Income Tax Regulations (Implementation of the Common Standard for Reporting and Due Diligence of Information on Financial Accounts), 5779-2019

Part I: General Reporting Requirements

A. Subject to Sections C through F, every reporting financial institution is required to report the following information with respect to each reportable account of such reporting financial institution:

The name, address, jurisdiction(s) of residence, TIN and date and place of birth (in the case of an individual), of each reportable person who is an account holder of the account, and in the case of any entity that is an account holder and which, after applying the due diligence procedures consistent with Parts V, VI and VII, is identified as having one or more controlling shareholders who are reportable persons – the name, address, jurisdiction(s) of residence and TIN of the entity and the name, address, jurisdiction(s) of residence, TIN and date and place of birth of each reportable person;

The account number (or functional equivalent in the absence of an account number);

The name and identifying number (if any) of the reporting financial institution;

The account balance or value (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value) as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such a year or period, the closure of the account;

In the case of a custodial account:

In the case of a deposit account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and

With respect to an account not described in subsection A.5 or 6, the total gross amount paid or credited to the account holder with respect to the account during the calendar year or other appropriate reporting period in respect of which the reporting financial institution is the obligee or the obligor, including the aggregate amount of all redemption payments to the account holder during the calendar year or other appropriate reporting period.

B. The information reported must specify the currency in which each amount is denominated.

C. Notwithstanding the provisions of subsection A.1, with respect to each reportable account that is an existing account, there is no requirement to report the TIN or the date of birth if the TIN or the date of birth, as aforesaid, is not in the records of the reporting financial institution and that reporting financial institution is not otherwise required to collect it pursuant to domestic law. However, a reporting financial institution is required to use reasonable efforts to obtain the TIN and the date of birth with respect to existing accounts by the end of the second calendar year following the year in which such accounts were identified as reportable accounts.

D. Notwithstanding the provisions of subsection A.1, there is no requirement to report the TIN if (i) a TIN has not been issued by the relevant reportable jurisdiction, or (ii) the domestic law of the relevant reportable jurisdiction does not require the collection of the TIN issued by such a reportable jurisdiction.

E. Notwithstanding the provisions of subsection A.1, there is no requirement to report the place of birth unless the reporting financial institution is otherwise required to obtain and report it pursuant to domestic law and it is available in the electronically searchable data maintained by the reporting financial institution.

F. Notwithstanding the provisions of Section A, the information reported with respect to [XXXX] is the information described in that Section, except with respect to gross income described in sub-paragraph A.5(b).

Part II: General Requirements for Due Diligence

A. An account shall be treated as a reportable account from the date of its identification as such pursuant to the due diligence procedures in Parts II to VII, and information with respect to a reportable account must be reported, unless otherwise provided, annually, in the calendar year following the year to which the information relates.

B. The balance or value of an account is determined as of the last day of the calendar year or other appropriate reporting period.

C. Where a balance or value threshold is to be determined as of the last day of a calendar year, the relevant balance or value must be determined as of the last day of the reporting period that ends with or within that calendar year.

D. Each jurisdiction may allow reporting financial institutions to use service providers to fulfil the reporting and due diligence obligations imposed on such reporting financial institutions, pursuant to domestic law, but these obligations shall remain the responsibility of the reporting financial institutions.

E. Each jurisdiction may allow reporting financial institutions to apply due diligence procedures for new accounts to existing accounts, and the due diligence procedures for high value accounts to low value accounts. Where a jurisdiction allows the use of due diligence procedures for new accounts to be applied to existing accounts, the other rules otherwise applicable to existing accounts shall continue to apply.

Part III: Due Diligence for Existing Individual Accounts

These procedures apply for the purpose of identifying reportable accounts among existing individual accounts.

A. Accounts Not Subject to Review, Identification or Reporting.

An existing individual account that is a cash value insurance contract or an annuity contract is not subject to review, identification or reporting, provided that the reporting financial institution is effectively prevented by law from selling a cash value insurance contract or an annuity contract, as aforesaid, to residents of a reportable jurisdiction.

B. Low Value Accounts. The following procedures apply with respect to low value accounts.

Residence Address. If the reporting financial institution holds in its records a current residence address of the individual account holder based on documentary evidence, the reporting financial institution may treat the individual account holder as a resident for tax purposes of the jurisdiction in which the address is located for the purpose of determining whether such individual account holder is a reportable person.

Electronic Record Search. If the reporting financial institution does not rely on a current residence address of the individual account holder based on documentary evidence as set out in subsection B.1, the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for each of the following indicia and apply subsections B.3 to 6:

If none of the indicia listed in subsection B.2 are discovered in the electronic search, then no further action is required until there is a change in circumstances that results in one or more indicia being associated with the account, or the account becomes a high value account.

If any of the indicia listed in sub-paragraph B.2(a) to (e) are discovered in the electronic search, or if there is a change in circumstances that results in one or more indicia being associated with the account, then the reporting financial institution must treat the account holder as a resident for tax purposes of each reportable jurisdiction for which an indicium is identified, unless it elects to apply subsection B.6 and one of the exceptions in that subsection applies with respect to that account.

If a "hold mail" instruction or an "in-care-of" address is discovered in the electronic search and no other address or any of the other indicia listed in sub-paragraph B.2(a) to (e) are identified for the account holder, the reporting financial institution must, in the order most appropriate to the circumstances, apply the paper record search described in subsection C.2, or seek to obtain from the account holder a self-certification or documentary evidence to establish the tax residence(s) of such account holder. If the paper record search yields no information and the attempt to obtain a self-certification or documentary evidence is unsuccessful, the reporting financial institution must report the account as an undocumented account.

Notwithstanding the discovery of an indicium pursuant to section B.2, a reporting financial institution is not required to treat an account holder as a resident of a reportable jurisdiction if –

(ii) documentary evidence establishing the account holder's status as a non-reportable person;

(ii) documentary evidence establishing the account holder's status as a non-reportable person.

C. Enhanced Review Procedures for High Value Accounts. The enhanced review procedures set out below shall apply with respect to high value accounts.

Electronic Record Search. With respect to high value accounts, the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for each of the indicia described in subsection B.2.

Paper Record Search. If the reporting financial institution's electronically searchable databases include fields for, and capture all of the information described in subsection C.3, then no further paper record search is required. If the electronic databases do not contain all of this information, then with respect to a high value account, the reporting financial institution must also review the current customer master file and, if the information is not contained in the current customer master file, review the following documents associated with the account and received by the reporting financial institution in the last five years with respect to each of the indicia described in subsection B.2:

Exception Where Databases Contain Sufficient Information. A reporting financial institution is not required to conduct the paper record search described in subsection C.2 to the extent that the reporting financial institution's electronically searchable information includes the following:

Enquiry of Relationship Manager for Actual Knowledge. In addition to the electronic record and paper record searches described above, the reporting financial institution must treat as a reportable account any high value account assigned to a relationship manager (including any financial accounts aggregated with such high value account) if the relationship manager has actual knowledge that the account holder is a reportable person.

Effect of Finding an Indicium

If an existing individual account is not a high value account on 31 December [XXXX], but becomes a high value account as of the last day of any subsequent calendar year, the reporting financial institution must complete the enhanced review procedures described in section C with respect to such account within the calendar year following the year in which the account becomes a high value account. If based on such review such account is identified as a reportable account, the reporting financial institution must report the required information with respect to such account for the year in which it is identified as a reportable account and for subsequent years on an annual basis, unless the account holder ceases to be a reportable person.

Once a reporting financial institution applies the enhanced review procedures described in section C to a high value account, the reporting financial institution is not required to re-apply those procedures, other than the relationship manager enquiry described in subsection C.4, to the same high value account in any subsequent year unless the account is undocumented, in which case the reporting financial institution must re-apply them annually until such account ceases to be undocumented.

If there is a change in circumstances with respect to a high value account that results in one or more of the indicia described in subsection B.2 being associated with the account, then the reporting financial institution must treat the account as a reportable account for each reportable jurisdiction for which an indicium is identified, unless it elects to apply subsection B.6 and one of the exceptions in that subsection applies with respect to that account.

A reporting financial institution must implement procedures to ensure that a relationship manager identifies any change in the circumstances of an account. For example, if a relationship manager is notified that the account holder has a new mailing address in a reportable jurisdiction, the reporting financial institution is required to treat the new address as a change in circumstances, and if it elects to apply subsection B.6, it is required to obtain the appropriate documentation from the account holder.

D. The review of existing individual accounts must be completed by [xx/xx/xxxx].

E. Any existing individual account that has been identified as a reportable account pursuant to this Part shall be treated as a reportable account in all subsequent years, unless the account holder ceases to be a reportable person.

Part IV: Due Diligence for New Individual Accounts

These procedures apply for the purpose of identifying reportable accounts among new individual accounts:

A. With respect to new individual accounts, upon opening an account the reporting financial institution must obtain a self-certification, which may form part of the account opening documentation, that will allow the reporting financial institution to determine the account holder's tax residence(s) and to confirm the reasonableness of such self-certification based on the information obtained by the reporting financial institution in connection with the opening of the account, including any documentation collected pursuant to AML/KYC procedures.

B. If the self-certification establishes that the account holder is a resident for tax purposes in a reportable jurisdiction, the reporting financial institution must treat the account as a reportable account and the self-certification must also include the account holder's TIN with respect to such reportable jurisdiction (subject to subsection D of Part I) and date of birth.

C. If there is a change in circumstances with respect to a new individual account that causes the reporting financial institution to know, or have reason to know, that the original self-certification is incorrect or unreliable, the reporting financial institution cannot rely on the original self-certification and must obtain a valid self-certification that establishes the account holder's tax residence(s).

Part V: Due Diligence for Existing Entity Accounts

These procedures apply for the purpose of identifying reportable accounts among existing entity accounts:

A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. Unless the reporting financial institution elects otherwise, with respect to all existing entity accounts, or separately, with respect to any clearly identified group of such accounts, an existing entity account with an aggregate account balance or value not exceeding 250,000 dollars as of 31 December [XXXX] is not required to be reviewed, identified or reported as a reportable account until the aggregate account balance or value exceeds 250,000 dollars as of the last day of any subsequent calendar year.

B. Entity Accounts Subject to Review. An existing entity account with an aggregate account balance or value exceeding 250,000 dollars as of 31 December [XXXX], and an existing entity account that does not exceed 250,000 dollars as of 31 December [XXXX], but the aggregate account balance or value of which exceeds 250,000 dollars as of the last day of any subsequent calendar year, must be reviewed in accordance with the procedures set out in section D.

C. Entity Accounts With Respect to Which Reporting Is Required. With respect to existing entity accounts described in section B, only accounts held by one or more entities that are reportable persons, or by passive NFEs with one or more controlling shareholders who are reportable persons, shall be treated as reportable accounts.

D. Review Procedures for Identifying Entity Accounts With Respect to Which Reporting Is Required. With respect to existing entity accounts described in section B, the reporting financial institution must apply the following review procedures to determine whether the account is held by one or more reportable persons, or by passive NFEs with one or more controlling shareholders who are reportable persons:

Determination of whether the entity is a reportable person.

Determination of whether the entity is a Passive NFE with one or more controlling shareholders who are reportable persons. With respect to an account holder of an existing entity account (including an entity that is a reportable person), the reporting financial institution must determine whether the account holder is a Passive NFE with one or more controlling shareholders who are reportable persons. If any of the controlling shareholders of a Passive NFE is a reportable person, then the account must be treated as a reportable account. In making these determinations the reporting financial institution must follow the guidance in sub-subsection D.2. a) to c) in the order most appropriate in the circumstances.

(ii) a self-certification from the account holder or from a controlling shareholder as aforesaid with respect to the jurisdiction(s) in which the controlling shareholder is a resident for tax purposes.

E. Timing of reviews and additional procedures applicable to existing entity accounts.

Review of existing entity accounts with an aggregate balance or value exceeding 250,000 dollars as at 31 December [XXXX] must be completed by 31 December [XXXX].

Review of existing entity accounts with an aggregate account balance or value not exceeding 250,000 dollars as at 31 December [XXXX] but exceeding 250,000 dollars as at 31 December of any subsequent year must be completed within the calendar year following the year in which the aggregate balance or value of the account exceeds 250,000 dollars.

If there is a change in circumstances with respect to an existing entity account that causes the reporting financial institution to know, or to have reason to know, that the self-certification or other documentation associated with the account is incorrect or unreliable, the reporting financial institution must re-determine the status of the account pursuant to the procedures set out in Section D.

Part VI: Due Diligence for New Entity Accounts

The following procedures apply for the purpose of identifying reportable accounts among new entity accounts:

A. Review procedures for identifying entity accounts in respect of which reporting is required. With respect to new entity accounts, the reporting financial institution must apply the following review procedures in order to determine whether the account is held by one or more reportable persons, or by Passive NFEs with one or more controlling shareholders who are reportable persons;

Determination of whether the entity is a reportable person.

Determination of whether the entity is a Passive NFE with one or more controlling shareholders who are reportable persons. With respect to an account holder of a new entity account (including an entity that is a reportable person), the reporting financial institution must determine whether the account holder is a Passive NFE with one or more controlling shareholders who are reportable persons. If any of the controlling shareholders of a Passive NFE is a reportable person, then the account must be treated as a reportable account. In making these determinations the reporting financial institution must follow the guidance in sub-subsection A.2. a) to c) in the order most appropriate in the circumstances.

Part VII: Special Due Diligence Rules

The following additional rules shall apply in implementing the due diligence procedures described above:

A. Reliance on self-certification and documentary evidence. A reporting financial institution may not rely on a self-certification or documentary evidence if the reporting financial institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable.

B. Alternative procedures for financial accounts held by individual beneficiaries of a cash value insurance contract or an annuity contract. A reporting financial institution may treat an individual beneficiary (other than the owner) of a cash value insurance contract or an annuity contract who receives a death benefit as not being a reportable person and may treat such a financial account as not being a reportable account, unless the reporting financial institution has actual knowledge, or reason to know, that the beneficiary is a reportable person. A reporting financial institution has reason to know that a beneficiary of a cash value insurance contract or an annuity contract is a reportable person if the information collected by the reporting financial institution and associated with the beneficiary includes indicia as described in Section B of Part III. If a reporting financial institution has actual knowledge, or reason to know, that the beneficiary is a reportable person, the reporting financial institution must follow the procedures in Section B of Part III.

C. Aggregation of account balances and currency rules.

Aggregation of individual accounts. For the purpose of determining the aggregate balance or value of financial accounts held by an individual, a reporting financial institution is required to aggregate all financial accounts held at the reporting financial institution, or at a related entity, but only to the extent that the reporting financial institution's computerised systems link the financial accounts by reference to data such as a client number or TIN, and enable the aggregation of account balances or values. Each holder of a jointly-held financial account shall be attributed the full balance or value of the jointly-held financial account for the purpose of applying the aggregation requirements described in this subsection.

Aggregation of entity accounts. For the purpose of determining the aggregate balance or value of financial accounts held by an entity, a reporting financial institution is required to take into account all financial accounts held at the reporting financial institution, or at a related entity, but only to the extent that the reporting financial institution's computerised systems link the financial accounts by reference to data such as a client number or TIN, and enable the aggregation of account balances or values. Each holder of a jointly-held financial account shall be attributed the full balance or value of the jointly-held financial account for the purpose of applying the aggregation requirements described in this subsection.

Special aggregation rule applicable to relationship managers. For the purpose of determining the aggregate balance or value of financial accounts held by a person in order to determine whether a financial account is a high value account, a reporting financial institution is also required, in the case of financial accounts that a relationship manager knows, or has reason to know, are owned or controlled, directly or indirectly, by the same person, or were established (other than by way of a trust) by the same person, to aggregate all such accounts.

Amounts treated as including equivalent amounts in other currencies. All amounts denominated in dollars are in United States dollars and shall be treated as including equivalent amounts in other currencies, as shall be determined under domestic law.

Part VIII: Defined Terms

The following terms have the meanings set out below:

A. Reporting financial institution

The term "reporting financial institution" means any financial institution of a participating jurisdiction that is not a non-reporting financial institution.

The term "financial institution of a participating jurisdiction" means (i) any financial institution that is resident in a participating jurisdiction, but excludes any branch of that financial institution that is located outside that participating jurisdiction, and (ii) any branch of a financial institution that is not resident in a participating jurisdiction, if that branch is located in such a participating jurisdiction.

The term "financial institution" means a custodial institution, a depository institution, an investment entity or a specified insurance company.

The term "custodial institution" means any entity that holds, as a substantial portion of its business, financial assets for the account of others. An entity holds financial assets for the account of others as a substantial portion of its business if the entity's gross income attributable to the holding of financial assets and related financial services equals or exceeds 20 per cent of the entity's gross income during the shorter of: (i) the three-year period ending on 31 December (or the last day of a non-calendar year accounting period) before the year in which the determination is made; or (ii) the period during which the entity has been in existence.

The term "depository institution" means any entity that accepts deposits in the ordinary course of a banking business or similar business.

The term "investment entity" means any entity:

(ii) individual and collective portfolio management; or

(iii) otherwise investing, administering, or managing financial assets or money on behalf of others; or

An entity shall be treated as primarily conducting as a business one or more of the activities described in sub-subsection A.6.a), or the gross income of an entity is primarily attributable to investing, reinvesting, or trading in financial assets for the purposes of sub-subsection A.6.b), if the entity's gross income attributable to the relevant activities equals 50 per cent or more of the entity's gross income during the shorter of: (i) the three-year period ending on 31 December of the year preceding the year in which the determination is made; or (ii) the period during which the entity has been in existence. The term "investment entity" does not include an entity that is an Active NFE because it meets any of the criteria set out in sub-subsection D.9.d) to g).

This subsection shall be interpreted in a manner consistent with similar language as set out in the definition of "financial institution" in the Financial Action Task Force Recommendations.

The term "financial asset" includes a security (for example, a share in a corporation; partnership interest or beneficial ownership interest in a widely held or publicly traded partnership or trust; note, bond, debenture, or other evidence of indebtedness), partnership interest, commodity, swap contract (for example, interest rate swaps, currency swaps, basis swaps, interest rate caps, interest rate floors, commodity swaps, equity swaps, equity index swaps and similar agreements), insurance contract or annuity contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, swap contracts, insurance contract or annuity contract. The term "financial asset" does not include a direct interest in real property that is not a debt.

The term "specified insurance company" means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a cash value insurance contract or an annuity contract.

B. Non-reporting financial institution

The term "non-reporting financial institution" means any financial institution that is –

The term "governmental entity" means the government of a jurisdiction, and any political subdivision of a jurisdiction (which, for the avoidance of doubt, includes a state, province, county or municipality), or any agency or body wholly owned by a jurisdiction of any one or more of the foregoing (each, a "governmental entity"). This category is composed of the integral parts, controlled entities, and political subdivisions of a jurisdiction.

(ii) the entity's net earnings are credited to its own account or to the accounts of one or more governmental entities, with no portion inuring to the benefit of any private person; and

(iii) the entity's assets vest in one or more governmental entities upon dissolution.

The term "international organisation" means any international organisation or agency or body wholly owned thereby. This category includes any intergovernmental organisation (including a supranational organisation) (1) that is comprised primarily of governments; (2) that has in effect a headquarters agreement or substantially similar agreement with the jurisdiction; and (3) the income of which does not inure to the benefit of private persons.

The term "central bank" means an institution that is by law or governmental sanction the principal authority, other than the government of the jurisdiction itself, issuing instruments intended to circulate as currency. Such institution may include a body that is separate from the government of the jurisdiction, whether or not owned in whole or in part by the jurisdiction.

The term "broad participation retirement fund" means a fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries who are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund:

(ii) the fund receives at least 50 percent of its total contributions (other than transfers of assets from other plans described in subsections b.5 to 7 or from retirement and pension accounts described in sub-paragraph c.7.a) from the sponsoring employers;

(iii) distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related to retirement, disability, or death (except rollover distributions to other retirement plans described in sub-paragraphs b.5 to 7 or retirement and pension accounts described in sub-paragraph c.17.a), or penalties apply to distributions or withdrawals made before such specified events; or

(vi) contributions (other than certain permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed 50,000 dollars annually, applying the rules set forth in Section C of Part VII regarding account aggregation and currency translation.

The term "narrow participation retirement fund" means a fund established to provide retirement, disability, or death benefits to beneficiaries who are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that:

The term "pension fund of a governmental entity, international organisation or central bank" means a fund established by a governmental entity, international organisation or central bank to provide retirement, disability, or death benefits to beneficiaries or participants who are or were formerly employees (or persons designated by such employees), or who are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration for personal services performed for the governmental entity, international organisation or central bank.

The term "qualified credit card issuer" means a financial institution satisfying the following requirements:

The term "exempt collective investment vehicle" means an investment entity that is regulated as a collective investment vehicle, provided that all interests in the collective investment vehicle are held by or through individuals or entities that are not reportable persons, except for a passive NFE with controlling persons who are reportable persons.

An investment entity regulated as a collective investment vehicle shall not fail to qualify as an exempt collective investment vehicle under subsection b.9 solely because the collective investment vehicle has issued physical shares in bearer form, provided that:

C. Financial Account

The term "financial account" means an account maintained by a financial institution, and includes a depository account, a custodial account and also:

The term "financial account" does not include any account that is an excluded account.

The term "depository account" includes any commercial, current, savings, term, or subordinated savings account, or an account that is evidenced by a certificate of deposit, certificate of subordinated savings, investment certificate, certificates of indebtedness, or other similar instrument held at a financial institution in the ordinary course of a banking or similar business. A depository account also includes an amount held by an insurance company pursuant to a guaranteed investment contract or similar agreement to pay or credit interest thereon.

The term "custodial account" means an account (other than an insurance contract or annuity contract) that holds one or more financial assets for the benefit of another person.

The term "equity interest" means, in the case of a partnership that is a financial institution, either a capital or profits interest in the partnership. In the case of a trust that is a financial institution, an equity interest is considered to be held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other individual exercising ultimate effective control over the trust. A reportable person shall be treated as a beneficiary of a trust if such reportable person has the right to receive directly or indirectly (for example, through a nominee) a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.

The term "insurance contract" means a contract (other than an annuity contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk.

The term "annuity contract" means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals. The term also includes a contract that is considered to be an annuity contract in accordance with the law, regulations or practice of the jurisdiction in which the contract was issued, and under which the issuer agrees to make payments for a term of years.

The term "cash value insurance contract" means an insurance contract (other than an indemnity reinsurance contract between two insurance companies) that has a cash value.

The term "cash value" means the greater of (i) the amount that the policyholder is entitled to receive upon surrender or termination of the contract (determined without reduction for any surrender charge or policy loan) and (ii) the amount the policyholder can borrow under or with regard to the contract. Notwithstanding the foregoing, the term "cash value" does not include an amount payable under an insurance contract:

The term "existing account" means a financial account maintained by a reporting financial institution as of [xx/xx/xxxx].

The term "new account" means a financial account maintained by a reporting financial institution opened on or after [xx/xx/xxxx].

The term "existing individual account" means an existing account held by one or more individuals.

The term "new individual account" means a new account held by one or more individuals.

The term "existing entity account" means an existing account held by one or more entities.

The term "lower value account" means an existing individual account with an aggregate balance or value as of 31 December [XXXX] that does not exceed 1,000,000 dollars.

The term "high value account" means an existing individual account with an aggregate balance or value that exceeds 1,000,000 dollars as of 31 December [XXXX] or 31 December of any subsequent year.

The term "new entity account" means a new account held by one or more entities.

The term "excluded account" means any of the following accounts:

(ii) the account is tax-favoured (that is, contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or such income is taxed at a reduced rate);

(iii) information reporting is required to the tax authorities with respect to the account;

(iv) withdrawals are conditioned on reaching a specified retirement age, disability, or death, or penalties apply to withdrawals made before such specified events; and

a financial account that otherwise meets the requirement of sub-paragraph C.17.a)(v) shall not fail to meet that requirement solely because such financial account may receive assets or funds transferred from one or more financial accounts that meet the requirements of sub-paragraph C.17.a) or b) or from one or more retirement or pension funds that meet the requirements of any of sub-paragraphs B.5 to 7.

(ii) the account is tax-favoured (that is, contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or such income is taxed at a reduced rate);

(iii) withdrawals are conditioned on meeting specified criteria related to the purpose of the investment or savings account (for example, the provision of educational or medical benefits), or penalties apply to withdrawals made before such specified events have occurred; and

(iv) annual contributions are limited to 50,000 dollars or less, applying the rules set out in Section C of Part VII with respect to account aggregation and currency translation;

a financial account that otherwise meets the requirement of sub-paragraph C.17.b)(iv) shall not fail to meet that requirement solely because such financial account may receive assets or funds transferred from one or more financial accounts that meet the requirements of sub-paragraph C.17.a) or b) or from one or more retirement or pension funds that meet the requirements of any of sub-paragraphs B.5 to 7.

(ii) the contract has no contract value that any person can access (by way of withdrawal, loan, or otherwise) without terminating the contract;

(iii) the amount (other than a death benefit) payable upon the cancellation or termination of the contract cannot exceed the aggregate premiums paid for the contract, less the sum of mortality, morbidity, and expense charges (whether or not actually imposed) for the period or periods of the contract's existence and any amounts paid prior to the cancellation or termination of the contract; and

(iv) the contract is not held by a transferee for value.

(ii) a sale, exchange, or long-term lease of real property or personal property, provided that the account meets the following requirements:

(ii) the account is established and used solely to secure the obligation of the purchaser to pay the purchase price for the property, of the seller to pay any contingent liability, or of the lessor or lessee to pay for any damages relating to the leased property as agreed under the lease;

(iii) the assets of the account, including the income earned thereon, will be paid or otherwise distributed for the benefit of the purchaser, seller, lessor, or lessee (including to satisfy such person's obligation) when the property is sold, exchanged, or delivered, or the lease terminates;

(iv) the account is not a margin account or similar account established in connection with a sale or exchange of a financial asset; and

(iii) an obligation of a financial institution servicing a loan secured by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time.

(iv) an obligation of a financial institution solely to facilitate the payment of taxes at a later time.

(ii) beginning on [xx/xx/xxxx] or before that date, the financial institution implements policies and procedures either to prevent a customer from making an overpayment in excess of 50,000 dollars, or to ensure that any customer overpayment in excess of 50,000 dollars is refunded to the customer within 60 days, in each case applying the rules set out in Section C of Part VII with respect to account aggregation and currency translation. For this purpose, a customer overpayment does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns.

D. Reportable Account

The term "reportable account" means an account held by one or more reportable persons or by a passive NFE with one or more controlling persons who are reportable persons, provided that it has been identified as such pursuant to the due diligence procedures described in Parts II to VII.

The term "reportable person" means a reportable jurisdiction person other than: (i) a corporation the stock of which is regularly traded on one or more established securities markets; (ii) any corporation that is a related entity of a corporation described in (i); (iii) a governmental entity; (iv) an international organisation; (v) a central bank; or (vi) a financial institution.

The term "reportable jurisdiction person" means an individual or entity that is resident in a reportable jurisdiction under the tax laws of such jurisdiction, or an estate of a decedent who was a resident of a reportable jurisdiction. For this purpose, an entity such as a partnership, limited partnership, or similar legal arrangement that has no residence for tax purposes shall be treated as resident in the jurisdiction in which its place of effective management is situated.

The term "reportable jurisdiction" means a jurisdiction (i) with which there is an agreement pursuant to which there is an obligation to provide the information specified in Part I, and (ii) that is identified in a published list.

The term "participating jurisdiction" means a jurisdiction (i) with which there is an agreement pursuant to which it will provide the information specified in Section I, and (ii) that is identified in a published list.

The term "controlling persons" means the natural persons who exercise control over an entity. In the case of a trust, such term means the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person exercising ultimate effective control over the trust, and in the case of a legal arrangement other than a trust, such term means persons in equivalent or similar positions. The term "controlling persons" shall be interpreted in a manner consistent with the Financial Action Task Force (FATF) Recommendations.

The term "NFE" means any entity that is not a financial institution.

The term "passive NFE" means any: (i) NFE that is not an active NFE; or (ii) investment entity described in sub-paragraph A.6.b) that is not a financial institution of a participating jurisdiction.

The term "active NFE" means any NFE that meets any of the following criteria:

(ii) it is exempt from income tax in its jurisdiction of residence;

(iv) the applicable laws of the NFE's jurisdiction of residence or the NFE's formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable entity other than pursuant to the conduct of the NFE's charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased; and

E. Miscellaneous

The term "account holder" means the person listed or identified as the holder of a financial account with the financial institution that maintains the account. A person, other than a financial institution, holding a financial account for the benefit or account of another person as agent, guardian, nominee, signatory, investment adviser, or intermediary shall not be treated as holding the account for purposes of the Common Reporting Standard, and such other person shall be treated as holding the account. In the case of a cash value insurance contract or an annuity contract, the account holder is any person entitled to access the cash value or to change the beneficiary of the contract. If no person can access the cash value or change the beneficiary, the account holder is any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract. Upon the maturity of a cash value insurance contract or an annuity contract, each person entitled to receive a payment under the contract shall be treated as an account holder.

The term "AML/KYC procedures" means the customer due diligence procedures of a reporting financial institution pursuant to the anti-money laundering or similar requirements to which such reporting financial institution is subject.

The term "entity" means a legal person or a legal arrangement, such as a corporation, partnership, trust, or foundation.

An entity is a "related entity" of another entity if either entity controls the other entity, or the two entities are under common control. For this purpose, control includes direct or indirect ownership of more than 50 per cent of the vote or value of an entity.

The term "TIN" means a taxpayer identification number (or functional equivalent in the absence of a taxpayer identification number).

The term "documentary evidence" includes any of the following:

Part IX: Effective Implementation

A. A jurisdiction must have rules and procedures in place to ensure effective implementation of, and compliance with, the reporting and due diligence procedures set out above, including:

Rules to prevent any financial institution, person or intermediary from adopting practices intended to circumvent the reporting procedures and due diligence checks;

Rules requiring reporting financial institutions to maintain records of steps taken and any evidence relied upon for the implementation of the above procedures and adequate measures for obtaining such records;

Administrative procedures aimed at verifying compliance of reporting financial institutions with the reporting procedures and due diligence checks; administrative procedures for monitoring a reporting financial institution where there is reporting of undocumented accounts;

Administrative procedures aimed at ensuring that the entities and accounts defined in domestic law as non-reporting financial institutions and excluded accounts continue to present a low risk of being used for tax evasion; and

Effective enforcement provisions for addressing non-compliance.