Understanding tax residency and withholding tax (WHT)

Every year we do a review of all the clients on our platforms to determine if they have indicated that they are tax residents of a foreign jurisdiction. They could have indicated this through information provided during the account opening process or personal contact information they’ve updated throughout the year. 
 
We confirm your client's tax residency under the:

• Common Reporting Standard (CRS), a single global standard for the collection, reporting and exchange of financial account information on foreign tax residents, and
• Foreign Account Tax Compliance Act (FATCA), US legislation requiring us to confirm your client’s status as a US or non-US citizen or tax resident.

As part of our ongoing CRS and FATCA reporting obligations, we contact clients because:

1. We've found foreign indicia (evidence of foreign tax residency) on file and require confirmation of tax residency from them. Foreign indicia could be a foreign address, contact details or foreign ID on file. We may also know that your clients have a foreign taxpayer identification number (TIN) but we don’t have this TIN recorded, or
2. ​​they’re an entity that needs to self-certify for the first time, regardless of whether evidence of foreign tax residency has been found on file.

To help you and your clients provide the right documents, we’ve outlined the requirements below. 

You can find the ID forms here or by searching for “ID forms” on Adviser Tools. 

Individuals

Entities

 
It’s important to note that we may contact your clients for additional information, like a copy of their Australian identification, if required.

US Specified Persons must provide a United States of America (US) Taxpayer Identification Number (TIN) when opening a new account with Macquarie.  

Existing account holders without a US TIN will continue to be contacted as part of our annual CRS and FACTA due diligence procedures.

A US Specified Person includes, but is not limited to:

• US citizen and US residents for tax purposes
• Holder of a US TIN or US Reportable Account
• Entities that are US Specified Persons
• Non-US entities with US controlling persons.

Collection of Tax File Numbers (TFNs) is authorised, and its use and disclosure is regulated by the tax laws and Privacy Act.

Investors are not required to provide their TFN and declining to do so is not an offence. However, TFN withholding tax (WHT) will be deducted where the investor does not provide any one of the following:

• A TFN (including both TFNs for joint accounts)
• An Australian Business Number (ABN)
• An exemption reason (e.g. they are a charity).

TFN WHT will be deducted (at the highest marginal tax rate plus the Medicare Levy) from any income earned on their account (e.g. interest, dividends and distributions) at the time payment is made.

The amount of TFN WHT will be disclosed on the Tax Reports.

For further information, please contact the Australian Taxation Office.

Non-residents and intermediaries who act on behalf of non-residents are subject to WHT. The rate of WHT applied depends on the:

• type of income, and
• location of the recipient.

Generally, we apply non-resident WHT as follows:

The 12H distribution schedule which is included in the Product Issuer Schedule provides investors with the distribution components for managed investments available on investment menus.

The information provided can assist investors with undertaking their own withholding obligations on behalf of their direct non-resident beneficiaries/investors.

This is usually made available to advisers in mid-late August.