FATCA and Australia – Part 1 of 2

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

1. No action will be able to be taken on the Australia-US Tax Treaty in the near future.

   ??????????????????

   I’m sorry to say mate but this issue has been put on the backburner with the current change in administration over in the US.

   I’m sure you’ll have heard the news about Trump withdrawing the US from the Trans-Pacific Partnership. At this stage the Government does not expect changes to the Australia-US Tax Treaty in the near future.

   The Treasurer’s office has asked me to pass along their apologies that no action will be able to be taken on this matter for the foreseeable future.

   Yours sincerely
   Ross

   t. 07 3893 3488
   e. ross.vasta.mp@aph.gov.au
   W: http://www.rossvasta.com.au
   FB: /rossvastamp
   Insti: /rossvastamp

2. This is TERRIBLE news.

   At first read, it sort of makes sense.
   But WTH does withdrawal from TPP have to do with re-writing a tax treaty? And its not the whole thing but just some amendments.

   Don’t give up.

3. @PM

   Maybe amending a tax treaty involves sorcery and best be done as little as possible.

4. Sounds like a BS excuse to me.

5. This is feedback from a Liberal backbench MP – it is not official government policy. It probably reflects the frustration that our government feels in dealing with the new US administration. That frustration is understandable, but they will need to put it aside and deal with the new reality in Washington. I don’t think this changes anything with regard to the aims of the Australian group. We always knew this wouldn’t be a quickly won battle.

6. https://pbs.twimg.com/media/C3gLB2OXAAA0fc2.jpg:large

7. https://scontent-sjc2-1.xx.fbcdn.net/v/t1.0-9/16298688_10154945408544798_8583048278538923288_n.png?oh=08d3e55956f8782a561d8c98b524a70e&oe=590F3080

8. @Jak Dac, that guy is full of Shiiiit. He should have said the dog just ate the treaty.

   @Bubbles…..LOL….LOL yeah they must need some outback voodoo magic to amend the treaty.

9. @George

   Maybe in Australia it involves all lawmakers drinking the blood of a male dingo caught by a drunken Fosters drinker during the passing of Halley’s Comet.

10. I just posted an article by John Castro on the Fix the Tax Treaty Facebook Group. The article provides further support for the position that superannuation is equivalent to social security and therefore NOT taxable in the US under the current Australia/US treaty. Anyone whose tax preparer is including super in their US taxable income should send this article to their tax preparer and ask why!

11. US / Australia relation in the news;
    ex.
    http://www.cbc.ca/news/world/u-s-australia-have-very-strong-relationship-prime-minister-says-despite-reports-of-tense-phone-call-1.3962991

    Commenters could take the opportunity to raise the situation with FATCA, US extraterritorial taxation of the Super in this and similar articles to raise awareness of the problems?

12. http://www.sunshinecoastdaily.com.au/news/trumped-why-this-us-citizen-is-renouncing-his-coun/3138571/

13. Thanks for finding that one Badger – I’ve submitted a comment.

14. To: The Steering Committee of Let’s Fix the Australia/US Tax Treaty!

    I believe it important for this group to define “double taxation.” The definition needs to be separate from the language and interpretation of the existing tax treaty. It must be made clear that the tax treaty does not prevent double taxation.

    Furthermore, I suggest that a statement on the justification of taxation would advance our aims. Such a statement will underpin assertions of when a government is justified and when it is not justified to tax Australian residents. When a government claims tax jurisdiction such claim comes with government obligations to those taxed. This fits in nicely with our position that the Australian Government is obligated to act to remedy the tax treaty.

    I submit these two section drafts to precede the sections outlining various tax treaty gaps.

    Double Taxation

    Double Taxation is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transactions (in the case of sales taxes). 1

    While an aim of the Australian-U.S. Tax Treaty is to avoid double taxation, there is no exemption or refutation in the treaty of the U.S. claim of tax jurisdiction over Australia. Nor is there refutation of the U.S. claim that Australian residents are also “residents” of the U.S.

    In the case of Australian tax residents, who are also U.S. Persons, there is further tax and penalties required by the overlay of the 76,000+ page U.S. tax code on top of the Australian tax rules. This is beyond all tax and compliance required by Australia. While the treaty helps mitigate double taxation extra tax is guaranteed from the mismatch of the two tax codes.

    ‘Under a specific set of circumstances Australian residents who are also U.S. Persons may be subject to United States taxation on their Australian-source income and assets. These circumstances are called Tax Treaty Gaps.’ 2

    Why Does Double Taxation Represent Injustice?

    “Immanuel Kant said taxation was justified when it increased human autonomy by providing for people’s basic survival needs or for the protection of property rights.”3

    The Australian Government is justified to tax Australian residents. The U.S. Government is not justified in its claim of tax jurisdiction over Australia. The U.S. Government does not provide services for Australian residents (roads, hospitals, education, unemployment payments, etc), nor does the U.S. Government provide for the protection of property rights within Australia.

    The Australian Government ratified a tax treaty with inadequate protection of property. There is also no protection against loss of autonomy from the complexity, U.S. penalties, and compliance burden of the overlay of the U.S. Tax code on top of the Australian tax laws.

    There is no evidence in the treaty text that the Australian government did any more than to accept the text from the United States. U.S. tax obligations representing double taxation flow through and become obligations under Australian law as represented by the tax treaty and FATCA IGA.

    The Tax Treaty incorporates tax injustice and, consequently, is flawed. The Australian Government has a sovereign right and obligation to prioritise modification of the treaty to comprehensively protect Australians from the unjustified extraterritorial U.S. tax and compliance.

    1. https://en.wikipedia.org/wiki/Double_taxation
    2. https://netorg82979-my.sharepoint.com/personal/information_adcs-adsc_ca/_layouts/15/guestaccess.aspx?guestaccesstoken=cBrQYPFDI%2fKRC6D2cx4JDUX5mGmink%2bEDDekOsZ98ks%3d&docid=0febbc4e18032452597462a04675facdf, p4.
    3. https://www.libertarianism.org/columns/kant-justified-taxation

15. New post up on the website

    http://fixthetaxtreaty.org/2017/02/07/our-stories-the-human-element/

16. The ATO, the “Competent Authority” of the Australian Government under the Australian-U.S. Tax Treaty, misleads Australians and the Australian Parliament, and fails its mission of clearly communicating tax obligations under Australian law (including the tax treaty and FATCA IGA), by stating on its website that “tax treaties prevent double taxation” with no footnote of exceptions in regards to the Australian-U.S. Tax Treaty.4 The word “prevent” used by the ATO in itself is an overstatement of the treaty language of “avoid.”

    The treaty text lacks necessary exemptions needed to adequately protect property and income of Australian residents from the U.S. extraterritorial claim of tax jurisdiction over Australia. The Australian Competent Authority appears to have been oblivious in regards to U.S. claims. The tax treaty guarantees double taxation.
    http://isaacbrocksociety.ca/fatca-and-australia/comment-page-42/#comment-7799743

    4. https://www.ato.gov.au/general/international-tax-agreements/in-detail/what-are-tax-treaties-/

17. Just never forget that this same, secular (supposedly) “ATO” stands behind, “super-natural belief”, to start a tax-free church? I’m starting to believe my tin-foil hat conspiracy nut.

    WTF & WTH & WHA???

    http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9217/NAT/ATO/00001

18. https://extranewsfeed.com/https-medium-com-rachelheller-why-i-renounced-my-us-citizenship-e1f77b1969ce#.b261f9y4n

19. Re Rachaels Nightline program project mgr and producer geoff.martz@abc.com, roxanna.z.sherwood@abc.com

20. She was filmed by Nightline never shown

21. We’ve added an “Our Stories” page to the website over at fixthetaxtreaty.org:
    http://fixthetaxtreaty.org/about/our-stories/

    Telling our stories adds a human element to the problems faced by US Persons living in Australia and will help bring home to policy makers and the public at large the real injustices caused by taxing non-resident citizens.

    We would welcome any contributions from other Australians affected by FATCA or the inadequacy of the tax treaty.

22. I came to Australia in 1991 to be with my Australian then-boyfriend. I had told my friends and family that I’d only be in Australia for 2-3 years. I was in my 20s and carefree, on an adventure. Needless to say, I had no idea I had to continue filing taxes in the US. Well, I ended up staying and I got my Australian citizenship in 2006. I worked hard here for 25 years, and made investments in addition to superannuation. Between our investment property, our Sydney home, and the index funds I’ve had since 1997, I’m the dreaded covered expat! I have bigtime PFIC problems, super problems and potential home sale problems. Like Carl, I cannot afford to expatriate now. I discovered the mess I’m in almost exactly a year ago to this day, when I returned from a wonderful European holiday. I opened an envelope from Merrill Lynch. The letter stated that they were canceling my 401K plan I had left in the US in 1991. The account was very small at the time I left, so I didn’t think much of it. The letter said I had 30 days to contact them about rolling it over to another provider. Unfortunately, the letter had taken longer than 30 days to get to Australia, and when I contacted them, they said “the cheque is in the mail”. No one could explain why this was happening, only “a lot of people are angry about this”. I had no idea what FATCA or FBAR was, let alone that I was supposed to be filing tax returns. Now, I feel that I am a changed person since finding all this out. I think about the problem every single day. I feel that no one understands — not even my family and friends in either country. Also, no one has any sympathy here for Americans caught up in this mess. People just say to me, “well if you move back to the States, would this problem go away?” Not helpful. I have written letters to politicians and they don’t care. My husband is Australian, and he thinks I’m making a big deal over nothing. He doesn’t think I should even be worrying about the situation, and that I should have just kept my head in the sand. No one wants to hear our stories, except for the people who are in the same predicament. I feel like I have to live with this all myself. Yet, I still feel like helping our cause in some way! I have thought about renouncing, but my mother and sister still live in the US, and I worry that I may need to go back to help them one day. Maybe I can give all my assets over to my husband so I am not a covered expat, and then get out of this mess, but I hate to think how much it will all cost in accountancy fees to do so.

    I am here in Australia on a Temporary DEFACTO Partnership Visa while I wait on a PR Visa. I am a retired teacher on a US State Teacher Retirement pension that is drafted to a US checking account. I pay USA Federal Income Tax on my US State teacher pension. I also have investments in the market in the USA of which I pay USA Federal Income taxes and US State taxes on capital gains and distributions. I have no Australian income as I am retired and 65 years old. As a temporary resident of Australia, I am being taxed 34% by the Australian Government on the same exact USA income. I am now required to pay quarterly taxes to Australia for my US State teacher pension! I have no issue with paying the Australian Medicare Levy, but I cannot afford to pay double taxes on the same income even though I am given credit in Australia for the taxes I pay in America. Australian tax rates at 34% are 24% higher than my USA tax bracket and rate! My partner sponsors me and pays all of our living expenses in Australia as my teacher retirement income pays for the expenses of my home in the US that Australia Immigration is requiring me to keep as an asset for immigration purposes. My Australian partner was born congenitally blind and is now experiencing progressive hearing loss. He is employed as a Policy and Advocacy Officer for Blind Citizens Australia in Melbourne. I am sighted and act as his assistant for various work matters on a volunteer basis. I also do volunteer work for Blind Citizens Australia in the office in Melbourne. If I am granted PR in Australia, the current tax problem may require me to return to the USA causing my partner to have to live alone in Australia, which is virtually impossible with his dual disability and possibly leave his employment as a tax paying citizen of Australia. My point is that if I am earning income in Australia, I should pay Australian taxes on Australian earned income. Currently, I am paying Australian Taxes on USA earned USA taxed retirement pension. That is not fair. Fix the tax treaty and/ or raise the tax threshold for the average person who is caught in the gap!

    A man without a country, I am sure I have heard that before? But that’s how I am feeling right now. My family and I came to Australia 32 years ago and I have been a Australian citizen for 25 years. I have paid my taxes to Australia and set my family up with a retirement superannuation or what the U.S. Would call social security. I have been contacted by my bank about FATCA a few weeks ago, because my accounts had more then $50,000 dollars in them. So of course you start researching FATCA and the more you read the scary it gets, the IRS have the power to ruin your life by a country that you haven’t lived in for 32 years. Thanks to the US blackmailing the Australian government and banks to give banking details about US citizens living in Australia. Or threat of a 30% tax on any business that a Australian Bank might do in the US, well when push comes to shove the Australian government and banks rolled over and threw the American expats under the bus? (Look at FATCA in 4 minutes on YouTube) I had a meeting the other day with a attorney about my superannuation as the US want to tax it. He assured me that he could get my superannuation through the IRS with out any US tax, I can’t tell you how relieved I was, until he mentioned his fee of $30,000 plus. See why I feel like a man with out a country? A country that I was very proud to say I was from and then a country that I have lived in for the last 32 years and a citizen for 25 years and then the accountants and lawyers hovering over there prey like a rabbit on the run. The Australian public wouldn’t know about this as most Americans would be embarrassed to say their home country is hunting them down like a criminal hiding money from them ( sure? teachers, farmers,tradesmen,average Australian people living in Australia) and then being sold out by Australian government and the big banks because of the 30% big stick the US is holding over them. I think maybe the Australian public don’t realise that every dollar the IRS sucks out of economy here in Australia is their money, money that would be taxed here or spent into the economy, and the sad thing is that it’s happening all over the world, there is close to 8 million American expats in the world.

    You asked me to serve you, and I did.
    You asked me to continue to serve you, and I did.
    You asked me to go overseas for you, and I did.
    You asked me to stay overseas for you, and I did.
    You asked me to go into harm’s way for you, and I did.

    You gave me commendations and citations, awards and medals. You promoted me.

    I gave you my youth, which you were glad to have.
    I was injured for you, which you did not fix.
    Still, I paid my taxes.

    I did this willingly, gladly, and yes, proudly.
    I am a patriot.

    I do not ask you what you owe me.
    I do not make demands of you.

    If I have not paid my fair share, then who has?

    When you sent me overseas to defend you for years, did you not expect me to find love?
    You promised to look after and care for her.
    You sent me into harm’s way again.
    But you did not care for her.
    You rejected her. You would not accept her.
    Is it surprising that we returned overseas to make our lives? To have and to raise our family?

    I am now amongst your staunchest of allies. I am Australian.
    I was asked to work on behalf of the Australian Defense Force, and I did.
    I was asked to work on behalf of the US Coast Guard, and I did.
    Still, I pay my taxes.
    I pay taxes to the country I have lived and worked in for over two decades.
    I pay taxes to the country that took me in when you rejected me.
    I pay taxes to the country that will look after me in my old age, that defends me now that I am no longer a young man.
    I ask for nothing from you.
    I take nothing from you.
    I am Australian.

    And yet you demand from me.
    You threaten me.
    You call me a traitor.
    You demand obsequiousness, unquestioned and endless fealty.
    It is you who have forgotten what it is to be American.

    Attachments area
    Preview YouTube video FATCA Explained in 4 Minutes…

23. AUSTRALIA-US INTERGOVERNMENTAL AGREEMENT (IGA) TO IMPROVE INTERNATIONAL TAX COMPLIANCE AND TO IMPLEMENT FATCA (THE US FOREIGN ACCOUNT TAX COMPLIANCE ACT)
    http://www.treasury.gov.au/…/HT…/Intergovernmental-Agreement
    Should read /
    AUSTRALIA-US TO IMPROVE INTERNATIONAL TAX AND TO IMPLEMENT SUPERANNUATION TAXED ONLY AS A RESIDENT (As per existing US Model Tax Treaty)

    Signed 28/4/2014 they got onto THIS fast enough

24. The Australian Government is developing a foreign policy White Paper – a comprehensive framework to guide our international engagement over the next five to ten years.

    The Australian Government is calling for public submissions. Deadline: 28 February.

    http://dfat.gov.au/whitepaper/index.html

25. Thank you, JC. I’ve linked to it in the sidebar under Take Action! and on the projects and submissions pages.

Comments are closed.