FATCA and Australia – Part 1 of 2

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

1. Hi all —
   We’re trying something new over at https://wiki.fixthetaxtreaty.org/

   Finding stats and facts to support our position is hard enough – remembering where those stats and facts came from is nearly impossible. So we’ve put up a user-editable wiki to serve as a reference source. Carl explains what we’re trying to do in his latest blog post: http://fixthetaxtreaty.org/2017/03/27/just-the-facts-maam-introducing-the-fix-the-tax-treaty-wiki/

   To avoid spam, users will need to register to be able to edit. You can use a pseudonym, but we will need a real email address to send login credentials to. More on becoming an editor here: https://wiki.fixthetaxtreaty.org/doku/doku.php?id=wiki:start:editor_instructions

   We hope you will join us in creating a useful source of references/links/data that will be easy to find when we need it.

2. Future US taxpayers?

   Californian men recruited to cure Victoria’s ‘sperm drought’ : Victoria has a shortage of donor sperm. A proposed scheme would reduce the wait time for IVF treatment from more than a year to a matters of weeks, where donors are required.

   http://www.theage.com.au/victoria/monash-ivf-proposes-bulk-sperm-import-scheme-to-cure-victorias-sperm-drought-20170329-gv96t5.html

3. New post up at fixthetaxtreaty.org: CRS – Coming soon to a bank near you… – explaining the Australian implementation of the Common Reporting Standard.

4. Newly founded: Senate Friends of Australia Caucus

   Perhaps another angle for lobbying.

   http://www.news.com.au/world/north-america/us-senators-form-friends-of-australia-caucus-after-donald-trumps-hostile-phone-call/news-story/ec343172be8416fcfded62626339b0c8

5. Yesterday JakDac brought this article (https://www.smsfadviser.com/strategy/15482-how-the-super-reforms-impact-us-expats) to my attention. The article is open for comments and I have posted this comment (currently in moderation):

   It is good to see someone addressing the special problems of Australian-resident US taxpayers, as normal financial planning is exceedingly difficult for taxpayers caught between two very different systems. The way the US tax code treats anything “foreign” as toxic makes ordinary business and investment decisions very difficult or impossible.

   With super, however, there is a ray of hope. The introduction to the article states: “Absent bilateral treaty renegotiations, US expats, who are obligated to pay US taxes on their worldwide income, have no other recourse except to trundle through the byzantine tax laws of both countries in order to arrive at a defensible (though uncertain) position on why Australian superannuation funds should not subject to US taxation.”

   If there is a defensible position that superannuation accounts are not subject to US tax then, a) our Australian government ought to be exhausting every possible avenue to ensure that this position prevails and is publicised among the affected community; and b) US taxpayers in Australia should seek out US tax practitioners who are willing to take this position. I would hope that someone in the Australian government would read this and realise that allowing the US to tax the superannuation of Australian-resident Australian/US dual citizens undermines the public policy goals that the superannuation system is meant to address. As stated in the article, one remedy for this situation is to re-negotiate the tax treaty.

   After that glimmer of hope, however, the rest of the article is then written from the premise that superannuation is taxable on a US return. Conceding the point that the IRS thinks the US has the right to tax superannuation, and acknowledging that even the IRS is uncertain what that means in terms of US tax law, I have a concern about the discussion of the A$1.6m Lifetime Transfer Balance Cap.

   I’m not clear on why a transfer from pension mode to accumulation mode in response to the cap is a taxable event, as there has been no change in the right of the account holder to access that money. First, the requirement to reduce a balance held in pension mode applies only to account based pensions; those with defined benefit income streams will have their transfer balance cap reduced, but are not required to commute an income stream in excess of the limit. In an account based pension, once a condition of release is met, the entire balance of the account can be withdrawn at any time (giving up the concessions of the superannuation system) – see ASIC’s MoneySmart website. Thus, an account holder has the ability to withdraw funds from an account based pension (whether to meet the $1.6m cap or for any other reason) at any time after retirement and the imposition of the cap has changed nothing in this regard. As the imposition of the cap has not changed the account holder’s rights with regard to her super balance, I don’t see how the doctrine of constructive receipt applies to this transaction.

   It really bothers me when carpetbaggers show up from the US and think they know a) how super works and b) how it should be taxed by a foreign country.

6. Fellow Aussies,… what are my chances in opening a bank/checking account in Australia as a European national born in the States without a US tax number? A company out there is offering me an employment opportunity, with work visa to be sorted. I fear lest my chances are (next to) nil on the banking front…

7. @Duality – I last opened an account at a new institution in early 2014 (just before the FATCA IGA was signed), so I’m not sure what has changed. However, the Australian banks have not been as difficult about opening accounts for US Persons as European banks have been. While the big 4 have been collecting SSNs and reporting, some of the smaller banks and credit unions are deemed-compliant under FATCA and therefore less likely to care. I haven’t heard of anyone being denied an account here.

   CRS does come into effect on 1 July – so more banks may be asking what countries you’re tax resident in.

8. oh – and congrats on the job offer. What city will you be located in?

9. @Karen

   Thank you for the reply!

   In Sydney. I just need to apply for a work visa, which will be granted with ease in my sector. Apparently, employers in my sector are begging for guys like me, so it sounds promising. I would be extremely happy to leave this European madness and settle out there for some time. The euro crisis, Brexit, right-wing fanatics, youth unemployment,… the list goes on.

   If smaller banks and credit unions are deemed compliant under FATCA, then I would have thought that they would be deemed compliant under CRS as well. I will need to investigate this further, as no one wants to travel so far away to have doors slammed in one’s face. Yes, European banks have been ruthless, and a few MEPs (e.g. Sophie in’t Veld) have done their best to address these problems. Fortunately, I opened all my accounts pre-Fatca so have been able to function like a normal citizen in the meantime.

10. @Duality – check out my blog post on the Australian implementation of CRS – http://fixthetaxtreaty.org/2017/05/01/crs-coming-soon-to-a-bank-near-you/

    There is no small bank exception for CRS. If you bank at a credit union or deemed FATCA-compliant bank, they are supposed to collect US taxpayer info and send it on to the ATO, but the ATO shouldn’t send it on to the IRS. Some of the banks here are pretty relaxed about the whole thing.

    If you’re on FB, come join our FB group (https://www.facebook.com/groups/FixTheTaxTreaty/). You can ask the Sydneysiders what experience they have with small banks down there (I’m in Brisbane, and my small bank doesn’t have branches in NSW).

11. @Karen

    “If you bank at a credit union or deemed FATCA-compliant bank, they are supposed to collect US taxpayer info and send it on to the ATO, but the ATO shouldn’t send it on to the IRS.”

    If this should be the case and I am without a US tax number, then what? This is why moving to Australia may prove to be an extremely risky and costly exercise should anything go wrong. My income might be lower here than what is being offered in Australia, but at least I am able to carry on getting paid. This Fatca, it is really a sad state of affairs. I suppose that I am not the only one here who finds himself in this predicament…

12. @Duality,

    I don’t *think* that lack of SSN will prevent you from opening an account in Australia, but, given the changes that might be coming under CRS, I can’t give absolute assurance. To give you an idea of the type of ID needed to open an account – here’s a form from Commonwealth Bank (it’s for certifying ID when the account holder can’t be present, but section 4 lists the acceptable forms of ID) https://www.commbank.com.au/personal/apply-online/download-printed-forms/Certified_Copies_Identification_Form.pdf (Commonwealth is the largest bank here, it is required to report under both FATCA and CRS, but smaller banks which report only under CRS will have the same ID requirements).

    If your non-US passport doesn’t list an unambiguous US place of birth, the bank may not identify you as a US person, though at some point they will probably ask you to self-certify whether you are tax-resident anywhere outside Australia.

    Also, if you can manage to open an account online before 1 July, it becomes a pre-existing account for CRS and doesn’t have to be reviewed under CRS until 2019 (assuming it has less than $250k in it).

13. @ Karen

    My European passport notes a US place of birth; there is no way around it. I may have to apply for a work permit, fly out there for a short stay, and shop around for a bank account (out of all things to do). If unsuccessful, I would then return to Europe.

14. @Duality – best of luck! I hope it all works out for you.

15. @Duality – FYI, here’s the official ATO guidance on collecting taxpayer id numbers under CRS https://www.ato.gov.au/General/International-tax-agreements/In-detail/International-arrangements/Automatic-exchange-of-information—guidance-material/?page=3#5_5_Taxpayer_Identification_Numbers__TINs___amp__date_of_birth

    While it does say

    For both new and pre-existing accounts, a TIN is not required if a TIN was not issued to the person by the relevant jurisdiction.
    …
    If a person claims not to have a TIN, this statement should be part of the self-certification collected for the account, unless the RFI reasonably determines that the person would not have a TIN for the relevant foreign jurisdiction, based on information on the OECD’s Automatic Exchange of Information Portal/

    I don’t know how reasonable the banks would be about this.

    And – FYI – Commonwealth Bank has a webpage for people moving to Australia – https://www.commbank.com.au/personal/can/moving-to-australia.html
    They are the largest bank here and will be required to report under both FATCA and CRS.

16. @Karen

    Thanks for the expat link.

    If the United States are not participating in the OECD’s CRS, then surely a small credit union wouldn’t ask for TINs for non-participants, would they? I am unwilling to even self-certify this since the financial institution would be making assumptions about my nationality based on a place of birth. I hope to find people with common sense at those credit unions. (The commercial banks in Australia will lock me out in any case.)

17. Anyone who believes that staying in the USA tax system is better than renouncing must be an extremely hopeful person.

    I love happy & hopeful people– & I really hate disappointing them, but CBT will not leave for decades (my expected timeline) & I’m very sorry. Pay, renounce, move on. Us humans have an expiry date.

    😉

18. @Jane

    “Anyone who believes that staying in the USA tax system is better than renouncing must be an extremely hopeful person.”
    Who said we were staying? It is imposed on us extraterritorially, which is the problem.

    “CBT will not leave for decades (my expected timeline)”
    CBT (including FATCA and FBAR) will morph into something less (or more) sinister…

    “Pay, renounce, move on.”
    A luxury for me; easier said than done.

    “Us humans have an expiry date.”
    Life after CBT? Purgatory (to pay for my bitterness)…

19. Nice to hear

    Many supporters of FATCA reform also take exception to the U.S. policy of Citizenship Based Taxation. Democrats Abroad has launched a campaign to overturn Citizenship Based Taxation and replace it with a policy of Residency Based Taxation.

    The United States is the only country aside from Eritrea that taxes its citizens on their worldwide income regardless of where it is generated, no matter where they live, no matter how long they’ve lived there and regardless of whether they face taxation on that same income in their country of residence.

    Democrats Abroad supports Residency Based Taxation or RBT, a system of taxation in which a nation imposes tax on income generated within its border. Citizens of a nation with Residency Based Taxation pay tax on income in the place where the income was generated. If they live and generate income abroad then their offshore income is taxed abroad and not taxed by the nation of their citizenship. Only income generated within their nation of citizenship is taxed by their nation of citizenship.

    For the first time since the 1980’s Congress has turned its attention to comprehensive tax reform. Democrats Abroad, in collaboration with the other organisations representing Americans abroad, believes we have an opportunity to influence the process by campaigning for Residency Based Taxation to be included in Congress’s package of tax reforms.

    This week we launched the attached Residency Based Taxation – Campaign in a Box for use by Americans interested in adding their voices to the cry for Residency Based Taxation. It includes information about the campaign and advice about the multiple ways you can participate in it.

    We draw your attention especially to the RBT Congressional Call Storm happening on Thursday June 15th – during which we hope that Americans across the world who support RBT will blitz Capitol Hill with calls demanding support for this important reform.

    Thank you for your attention.

    Please contact me with questions, comments or to be removed from the FATCA Reform Campaign Distribution List.

    Many thanks again,

    Carmelan Polce

    on behalf of the Democrats Abroad Taxation Task Force

    Ms Carmelan Polce
    Chair, Taxation Task Force
    Democrats Abroad
    Singapore
    M: +65 9380 1084
    E: cpolce@tpg.com.au
    Skype: carmelan.polce

    ________________________________________________________________________

    Interview with CNBC

    David McKeegan has informed
    that he has discussed a lot about Taxation without representation/CBT, PFICs, FATCA bank account closures, etc.

    We need to see what the interviewer writes/prints but it could be good.

    Cheers

    David Mckeegan, MBA, EA founder of Greenback Expat Tax Services

    He REALLY seems to be trying to help

20. Co-sign letter to Administration and Congress by groups supporting change from Citizenship-based to Residency-based taxation for Americans overseas http://www.prnewswire.com/news-releases/co-sign-letter-to-administration-and-congress-by-groups-supporting-change-from-citizenship-based-to-residency-based-taxation-for-americans-overseas-300460257.html?platform=hootsuite

21. http://www.valuewalk.com/2017/05/citizen-based-taxation/

22. Lot of “fighters” posting. Great to see a big newspaper reporting. Remember when we broke from England and refused to pay their tax most had that ol pioneer sprit . Remember Condolisa Rice condemned Eritrea for their TWO percent Citizen Based Tax. The US is the ONLY country to do this ( started during the Civil War when people were leaving) People who left the US decades ago have pensions /house bought overseas taxed by the US (some tax paid in pensions may not be credited for US tax and NO interest deducted re home) When one is playing baseball do they follow football rules. RBT like the rest of the world please. We are not the rich guys just the ones that by fate lived overseas for many reasons / marriage / job etc.
    https://www.wsj.com/articles/are-you-hiding-money-from-the-irs-overseas-be-very-afraid-1496395802

23. Tax reform with Individuals / Tax reform by September, says Grover Norquist / https://www.youtube.com/watch?v=ua-w_TQk3JY

24. It is vital that any tax reform legislation includes territoriality for individuals. Implementing a system where Americans are taxed based on their residence would make tax compliance far simpler and should be part of the effort to simplify the code for individuals.
    http://www.atr.org/tax-reform-should-include-territoriality-individuals
    Follow us: @taxreformer on Twitterhttp://www.atr.org/tax-reform-should-include-territoriality-individuals

25. https://www.forbes.com/sites/robertwood/2017/06/12/more-americans-renounce-citizenship-new-list-released/#1a356ade6fe9

    eliminate unfair practices like taxing Aussie superannuation
    https://youtu.be/tNXPGJsxCcI

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