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”

  1. @JC

    Did they just put this out? Three days to respond is a bit short notice for something so important….(assuming they do anything at all with what they receive in response).

  3. Hon. Malcolm Turnbull, Prime Minister
    Hon. Julie Bishop, Minister for Foreign Affairs
    Hon. Steven Ciobo, Minister for Trade, Tourism and Investment

    Re: Foreign Policy White Paper Public Submission

    Trump Will Understand: Australian Sovereignty Should Be Defended From Extraterritorial Law
    http://www.FixTheTaxTreaty.org !

    Australia has a sovereign right to defend Australians when other nations claim extension of their laws onto Australian soil. The Australian Government should not continue to defend Non-Australians in far off lands (via speeches, international aid, and military might) without a focus on defending resident Australians from unjust extraterritorial laws of other countries.

    America is exceptional in its claim of tax jurisdiction over resident Australian citizens with U.S. citizenship or a Green card. Yet why does Australia make exception to its own public policy of residence based taxation and allow Australian law to support U.S. citizenship based taxation? Why does the Australian government acquiesce in the tax treaty to the surreal U.S. claim that Australian residents are also residents of the U.S. for U.S. tax purposes?

    Australian law, by not stating otherwise in the tax treaty and FATCA IGA, obliges the overlay of the 76,000+ page U.S. tax code on top of the Australian tax code. Australia is considered a higher taxing country than the U.S. Tax credits are recognised for like for like taxes. However, it is the mismatch of the two codes that double taxation comes into play on any lower threshold, higher rate, tax by a different name, or different tax the U.S. has such as the U.S. designation of superannuation as a nonqualified pension fund.

    DFAT should act to block U.S. punitive law for local accounts, assets, earnings, and superannuation designated “foreign” by the U.S. tax code. How can the Australian Government say to resident Australians paying their fair share of tax to Australia (just like their Non-U.S. Australian neighbours – from any range of Non-US countries), that your tax payment is not fair enough? You need to pay more to the U.S. and ignore some very good Australian tax incentives and structure your finances for the U.S. tax overlay?

    What is the Australian domestic policy objective of this extra tax and the permitted undermining of domestic Australian tax incentives such as superannuation?

    The Treasurer Honourable Scott Morrison does not grasp international convention when he states:

    “…under US law, the US can tax its citizens on the worldwide income, regardless of where they reside. In this regard, your concerns about the application of US tax law to your Australian superannuation entitlements are, in the first instance a matter for you to pursue with the US Government.”

    As perhaps DFAT may better appreciate than Treasury, for an individual to pursue the US Government in the first instance would make sense in the case of an Australian resident in the United States. For the Australian government to question US tax and compliance law in such circumstance might be characterised as Australian intervention into the internal domestic affairs of the U.S. Under the internationally accepted convention of The Master Nationality Rule, the law of the country one is in prevails to the exclusion of laws of other sovereign states.

    Morrison appears to have missed the nuance that of question is Australian citizens resident in Australia, impacted by laws of another country intervening into the internal affairs of Australia.

    Morrison’s statement is similar to saying that the US can decide gun laws for US Persons in Australia – based on U.S. law and the 2nd Amendment to the U.S. Constitution – “The Right to Bear Arms.” This is exactly what he is saying: it is ok for US law to apply here in Australia! It sounds ridiculous, doesn’t it? Common knowledge and international practice is that the laws one is governed by are the laws of the country one is in. “Tax residency” is another level to justify exclusion of tax laws from other countries.

    Morrison and Australia shirks an obligation to protect Australians. Additionally the Australian Government via the ATO website misleads by stating that tax treaties “prevent double taxation” with no footnote regarding the Australian-US tax treaty. While the tax treaty mitigates double taxation, it guarantees double taxation and double compliance of unfathomable complexity.

    These matters of double taxation are beyond common sense and comprehension for mere mortals. When tax expertise is sought to sort out the compliance that is when the punitive nature of Australian-US Tax Treaty omissions and the U.S. tax code lands. Tax preparers are inclined to be conservative in areas lacking clarity adding to the harshness and expense.

    There are 100,000 Australian residents impacted of which approximately 54% hold Australian citizenship. This number is increased when Australian only family members are considered where the Australian government indifference on double taxation permitted by the tax treaty undermines the security of the family financial unit. Additionally there are 200,000 Australians living in the U.S.

    No doubt interaction with America adds to the growth and prosperity of Australia. There are shared values, common language, a free trade agreement, and the U.S. is the largest global market. Such benefit to Australia and Australians may increase with tax treaty modification to enforce the globally accepted rules of residence based taxation; and a tax treaty that provides the utmost clarity and simplicity in regards to ones tax and compliance obligations.

    On February 4 2017 a Financial Review article mentioned hopes of enticing Australians back from Silicon Valley to spur innovation in Australia. These Australians over years may have gained a Green card, U.S. citizenship, and U.S. family members. One way to ease return of such talent is to exempt all Australian residents from U.S. tax and compliance on their Australian property and income.

    For no group of Australians are the injustices of Australian Government acquiescence to U.S. extraterritorial law more apparent than for “accidental Americans.” Some fully Australian accented US Persons may have lived their entire lives in Australia but gained citizenship through a parent. Or, they may have acquired U.S. citizenship through birth in the U.S. and moved back to Australia as a child. Yet, the Australian government through the FATCA IGA has acted as if it were right to report their Australian accounts to the U.S. Internal Revenue Service (IRS). One impact of this is apprehension in regards to travel to the U.S. either for work requirement or to visit relatives. If one is a US Person then one needs a U.S. passport to enter. To obtain a U.S. passport one needs a U.S. Social Security Number.

    For the U.S. to allow accidental Americans (and others) to pay $US2,350 to renounce U.S. citizenship they must first enter the U.S. tax system (if not in it already) and file three years of taxes, on the basis of tax residency in the U.S with punitive treatment for Australian, a.k.a. “foreign”, assets and accounts. For some this may cost tens of thousands of dollars. For others, wealth for toil in Australia may mean the prohibitive U.S. exit tax may apply even though they may have never lived in the U.S.

    Australia should not pretend that U.S. taxation of Australians is justified within our borders. The U.S. does not provide government services to Australian residents to justify its taxation (roads, hospitals, unemployment, etc.). Nor does the U.S. provide for protection of property within Australia.

    How is all this right? For no other nationality does the Australian government force such an imbroglio and a 2nd class of Australian citizenship and opportunity. There should be a level playing field for all Australians in regards to tax.

    Australia has turned its back. Perhaps the issues of Australian sovereignty and extraterritorial tax are less glamourous and attention-grabbing than the billions Australia spends on the military and overseas aid. Perhaps the reflex has been to agree with whatever the U.S. asks. Or, perhaps government officials may have thought that they know best on these matters (without due diligence) and have been dismissive instead of connected with concerns raised.

    The Australian Government has an obligation to protect Australians, full stop. Australia should atone for past disinterest and tax treaty malpractice.

    A simple way forward is the establishment of a Parliamentary Inquiry into Australia-U.S. tax treaty gaps that permit double taxation and double compliance; and as a basis for pursuit of remedy through tax treaty revision. Donald Trump will understand when Australia pursues tax treaty revision on the following bases: (1) Australia First; (2) the existing agreement is not fair for Australia and Australians.

    The Whitepaper should include focus on defending Australia and Australians from extraterritorial law.

    For more background:
    http://www.FixTheTaxTreaty.org
    http://www.smh.com.au/national/us-citizens-renouncing-because-of-tax-laws-affecting-australian-superannuation-20160910-grdb0a.html
    https://storify.com/FixTheTaxTreaty/can-the-us-tax-my-super
    http://isaacbrocksociety.ca/fatca-and-australia/comment-page-33/#comment-7561948

    Regards,
    Joe Citizen
    @JCDoubleTaxed

    This is a public submission and will be posted on the web. The author consents to reprint.

  4. Good letter @JC. Consider it upticked. I hope your ministers are more receptive than ours. Most of ours tuned us out. Some who initially tune us in ended up turning their back on us. Now we wait to see how the Canadian justice system responds. Will they cave to the might of the USA or do what is right for Canadian citizens and residents? Time will tell.

  5. The following are reasons to be hopeful that US law regarding Superannuation may change sooner than later:

    1. My colleague Marsha Dungog and I were recently invited to on a call with government officials to discuss problems with foreign pension funds, especially ASFs.

    2. My colleague Marsh Dungog and I have been approached by a major US tax publisher to write the definitive analysis on the US classification of the Australian Super.

    3. We understand on very good authority that a powerful US governmental organization has been hiring experts on the US taxation of foreign pension funds.

    4. The DJT administration has indicated that it will likely be releasing sweeping tax reforms this fall.

    All good stuff.. and I believe directly related to the work we all have done on raising the issue at the appropriate levels of government. High-fives are premature, but we are cautiously optimistic.

    Keep the faith and stay the course.

    Roy

    Roy A Berg JD, LLM (US TAX) | Profile
    Director, US Tax Law

    Moodys Gartner Tax Law LLP | D 403.693.5120
    210, 2020 – 4 Street SW
    Calgary, AB T2S 1W3

  14. AmCham CEO Niels Marquardt (ex ambassador) has been helpful re Expat tax issues(see previous videos). Let him know you are thankful for his help

  15. If you have google voice or hangouts (free calls to US) ask the Senate Finance Committee what they are doing about Expat tax / tel 202 224 4515

  16. We have posted two more stories in our series of “Our Stories” documenting the injustice of US citizenship based taxation.

    “Shaun” tells us that “The day I had to give that final statement I was in tears at the counter at the US consulate in Sydney, I felt I had been betrayed & abused by the US.”
    Shaun was undergoing cancer treatment while being abused by the IRS. He says “If I could have chosen between Chemotherapy & dealing with this legal situation, I would have chosen Chemotherapy because at least you would know when the end would happen & the worst thing would be that you could die. With the legal matters months turn to years & I felt totally helpless that it would be resolved before I died.”
    http://fixthetaxtreaty.org/about/our-stories/shauns-story/

    “Mary” says “I only found out I should have been filing tax returns to the US three years ago. Since then my life has become a nightmare of uncertainty, fear, marital stress, financial paralysis, and a mixture of threatening and sloppy treatment from the IRS. Previously I saw myself as a strong, capable and competent person, but as a result of this experience I have become hypervigilant and fearful. I ruminate and strategise at night which affects my sleep and mood, and I have been told by a Clinical Psychologist that I have PTSD. I have developed two auto-immune conditions that are considered to be possibly stress-related.”
    http://fixthetaxtreaty.org/about/our-stories/marys-story/

  24. Asked of Bernie Sanders a while ago should we ask again ?
    On a phone interview he accepted RBT
    His brother lives in Europe

    Letter to
    Senator Bernie Sanders
    Many Americans abroad have lived with the policies that you advocate for. As such, they know these policies work. However, there is one hurdle to winning over my full and unreserved support as an American abroad.

    That hurdle? Citizen based taxation and its surrounding issues.

    Indeed, while the well-being of our brothers and sisters back home is enough to garner many votes from our particular community, CBT, FATCA, and FBAR hurts many more of our middle and working class members. So, while I may support your policies in other areas, I feel as though my community of Americans abroad is again being taken for granted.

    Are you willing to take another look at the issues around citizenship-based taxation and suggest either repeal or adjustments to the relevant legislation so that they do the jobs they were intended to do without putting undo stress and financial hardship on hard-working Americans simply living and working abroad?

    Thank you for your time, and I look forward to you addressing this issue as soon as possible.

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