The Financial Services Council (FSC) has expressed concerned that the Australian financial services industry will be unable to comply with the proposed US Foreign Account Tax Compliance Act (FATCA) regulations when they come into effect on 1 January 2013. Mr John Brodgen said that the FSC has briefed US Treasury and will give evidence to an Internal Revenue Service (IRS) hearing in Washington DC seeking relief for Australian retirement funds from the FATCA rules. US Treasury officials have been very open and receptive on the impact of the FATCA on the Australian financial services industry, Mr Brogden said.
The FATCA provisions will require Australian foreign financial institutions (FFIs), including superannuation funds, to collect detailed information on their members in order to determine whether an individual member’s financial and residency arrangements make them a US taxpayer. If a member is a US taxpayer, 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. Final regulations are not expected to be released until September 2012.
Source: FSC media release, 15 May 2012
[LTN 92, 15/5]