Draft Taxation Determination

TD 93/D213

Income tax: Offshore Banking Units (OBU) - is an OBU required to maintain separate bank accounts and separate nostro accounts?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 95/3.

FOI status:

draft only - for comment

1. Yes. As pointed out in the Explanatory Memorandum to Taxation Laws Amendment Act (No. 4) 1992,an OBU is required to maintain a separate pool of funds and to keep separate identifiable records in respect of the offshore banking activities. These records have to be maintained as though the OBU were a bank conducting banking activities with another person. Accordingly funds are required to move through separate bank accounts including nostro/vostro accounts.

2. The legislation envisages a complete separation of offshore and domestic banking if the revenue is to be protected. The aggregation of nostro accounts with reliance upon separate accounting records would not provide a satisfactory assurance against the blending of non-OBU and OBU monies. The use of a single nostro account to hold a particular foreign currency would create a serious risk that transactions with Australian residents might be included in the offshore banking part of the business.

Commissioner of Taxation
19/8/93

References

ATO references:
NO 93/3707-5

Subject References:
Offshore banking
record keeping
nostro accounts

Legislative References:
ITAA 262A