What is FACTA for SMSFs?
The Foreign Account Tax Compliance Act (FATCA) is legislation enacted by the US government to ensure that its citizens and tax residents comply with US tax laws.
Australia and the US have signed an agreement to implement FATCA. In order to ensure that both countries’ tax laws are effectively enforced, Australian Financial Institutions are required to report US citizens’ or US tax residents’ revenue and income to the Australian Taxation Office.
The aim of this legislation is to facilitate tax information sharing between the two countries. For more information on FATCA, please click on the button below:
Does an SMSF have to company with FATCA reporting requirements to the IRS?
Australian complying superannuation funds, including SMSFs, are exempt from FATCA requirements therefore financial institutions in Australia typically ask account holders including SMSFs to self-certify with their institution (bank / broker etc).
Under the Intergovernmental Agreement with the USA that extends the U.S. Foreign Accounts Tax Compliance Act to Australia, the following are treated as Non-Reporting Australian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code:
Any plan, scheme, fund, trust, or other arrangement operated principally to administer or provide pension, retirement, superannuation, or death benefits that is a superannuation entity or public sector superannuation scheme (including an exempt public sector superannuation scheme) as defined in the Superannuation Industry (Supervision) Act 1993, or a constitutionally protected fund as defined in the Income Tax Assessment Act 1997.
Under the superannuation legislation, a ‘superannuation entity’ includes an SMSF. Therefore, SMSFs are not required to report and their owners are exempt from FATCA reporting requirements - however most account holders - including SMSFs will still need to self-certify under the FACTA rules (see below).
Does an SMSF need to self-certify with FACTA / FATCA / CRS ?
Yes. All accounts opened on/after 1 July 2017 are to be treated as ‘new accounts’ for FATCA/CRS and are required to certify.
All individual account holders and all entity account holders will be required to certify for themselves or alternatively for the designated account (where applicable) e.g. for a trust, other entity or person.
Generally, the designated account is considered to be the ‘account holder’ for FATCA/CRS purposes except where the designated account is a description only, or the registered holder is a financial institution.
How does an SMSF self-certify for FATCA?
Most providers will have an online form they will direct you to where you complete the certification.
For an SMSF, you simply select "An Australian regulated superannuation fund (including a complying SMSF), retirement or pension fund" as the entity type on the FATCA form.
Below is an example of how the FATCA form is completed on LinkMarketServices - however most institutions / brokers / share registries will have forms that ask similar questions:
Please note that FATCA / CRS is different compared to a Organisation Tax Residency Self-Certification Form.