Foreign Tax Resident Reporting

The Australian Government has entered into global agreements requiring the reporting of foreign tax resident information to international tax authorities.   

This reporting is supported by two regimes:

  • the Foreign Account Tax Compliance Act (FATCA); to exchange information between Australia and the United States (US); and
  • the Common Reporting Standard (CRS); to exchange information between Australia and various countries that have adopted this regime.

These regimes are supervised in Australia by the Australian Tax Office (ATO).  

A brochure summarising foreign tax resident reporting information for consumers is available from the ATO.


WHY DO THESE REGIMES APPLY TO AUSTRALIA?

The Australian Government has committed to implementing FATCA and CRS and has passed Australian tax laws that require Australian Financial Institutions to comply with these regimes. 

By implementing FATCA and CRS, Australia will receive information from Financial Institutions in other participating countries on accounts held by Australian tax residents.


WHAT ARE THE IMPLICATIONS OF FOREIGN TAX RESIDENT REPORTING?

Under FATCA and CRS, we are required to ask you to provide your tax status before we can open an account for you.   If you are opening an account for an entity, we may also require tax information from certain individuals associated with the entity, such as owners or controllers.

We are required to report foreign taxpayer information to the ATO who is responsible for passing this information on to the relevant international tax authority.  These international tax authorities may then seek to match this data with their taxpayer records.

INVESTORS


What additional information do I need to provide?

A self-certification of your tax residency is required.

  • For new clients, this information will be captured on product application forms or customer identification forms at the time of application.
  • For existing clients, we may contact you to request this information at a later date.

What happens if I do not provide the tax information requested?

  • For new clients, we are prohibited from opening an account if the required tax information is not provided.  Delays in providing this information may result in investments being issued at unit prices as at the date this information is provided (rather than application date).
  • For existing clients, we may be required to treat you as a foreign tax resident if any information requested is not provided.

How do I know if I am a foreign resident for tax purposes?

Tax Residency rules differ by country. Whether an individual is a tax resident of a particular country is often (but not always) based on the amount of time a person spends in a country, the location of a person’s residence or place of work.

For the US, tax residency can be as a result of citizenship or residency.  US citizenship is generally assigned to anyone born in the US and must be officially renounced to no longer be valid.

If I am unsure whether I am a foreign resident for tax purposes, who can assist me?

If you have questions about your tax residence status, contact the ATO, the tax authority of your country of residence, or seek advice from a tax agent or advisor.

What if I am a foreign resident for tax purposes?

We are obliged to report foreign tax resident information to the ATO, who may pass this information on to the relevant overseas tax authority.

Why is tax information requested for the beneficial owners or controlling persons of an entity?

Certain entities controlled by foreign tax residents are required to be reported to the ATO, including details of the foreign taxpayers who own or control these entities.

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

The tax information requested in application or ID forms is explained in the ID Forms Terminology section on this page.  Further information can also be obtained from the ATO

ADVISERS


What is changing and when?

FATCA commenced on 1 July 2014 and CRS commenced on 1 July 2017. FATCA reporting commenced in 2015 and CRS reporting commences in 2018.

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

The tax information requested in application or ID forms is explained in the ID Forms Terminology section on this page.  Further information can also be obtained from the ATO.

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

If your client has any questions about their tax residence status, they can contact the ATO,  the tax authority of their country of residence, or seek advice from a tax agent or advisor.

Which clients are impacted?

All new clients investing into non-superannuation products will be required to provide tax 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 the adoption of FATCA and CRS?

Financial Institutions are required to perform reviews of pre-existing clients to identify any that may be required to provide tax information. Perpetual will contact clients and advisors if any of their clients are considered to be potential foreign residents for tax purposes and request that additional tax information be provided about these clients.

What happens if the requested tax information is not provided?

  • For new clients, we are prohibited from opening an account if the required tax information is not provided.  Delays in providing this information may result in investments being issued at unit prices as at the date this information is provided (rather than application date).
  • For existing clients, we may be required to treat existing clients as foreign tax residents if any information requested is not provided.

INSTITUTIONS


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

Perpetual entities that are considered to be Financial Institutions have registered with the IRS in the US. 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.

Perpetual entities registered for FATCA purposes are also considered to be Financial Institutions for CRS purposes.  All Perpetual entities operate in jurisdictions that are participating in CRS (Australia and Singapore).

GIIN document - Perpetual Entity Fatca Registration Details

ID FORMS TERMINOLOGY

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

What is a Taxpayer Identification Number (TIN)?

  • A TIN is the number assigned by each country for the purposes of administering tax laws. This is the equivalent of a Tax File Number in Australia
  • A US TIN consists of a Social Security Number for an individual or an Employer Identification Number for an entity.
  • The Organisation for Economic Co-operation and Development (OECD) provides information on TINs for a range of jurisdictions at the following link

What if I don’t have a TIN?

If you are a foreign tax resident and do not have a TIN, one of the reason listed in application/ID forms must be provided, specifically:

Reason A - The country of tax residency does not issue TINs to tax residents

Reason B - The individual has not been issued with a TIN

Reason C - The country of tax residency does not require the TIN to be disclosed

What is a Financial Institution?

Under foreign resident tax reporting regimes, 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, then it is unlikely that you are one.

Further information regarding these definitions can be found at the ATO 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  purposes.

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:

  • Deemed Compliant Financial Institution
  • Excepted Financial Institution
  • Exempt Beneficial Owner
  • Non Reporting IGA Financial Institution
  • Nonparticipating Financial Institution
  • US Financial Institution

What is a Non-Participating CRS jurisdiction?

A Non-Participating CRS jurisdiction is a country that is not party to the OECD Common Reporting Standard.  CRS Participating Jurisdictions are published on the Perpetual website.

Australia and Singapore have signed up to CRS and therefore are not Non-Participating CRS jurisdictions.

What is the FATCA / CRS status of a Super fund (including Self Managed Super Funds)?

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

What is an Active Non-Financial Entity?

  • Non-Financial Entities (NFEs) include all entities not specifically defined as Financial Institutions (refer above).
  • Active NFEs are entities that primarily (> than 50%) earn revenue or hold assets related to earning income that is not considered to be passive income.  Passive income includes dividends, interests and royalties. 
  • Active NFEs therefore are generally engaged in carrying on a business (such as a goods or services business), whereas passive entities earn income from investments.
  • More information on the definition of Active and Passive Entities can be found in Section VIII in the Annexure of the OECD ‘Standard for Automatic Exchange of Financial Account Information’ at www.oecd.org.

Who is a controlling person?

A controlling person is a natural person (an individual) who exercises 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.

OTHER FREQUENTLY ASKED QUESTIONS


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 and report information about these clients to the local tax authority (the ATO), who pass this information on to the US Internal Revenue Service (IRS).

FATCA commenced in Australia on 1 July 2014.

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

What is CRS?

The Common Reporting Standard (CRS) is a global standard for the collection, reporting and exchange of financial account information for foreign tax residents.

Under CRS, Financial Institutions are required to identify clients that non-resident taxpayers or entities with substantial non-resident taxpayer owners or controlling persons and report information about these clients to the local tax authority (the ATO), who pass this information on to the relevant foreign tax authority.

CRS commenced in Australia on 1 July 2017.

The CRS has been developed by the international Organisation for Economic Co-operation and Development (OECD) and further information can be found on the OECD CRS site.

What is the difference between FATCA and the CRS?

FATCA aims to identify US taxpayers, whereas CRS aims to identify all non-resident (non-Australian) taxpayers.  Australia has adopted the ’wider approach’ for CRS, with the effect that all non-resident taxpayers are required to be reported, rather than only the countries participating in CRS. 

If you are a tax resident of a country that is not participating in CRS, while we are required to collect your tax residency status and report this to the ATO, the ATO will not pass this information on to your local tax authority.

What do I need to do?

New customers will be asked about your tax residency status as part of the account opening process.

Existing customers may be contacted to provide tax residency status if this information is required as part of foreign tax resident reporting pre-existing client reviews.

How do I know if I am a foreign resident for tax purposes?

Tax Residency rules differ by country. Whether an individual is a tax resident of a particular country is often (but not always) based on the amount of time a person spends in a country, the location of a person’s residence or place of work.

For the US, tax residency can be as a result of citizenship or residency.  US citizenship is generally assigned to anyone born in the US and must be officially renounced to no longer be valid.

Why do I need to provide this tax information?

Australia is one of many countries that has passed laws and entered into international agreements for the reporting of foreign tax residents.

As a result, Australian Financial Institutions are required to identify foreign tax residents and report their details and relevant financial account information to the ATO. The ATO will then exchange this information with countries who have passed similar laws.

How does this foreign resident tax resident reporting affect superannuation and pension products?

Members of superannuation and pension funds are excluded from foreign resident tax resident reporting requirements.

Superannuation fund investors (including self-managed super funds) in non-superannuation investments, such as Managed Investment Schemes, are not reportable under foreign tax resident reporting regimes as they are defined as’ Financial Institutions – Exempt Beneficial Owners’.

How does this foreign resident tax resident reporting affect my information Privacy?

Perpetual will only disclose your information to the ATO under foreign tax resident reporting regimes if we are legally required to do so.

Where can I find more information on this foreign resident tax resident reporting?

  1. Australian Taxation Office (ATO)
  2. The US Internal Revenue Service (for FATCA)
  3. The Organisation for Economic Co-operation and Development (for CRS)

This is general information regarding foreign tax resident reporting and not to be considered legal advice. If you have questions about your tax residency status, it is recommended that you contact the ATO, the tax authority of your country of residence, or seek advice from a tax agent or adviser.