Section 24 - Foreign tax compliance

Section 24 - Foreign tax compliance

24.1 - Introduction

Australia is one of many countries that has committed to new global standards on the automatic exchange of financial account information. This information is required by law to be collected by financial institutions around the world for reporting to tax authorities. Tax authorities will exchange this information to ensure everyone pays the right amount of tax.

To facilitate this process the Australian Government has enacted laws and entered into international agreements. This may affect investors in the mFund Settlement Service. These laws implement automatic exchange of information (AEOI) with:

  • United States (US) under a system known as the Foreign Account Tax Compliance Act (FATCA). This is for US citizens and tax residents only; and

  • signatory countries under the Common Reporting Standard (CRS). The CRS applies to foreign tax residents other than US.

This means Australian financial institutions must identify accounts held by investors who are foreign tax residents or entities connected to foreign tax residents. They must report these accounts to the Australian Tax Office (ATO). ATO will then report the account information to the foreign tax authorities.

CHESS will help facilitate this process by providing the messaging structures to allow sponsoring participants to make a foreign tax status determination of their investors and provide this to the fund issuer. A foreign tax determination must be made for ALL investors.

The CHESS Foreign Tax Status message suite is extensive and caters for most investors, but there may still be a need for mFund issuers to follow up with any investors that are reportable under FATCA and/or CRS.

For further details please refer to ATO Foreign Tax Reporting.

24.2 - CHESS Foreign Tax Status Validation

CHESS validation will ensure that all mandatory fields have been responded to, based on the investor account type (Account Type). 

The following tables detail foreign tax status information based on Account Type and the associated requirements for each:

Attribute

Account Investor Types

Individual (SIGL)

Joint (JOIT)*

Company (COMP);

Trust (TRST);

Partnership (PRTN); or

Other Non-Individual (OTHR)

Superannuation Fund (SPFD)

Government Organisation (GOVN)

Holder Identifier

M

M*

Not Allowed

Not Allowed

Not Allowed

Date of Birth

M

M*

Not Allowed

Not Allowed

Not Allowed

Address

M

M*

M

Not Allowed

Not Allowed

Entity Characterisation

Not Allowed

M

Not Allowed

Not Allowed

Company Identifier

Not Allowed

M - Where Entity Characterisation = Public Listed Company (PLCO) else Not Allowed

Not Allowed

Not Allowed

Place of Listing

Not Allowed

M - Where Entity Characterisation = Public Listed Company (PLCO) else Not Allowed

Not Allowed

Not Allowed

GIIN

Not Allowed

M - Where Entity Characterisation = where the Entity Characterisation is Financial Institution (FIIN) (Alternatively a GIIN Absent Reason must be provided) else Not Allowed

Not Allowed

Not Allowed

GIIN Absent Reason

Not Allowed

M - Where Entity Characterisation = where the Entity Characterisation is Financial Institution (FIIN) and a GIIN Absent Reason is not provided else Not Allowed

Not Allowed

Not Allowed

Entity CRS Jurisdiction

Not Allowed

M - Where Entity Characterisation = where the Entity Characterisation is Financial Institution (FIIN) else Not Allowed

Not Allowed

Not Allowed

Foreign Tax Residency Indicator

M

M*

M - Where Entity Characterisation is Financial Institution (FIIN) and the Entity CRS Jurisdiction is Non-CRS Participating Jurisdiction (NCRS); or Entity Characterisation is Active Non-Financial Entity (ANFE); or Entity Characterisation is Passive Non-Financial Entity (PNFE); else Not Allowed

Not Allowed

Not Allowed

Foreign Resident Controllers

Not Allowed

M - Where Entity Characterisation is Financial Institution (FIIN) and the Entity CRS Jurisdiction is Non-CRS Participating Jurisdiction (NCRS); or Entity Characterisation is Passive Non-Financial Entity (PNFE); else Not Allowed

Not Allowed

Not Allowed

Tax Residency Country (up to 5)

M - with at least one value that is not AU (Australia) when Foreign Tax Resident Indicator is provided as true, else Not Allowed

M - with value AU (Australia). Other values not allowed.

Not Allowed

Tax Identification Number

M for every Tax Residency Country Provided (Alternatively TIN Absent Reason must be provided)

M - to capture Superannuation Fund ABN

Not Allowed

TIN Absent Reason

M if Tax Identification Number is not Provided for a Tax Residency Country

Not Allowed

Not Allowed

Details of Foreign Tax Resident Beneficial Owners and Controllers

Foreign Resident Holder Type Indicator

Not Allowed

M to provide details of foreign tax resident Beneficial Owners or Controllers (up to 5) where Foreign Resident Controllers is provided as true; else Not Allowed

Not Allowed

Not Allowed

Holder Name

Not Allowed

Not Allowed

Not Allowed

Date of Birth

Not Allowed

Not Allowed

Not Allowed

Address Type

Not Allowed

Not Allowed

Not Allowed

Address

Not Allowed

Not Allowed

Not Allowed

Tax Residency Country (up to 5)

Not Allowed

M - with at least one value that is not AU (Australia), else Not Allowed

Not Allowed

Not Allowed

Tax Identification Number

Not Allowed

M for every Tax Residency Country Provided (Alternatively TIN Absent Reason must be provided)

Not Allowed

Not Allowed

TIN Absent Reason

Not Allowed

M if Tax Identification Number is not Provided for a Tax Residency Country

Not Allowed

Not Allowed

Additional Foreign Parties

Not Allowed

Optional to Indicate there are additional joint owners with foreign tax residency

Optional to Indicate there are additional foreign tax resident Beneficial Owners or Controllers

Not Allowed

Not Allowed

Date of Birth Details of Individual Named holders on the Account (Non-Individual Account Investor Types)

Holder Identifier

Not Allowed

Not Allowed

Optional~

Optional~

Optional~

Date of Birth

Not Allowed

Not Allowed

Optional~

Optional~

Optional~

Notes
Not Allowed - This is not a permitted attribute for this account investor type.
M - Defines an attribute as mandatory.
* - Joint refers to joint ownership where account holders consist of two or more natural persons. Details are required for all account holders.
~ - Where details are not provided, when the foreign tax determination is accompanying an mFund application, may result in the application not meeting fund requirements and rejection of the application request by the Product Issuer Settlement Participant (PISP)

 

 

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