Liberty and justice for all United States persons abroad

The Isaac Brock Society

FATCA and Australia – Part 1 of 2

January 2020:  This thread continues at FATCA and Australia – Part 2 of 2.

 

Let’s Fix the Australia/US Tax Treaty! The Australia/US tax treaty needs urgent revision to prevent double taxation. Get involved at www.FixTheTaxTreaty.org

Australian Americans Overseas 640 x 640

Posts on The Isaac Brock Society website concerning FATCA and Australia

For articles on other websites, see Media and Blog Articles

For general discussion of FATCA, see  FATCA Discussion Thread

For links to some websites and contact info (government, organisations, tax information), see Australia Information Links

***If clicking on a comment link brings you to the wrong page, click here  to get on the most recent page of comments. (alternatively, to reach the most recent comment page, go to  the url in the bar at the top of your browser and delete everything after October 2018

25: John Richardson and Karen Alpert Session in Brisbane Australia Oct 25, 2018

August 2018

01: U.S., U.K., Canada, Australia and Netherlands form international tax enforcement group

January 2018

08: Investing with One Hand Tied Behind Your Back – an Australian Perspective on United States Tax Rules for Non-Resident Citizens

July 2017

18: Australian Greens Senator @LarissaWaters resigns because of her CANADIAN place of birth-Too bad she was born in Canada

March 2017

13: What Lessons Can Be Learned from the Sad Stories of “IRS Compliant” Australians Shaun and Mary?

November 2016

30: “Solving U.S. Citizenship Problems” – Online January 9, 2017 (Australia)

August 2016

25: Let’s Fix the Australia/US Tax Treaty!

May 2016

15: Australia: Dealing with Superannuation

February 2016

19: #Australia funds America’s #FATCA #Ethnic Identification System

September 2012

27: Last Day to make a FATCA submission to the Australian Govt

07: Australia and FATCA

August 2012

28: Australian Government wants YOU to tell them what to do about FATCA

July 2012

20: Australian Financial Services Council lobbies Washington for FATCA exemption

 

1,187 thoughts on “FATCA and Australia – Part 1 of 2”

  2. NEWS IS SPREADING

    WOW DA Australia is on our side https://www.facebook.com/DemocratsAbroadAustralia

    AND has a great article from Bloomberg
    TITLED End the American Expat Tax
    http://www.bloombergview.com/articles/2015-04-24/end-the-american-expat-tax
    David Shipley at davidshipley@bloomberg.net (email him a thanks)

    – Does the U.S. really want to share this distinction with Eritrea?
    – principle is simply wrong. It’s also outdated
    – most pay more than they would at home
    – why demand taxes of people who don’t benefit from the proceeds
    – entangled in a complex web of taxation.
    – some expatriates have trouble opening accounts
    – Congress should change the law

    435 COMMENTS add more

    Going to resend to International and Independent Senate email addresses

    LET THE MEDIA KNOW “BUILD IT AND THEY SHALL COME”

  5. The submissions I’ve read so far (and I’ve just started) are from individuals – expats living abroad whose home is located in many different areas of the world including; Japan, Sweden, Switzerland, Australia, France, UK, Canada, Ethiopia, Taiwan, Hong Kong, Russia, NZ, etc. Some expats had lived in several countries – and some were destined to move again in future – due to their employment or their family connections (ex. spouse another nationality, children yet another), were duals by birth or by naturalization or by parentage, and they were of quite modest income.

    They span ages, employment status, occupations, income, genders, etc.

    The US has been actively tormenting and destroying the lives of those it claims as ‘taxable person-citizens’ living (and in several instances born) outside the US. It is actively forcing people to renounce as a remedy – IF they can afford to. The US is actively turning those it asserts are part of the US ‘community’ (insert the fancy word in Greek used by Kirsch) against it. A ‘community’ is not comprised of people who are involuntarily and forcibly compelled to be unwilling or unwitting members. Thus, the use of the rationale that USdeemedcitizens are taxable because they are members of the US ‘community’ and should pay for the privilege, is a twisted way of masking that the US is holding people hostage. Even those who acknowledge their US status and are somewhat willing or invested in remaining highlight the unacceptable and fruitless costs and stresses of Club USA membership.

  6. From an Anonymous submission to The Senate Finance Committee subsequently removed as they
    did not want their name on the internet.

    Double taxation prevents Americans from building a future

    April 13, 2015

    I am an American who recently moved to Australia to teach at a university here. I enjoy
    living in Australia and am looking forward to building a life and career. However I am becoming
    extremely disheartened by the seeming impossibility for overseas Americans to participate in
    the same middle-class retirement saving and wealth-building strategies which are available to
    all other ordinary Americans and Australians.

    Take retirement savings. Americans have tax-deferred 401(k) and IRA plans available, and
    Australians have tax-advantaged superannuation plans. But Americans in Australia have no
    access to IRS approved tax-deferred plans and the IRS does not recoginze Australian super-
    annuation concessions, so we can get taxed by the United States at the full marginal tax rate
    on our Australian government-mandated retirement accounts. And we can’t even buy local
    mutual funds with our post-tax dollars because of the onerous PFIC reporting rules and puni-
    tive taxation regime which completely destroys the value of such investments. It seems that
    the main American brokerages (e.g. Fidelity, Vanguard) won’t even open accounts for expats,
    and even if we can manage to get a US-based account, then we have to contend with overseas
    banking and foreign exchange fees. How ridiculous is it that as an Australian resident making
    an Australian salary, I have to send my cash through the US just to invest in an Australian
    mutual fund? And imagine if the Australian government follows suit by making it difficult for
    Australian taxpayers to invest overseas – then I would be unable to buy Financial products in
    either the US or Australia!

    Then there is the other great pillar of middle-class wealth, the family home. The US offers
    a mortgage interest deduction, which Australia does not offer, and Australia offers zero capital
    gains tax on primary home sales, which the US does not offer. The result is that an American
    living in Australia gets no mortgage interest-rate deduction on their Australian returns, and
    then has to pay the United States capital gains tax when they sell the home. A more absurd
    issue is the capital gains tax that the US charges for currency fluctuations. If I buy a home
    with my Australian salary and then later sell it a loss, I could still be liable for capital gains tax
    on the US-dollar value of the mortgage if the US dollar has depreciated against the Australian
    dollar in the interim. This is despite the fact that I have not made any money! This makes
    a home purchase a much poorer investment for an expat than for either an American or an
    Australian.

    While a double taxation treaty appears to avoid direct double taxation on a dollar-for-dollar
    basis, Americans living overseas always have to pay the higher of US and Australian rates for
    each dollar, which is assessed differently by the two countries depending on the type of income.
    Because of the different structures of the two tax codes, this means we get slammed by all the
    most burdensome aspects of both tax codes and have access to none of the advantages of either
    tax code. In particular, retirement savings and investing in our future is virtually impossible
    for ordinary middle-class expats, unlike for all other Americans. The current double taxation
    regime caused by the United States’ unique citizen-based taxation is fundamentally unjust.

  10. @JackDac,

    Looks like it excludes “Social Security payments and other public pensions” paid by Australia to US citizens from US taxation. From the technical explanation:

    “The reference to U.S. citizens is to ensure that a social security payment
    by Australia to a U.S. citizen resident in Australia shall be taxable only in Australia and not in
    the United States. The exemption of such income provided by this paragraph is excepted from
    the saving clause under paragraph 4 of Article 1 (Personal Scope).”

    http://www.irs.gov/file_source/pub/irs-trty/austtech.pdf

    So looks like it applies to Australian social security payments, though not to private pensions?
    (Don’t ask me how a superannuation account is treated, though I would not get my hopes up there based on this. But I am not a lawyer.)

  11. @JakDac: That’s just the regulations behind Form 8833. Yes, under Article 18 of the Oz-U.S. treaty, payments from pensions are taxable only where you live (and the saving clause doesn’t affect this treatment) so if you live in Australia you can file Form 8833 to prevent US taxation after you’ve retired. But that’s not the problem:

    1. If you’re taking a treaty-based return position, the IRS still demands you fill out all the normal paperwork as if you were going to pay the tax, you’re just exempted from paying the tax. This basically means people who cannot afford to get the paperwork filled out, or for whom the paperwork is more expensive than the tax owed, are deprived of the benefits of the treaty.
    2. The treaty does not give any benefit for your Super contributions; they are not a deduction on your U.S. taxes, and they probably count as a contribution to a foreign grantor trust i.e. Form 3520.
    3. Neither are the gains inside your Super exempt from U.S. taxation or reporting

  12. Would this be true ?

    Superannuation is mandatory and therefore falls under the oecd definition of social security to which the U.S. Is a signatory.

    There are specific exemptions and therefore reporting is silent.

  16. Let Niels know we appreciate his help

    Niels will meet with the US Treasury in June with an Aussie delegation, to push again for tax relief.

    Efforts to apply pressure in Congress and elsewhere are also helpful and appreciated.

    Niels Marquardt
    U.S. Ambassador (ret),
    Chief Executive Officer
    P: 02 8031 9000 E: nielsmarquardt@amcham.com.au W: http://www.amcham.com.au

  17. Just sent to these committee members via contact care to join ?

    New survey finds US expat voting could impact 2016 Presidential Election – See more at: http://globenewswire.com/news-release/2015/05/26/739115/10135930/en/New-survey-finds-US-expat-voting-could-impact-2016-Presidential-Election.html#sthash.sPw9yVYL.dpuf

    Committee Membership

    Majority Members (Republicans)
    Member Name DC Phone DC FAX Contact Form
    Orrin G. Hatch (R-UT) [Chairman] 202-224-5251 202-224-6331 http://www.hatch.senate.gov/public/index.cfm/email-or …
    Chuck Grassley (R-IA) 202-224-3744 202-224-6020 http://www.grassley.senate.gov/constituents/questions …
    Mike Crapo (R-ID) 202-224-6142 202-228-1375 http://www.crapo.senate.gov/contact/email.cfm
    Pat Roberts (R-KS) 202-224-4774 202-224-3514 http://www.roberts.senate.gov/public/index.cfm?p=Emai …
    Mike Enzi (R-WY) 202-224-3424 202-228-0359 http://www.enzi.senate.gov/public/index.cfm/e-mail-se …
    John Cornyn (R-TX) 202-224-2934 202-228-2856 http://www.cornyn.senate.gov/public/index.cfm?p=Conta …
    Richard Burr (R-NC) 202-224-3154 202-228-2981 http://www.burr.senate.gov/public/index.cfm?FuseActio …
    Rob Portman (R-OH) 202-224-3353 202-224-9075 https://www.portman.senate.gov/public/index.cfm/conta …
    Pat Toomey (R-PA) 202-224-4254 202-228-0284 http://www.toomey.senate.gov/?p=contact
    Dan Coats (R-IN) 202-224-5623 202-228-1820 http://www.coats.senate.gov/contact/
    Dean Heller (R-NV) 202-224-6244 202-228-6753 http://www.heller.senate.gov/public/index.cfm/contact …
    Tim Scott (R-SC) 202-224-6121 202-228-5143 http://www.scott.senate.gov/contact/email-me

    Minority Members (Democrats)
    Member Name DC Phone DC FAX Contact Form
    Ron Wyden (D-OR) [Ranking Member] 202-224-5244 202-228-2717 http://www.wyden.senate.gov/contact/
    Charles E. (Chuck) Schumer (D-NY) 202-224-6542 202-228-3027 http://www.schumer.senate.gov/Contact/contact_chuck.cfm
    Gary Peters (D-MI) 202-224-6221 Not Available None Currently Available
    Maria Cantwell (D-WA) 202-224-3441 202-228-0514 http://www.cantwell.senate.gov/public/index.cfm/email …
    Bill Nelson (D-FL) 202-224-5274 202-228-2183 http://www.billnelson.senate.gov/contact-bill
    Robert Menendez (D-NJ) 202-224-4744 202-228-2197 http://www.menendez.senate.gov/contact/?i=OTH
    Tom Carper (D-DE) 202-224-2441 202-228-2190 http://www.carper.senate.gov/public/index.cfm/email-s …
    Benjamin L. Cardin (D-MD) 202-224-4524 202-224-1651 http://www.cardin.senate.gov/contact/
    Sherrod Brown (D-OH) 202-224-2315 202-228-6321 http://www.brown.senate.gov/contact
    Robert P. Casey, Jr. (D-PA) 202-224-6324 202-228-0604 http://www.casey.senate.gov/contact
    Mark R. Warner (D-VA) 202-224-2023 202-224-6295 http://www.warner.senate.gov/public//index.cfm?p=Cont …

  18. Full contact links

    Committee Membership

    Majority Members (Republicans)

    http://www.hatch.senate.gov/public/index.cfm/email-orrin
    http://www.grassley.senate.gov/constituents/questions-and-comments
    http://www.crapo.senate.gov/contact/email.cfm
    http://www.roberts.senate.gov/public/index.cfm?p=EmailPat
    http://www.enzi.senate.gov/public/index.cfm/e-mail-senator-enzi
    http://www.cornyn.senate.gov/public/index.cfm?p=ContactForm
    http://www.burr.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm
    https://www.portman.senate.gov/public/index.cfm/contact-form
    http://www.toomey.senate.gov/?p=contact
    http://www.coats.senate.gov/contact/
    http://www.heller.senate.gov/public/index.cfm/contact-form
    http://www.scott.senate.gov/contact/email-me

    Minority Members (Democrats)

    http://www.wyden.senate.gov/contact/
    http://www.schumer.senate.gov/Contact/contact_chuck.cfm
    http://www.cantwell.senate.gov/public/index.cfm/email-maria
    http://www.billnelson.senate.gov/contact-bill
    http://www.menendez.senate.gov/contact/?i=OTH
    http://www.carper.senate.gov/public/index.cfm/email-senator-carper
    http://www.cardin.senate.gov/contact/
    http://www.brown.senate.gov/contact
    http://www.casey.senate.gov/contact
    http://www.warner.senate.gov/public//index.cfm?p=ContactPage

  22. Reference: Professor Allison Christians, international tax law expert, on the existence of tax treaty gaps were double taxation flows through to Australian residents who are US persons
    (In most respects the Canadian tax treaty is similar to the Australian tax treaty):
    Volume 1, page 93: Allison Christians on Tax Treaty Gaps.
    VOLUME 1

    See CBC Toronto Canada news video featuring Professor Allison Christians speaking about FATCA and US citizenship based taxation injustices: https://www.youtube.com/watch?v=yyQ6Rs_SEHM

    Reference: Professor Robert Wood, on IRS tax collection means and potential intention of what they will do with the blanket financial account information on Australians who are US persons that the ATO, under the FATCA IGA, will send to the US IRS.
    Volume 2, page 262: Robert Wood, sec 4 IRS Collection Options.
    VOLUME 2

  23. Subject: Letter to Kim Beazley now part of U.S. Congressional Record
    To: The Honourable Kim Beazley, Australian Ambassador to the United States
    Cc: The Honourable Julie Bishop, Australian Foreign Minister
    Cc: The Honourable Joe Hockey, Australian Treasurer

    On 16.04.15 I e-mailed the attached letter to you, with title:

    Imperative to Revise The Australia-USA Tax Treaty; To Prevent Double Taxation of Australian Residents And To Incorporate US Respect For Australian Sovereignty.
    http://isaacbrocksociety.ca/fatca-and-australia/comment-page-1/#comment-5974215

    The letter was also addressed to the US Senate Finance Committee Bi-Partisan Work group on Tax Reform, and is now publicly available on the US Senate Finance Committee website, under international submissions, under Joe Citizen, along with letters from 15 other Australians and letters from the American Chamber of Commerce of Australia(AmCham), and the Australian Superannuation Association.
    http://www.finance.senate.gov/legislation/details/?id=34184F67-5056-A032-52C8-0A4960018D92

    According to AmCham 200,000 Americans (many of whom are dual nationals) reside temporarily or permanently in Australia, not including Australian residents with US Green Cards (who are also required to file US tax returns, pay US taxes, and report their Australian financial accounts to The US Financial Crimes Enforcement Network). There are perhaps 500,000 Australians in the US or half of the Australians abroad, with most having or likely to have in future superannuation or other Australian assets subject to US foreign tax and compliance laws.

    As suggested in my first letter, US tax and compliance law and tax treaty gaps allowed by Australian law under The Australian-US Tax Treaty, have created a 2nd class of Australian resident substantially disadvantaged in building Australian financial security with certainty. This is not right.

    Mr Beazley you are in an appropriate position in the Australian government to speak out and take action in defence of Australians resident in Australia and in the US, against unjust and overbearing US Citizenship Based Tax and compliance law, and Australian law that makes the injustices worse.

    The ASK:

    On simplification, fairness, and respect for Australian sovereignty grounds Australia requests agreement and tax treaty change with the US with EXEMPTION from US tax for Australian residents: Superannuation, personal home, estate, Australian tax free threshold, any additional US tax above Australian tax rates even 0% Australian rates and even for taxes Australia does not have, Obamacare NIIT Investment tax, and up to $5 million asset exemption and all asset appreciation while living in Australia for Australian assets – and for Australian resident US persons to be taxed as “non-resident aliens” under US tax and compliance law.

    Picture this: Two households in the same Australian community, on the same street, next to each other with identical finances. One household has a head of household as an Australian who calls Australia home but who is also a US person, with Australian only spouse and Australian kids. The next household has only Australian persons.

    The household with Australian only persons may enjoy Australian government policy regarding superannuation, tax free gains on the principal residence, full franking credits on Australian dividends, no estate taxation, and other benefits of Australian government tax breaks.

    The Australian household with US person head of household gets extra US tax on top and gets subjected to a US tax and compliance nightmare, under pretense that these Australian residents live in the US, upending Australian government tax incentives and placing that household at a substantial disadvantage in building household financial security compared to the household with Australian only family members; because Australian households with US persons are extended incomplete protections under the Australian-US Tax treaty.

    Worse, the ATO provides misleading information on their website along the lines of no worries mate, tax treaties prevent double taxation, without footnote for the case of US persons and the Australian-US Tax Treaty. While at the same time the ATO is preparing to send local Australian banking account information of all US persons in Australia to the US IRS under the Australian FATCA IGA (FATCA is supposed to be reciprocal, yet US banks are not asking all their account holders if they are Australian persons, for the US to truly be able to send to Australia reciprocal information, as the gathering of this information in the US is illegal under US law. Australia might demand a hold on sending information to the US under the agreement until the US is truly ready to provide reciprocal information).

    I bring to your attention the 15 letters from Australian residents submitted to the US Senate Finance Committee and the reasons why these Australians wrote these letters; 13 of the individuals complain about the unfairness of US taxation of Superannuation, one person is on disability pension, and the other is from a self funded retiree; 12 of the individuals request remedy for the overbearing tax and compliance complexity imposed on Australians by unjust US tax laws.

    The letter from Amcham requests on fairness grounds an Australia-US Tax Treaty change to exempt superannuation from US taxation. The letter from the Australian Superannuation Funds Association also asks for exemption of superannuation from US taxation.

    This is not right for the Australian government to allow US taxation of superannuation accounts of Australian residents. It represents neglectful abrogation of responsibilities of the Australian government to protect one’s citizens and residents on Australian soil – and not let an outside sovereign upend Australian domestic policies, in this case the US.

    And how much in the way of US government services do these Australian residents get in return for US taxation and excessive compliance forms, with severe penalties if not done to the satisfaction of the US IRS? Roads, schools, hospitals, unemployment support, disability support, aged pension etc. in Australia funded from the US? The answer is $0 in US government services, other than what is paid for on a fee basis such as for a passport.

    It is pure double taxation without representation – and in contradiction of the founding principles of America, yet a peculiarity of the US system where one must live in a US Congressional district for Congress to care (with Democrats favouring policies they think will play well with their constituents based on declaring all 7+ million US persons living overseas as US tax cheats, with inclination to ratchet up US tax and compliance burden on them, and with misguided perception that US persons living overseas get a tax loophole when in reality they get a tax and compliance sinkhole).

    And thus far the situation represents a peculiarity of the Australian system where the Australian government ignores the situation for Australian resident US persons and their Australian families as the Australian government treats it as a matter for the US, as if Australia were part of and subservient to America – as if it were the 51st state which it is not. I understand that Australia is a sovereign country and expect it to act as one in regards to these issues.

    The Privacy legislation for Australia was specifically amended to make way for US FATCA law with ‘exception in case of international treaty.’ So for FATCA and Australians who are US persons, Australian privacy policy has been outsourced to the US. A key issue is that the US FATCA legislation was never debated by Congress or voted on separately but passed as tacked on to an unrelated bill. And how can Australia rightfully outsource Australian privacy policy to another country and have this apply to only a subset of Australians?

    The Australian discrimination policy might also be tested by the FATCA regulations.
    In Canada a group called The Alliance for The Defence of Canadian Sovereignty (ADCS) has filed suit against the Canadian government over the Canadian FATCA IGA claiming that it violates The Canadian Charter of Rights prohibiting discrimination based on national origin. Perhaps there needs to be a lawsuit in Australia as well against the Australian FATCA IGA on discrimination grounds. In America, http://www.FATCALegalAction says that FATCA is unconstitutional, and repeal of FATCA is part the Republican Party Platform.

    The US is subject of a human rights complaint submitted to the United Nations concerning US policies of citizenship based taxation, FBAR, and FATCA in regards to US persons living overseas. While it may be said that the US is claimed to commit human rights abuses against its own citizens living abroad via its taxation and compliance laws, it may also be claimed that the Australian Government is complicit in such abuse, by not opposing it specifically in the Australian-US Tax Treaty. You heard this right, the issue is claimed to represent a US human rights abuse including of Australian residents by the US of which the Australian Government may be claimed to be complicit (see The Isaac Brock Society for more information).

    In my first letter I stated that Australia must request revision of the Australian-US Tax Treaty based on fairness, simplicity, and respect for Australian sovereignty. I focused on US taxation of Superannuation representing US interference into the internal affairs of Australia. There are more dimensions to the injustices, yet I felt the denial of Superannuation benefits for Australian residents, by the US Tax law and the Australian-US tax treaty by not opposing it, the most egregious and perhaps understandable injustice by Australians generally.

    I reference Professor Allison Christians, international tax law expert, on the existence of tax treaty gaps were double taxation flows through (In most respects the Canadian tax treaty is similar to the Australian tax treaty): Volume 1, page 93: Allison Christians on Tax Treaty Gaps. The ATO and the Australian government should take note:
    http://isaacbrocksociety.ca/fatca-and-australia/comment-page-2/#comment-6155278

    See CBC Toronto Canada news video featuring Professor Allison Christians speaking about FATCA and US citizenship based taxation injustices: https://www.youtube.com/watch?v=yyQ6Rs_SEHM

    See videos of Canadians pressured to renounce US citizenship by a Canadian-US Tax treaty that provides incomplete protection against US tax and compliance law. These people may easily be Australians. I believe for no other citizenship does Australia pressure individuals to give up their nonAustralian citizenship, through incomplete tax treaty protections. It then might be claimed that Australian law thus discriminates against Australian residents with US person status and their Australian families.
    http://vimeopro.com/citizenshiptaxation/video-testimonials

    I also reference Professor Robert Wood, on IRS tax collection means and potential intention of what they will do with the blanket financial account information on Australians who are US persons that the ATO will send to the US IRS under the FATCA IGA

    Volume 2, page 262: Robert Wood, sec 4 IRS Collection Options. The ATO and the Australian government should take note:
    http://isaacbrocksociety.ca/fatca-and-australia/comment-page-2/#comment-6155278

    I bring to your attention the story of Canadian Patricia Moon as reported in The Wall Street Journal. (There are many Patricia Moons in Australia.) She lived for decades in Canada with her Canadian only bread winner husband. She made no more than $11,000 in any of the previous five years and held no more than $102,000 in joint accounts with her husband mostly from money made by him. She paid all her Canadian taxes. She owed $0 in US taxes. She received $0 in US government services.

    With news of FATCA she discovered that she was supposed to file US tax returns, as she was a Canadian citizen US person. Previous to this she did not know that she should have filed US taxes and report her accounts to the US as no one told her, it did not make sense to her, she thought that she did not make enough money, and she had no money in the US.

    Yet she calculated that she could be up for $US455,000 in US penalties for not reporting her joint financial accounts – actual figure as reported in the Wall Street Journal. She paid all Canadian taxes, owed $0 in US taxes, yet by US law she was liable for family life savings forfeiture of $US455,000 in fines, from perhaps one of the most feared collection entities on the planet: The US IRS.

    How many Australian Patricia Moons and others will the ATO/Australian government hand over the local financial account information to the US IRS? The Australian government will bring tens of thousands of Australians sleepless nights of financial terror. Apologies Mr. Ambassador if I suggest that in my opinion in this regard Australia is not a humane country.

    Another point is that because of the complexity of it all (some say the US tax system is the most complex in the world, then placed on top of the Australian tax system with different tax breaks, currency, financial year etc.) it may easily cost thousands of dollars annually to file a US return for even a simple financial situation even if no US tax is owed. People engage specialised tax assistance out of fear of tax cheat penalties as outlined in the Patricia Moon story. Others can not afford it. It all drains from building wealth for toil in Australia and represents a drain to the Australian economy.

    This issue is nothing new. There have been letters to Australian government officials in the past.

    Mr Beazley, It is part of your duty to act on this issue. You might review my first letter, now publicly part of the US Congressional record, review this letter, then act. Or will grass continue to grow under the feet of Australian public servants on the issue? Will Australian public servants continue to abet the erosion of Australian sovereignty to the US government, continuing to allow the US to prevent Australian residents from saving for their retirement, and continuing to allow the US to disadvantage those Australians who call Australia home, and those officially recognised by the government of Australia as being Australians, from building a future compared to Australians who are not US persons?

    In my view, the Australian government has a duty to provide crystal certainty to Australian residents who are US persons and their Australian families, so that they may plan their finances just like any other Australian families; and this may be done through fully enhancing tax treaty “protection.” It may be said that by enhancing the tax treaty that Australia will make taxation on these Australians more fair and just, as it may be said that US taxation without representation and without services in return is neither fair nor just.

    I hope to hear from you or of some action you have taken in this regard. Getting the ATO to address their communications gap and change their misleading website information with footnote in regards to tax treaty gaps in the Australian-US tax treaty would be such signal. Concrete steps to pursue timely revision of the Australian-US tax treaty incorporating full respect for Australian sovereignty would be a very clear signal.

    Don’t count on me ‘leaving this with you.’ I am getting the idea that my Australian taxes are not getting good value with your office. Then question may be raised within the Australian government as to why doesn’t the Australian Ambassador to the US speak out on this issue. ?

    Julie Bishop and Joe Hockey, it is your duty to speak out and act. Or is it Australian government policy to outsource Australian sovereignty to the US for these 200,000+ Australian residents and their Australian families? Please provide reference to underpinning of such policy in the Australian Constitution. Before you declare another country interfering into the internal affairs of another country (e.g. Russia in Ukraine), in my view, you should take steps to ameliorate US taxation and compliance interference into the internal affairs of Australia.

    I end up with one of the Australian submissions to the US Senate Finance Committee, presented anonymously. It would read differently if addressed directly to the Australian government. Nearly all of the submissions are from US tax compliant individuals. One may presume that those Australian residents who may pay all their taxes to Australia but who may not be compliant with US tax law may be too terrified to submit comment to the US Senate, out of fear of drawing attention to themselves by the US IRS. Or, because the US government has done a poor job of communicating its compliance and tax requirements to US persons living abroad and the ATO position is no worries mate, many Australian US persons just don’t know about US tax requirements and Australian-US Tax Treaty gaps, and these individuals and their Australian families are about to be delivered a surprise Australian FATCA IGA financial nightmare, courtesy of the Australian government.

    Double taxation prevents Americans from building a future

    April 13, 2015

    I am an American who recently moved to Australia to #### here. I enjoy living in Australia and am looking forward to building a life and career. However I am becoming extremely disheartened by the seeming impossibility for overseas Americans to participate in the same middle-class retirement saving and wealth-building strategies which are available to all other ordinary Americans and Australians.

    Take retirement savings. Americans have tax-deferred 401(k) and IRA plans available, and Australians have tax-advantaged superannuation plans. But Americans in Australia have no access to IRS approved tax-deferred plans and the IRS does not recoginze Australian superannuation concessions, so we can get taxed by the United States at the full marginal tax rate on our Australian government-mandated retirement accounts.

    And we can’t even buy local mutual funds with our post-tax dollars because of the onerous PFIC reporting rules and punitive taxation regime which completely destroys the value of such investments. It seems that the main American brokerages (e.g. Fidelity, Vanguard) won’t even open accounts for expats, and even if we can manage to get a US-based account, then we have to contend with overseas banking and foreign exchange fees. How ridiculous is it that as an Australian resident making an Australian salary, I have to send my cash through the US just to invest in an Australian mutual fund? [US persons resident overseas are barred by US law from buying US mutual funds even containing Australian shares]. And imagine if the Australian government follows suit by making it difficult for Australian taxpayers to invest overseas – then I would be unable to buy financial products in either the US or Australia!

    Then there is the other great pillar of middle-class wealth, the family home. The US offers a mortgage interest deduction, which Australia does not offer, and Australia offers zero capital gains tax on primary home sales, which the US does not offer. The result is that an American living in Australia gets no mortgage interest-rate deduction on their Australian returns, and then has to pay the United States capital gains tax when they sell the home.

    A more absurd issue is the capital gains tax that the US charges for currency fluctuations. If I buy a home with my Australian salary and then later sell it a loss, I could still be liable for capital gains tax on the US-dollar value of the mortgage [ ! ] if the US dollar has depreciated against the Australian dollar in the interim. This is despite the fact that I have not made any money! This makes a home purchase a much poorer investment for an expat than for either an American or an Australian.

    While a double taxation treaty appears to avoid direct double taxation on a dollar-for-dollar basis, Americans living overseas always have to pay the higher of US and Australian rates for each dollar, which is assessed differently by the two countries depending on the type of income. Because of the different structures of the two tax codes, this means we get slammed by all the most burdensome aspects of both tax codes and have access to none of the advantages of either tax code. In particular, retirement savings and investing in our future is virtually impossible for ordinary middle-class expats, unlike for all other Australians [in Australia] and Americans [in the US].

    The current double taxation regime caused by the United States’ unique citizen-based taxation is fundamentally unjust.

    Anonymous

    _ _ _ _ _ _ _ _ _ _ _ _

    The ask to the US is for a change to Residence Based Taxation, just like all other countries in the OECD. An ask to Australia is not to outsource Australian sovereignty to the US, but to remedy incomplete protections for Australians under the Australian-US Tax Treaty, including protection against new US taxes and compliance that the US has been historically inclined to enact on US persons overseas and that sail through without tax treaty “protection.”

    Mr. Beazley, my last letter to you ended up part of the US Congressional Record. This one is addressed within Australia. Let’s see where this one ends up.

    JC DoubleTaxed
    @JCDoubleTaxed

  25. @ JC
    That’s a really impressive letter to your ambassador, FM and treasurer. I truly hope you get some positive responses and results. I noticed you let them know they can’t just slough this off because you will keep up the pressure. Good on ya!

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