

An intergovernmental approach has been pursued whereby countries sign an agreement with the IRS to implement FATCA. Australia’s intergovernmental agreement was signed on 28 April 2014 and will be enacted into Australian law under the Tax Laws Amendment (Implementation of the FATCA Agreement) Bill 2014.

Under this agreement and related legislation all Australian financial institutions will be required to comply with FATCA.

INVESTORS

What additional information do I need to provide?

The additional FATCA information is essentially a self-certification of US tax residency.

  • For new clients, this information will be captured on product application forms or customer identification forms at the time of application.
  • For existing clients, no information is currently required however we may contact you to request this information at a later date.

How do I know if I am a US citizen or resident of the US for tax purposes?

A US citizen or resident of the US for tax purposes includes:

  • Anyone born in the US (who has not renounced their US citizenship)
  • A US citizen (including persons with dual or multiple citizenships)
  • US lawful permanent residents (e.g. green card holders).

Where can I find more information about the FATCA information I need to provide?

The FATCA information requested is explained in the ID Forms option on this page. Further information can also be obtained from the ATO or the IRS.

ATO website

IRS website

If I am unsure whether I am a US citizen or resident for tax purpose, who can assist me?

We recommend that you seek professional advice from a qualified tax professional. Your adviser cannot provide advice on your tax status.

What if I am a US citizen or resident for tax purposes?

We are obliged to report information about US taxpayers to the ATO, who will pass this information on to the US IRS.

What happens if I do not provide the FATCA information?

If you do not provide the requested tax information, we are obliged to treat you as a US taxpayer and report your details to the ATO.

ADVISERS

What is changing and when?

The main FATCA change impacting advisers is the use of new ID forms for account opening from 1 July 2014. The additional FATCA information collected is a self-certification of US tax residency of individual and entity account holders. For entities a declaration of whether there are any US controlling persons is required.

Where can I find more information about the FATCA information I need to provide?

The FATCA information requested is explained in the ID Forms section on this page. Further information can also be obtained from the ATO or the IRS.

ATO website

IRS website

Who can assist my client if they are unsure whether they are a US citizen or resident for tax purposes?

We recommend that they seek professional advice from a qualified tax professional. You cannot provide advice on the client’s tax status.

Who can assist if my client is an entity and is unsure of their FATCA status?

Further information on FATCA statuses can be found on the IRS website.

Which clients are impacted?

All new clients investing into non-superannuation products will be required to provide FATCA information at account opening. Product disclosure documents and application forms will provide guidance on the account opening process.

What about clients that existed prior to 1st July 2014?

FATCA requires financial institutions to perform reviews of pre-existing clients to identify any that may be US taxpayers. Perpetual will contact advisers if any of their clients are considered to be potential US taxpayers and request that advisers provide additional tax information about these clients.

What happens if the requested FATCA information is not provided?

If the requested tax information is not provided, we are obliged to treat the client as a US taxpayer and report their details to the Australian Tax Office (ATO).

INSTITUTIONS

This information is provided for financial institutions that are seeking information about the FATCA status of Perpetual’s corporate entities and funds.

Will Perpetual register for FATCA and obtain a GIIN?

Perpetual is required to comply with the FATCA intergovernmental agreement signed by the US and Australia and enabling Australian Legislation (Tax Laws Amendment - Implementation of the FATCA agreement Act 2014).

Perpetual entities that are considered to be financial institutions have registered with the IRS. As Australian Financial Institutions, these entities are considered to be Registered Deemed Compliant Financial Institutions. Please see the attached document that lists each entity and their respective GIIN’s.

GIIN document - Perpetual Entity Fatca Registration Details

ID FORMS

The additional information below is provided as a guidance to complete the FATCA section of the customer application/ ID forms.

What is a US Taxpayer Identification Number (TIN)?

The types of US TINs include:

  • Social Security Number (SSN) for individuals
  • Individual Taxpayer Identification Number (for individuals that are not eligible for an SSN).
  • Employer Identification Number (for entities, used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities).

A US TIN should not be confused with an Australian Tax File Number (TFN).

What if I don’t know my US TIN?

If you don’t know your US TIN or you don’t have it at the time of application, it can be provided at a later date.

What is a United States company?

A company incorporated in the United States.

What is a United States trust?

A trust subject to the laws of the United States and controlled by one or more persons who are citizens or residents of the United States.

What is an exempt payee for US tax purposes?

Certain US entities are exempt in the US from tax reporting, including:

  • US banks
  • a listed and regularly traded US corporation
  • a US retirement plan.

If you do not know whether you are an exempt payee for US tax purposes, then it is unlikely that you are one.

What is a Financial Institution?

Under FATCA a financial institution is an entity (e.g. company, partnership or trust) that engages in one of the following:

  • accepts deposits in the ordinary course of a banking or similar business (depository institution).
  • holds as a substantial portion of its business (equals or exceeds 20 % of the entity's gross income) in financial assets for the account of others (custodial institution).
  • is an investment entity including entities that trade in financial assets or that are investing, administering, managing funds, money, or certain financial assets on behalf of other persons
  • is an insurance company
  • is an entity that is a holding company or treasury centre that is a part of a group that includes one of the above.

If you are not certain whether you are a financial institution under FATCA, then it is unlikely that you are one.

Further information regarding these definitions can be found at the IRS website.

What is a Global Intermediary Identification Number (GIIN)?

A Global Intermediary Identification Number (GIIN) is a unique ID number that non-US financial institutions receive from the IRS when they register as a financial institution for FATCA.

What is a FATCA status?

Where a financial institution does not have a GIIN they will need to provide their FATCA status.

Some common FATCA statuses include:

1. Deemed compliant Financial Institution
2. Exempt beneficial owner (applicable to all super funds)
3. Non reporting Financial Institution
4. Excepted Financial Institution

The full set of all possible FATCA statuses are available at the IRS web site or on the IRS W-8BEN-E form.

What is the FATCA status of a Super fund (including SMSF’s)?

Super Funds are considered to be Financial Institutions under FATCA however they are classified as exempt beneficial owners and exempt from any FATCA obligations.

Who is a US controlling person?

US controlling persons are natural persons who are US citizens or residents for tax purposes who exercise control over an Entity.

Who is a Settlor?

Settlors are natural or legal persons who transfer ownership of their assets to trustees by means of a trust deed or similar arrangement.