The Treasurer has announced that Australia and the United States on Mon 28.4.2014 signed an intergovernmental agreement (IGA) to reduce the burden on Australian financial institutions in complying with the United States’ Foreign Account Tax Compliance Act (FATCA). FATCA is a US information-reporting regime that will commence on 1 July 2014 and will affect a large part of the Australian financial services sector. A copy of the IGA is available on the Treasury website.

The conclusion of this treaty-status IGA will help Australian financial institutions comply with FATCA. It seeks to reduce the overall burden on Australian business, minimises costs by simplifying due diligence requirements and broadens arrangements between the ATO and the US Internal Revenue Service. Mr Hockey said the IGA will also improve existing tax information-sharing arrangements between Australia and the United States, for the purpose of preventing tax evasion.

The Government will introduce legislation to give effect to the IGA as soon as practicable. Public consultation will immediately commence on the draft legislation and its explanatory memorandum.

Source: Treasurer’s media release, 28 April 2014

[LTN 78, 28/4/14]

Australia-US FATCA agreement: draft legislation released

The Government has now released on the Treasury website draft legislation to give effect to the Agreement. With effect from 1 July 2014, these amendments will require Australian financial institutions to collect information about their customers who are likely to be taxpayers in the US and to provide that information to the Commissioner of Taxation who will, in turn provide that information to the IRS.

COMMENTS on the draft are due by 9 May 2014.

[LTN 79, 29/4/14]