SECTION 31. US FOREIGN ACCOUNT TAX COMPLIANCE ACT

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1 SECTION 31. US FOREIGN ACCOUNT TAX COMPLIANCE ACT Introduction Regularly Traded Interests mfund Settlement Service FATCA Questions Allowable values Rejected Reason Codes Joint Holdings VERSION 3.4 i US FOREIGN ACQUISITIONS

2 This document is available online in Adobe Portable Document Format (PDF) at: > Participants > Library > Manuals Context of this Document The ASX Settlement Procedure Guidelines must be read in the context of the ASX Settlement Operating Rules. Any terms explicitly defined in the ASX Settlement Operating Rules and used in the ASX Settlement Procedure Guidelines should be interpreted according to the definition given in ASX Settlement Operating Rules. This includes terms such as participant, registry, holder, issuer, subregister, and financial product. Because of the large number of these terms, they have not been capitalised for emphasis in this document. In the interests of readability and comprehension, where a procedure applies only in the context of securities in a listed company, the specific term security has been used instead of the more generic term financial product. Change History Version Date Description of changes 1.0 June 2014 Initial version 3.1 Jan2016 ASXOnline document merge. 3.2 Mar 2016 T+2 implementation and change in references from C&S Operations to Post Trade Operations VERSION 3.4 ii US FOREIGN ACQUISITIONS

3 SECTION 13. US FOREIGN ACCOUNT TAX COMPLIANCE ACT 31.1 INTRODUCTION The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States Congress in March 2010 to improve compliance with US tax laws. FATCA imposes certain due diligence and reporting obligations on foreign (non-us) financial institutions, including Australian institutions. These institutions will be required to report to the US Internal Revenue Service (IRS) information on US citizens with financial accounts. On 28 April 2014, Australia and the US signed an intergovernmental agreement to assist in the facilitation of FATCA for Australian financial institutions. A key objective of the intergovernmental agreement is to support Australian compliance with FATCA in a way that reduces its overall burden on Australian business. This includes reporting the information via the Australian Taxation Office (ATO) under the existing Australia US tax treaty arrangements. Under FATCA a broad range of Australian financial institutions will be affected, including banks, some building societies and credit unions, specified life insurance companies, investment funds, custodial institutions and some brokers. These financial institutions will be required to register with the IRS. From 1 July 2014, the affected financial institutions will review customer accounts to determine whether they are reportable accounts (US citizens or US tax residents) under the intergovernmental agreement. The institutions will report to the ATO in the 2015 calendar year the required account information for the 2014 calendar year (supplied in the IRS FATCA XML Schema format). The information reported to the ATO will then be passed on to the IRS. Financial institutions that do not comply with FATCA will be subject to a 30 per cent US withholding tax on their US source income REGULARLY TRADED INTERESTS Effective 1 July , Non-US Issuers of financial products not regularly traded on a recognised exchange in Australia will be required to report to the IRS information on US Citizens with financial accounts 2. For the purposes of this section financial products not regularly traded on a recognised exchange in Australia will be referred to as unlisted financial products. 1 Effective 1 January 2016, Non-US Issuers of financial products that are regularly traded will be required to perform due diligence and report. 2 The term financial account is as defined under the Australia-US intergovernmental agreement. VERSION US FOREIGN ACQUISITIONS

4 31.3 MFUND SETTLEMENT SERVICE The mfund Settlement Service facilitates the application and redemption of unlisted financial products utilising CHESS. mfund issuers are required to comply with FATCA. Effective 1 July 2014, a new FATCA Questions field will be included in a number of mfund CHESS messages to assist mfund issuers with their FATCA due diligence and reporting obligations FATCA Questions The two FATCA questions that are required to be asked by the controlling participant of their client are: 1. For individuals: if they are a US citizen or US tax resident? [Yes or No]; and 2. For entities (i.e. non-individuals): if they are an entity other than a superannuation fund as defined in the Superannuation Industry (Supervision) Act 1993 (Cth)? [Yes or No] If No is answered to either questions 1 or 2, the controlling participant is required to input 1 into the FATCA Questions field of the appropriate mfund CHESS message. If Yes is answered to questions 1 or 2, the controlling participant is required to input either 2 or 3 into the FATCA Questions field of the appropriate mfund CHESS message which will alert the mfund Issuer that it may be a FATCA Reportable Account Allowable values The three allowable values for the FATCA question fields are: 1 = Not Applicable 2 = US Citizen or US Tax Resident 3 = Entity other than a Superannuation Fund VERSION US FOREIGN ACQUISITIONS

5 Rejected Reason Codes If a controlling participant provides a value other than 1, 2 or 3 in the FATCA Questions field, CHESS will reject the relevant message with an MT518 Rejected Transaction message utilising reason code: INVALID FATCA QUESTION VALUE, MUST BE EITHER 1, 2 or 3 mfund Issuers also have the ability to reject applicable CHESS messages utilising reason code: ISSUER DOES NOT ACCEPT THIS REQUEST - CONTACT FUND MANAGER Joint Holdings In the event of joint holders, or greater, a controlling participant is required to answer the questions in the context of the US Citizen or US Tax Resident where applicable. For example, where an application or redemption involves a joint holding where one holder is a US citizen or US tax resident the controlling participant is required to answer Yes to question 1. This section 31 should be read in conjunction with Section 28: mfund Settlement Service. VERSION US FOREIGN ACQUISITIONS

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