FSC in Washington to lobby for Aussie Super exemption from FACTA

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The CEO of the Financial Services Council (FSC) has headed to Washington DC this week to argue that Australian super funds should be exempt from the reach of the Foreign Account Tax Compliance Act (FACTA) regime.

Draft FATCA regulations released in February sent shockwaves through the Australian financial services industry when it became apparent that superannuation funds would not be exempt from the US reporting and withholding requirements under FATCA.

According to the FSC, the FACTA regime in its current incarnation will require Australian financial institutions, including superannuation funds, to collect detailed information on their members to determine whether an individual member’s financial and residency arrangements make them a US taxpayer.

If so, the FATCA regime requires the fund to report this information to the IRS. However, if the account holder does not provide the necessary information the fund will be required to withhold a 30% tax on US-connected payments for that member.

However, the FSC has been arguing since it made submissions on the draft regulations in April that the Australian superannuation system should be exempt from the FACTA regulations. It also called for an intergovernmental agreement to facilitate the transfer of reported data from the ATO to the

“We are continuing to work closely with US Treasury officials on the development of the final regulations to ensure they are on board to effectively carve out our superannuation schemes,” said FSC CEO John Brogden from Washington.

“We are also meeting with key members of congress to discuss the issue and to ensure that those responsible for writing the law in the first place know our predicament.”

The FSC is concerned that when the FATCA regulations when they come into effect on 1 January 2013, Australian financial services industry will be in danger of being unable to comply with the FATCA.

“It is clear from our discussions with US Government officials that a strong public statement is required from the Australian government calling for the commencement of talks to enter into an intergovernmental agreement with the United States,” said Brogden.

“An intergovernmental agreement has the potential to significantly reduce the FATCA compliance burden that will be faced by the Australian financial services industry and will ensure Australian firms are not placed in the position of having to breach local laws in order to comply with US laws.”

  • Marvin Van Horn on 21/07/2012 6:21:28 AM

    I am somewhat surprised it is taking them so long to respond. Both New Zealand and Australia have been amazingly placid in opposition to the incredible extra territorial overreach which FATCA is. It is totally unreported in the Australian media, unlike the secret TPP (Trans Pacific Partnership) talks which does get some coverage. FATCA impacts could be as dramatic and expensive to the Australian economy as TPP. More so, for your financial Services industry.

    I read the ABA letter in response to the FATCA draft regulations and the comments at the May 15th Public hearings. Did you? Here is a link if you are interested. http://bit.ly/LoUaUz I would have thought that the ABA would have just remained in town and kept lobbying then, not waiting until the final regs are about to come out.

    Your PM has a love affair with Obama, so maybe she should be calling in the "Darwin U.S. Marine base" chit to force the IRS to back off Super funds. Send them packing, as you don't need them. They just bring trouble anyway.

    That said, even if you get these Super funds 'deemed compliant', you still have the issue of your own Human Rights and Constitutional laws that will probably have to be amended if you are to search out and turnover all account data, for "U.S. Persons" including Green Card holders and accidental American babies born in the US, to the International Revenue Service (IRS).

    Make no mistake about it, this search is for more than just U.S. Citizens resident in America.

    The Canadian Bankers Association (CBA)is struggling with these issues in Canada. http://bit.ly/NA79m9 Maybe that is because there are so many dual US / Canadian citizens living in Canada, and you don't have so many down under. However, if you add up all those that could be deemed 'U.S. persons' living in Australia, there may be many more than you realize. You could have similar issues.

    Understand, unlike Australia, America takes to itself the right to tax U.S. persons around the world no matter where they reside! That includes Australians who have dual U.S. Citizenship living in Brisbane, Sydney or Whoop Whoop outback Australia. If they are resident in Australia, America wants their taxes to help with the U.S. deficit. So taxing them in Australia is a direct transfer of financial wealth from Australia to the US Treasury. Have you considered that?

    What would America think if Australia tried to extract tax revenues out of Australians who are long time resident in America? You know the answer. They would not like it!! In fact, in the case of Eritrea, which has a 2% citizenship tax on Eritreans in America, they condemned it in a UN resolution! http://bit.ly/MN0CAc Go figure!

    I hope this helps you see that there is more to this FATCA story than just Super funds. I trust you will expand your coverage on the coming impacts to Australia Financial Industry. You are being asked to take on a big cost because America can not / will not construct a reasonable homeland tax regime and pay for its own profligate spending without reaching into the Australian treasury. Why do you have to pay for this? This is not "fair dinkum"!

    Thank you for your consideration and posting this comment.

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