Please read the instructions on https://www.irs.gov/instructions/iw8bene before you complete the W-8BEN-E form.
To assist you, we will prepopulate some details on your W-8BEN-E form based on the information we have available. For example, if Australia is your country of tax residence you may be exempt from providing a Foreign Tax Identification Number (FTIN) in accordance with IRS Notice 2018-20. Some sections may require you to provide further information.
If any of the prepopulated details are incorrect, contact us on 1300 361 170 before submitting.
Some important things to consider:
CommSec only accepts applications for Companies incorporated in Australia or Trusts established in Australia, and only accepts the following Chapter 3 and Chapter 4 statuses on W-8BEN-E forms.
| CommSec Account Type |
Chapter 3 [Part I (4)] |
Chapter 4 [Part I (5)] |
|---|
| SMSF (individual or corporate trustee) |
Complex Trust |
Nonreporting IGA FFI |
| Trust (individual or corporate trustee) |
Complex Trust |
Active NFFE or Passive NFFE |
| Company |
Corporation |
Active NFFE or Passive NFFE |
Complex Trust: CommSec can only facilitate the transactions of trusts that satisfy the U.S. tax definition of a “Complex Trust” and are eligible to provide a W-8BEN-E form. Information in relation to the U.S. tax definition of the different types of trusts can be found at www.irs.gov/pub/irs-pdf/i1041.pdf.
Corporation: Generally, most Australian ‘Pty Ltd’ companies would be considered a Corporation for U.S. tax purposes.
Active Non-Financial Foreign Entities (NFFE) are Companies or Trusts that earn less than 50% of their total income from investment activities such as interest or dividends, or produces/holds less than 50% of their assets for producing investment income.
Passive Non-Financial Foreign Entities (NFFE) are any non-foreign financial entity that is not an active NFFE. A NFFE will be deemed a passive NFFE if 50% or more of gross income for the preceding calendar year was generated from passive income, and/or if 50% or more of the assets held by the entity are assets that produce or are held for the production of passive income (passive income generally includes income from financial products and investments including Dividends, Interest, Annuities, Insurance product returns, Net Transaction gains, Rents and Royalties other than those generated from active trade of business).
Chapter 4 (FATCA Status):
When completing the chapter 4 (FATCA Status) section of the W-8BEN-E form, for Australian:
SMSF
Part XII(26) Nonreporting IGA FFI:
a. IGA country of your SMSF would generally be ‘Australia’
b. Australia is considered a ‘Model 1 IGA’
c. Australian SMSF's would generally have an IGA category of ‘Exempt Beneficial Owner – Retirement Plan’
Active Companies and Trusts
Part XXV(39) Active NFFE:
a. You will need to select the certification box (if appropriate)
Passive Companies and Trusts
Part XXVI(40) Passive NFFE:
a. You will need to select the certification box in 'a' (if appropriate)
b. You will need to select the certification box ‘ ‘b’ (if appropriate)
If you select ‘c’ indicating there are substantial U.S. owners, we will be unable to process your application
Please note that CommSec International Shares does not presently support U.S. Persons in any capacity including where an account has substantial U.S. owners.
Part III Claim of Tax Treaty Benefits
14(a)
Refer to where the company or trust is a resident for income tax purposes. If the entity is a tax resident of Australia, then please note that Australia has an income tax treaty agreement with United States. If you wish to claim reduced rate of withholding, you can select “Yes”.
14(b)
Company: Companies incorporated in Australia are a tax resident of Australia. The question also requires a confirmation that the company is entitled to the benefits of the Australia USA Double Tax Treaty, which are generally available provided the shares in the company are owned by Australian tax residents. If you are entitled to the benefit, the limitation applicable to most Australian Pty Ltd companies is ‘Company that meets the ownership and base erosion test’.
More information
‘Company that meets the ownership and base erosion test’ generally requires more than 50% of the vote and value of the company's shares be owned, directly or indirectly, by parties who are residents in the same country as the company. If you are uncertain about the eligibility of your company, you should consult a tax advisor .
Trust/SMSF: Most Australian trusts/funds satisfy the Australian tax residency requirements and are entitled to benefits of the treaty as a result of ‘Article 16(2)’. However, this does not apply to all trusts and you should ensure you have understood the relevant definitions in the Treaty before completing Item 14. To find the relevant definitions, please visit https://www.austlii.edu.au/au/other/dfat/treaties/2003/14.html. If you are entitled to the benefit, please select ‘Other’ and specify Article 16(2)g.
More information
For the purposes of the Australia USA Double Tax Treaty, a trust would be considered a resident of Australia if it is considered an Australian tax resident under Australian tax law provided that, in relation to any income, the income is subject to Australian tax as the income of a resident, in the hands of a beneficiary, or, if that income is exempt from Australian tax, is so exempt solely because it is subject to United States tax.
Relevant to trusts, Article 16 paragraph 2 provides “a qualified person” will be eligible for the benefits of the Treaty if it satisfies one of the following paragraphs:
• (d) a trust in which:
(i) the principal class of units in that Trust is listed or admitted to dealings on a recognized U.S. or Australian stock exchange and is regularly traded on one or more of the recognized stock exchanges; or
(ii) the direct or indirect owners of at least 50 percent of the beneficial interests in that Trust are qualified persons by reason of the fact that interests in the owner are listed and traded on one of the recognized exchanges;
• (e) an entity organised under the laws of Australia or the USA and established and maintained in that State exclusively for a religious, charitable, educational, scientific, or other similar purpose, even if the entity is generally exempt from tax in that State;
• (f) an entity organised under the laws of Australia and established and maintained in Australia to provide, pursuant to a plan, pensions or other similar benefits to employed and self-employed persons, even if the entity is generally exempt from tax in Australia, provided that more than 50 percent of the entity’s beneficiaries, members or participants are individuals resident in Australia;
• (g) a trust which:
(i) at least half the days of the taxable year persons that are “qualified persons” by reason of being:
- an individual, or
- a company whose shares are listed and traded on a recognized US or Australian stock exchange, or
- another trust whose units, are listed and traded on a recognized US or Australian stock exchange
- own, directly or indirectly, at least 50 percent of the beneficial interests in the trust; and
(ii) less than 50% of the trust’s gross income for the taxable year is paid or accrued, directly or indirectly, to persons who are not residents of either Australia or the USA in the form of payments that are deductible for tax purposes (but not including arm’s length payments in the ordinary course of business for services or tangible property and payments in respect of financial obligations to a bank, provided that where such a bank is not a resident of Australia or the USA such payment is attributable to a permanent establishment of that bank located in Australia or the USA).
As these definitions are complex, we recommend you consult your tax advisor if you are uncertain of the applicability of the relevant definitions to your trust.
Prior to completing the W-8BEN-E form, please visit the Internal Revenue Service (IRS) website or seek independent tax advice to determine the entity type and Foreign Account Tax Compliance Act (FATCA) status that are most appropriate to your circumstances. If you believe that your entity type and FATCA status are different to the ones listed above, please contact CommSec on 1300 361 170 to discuss your details.
