preface
In the near future, the important agreements reached between China and Australia will come into force.
Under the Common Reporting Standard's international agreement, as a member of the OECD's OECD, China and Australia have reached an agreement requiring the exchange of non-tax resident assets and personal information on national investments and property purchases.
Officials say China and Australia are about to have their first exchange of information!
So what's CRS?? Will it affect me? Will the Australian Inland Revenue Office really give these bank information to China? What should I do as a human being?
1. On CRS
The CRS has been in effect since January 1, 2017, simply as a measure to address taxpayers' use of cross-border information opacity to evade taxes.
This will allow Australia's goverment to learn about Chinese buyers' home purchases in Australia and whether they pay taxes, as well as allow Chinese authorities to track down economic fugitives in Australia.
For some of the Chinese who want to take advantage of the gap,
What a bolt from the blue!
At present, the number of countries and regions committed to implementing CRS has reached 101.
In May last year, the State Administration of Taxation issued the due diligence measures on tax Information related to non-resident Financial accounts, which came into effect on July 1, 2017.
(photo source: official website of the State Revenue Service)
For China and Australia, a spokesman for the State Administration of Taxation said September 2018 would be the time for the first exchange of intelligence, and once a year thereafter.
In other words, the first batch of information will be exchanged in three months!
At that time, China will pass financial information on all Australian tax residents collected in China to Australia, and China will also obtain account information from Australian Chinese tax residents in Australia.
2. Who will be affected by the new policy?
So who will be affected by CRS?
In general, the financial assets held and the tax domicile are not taxpayers of the same country or region.
There are two types for China and Australia:
- The first is Chinese tax-paying residents with Australian financial accounts, which have any financial assets in Australia: deposits, investment insurance, funds, and so on.
- The second is non-Chinese tax-paying residents with financial assets in China, that is to say, holders of temporary Australian visas like Australia's PR, as long as "taxpayers" who are required to pay their taxes in Australia are satisfied.
(photo source: national Revenue Service)
In addition, in addition to individuals, business information will also be exchanged.
3. What information will be exchanged?
Australia's goverment has a clear understanding of the significance of transparency of tax-related information in financial accounts: tax evasion is a global problem. The international cooperation and high-quality financial institutions of various countries can be expected to effectively help countries to implement local tax laws.
Due diligence includes basic information about any non-Australian resident who opens an account in Australia, including: name, ID number, address, birthday, account number, account balance, and significant annual transactions. In addition, there are bank deposit accounts, escrow accounts, insurance contracts, and so on.
(photo source: national Revenue Service)
It is worth noting that non-financial assets such as overseas property, yachts, sports cars, antiques and paintings, jewelry and other non-financial assets are outside the scope of the CRS survey, because they are not revenue items in themselves.
But if Chinese tax residents buy real estate for rent in Australia, and rent income is transferred to Australian bank accounts, the information will be passed on to China's tax authorities in the future.
4. How to deal with
In general, for legal enterprises and individuals engaged in all kinds of activities, the impact is not very large.
But since then, it is believed that Chinese residents will be more cautious in sending remittances overseas for tax purposes and will no longer dare to deposit large amounts of money with foreign banks.
To this end, many Chinese Australians may be very difficult. They do not want to become Australian tax residents and pay taxes here, nor do they want their tax information returned to China.
But now there's no choice, because if you don't do so, you could face all sorts of penalties from the CRS.
For example, many Chinese buy homes in Australia: because they buy homes in the name of their wives or children, many foreigners who buy millions of luxury homes in Australia pay little or no taxes.
Non-residents who buy or sell properties in Australia must pay the proceeds of these investments and other related taxes.
There are also some foreigners did not apply to the goverment, is illegal to buy a house. It is illegal for a foreign buyer to buy a second-hand house in Australia without the approval of the foreign investment review committee Foreign Investment Review Board,FIRB.
Since the coalition party goverment began cracking down on illegal purchases of Australian property in 2013, 27 properties, worth about A $76.4 million, have been forced to sell, many of them Chinese, according to sources.
(photo source: Herald Sun)
In fact, Australia has even enacted new laws to combat illegal investment abroad. If individuals abroad illegally buy Australian assets, they will face a fine of $135000, or three years in prison. Or both fine and jail!
This could allow some people at this time to sell their assets in order to avoid being checked, and perhaps Australian property prices could be affected.
For many hard-working middle-class Australians, buying their first home is a huge achievement, according to Australia's goverment. Most taxpayers abide by the tax code, so those who break the law must be punished.
But for those who take advantage of transnational affairs, business operations involving tax evasion, asset transfer of individuals and enterprises, the problem is even more serious! China and Australia will impose strict penalties on the severity of the circumstances.
Under the background of increasing transparency of global tax-related information, it is more important to systematically manage the tax compliance work in various countries and improve the ability to deal with tax risks in order to improve the ability to deal with tax risks.
In general, as a tax resident of any country, there is an obligation to pay taxes, and do not evade taxes with a fluke mentality. While enjoying Australia's pure air and clean water, it also needs to contribute to the sustainable development of the community.
But also do not need to have unnecessary panic, immediately to return tax time, we should seize the time to collate information!
