What foreign tax details does the bank require?

What foreign tax details does the bank require?

Australia has committed to two global standards on the automatic exchange of financial account information. These are known as the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA).

Both the CRS and FATCA deal with the automatic exchange of tax information.

CRS

CRS is developed by the Organisation for Economic Co-operation and Development (OECD) as a standard for the collection, reporting and exchange of financial account information between participating countries, to deter tax evasion, which is a global problem.

From the Australian perspective, the CRS will help ensure that Australian residents with bank accounts in other participating countries are complying with Australian tax law and act as a deterrent to tax evasion.

For other participating countries, the CRS will help ensure that tax residents of those countries with bank accounts in other countries are complying with local taxation law and to have a deterrent against tax evasion.

FATCA

FATCA is a unilateral anti-tax evasion regime imposed by the United States and implemented in Australia and many other countries via an Intergovernmental agreement (IGA). Australia entered into an IGA with the U.S. to identify and report their U.S. account holders in Australia. We are obligated to report information to the ATO and they then send information to the U.S. Internal Revenue Service (IRS). 

To satisfy these two requirements, we require up-to-date information about your tax residency status before you open an account with us. 

What is tax residency status?

Your tax residency usually relates to the country or countries where you have to lodge a tax return.

What do you need to provide?

If you are a tax resident of another country you will need to provide us with the Tax Identification Number (TIN) or equivalent, issued to you by the tax authority in that country.

You can advise your tax residency status by completing the Declaration of Taxation Status and Quotation of TFN/Exemption for Individuals form and emailing to us at [email protected] 

If you do not provide this information we may be required to limit the services we provide to you, including placing a restriction on your account.

If you’re unsure about your tax residency status you should seek independent financial and tax advice.

Where can you find more information?

Visit the ATO or OECD websites .

What is Non Resident Withholding Tax?

If you are a non-resident or an Australian resident living overseas we are required by law to deduct non-resident withholding tax at the applicable rate from all future interest payments made to your savings and investment accounts. This money is paid to the Australian Tax Office.

A non-resident is essentially a non-resident of Australia for Australian tax purposes who does not meet the Australian tax residency tests.

We identify non-residents by first checking whether a member or customer has an overseas address.  An overseas address is often a sign that a member is non-resident.

When a non-resident member seeks to quote their TFN (Tax File Number) to us, we will still deduct non-resident withholding tax for the interest paid. This is because the withholding requirement is contingent on the overseas address and not the presence of the TFN.

Currently the amount of non-resident withholding tax we must withhold from a payment of interest we make to a non-resident member/customer is equal to 10% of the amount of the interest payment.