Common Reporting Standard – information for tax agents

The CRS is the single global standard for the collection, reporting and exchange of financial account information on foreign tax residents. Under it, banks and other financial institutions will collect and report to us financial account information on non-residents.

The ATO said it will exchange this information with the participating foreign tax authorities of those non-residents.

In return, the ATO will receive financial account information on Australian residents from other countries’ tax authorities. This will help ensure that Australian residents with financial accounts in other countries are complying with Australian tax law and act as a deterrent to tax evasion.

The CRS applies to foreign tax residents and to financial accounts held by entities (such as companies, trusts, partnerships and associations). If an individual controls or beneficially owns an entity or has a specific connection to the entity then they may be identified and reported in connection with the entity’s financial accounts.

Financial institutions such as banks and other deposit-taking institutions, custodial institutions, investment entities, and specified insurance companies are required to report under the CRS.

The ATO said tax agents should ensure clients accurately disclose their offshore assets and foreign source income. If they have foreign source income that has not been disclosed, they will be liable to penalties and interest charges.

It is essential tax agents ensure their clients accurately report all foreign source income. If tax agents have clients who are Australian tax residents and have an account with a financial institution overseas, the ATO will receive their information from the tax authority of that jurisdiction.

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. It is then automatically exchanged with the ATO each year. The exchange of this information helps make sure everyone pays the right amount of tax.

In September 2018 the ATO received the first round of data from foreign jurisdictions. The data contains information on financial accounts held by Australian tax residents and entities overseas. Financial accounts that will be reported to us include:

• Depository accounts
• Custodial accounts
• Debt or equity accounts
• Cash value insurance and annuity contract accounts

The data will contain details about each financial account including:

• The account balance
• Interest payments
• Dividend payments
• Proceeds from the sale of assets
• Other income