Australia

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Combined Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Although certain information relevant for identification of beneficial owners is required to be available mainly based on tax and company law obligations, only financial institutions (and other Reporting Entities under the AML/CTF Act, which are irrelevant for EOI purposes, such as those in the gaming and bullion sector) are required to identify beneficial owners of Designated Entities, in line with the standard in all cases. Since 2007, Reporting Entities must identify beneficial owners of most forms of companies (except incorporated partnerships and associations). Since 1 June 2014, Reporting Entities are required to identify and verify the beneficial ownership and control of all their customers, including companies, partnerships, trusts and other legal arrangements. Finally, although most Designated Entities are likely to have a bank account in Australia, these Designated Entities are not legally required to engage a financial institution in Australia in all cases.  Australia should ensure that beneficial owners of all Designated Entities are required to be identified in line with the standard. 
Although Australia has some identity information on trusts under the tax laws and the common law (namely, the identity of the trustee, settlor and direct beneficiary(ies)), the scope of these requirements does not cover the beneficial ownership requirements under the 2016 Terms of Reference in all cases, especially in respect of “any other natural person exercising ultimate effective control over the trust”. The identification of beneficial owners of trusts is nevertheless required under the AML/CFT rules (which commenced in June 2014), but only where a trustee is provided a service (prescribed in section 6 of the AML/CTF Act) by a Reporting Entities; that is mostly where the trust has a bank account in Australia. Consequently, there may be instances where information on beneficial owners is not available in respect of all express trusts administered in Australia or in respect of which a trustee is resident in Australia, unless these trusts have a bank account in Australia.   Australia should ensure that information on beneficial ownership information in respect of all express trusts administered in Australia or with a trustee resident in Australia is available as required under the standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.     
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Introduced business obligations set out in the AML/CTF Rules do not explicitly state that the bank relying on a third party remains ultimately responsible for CDD measures performed on their customers, and notably beneficial ownership information.  Australia should ensure that accurate and update beneficial ownership information on bank account holders is available in all cases. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Australia introduced enhancements to CDD obligations, which came into effect on 1 June 2014, accompanied by a transitional period of 18 months to enable Reporting Entities to achieve full compliance. During that period, and up to the end of the review period, only a small portion of the Reporting Entities has been monitored regarding the implementation of the new rules. In addition, due to the short period of time since the full application of the 2014 CDD Rules, the adequacy of the oversight and enforcement in practice could not be fully assessed.   
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Compliant.     

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.