Common Reporting Standard (CRS) and Foreign Tax Compliance Act (FATCA)

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What is the Common Reporting Standard (CRS)?

The Common Reporting Standard (CRS) is a global standard developed by the Organisation for Economic Co-operation and Development (OECD) under the Automatic Exchange of Information (AEOI) framework for the collection, due diligence, reporting and automatic exchange of financial account information between participating jurisdictions. Over 100 jurisdictions, including Australia, have committed to implementing the standard.

What is Foreign Account Tax Compliance Act (FATCA)?

FATCA is a United States law enacted to improve tax compliance by identifying US persons holding financial assets outside the United States. It is implemented in Australia through an intergovernmental agreement (IGA) between Australia and the US, which forms part of Australian law. Under this framework, Australian financial institutions are required to identify and report information on financial accounts held by US persons or by certain entities controlled by US persons to the Australian Taxation Office (ATO), which then exchanges that information with the US Internal Revenue Service (IRS).

Is CRS the same as FATCA?

No. FATCA and CRS are separate regimes. FATCA is a United States law designed to prevent tax evasion by US persons holding financial accounts outside the United States. In contrast, the Common Reporting Standard (CRS) is a global standard developed by the OECD and adopted by over 100 jurisdictions to facilitate the automatic exchange of financial account information between tax authorities for the purpose of combating tax evasion on a multilateral and reciprocal basis.

The Australian Government has incorporated both CRS and FATCA requirements into Australian law.

Who is CRS and FATCA information reported to?

Information that is required to collected is reported to the Australian Tax Office, who may then exchange or share this information with overseas tax authorities.

What information are customers required to provide?

Depending on the jurisdiction, customers will generally be asked to provide the following information:

• Name
• Current residence address
• Place and date of birth (for Individual and Controlling Persons)
• Country or jurisdiction of tax residence
• Taxpayer identification number(s) or its equivalents (“TIN”) 

Why do customers have to confirm their jurisdiction(s) of tax residency?

Under the CRS, financial institutions are required by law to obtain, validate and report certain information relating to their customers’ tax residency. As part of this process, customers must provide a self-certification of their tax residency when opening a financial account and whenever there is a change in circumstances (such as moving to another jurisdiction). The self-certification enables SILC to determine whether the account is reportable to the relevant tax authority.

How is the information required for CRS captured?

Customers are required to complete a CRS self-certification to declare their tax residency status. SILC must obtain a valid self-certification at account opening, either as part of the account opening documentation or as a separate form, and the requirements differ depending on whether the customer is an individual or an entity. The self-certification collects information such as jurisdiction(s) of tax residence, taxpayer identification number (TIN), and entity classification, and must be validated against other information held by the institution.

When does a CRS self-certification have to be completed?

New customers will complete a CRS self-certification before an account can be opened. Existing customers may be required to provide an updated self-certification where there is a change in circumstances (for example, a change in tax residency, ownership, or personal details) or where SILC has reason to believe that the information previously obtained is incorrect or incomplete. Self-certifications must be obtained and validated to enable SILC to determine whether an account is reportable under CRS.

What constitutes a ‘Change in Circumstances’?

A “change in circumstances” under CRS refers to any change in information relating to an account holder that affects the reliability or validity of the account holder’s tax residency status or previously provided self-certification. This includes any addition or modification of information that conflicts with existing records or indicates a different tax residency (for example, a new address in another jurisdiction or a change in ownership of an entity). Where a change in circumstances occurs, the financial institution must obtain a new valid self-certification and cannot rely on the previous information. 

How is tax residence defined?

A person’s tax residence is defined by having regard to jurisdiction-specific laws and individual / entity circumstances. Customers are advised to contact their tax advisor as SILC does not give tax or legal advice.

For further information on your tax residency, please refer to the rules governing tax residence that have been published by each national tax authority. You can also find out more at the OECD Automatic Exchange of Information portal.

To determine if you an Australian tax residence, you can use the tool made available by the ATO.

What is a Taxpayer identification number (“TIN”) and how can I find mine?

A taxpayer identification number (“TIN”) or its equivalent is a unique number typically issued to a customer by a tax authority. Some jurisdictions do not issue TINs, and other jurisdictions accept functional equivalents such as national identification numbers or similar unique identifiers as valid entries on the CRS self-certification.

More information on the applicable TIN (or functional equivalent) for each jurisdiction can be found at OECD’s website.

How often will this information be requested?

Once a valid and complete self-certification on file, a new self-certification will only be required when certain information on a client account is updated or there is reason to believe the investor’s reportable status may have changed.

What happens if this information is not provided?

Customers are required to provide complete and accurate information and should seek independent advice where necessary to determine their tax residency or other relevant details. Providing false or misleading information may result in penalties under applicable laws.

If a customer does not provide a valid CRS self-certification, SILC, as a financial institution, is required to take reasonable steps to obtain the required information. Where the information cannot be obtained or verified, SILC may be required to treat the account as reportable and disclose relevant details to the tax authorities based on the information available.

SILC is also subject to regulatory obligations and may face penalties if it does not comply with CRS due diligence and reporting requirements.

What information is shared with the tax authorities?

SILC will provide the legally required information to the tax authorities, including information in the CRS self-certification and details about products and policies a customer holds with SILC, such as their balances or values and the total amount of interest or payments credited.

Why does SILC ask for a CRS self-certification even if a customer lives in the same jurisdiction they paying taxes?

SILC must establish, maintain and apply CRS due diligence procedures to identify account holders (including controlling persons if the account holder is an entity) who are tax residents in reportable jurisdictions. The CRS self-certification has been determined to be the best way to perform these due diligence procedures.

Why does SILC ask for supporting documents in addition to the CRS self-certification?

There are certain mandatory CRS due diligence procedures where SILC is required to identify, collect and report information of reportable accounts to tax authorities. As part of this requirement, SILC needs to verify the details provided by customers as part of the CRS self-certification. This verification process could include requiring address proof, copies of passports, past tax returns or other forms of evidence.

What happens if a customer refuses to provide a CRS self-certification?

New investor or customers
If an investor does not provide a CRS self-certification at the time of onboarding, their application will not be processed further.

Existing investors/customers
If an existing investor refuses to provide CRS self-certification, SILC will apply the following measures to the investor’s account:

• Applying a block to all customer transactions on the account. The block may only be removed when a valid and reasonable self-certification is received.
• Closing the account.

The information that customers are providing is confidential and sensitive. How will SILC protect this information?

Who is a Controlling Person?

A Controlling Person is a natural person who ultimately owns or controls an entity. This may include individuals holding directly or indirectly more than 25% ownership or voting rights, or those who otherwise exercise control over management. For trusts and partnerships, it includes individuals such as trustees, beneficiaries, partners, or others with effective control.

Example: Determining Controlling Person