FATCA and Australia – Part 1 of 2

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

1. Companies vs Individuals http://www.forbes.com/sites/robertwood/2016/02/22/dear-irs-like-apple-and-google-im-offshore-for-taxes/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20160222

2. This was pointed out to me thanks. The “Hilary Clinton” quote commented on re RBT was actually the words of Rocky de la Fuente, the third and completely unpublicized Democratic candidate who hasn’t a hope of helping us

3. Retweets Requested:

   https://twitter.com/JCDoubleTaxed/status/702220631270514689

4. Democrats Abroad recordings of town hall Albright / Sanders

   As per Julia of DA

   The recordings are now up on the site (under news). The video wasn’t good enough to use so we went with just audio and an image but I think the messages are still very clear.

   http://www.democratsabroad.org/the_campaigns_speak_to_democrats_abroad

5. First question asked at end of Bernie’s speech was re FATCA and RBT
   Listen made me feel good

6. Sanders is the absolute first Democrat I’ve heard come out in support of RBT. Does anyone know of any others?

7. Let us broadcast that fact and ask others not why but why not

8. @ Bubblebustin
   Rocky de la Fuente.
   http://www.democraticunderground.com/1009471

9. For those still US persons: vote Sanders or you are at your peril, apparently.

10. Thanks for reminding me, EmBee.

    Rocky doesn’t mince words about it:

    “Citizenship-based taxation places an undue burden on U.S. citizens living abroad. In effect, it imposes dual-tax exposure upon individuals who, other than on a limited basis, do not represent an economic burden on the programs and services that our federal government provides. Residence-based taxation reflects one’s rationale contribution to the programs and services that affect the lives of those who reside in any given country and city. As Democrats Abroad so cleverly implies, unless the United States aspires to become the next Eritrea, it is time to join the rest of the world in recognizing the nexus between taxation and the programs and services such monies are meant to fund.”

11. @JC — Saw your post on Facebook that linked to this thread. Good luck gaining the attention of Australian politicians.

    Did you see the post on the American Expatriates Facebook Group where someone has re-computed the number of Americans by country? ( https://www.facebook.com/groups/AmericanExpatriates/permalink/562355560597187/ ) This estimate shows a significantly larger number than the 77,000+ that has been quoted for years — he estimates roughly 104,000 American-born Australian residents and 81,000 American citizens by descent resident in Australia, for a total of 185,000 American citizens in Australia (not to mention the green-card holders). While this hasn’t been adjusted for relinquishments/renunciations, I doubt those are material at this time. I guess my point is, even if you think 185,000 is high, 77,000 is too low; many more are affected. And the larger the affected population, the more likely the politicians are to take notice.

    One question about the letter to Nick Xenophon that you have posted on this thread — I’m assuming that you mailed this to him with your real name on it. If so, did you get a response? We (my husband and I) have had some luck in getting responses from our local MP. In 2014 we met with him and he asked some questions on our behalf of the then Assistant Treasurer. About a month ago we sent him a follow-up letter and have scheduled a meeting with him in late March. My personal feeling is that we are more likely to be successful by having as many affected Australian citizens as possible write to their local MPs as a demonstration that this issue affects a wide variety of Australian citizens and not just a few “Americans who happen to live in Australia”.

12. A letter we all copy and paste to our local rep with a site for all rep emails ?

13. @Karen

    If you like Heitor’s postings on Facebook, you’ll like postings by “ShadowRaider”here on Brock 😉

    Good for you getting in your MP’s face. I was very lucky that I managed to not get ignored by my MP here in Canada, both past and present. Unfortunately it hasn’t culminated in any tangeable results – yet. Now that I’ve offered myself as a witness in the continuing FATCA IGA lawsuit here in Canada, I’m faced with a dilemma – is my MP friend or foe?

14. Witness or not doesn’t matter. Any MP in the Liberal government is now foe as JT has obviously decided to ‘Fuck All the Canadian Americans.’

15. No argument there, WhiteKat. Perhaps the dilemma is more on her part – where it should create the greater amount of discomfort as my so-called “representative”, lol.

16. BB, I doubt much dilemma or loss of sleep on her part. She wants to keep her job, and it does not take much self delusion to retain the mindset that those ‘Americans living in Canada’ are a fortunate lot anyway and the government needs to protect the rest of the non-American Canadians. She probably wonders why you as a compliant US taxpayer and avowed American don’t just cough up the $2,350 and renounce if FATCA is such an abomination to you.

17. Then she would agree with Joseph Stalin that where there is “no person”, then there is “no problem”.

18. The funny part is, my strength as witness is only increased by the fact that I am US tax compliant and remain a US citizen.

19. Yes, it is much better to be a witness who can easily renounce (relatively speaking) if the going gets tough(er), rather than to be a witness who is non-compliant with US tax and reporting laws.

20. My ability to renounce has nothing to do with my capacity as witness.

    I could not even be considered as a witness in this capacity if I had a CLN, due to something called “harm”.

    “No person [citizenship], no problem”.

21. BB, I meant it is better for you personally as a witness to be compliant. If things get nasty, you can always say, ‘F-it’ and renounce cleanly. The non-compliant US persons have more reason to fear being a witness.

22. But having said that, I personally think that as long as one has no US assets and no joint accounts with untainted Canadians, then one has little to fear as a witness.

23. @JakDak
    As you’re probably aware, the Australian Parliament already has a list of MP/Senator contact details (http://www.aph.gov.au/senators_and_members/guidelines_for_contacting_senators_and_members). Is that what you meant by “a site for all rep emails”? Or were you thinking of a concerted campaign to inform our elected representatives with a site for people to let us know who had been contacted? It would be relatively easy to use Google Forms for this.

    As for “copy and paste”, my opinion is that a letter writing campaign will have more impact if the letters all seem personal and genuine. JC has put some good points in his letter to Nick Xenophon earlier in this thread. I can dig out my letter and post some of the points we made as well.

    @BB and WK — my approach has been to focus on how FATCA and US exceptionalism affects all Australians rather than how we have been personally affected. Once the issue is framed as how FATCA affects USCs in Australia, their immediate response is to say we must look to the US government for remedy, rather than the Australian government. This also frames us as “Americans in Australia” (even though we are Australian citizens), rather than as Australians being chased by a foreign government.

    We are in the process of renouncing — and I think that once we are no longer USCs that will strengthen our standing to argue that the Australian government should be doing something to protect Australian citizens and residents from the international bully that is the US government.

24. @Karen. Great input. For tomorrow that is the letter. I was thinking of revising/updating at some point. The more the numbers the better the case. I have not mailed Xenophon under my real name. I don’t live in SA.

    I will also try to corner ATO on misleading website info on tax treaties saying that they “prevent double taxation” when in fact they guarantee double taxation.

25. Here’s the letter we sent to our MP a couple of weeks ago. Some of the numbers are already out of date. I’ve deleted personal identifying information.

    Dear (MP name here),

    Thank you for your assistance in the past … (removed personally identifiable introductory paragraph).

    We would like to speak with you or a staff member at your office to share our concerns. We will put some key points into writing in this letter to get the discussion started.

    You may have noticed news articles recently reporting that the number of people renouncing their US citizenship in 2015 again hit an all-time record (story on 9news.com). Additionally, in September 2015 the Australian Tax Office sent data on over 30,000 Australian bank accounts with an average balance of more than A$160,000 to the IRS (article in The Australian). Given this backdrop, we believe this is a good time to make sure Parliament is aware of the effects this US tax grab is having on Australian citizens and residents. The main issues we would like to emphasise are:

    1. This affects all Australians, not just those defined by the US as ‘US Persons’. The original Australian FATCA implementation legislation estimated the cost of implementation at A$482.68million, or A$6,270 for each of the approximately 77,000 US citizens resident in Australia. Banks will pass these costs on to all customers in the form of higher account fees and/or lower deposit interest. And, to the extent that the Australian government allows the US to drain capital from the Australian economy through taxation of superannuation accounts and punitive taxation of managed fund investments in Australia, the ‘US Person’ victims of this tax grab will be more likely to need to rely on the social safety net funded by the Australian taxpayer. All persons opening bank accounts in Australia are now asked whether they are a US citizen, whether they have any connection to the US or not. Is this creating a new ‘tainted’ class of people?

    2. The FATCA data transfer represents a violation of privacy and a risk of identity theft. Just last week the IRS reported that hackers stole online PINs of 100,000 taxpayers; this news report is hardly unique. And, once the IRS has the data, the US FATCA legislation does NOT restrict the data to use only for tax compliance purposes. The data can be shared with other branches of the US government without a warrant or notification to the taxpayer involved.

    3. Now that the US has bullied most of the rest of the world into signing on to FATCA IGAs, the US refuses to sign on to the Common Reporting Standard (CRS) that the rest of the world has developed in response to FATCA. While the CRS has its own problems, it has the benefit of requiring reporting only on non-resident accounts. Since the US has not agreed to CRS, it has now become one of the top tax havens in the world, as reported by Bloomberg, Forbes (twice), and Business Insider.

    4. The US system of citizenship based taxation is an anomaly in the developed world. While we understand from your earlier enquiries on our behalf that the Treasury is aware of the problem with double taxation of superannuation, it is disappointing that, almost 24 years after the superannuation system was enacted, this deficiency in the treaty has not been fixed. Superannuation is not the only source of double taxation for Australian citizens and residents claimed by the US. The US imposes tax on capital gains from the sale of a personal residence, which is not taxed in Australia. In addition, the US imposes a very punitive Passive Foreign Investment Company (PFIC) regime on investments in Australian managed funds, REITs and ETFs (and other managed investment products). If an investment is classified as a PFIC, the tax on any gain can easily be 100% of the gain or more. Some US tax preparers are classifying superannuation funds as Foreign Trusts filled with PFICs for US tax reporting – a treatment that will result in a confiscatory level of US tax. Outside of superannuation, any Australian who is claimed as a US taxpayer will be unable to invest in Australian managed investment products. This is clearly an extraterritorial imposition of US law, which acts contrary to the interests of Australian residents and citizens.

    5. Many of the Australian citizens claimed by the US as US taxpayers may not even be aware that they should be filing with the IRS. The US grants citizenship to anyone born on US soil – including the children of Australians in the US temporarily for work or study. Many of these children will have moved back to Australia at a very young age and will have few, if any, connections to the US. The US also claims the right to tax some Australian-born children of US citizens (the rules are complex).

    6. Renouncing US citizenship to become free of US‘taint’ is expensive. The US Department of State charges US$2350 for renunciation or relinquishment of US citizenship. But this is only the beginning. In order to cleanly exit the US tax system, a person must be fully compliant with US taxes for 5 years, as well as meeting tests relating to income and net worth. Failure to meet all three of these requirements results in the imposition of an Exit Tax computed on the unrealised gain as if all assets were sold on the day prior to renunciation – including assets earned and accumulated while resident in Australia. While an exemption is allowed for the first US$650,000 of gain on property, there is no exemption on the current value of the renunciant’s superannuation balance. The full value of superannuation, less any contributions and/or income previously taxed by the US, will be taxed as if received in cash. For long-term Australian residents, the Exit Tax will make renunciation impossible. Homeowners in Melbourne and Sydney nearing retirement with average superannuation balances may have trouble getting below the net worth limit. The financial toll of becoming US tax compliant and renouncing citizenship will mean that Australian citizens with a US taint will be more likely to need to rely on the Age Pension even after saving diligently in the superannuation system. This cost will be borne by all Australian taxpayers.

    Where to go from here:

    Our main objective is to ensure that members of Parliament and the Senate are aware of this issue and the costs of US exceptionalism to both the individuals affected and the country as a whole. We would welcome your advice on how best to achieve this goal.

    As you are probably aware, no country feels the impact of FATCA and US tax law more than Canada, where there are at least 1 million US expatriates. There is currently a crowd-funded lawsuit in Canada that claims that the FATCA IGA signed by the Canadian government violates the Charter Rights of Canadian citizens. Additionally, a member of the opposition in Canada recently tabled a series of questions in the Canadian Parliament about the data sent by the Canadian Revenue Authority to the IRS under FATCA. While many of those questions are specific to Canada, questions about data security, privacy, reciprocity, and implementation costs should be asked in all countries that have agreed to implement FATCA. We would welcome discussing whether it is possible to ask the
    Australian government similar questions regarding the data submitted by the ATO under FATCA.

    Our situation:

    (paragraph outlining our personal situation removed)

    We are not ‘US citizens’ whinging about US policies. We are Australian citizens, concerned about US intrusion into Australian affairs, and the one-way nature of US tax imperialism. We have learned a lot about
    this issue over these two years. We would like to share that knowledge with you. We hope that by educating Australian lawmakers about the injustices of this US grab for tax revenue, our government will do a better job of protecting Australian sovereignty from the bullying of the US government in future.

    Sincerely,

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