CRS and FATCA obligations – self-review guide and toolkit

Automatic exchange of financial information (AEOI) framework

The ATO is responsible for data collection and exchanges with foreign jurisdictions for 2 AEOI regimes:

• Foreign Account Tax Compliance Act (FATCA)
• Common Reporting Standard (CRS).

Reporting financial institutions (RFIs) are required to have procedures and systems in place to ensure that:

• reportable accounts are identified
• the relevant information is collected
• the correct information is reported to the ATO.

The international agreements to which Australia is a party expect the ATO, as the competent authority, to ensure that RFIs provide complete and accurate information for exchange with those jurisdictions.

The AEOI self-review guide and toolkit provides practical information for RFIs on how to conduct a self-review of their ‘AEOI framework’. It outlines 3 core elements and areas of compliance:

• AEOI governance
• due diligence obligations
• reporting systems.

A well-designed AEOI framework should:

• provide a clear line of sight for the maintenance, reporting and compliance with your AEOI obligations
• offer insights as to what your AEOI operating model looks like and what controls you have in place, including your compliance program for due diligence obligations
• help to identify potential systems and process gaps which may prevent reporting errors in advance and reduces incidence of misreporting
• assist senior management with clarifying accountabilities for managing AEOI obligations, and any associated risks and issues.
• provide accurate reporting of your customers’ information.

For more information see Automatic exchange of information guidance – CRS and FATCA.

Who should use this guide

You can use this guide to:

• prepare for an AEOI review if you are an Australian reporting financial institution (RFI)
• review the design and operation of your AEOI framework as part of your AEOI obligations
• undertake a review of your AEOI reporting systems and data testing to ensure your business systems are accurately recording and reporting information for AEOI purposes.

For more information refer to Common Reporting Standard – information for tax agents.

Our approach to AEOI reviews

When we undertake an AEOI review, we evaluate your compliance with the AEOI obligations by obtaining objective evidence of your AEOI framework. We look for evidence in the form of policies and procedures demonstrating the existence and design of the AEOI framework. We tailor our initial request for information relevant to your business and ask you to complete a Common Reporting Standard annual compliance questionnaireExternal Link. We will apply the following staged rating system:

• Operating as required
  • there is evidence to demonstrate that an AEOI framework in place, has been designed effectively and is operating as required in practice.
• Operating in part (requires improvement)
  • there is evidence to demonstrate that an AEOI framework is in place and has been designed effectively, but one or more core elements require improvements for the AEOI framework to be fully operational as required.
• Not operating as required, or not in place
  • there is insufficient evidence to demonstrate an AEOI framework is in place or there is evidence to demonstrate an AEOI framework is in place, but
    • significant concerns exist that information is not accurately recorded and reported to the ATO, or
    • a significant number of core elements require improvements both in terms of design and operational effectiveness.

If we have completed the AEOI review and found no major deficiencies in your AEOI framework, it is intended that we may initiate the next review on a periodic basis at least once every 4 years.

During the intervening period (3 years), reporters are expected to proactively monitor their AEOI framework. They must act on any major reporting errors by preparing remediation plans or lodging amended reports (or both) where appropriate.

We encourage reporters to use this guide to continually self-assess and engage early with us should any major deficiencies arise within your AEOI framework.