When obtaining self-certifications or other information from Account Holders, an RFI will need to use a range of terms with specific meaning under the CRS and FATCA. Following are some short form definitions that may be useful in assisting Account Holders to provide correct information. Some or all of these short form definitions may be used by an RFI for that purpose.
It is recommended that any use of these simplified definitions should be accompanied by a note that the explanations are a summary only and more information can be found through a link or reference to this Guidance.
Account Holder means an individual or entity listed or identified as the holder of a Financial Account. A person, other than a financial institution, holding a Financial Account for the benefit of another person as an agent, a custodian, a nominee, a signatory, an investment advisor, an intermediary, or as a legal guardian, is not treated as the Account Holder. In these circumstances that other person is the Account Holder. For example, in the case of a parent/child relationship where the parent is acting as a legal guardian, the child is regarded as the Account Holder. For a jointly held account, each joint holder is treated as an Account Holder.
Active NFE is an NFE that meets any of these criteria:
- active by reason of income and assets (less than 50% of the NFE’s gross income for the preceding year or other appropriate reporting period is passive income and less than 50% of the assets held by the NFE during the preceding year or other appropriate reporting period are assets that produce or are held for the production of passive income
- publicly listed NFE
- Governmental Entity, International Organisation, Central Bank, or their wholly owned entity
- holding NFE that is a member of a non-financial group (generally where substantially all of the activities of the NFE consist of holding the shares of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses)
- NFE that is not yet operating a business and has no prior operating history, (a start-up NFE) but is investing capital into assets with the intent to operate a business
- NFE that is liquidating or emerging from bankruptcy
- treasury centre that is a members of a nonfinancial group
- not-for-profit NFE operating exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or a professional organisation, business league, chamber of commerce, labour organisation, or other organisation operated exclusively for the promotion of social welfare.
Controlling Person is generally a natural person who exercises control over an entity. Control depends on the legal structure of the entity.
- For a company, Controlling Persons include any natural person that holds directly or indirectly more than 25 percent of the shares or voting rights of the entity as a beneficial owner. If no such person exists, then it is any natural person(s) that otherwise exercise control over the management of the entity (for example, the senior managing official of the company).
- For a trust, the term Controlling Persons means the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust.
- For a partnership Controlling Person means any natural person who exercises control through direct or indirect ownership of the capital or profits of the partnership, voting rights in the partnership, or who otherwise exercises control over the management of the partnership.
Entity means a legal person or a legal arrangement, such as a company, organisation, partnership or trust.
Financial institution means a Custodial Institution, Depository Institution, an Investment Entity, or a Specified Insurance Company.
Investment Entity includes two types of entities.
An entity that primarily conducts as a business for or on behalf of customers
- trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading
- individual and collective portfolio management
- otherwise investing, administering, or managing financial assets or money on behalf of other persons.
Alternatively an entity that derives 50% or more of its gross income from investing, reinvesting, or trading in financial assets and the entity is managed by another entity that is a financial institution. A financial institution manages an entity if it has discretionary authority manage the other entity’s financial assets (either in whole or part).
NFE is any entity that is not a financial institution.
Non-Participating Jurisdiction means generally a jurisdiction with which Australia does not yet have an agreement to automatically exchange financial account information using the Common Reporting Standard (CRS). See CRS Participating Jurisdictions.
Passive NFE means any NFE that is not an Active NFE. An Investment Entity located in a Non-Participating Financial Institution is also treated as a Passive NFE for the purposes of the CRS.
Resident (for tax purposes) means resident under the tax laws of a jurisdiction. The OECD has compiled information on tax residency for most jurisdictions, see Automatic Exchange PortalExternal Link