Australia's answer to FATCA is here

Category: 
Regulatory Risk
Region: 
Australia

By Karen Payne, Minter Ellison

SYDNEY - 2 June 2014: Minter Ellison partner, Karen Payne reports that on 28 April 2014, Australia entered into an Intergovernmental Agreement (IGA) with the United States of America (US) to improve international tax compliance and implement the US Foreign Account Tax Compliance Act (FATCA).

Exposure draft legislation has also been released by the Australian Treasury which will give domestic effect to our obligations under the IGA.
 
The IGA and the proposed new Division 396 – FATCA of the Taxation Administration Act, 1953 (TAA 1953) broadly relieve Reporting Australian Financial Institutions (as defined in the IGA) from FATCA reporting obligations. These are replaced with like reporting and due diligence obligations to the Australian Taxation Office (ATO) which will in turn exchange this information in accordance with the IGA and Article 25 of the double tax agreement between Australia and the US.
 
Under a Memorandum of Understanding and on the basis that Australian domestic legislation is in force by 30 September 2015, the US has agreed to treat each Australian Financial Institution (as defined in the IGA), as complying with, and not subject to FATCA withholding during the period in which the Australian government effectively implements the IGA (i.e. FATCA) obligations domestically.
What should you do now?
The signing of the IGA and the proposed domestic implementation of FATCA highlight the fact that Boards and Executives of Australian Financial Institutions will need to turn their attention (if they have not already) to the application of FATCA to their organisation which should include the following:
  • review existing precedents and templates to confirm that they are FATCA/IGA compliant;
  • review contracts and applications for subscription to confirm FATCA/IGA information requirements and releases are appropriate;
  • confirm if any update or revised disclosure requirements apply under previously released disclosure statements (PDS and IMs);
  • ensure appropriate internal training is regularly conducted and prepare internal training manuals (which should be maintained) to illustrate compliance with due diligence requirements;
  • review information collection, processing, storage and retrieval processes to ensure that due diligence, information reporting and storage requirements are met; and
  • monitor for any additional ATO guidance on the approved form for the reporting of such information.
Minter Ellison has prepared a high level summary of the new reporting and due diligence requirements as set out in the IGA and the exposure draft, and a copy is available by clicking here.
 
This opinion was first published on the Minter Ellison website.