Determination: In Place But Needs Improvement
Australia’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the scope of Reporting Financial Institutions required to report information (SR 1.1), the scope of Financial Accounts required to be reported (SR 1.2), and the framework to enforce the requirements (SR 1.4). More specifically, Australia’s legislative framework provides for a category of jurisdiction-specific Non-Reporting Financial Institution and a jurisdiction-specific Excluded Account that do not meet all the requirements, and the rules to prevent persons or intermediaries from adopting practices intended to circumvent the reporting and due diligence procedures are insufficient in scope.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Australia has defined the scope of Reporting Financial Institutions in its domestic legislative framework in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Australia provides for a category of jurisdiction-specific Non-Reporting Financial Institutions that is not in accordance with the requirements, such as not necessarily being related to an employer-employee relationship. The definition of Reporting Financial Institutions, including the provision of Non-Reporting Financial Institutions, is material to the proper functioning of the AEOI Standard.
Recommendations:
Australia should amend its domestic legislative framework to remove the Narrowly Based Superannuation Funds from its jurisdiction-specific list of Non-Reporting Financial Institutions as their characteristics do not meet the requirements of the AEOI Standard, such as not necessarily being related to an employer-employee relationship, not indexing or limiting contributions based on the contributor’s salary and permitting non-residents to own up to 50% of the fund’s assets.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Australia has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Australia provides for a jurisdiction-specific Excluded Account that is not in accordance with the requirements, as it does not provide for effective penalties for withdrawals that do not meet the criteria of the account. The definition of Financial Accounts, including the provision of Excluded Accounts, is material to the proper functioning of the AEOI Standard.
Recommendations:
Australia should amend its domestic legislative framework to remove the Scholarship Plans from its jurisdiction-specific list of Excluded Accounts, as they do not meet the requirements in the AEOI Standard, such as by not having penalties for withdrawals from the accounts for non-educational purposes.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Australia has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Australia has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Australia’s legislative framework does not include rules to prevent all relevant persons (including other persons and intermediaries) from adopting practices intended to circumvent the due diligence and reporting procedures to the extent required. This is a key element of the required enforcement framework and is therefore material to the proper functioning of the AEOI Standard.
Recommendations:
Australia should amend its domestic legislative framework to include rules to prevent all Financial Institutions, persons or intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures, rather than just Reporting Financial Institutions or Account Holders involved in transactions or arrangements with the purpose of causing an account to not be a Reportable Account.
