For those who have financial arrangements that span international borders the world is becoming a much smaller place.
The Organisation for Economic Co-operation and Development (OECD) has been working on measures to identify individuals and corporations who use cross border transactions and overseas financial arrangements to avoid paying tax in their jurisdiction of residence. As a result, they have implemented a Common Reporting Standard (CRS) that calls on jurisdictions to obtain information from their financial institutions and then automatically exchange that information with other jurisdictions on an annual basis.
The information to be collected and shared includes:
- Identifying data
- Jurisdiction of residence
- Account balances
- Income paid on the account including interest and dividends
- Proceeds from the redemption of an account
Australia has arrangements in place to receive information from 50 jurisdictions and send information to 41. Most of these were activated on 22 December 2016 and they are effective from varying dates. The earliest effective date noted is for taxable periods starting on or after 1 January 2016.
The following jurisdictions will be sending information to Australia (current as of 9 January 2017):
- British Virgin Islands
- Cayman Islands
- Czech Republic
- Faroe Islands
- Isle of Man
- Saint Vincent and the Grenadines
- San Marino
- Slovak Republic
- South Africa
- Turks and Caicos Islands
There are two more rounds of activations scheduled to take place in March and June 2017. In total 101 jurisdictions have agreed to start automatically exchanging information in 2017 and 2018 under the CRS. We can expect that further jurisdictions sending information to Australia will be added over the next 12 months.
If you are or plan to operate across international borders please speak with your usual Hanrick Curran adviser or alternatively contact Jamie Towers, Peter Maletz or Robert Pitt on 07 3218 3900 for guidance. As an Alliott Group member firm, Hanrick Curran have a strong network of over 170 accounting and legal firms in more than 70 different countries, through this network we can assist to coordinate advice with counterparts around the world on behalf of our clients.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.