New Draft Tax and Superannuation Legislation Bill in CTH
Tuesday 22 September 2015 @ 12.05 p.m. | Legal Research | Taxation
Late last week (18 September 2015), the Federal Government released draft papers for the proposed Schedule 1 of the Tax and Superannuation Laws Amendment (2015 Measures No. 6) Bill 2015. If enacted, the bill would begin the process of implementing the OECD’s Common Reporting Standard (CRS) for the automatic exchange of financial account information.
Background to the Draft Legislation
According to the Draft Explanatory Memorandum, the CRS is an international framework developed by the Organisation for Economic Co-operation and Development (OECD), working with G20 countries to tackle and deter cross-border tax evasion. It establishes a common international standard for financial institutions to identify the financial accounts of foreign residents, report information on those account holders and their financial accounts to their local tax authority and for the authority to exchange that information with the tax authority of the foreign resident.
As tax evasion is a global problem and international cooperation and sharing of high quality, predictable information between revenue authorities will help them enforce compliance with local tax laws, the CRS was endorsed by G20 Leaders at their meeting on 15 and 16 November 2014. Over 90 jurisdictions have committed to its implementation.
The CRS is based on and often mirrors the obligations imposed on financial institutions by the United States’ Foreign Account Tax Compliance Act. These obligations are imposed on Australian financial institutions through the operation of Division 396 of Schedule 1 to the Taxation Administration Act 1953 (Cth) which, following the passage of the Tax Laws Amendment (Implementation of the FATCA Agreement) Act 2014, took effect on 1 July 2014.
The CRS sets out the due diligence rules that financial institutions (Reporting Financial Institutions) of a Participating Jurisdiction must follow to identify Account Holders who are tax residents of another Participating Jurisdiction and to report the relevant account information to their local tax authority.
Amendments Contained in the Draft Legislation
According to the Draft Bill, Schedule 1 of the proposed legislation contains amendments to the Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act 1953 (Cth) in order to bring about the introduction of a new Subdivision 396-C into Schedule 1 of the Taxation Administration Act 1953 (Cth), which relates to the Common Reporting Standard.
Final submissions close on 9 October 2015 and interested parties should refer to the information in the draft explanatory notes as follows:
"The draft legislation adopts meanings and concepts used in the CRS and Commentaries and gives effect to particular matters that the CRS allows implementing jurisdictions to specify. The Commentaries provide additional information on how financial institutions should apply the due diligence procedures to ensure consistency across jurisdictions. The CRS and its Commentaries are available on the OECD’s website at Standard for Automatic Exchange of Financial Account Information in Tax Matters."
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Sources:
[Draft] Tax and Superannuation Laws Amendment (2015 Measures No. 6) Bill 2015: Common Reporting Standard and Secondary Materials, as reported in TimeBase LawOne
