Implementing OECD Common Reporting Standard in Australia


  • The CRS is the OECD’s initiative for the global automatic exchange of information for tax purposes.
  • The introduction of the CRS will represent an increased compliance burden for financial institutions.
  • The first reporting date by Australian reporting financial institutions to the ATO is 31 July 2018 for the calendar year 2017 unless an election to defer to 31 July 2019 for the calendar year 2018 applies.

On 17 September 2015, the Australian Treasury released exposure draft legislation to implement the Organisation for Economic Co-operation and Development’s (OECD) Common Reporting Standard (CRS) for the automatic exchange of financial account information between tax authorities. The CRS is intended to reduce tax evasion worldwide by requiring tax authorities to exchange information about tax payers with residence jurisdictions.

The OECD, at the request of the G8 and G20 countries, released the CRS, the Common Reporting Standard set out in the Standard for Automatic Exchange of Financial Information in Tax Matters, which was approved by the Council of the OECD on 15 July 2014. 

The CRS establishes a common international standard for financial institutions to collect, report and exchange financial account information of foreign residents to their local tax authority and for tax authorities to exchange this information. It is designed to improve cross border tax compliance. It follows the Foreign Account Compliance Act (FATCA) and has been modelled on the Model 1 Intergovernmental Agreement.

More than 90 jurisdictions, including Australia, have committed to the CRS, and over 70 jurisdictions, including Australia, have signed the OECD Multilateral Competent Authority Agreement on Automatic Exchange of Account Information. This agreement enables CRS information to be exchanged between jurisdictions’ tax authorities, provided relevant legislation is in place. 

There are more than 50 early adopting countries of the CRS including the British Virgin Islands, the Cayman Islands, Guernsey, Ireland, Luxembourg and the UK. Australia is one of the later adopting countries. 

The US has not signed up to the CRS, but the IGAs it has entered into acknowledge the need for the US to achieve equivalent levels of reciprocal automatic information exchange with partner jurisdictions. 

We set out below some high level comments on the CRS and some of the potential implications for fund managers.

Who does the CRS apply to?

The CRS applies to ‘Reporting Financial Institutions’. Under the CRS a ‘Reporting Financial Institution’ specifically includes ‘Custodial Institutions’, ‘Depository Institutions’, ‘Specified Insurance Companies’, and ‘Investment Entities’, which include entities undertaking the following activities on behalf of a customer:

  • Trading in financial products;
  • Individual and collective portfolio management; and
  • Investing, administering, or managing financial assets or money on behalf of another person. 

The definition is broad and will generally include trust companies, custodians, Australian domiciled funds, offshore funds and platforms.

What are fund managers required to do in preparation for the CRS?

In preparation for the CRS reporting obligations, reporting financial institutions will need to review and update their policies and procedures to comply with the CRS requirements. This will include updating: 

  • Offering documents, marketing materials and application forms to include suitable disclosure and risk warnings;
  • Their subscription documents and distribution agreements to ensure the information required to comply with the CRS is collected; and
  • Service agreements to amend the scope of additional due diligence and reporting.

What are fund managers required to do to comply?

Under the CRS, reporting financial institutions will need to: 

  • Carry out CRS due diligence procedures to identify accounts held by all customers that are foreign residents (we note that this is not limited to residents of countries that have adopted the CRS), which varies between new accounts (from 1 January 2017) and pre-existing accounts, and high-value and low-value accounts; 
  • Report on these accounts by providing an annual statement to the ATO in the approved form by 31 July of the following year on a self-assessment basis; and
  • Maintain relevant records for 5 years.

Penalties apply to reporting financial institutions for failure to lodge reports on time, providing misleading statements in reports and not maintaining adequate records. Account holders may also be subject to penalties if they provide misleading information.

Timing of reporting

The early adopting jurisdictions under the CRS have agreed to exchange financial information by September 2017 for account information relating to the 2016 calendar year. 

As Australia is a later adopting jurisdiction, the exposure draft legislation requires reporting financial institutions to provide the first reports to the ATO by 31 July 2018 for the 2017 calendar year with data exchanges with partner jurisdictions occurring by 30 September 2018. 

However, there is a transitional period, which allows reporting financial institutions to elect to defer their reporting obligations to 31 July 2019 for the 2018 calendar year (by providing a notice in writing) with data exchanges with partner jurisdictions occurring by 30 September 2019. 


Given the CRS is modelled on the Foreign Account Tax Compliance Act (FATCA), Australian financial institutions should be able to leverage existing FATCA processes and systems. However, there are a number of notable differences:

  • The definition of ‘Financial Institution’ under the CRS is broader, which means some entities that are not caught under FATCA will be caught under the CRS such as exchange traded funds; 
  • Information to be collected under the CRS is based on tax residency, whereas information to be collected under FATCA is based on citizenship or nationality; 
  • Certain exceptions applying under FATCA do not apply under the CRS such as captive finance companies; 
  • There are no registration or withholding requirements under the CRS; and
  • Additional information is required to be collected under the CRS. Although reporting is broadly similar in scope to FATCA and includes information such as name, address, taxpayer identification number and date of birth. Additional fields for capture of, for example, tax residency may need to be created, which may involve contacting certain pre-existing customers to obtain the additional information. 

Two of the main difficulties with implementing FATCA involved the unclear requirements and delayed timelines. 

We do not anticipate the same issues with implementing the CRS given the requirements and the timelines are clear and it has already been transposed into law by other countries including the Cayman Islands. Given Australia is not one of the early adopting countries, it may leverage off experiences of other countries in implementing the CRS.  

Nikki Bentley

I understand the financial services industry and thrive on helping our clients in this industry succeed.

Nikki Bentley Partner

Nikki is the Group Leader of Henry Davis York's Corporate Group, which includes the legal teams for Corporate / Mergers & Acquisitions; Investments & Financial Services and Tax.

Nikki is a leading investment funds advisor specialising in financial services and corporate law.  She specialises in business establishment and structuring, fund establishment, funds merger and acquisition, product disclosure and distribution. Nikki leads HDY's corporate group which combines expertise from the Financial Services, M&A and Tax areas.

Nikki provides advice to leading Australian and global fund managers on a full range of corporate, commercial and regulatory issues facing their businesses. She has considerable experience in assisting clients with fund establishment (onshore and offshore), disclosure and distribution. Nikki regularly advises clients on establishing, buying, selling and restructuring their businesses. She also regularly assists clients responding to regulatory enquiries and investigations.

With more than 15 years funds management experience in private practice, government and as an in-house lawyer, Nikki's practice spans the range of funds management products, with particular expertise in hedge funds, property funds and equities.

Nikki is regularly involved in industry and government discussions on regulatory reforms impacting the Australian funds management industry. Nikki is a passionate advocate for the development of a new corporate collective investment vehicle because of the opportunities it could provide to grow the funds management industry. She is the Honorary Legal Counsel and Chair of the Regulatory Committee for the Australian branch of the Alternative Investment Management Association (AIMA) and is a regular participant on the Financial Services Council (FSC) working groups.

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