Australia: Updated AEOI guidance provides clarifications on IRS foreign financial institutions list
The foreign financial institutions list can no longer be relied upon to verify whether an entity account holder is a financial institution.
Clarifications on IRS foreign financial institutions list
The Australian Taxation Office (ATO) in October 2023 updated its automatic exchange of information (AEOI) guidance to provide additional guidance on the foreign financial institutions list published by the U.S. tax agency (IRS).
The guidance provides that the foreign financial institutions list can no longer be relied upon to verify whether an entity account holder is a financial institution.
The ATO also notes that the Organisation for Economic Co-operation and Development (OECD) has raised concerns on the excessive dependance on the foreign financial institutions list as the primary evidence for assessing whether an entity qualifies as a financial institution during the due diligence process. Since the IRS updates the FFI List monthly, as opposed to real time, it may not be accurate for due diligence purposes. When applicable, taxpayers need to revise their due diligence procedures no later than 1 January 2025.
Read a November 2023 report [PDF 137 KB] prepared by the KPMG member firm in Australia
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