Submissions to Federal Treasury in relation to the proposed Intergovernmental Agreement (IGA) for the Foreign Account Tax Compliance Act (FATCA) closed on 28 September 2012. We provided our insights into the advantages and disadvantages of an IGA and how they would affect Australian financial institutions.
An IGA based on the Model IGA published by the United States Department of the Treasury in July 2012, would provide Australian financial institutions (FIs) with an alternative means of complying with FATCA. In particular, it would remove the requirements for FIs to:
- enter into individual FFI agreements with the U.S. Internal Revenue Service (IRS) and instead, would require FIs to report the requisite information about their US accounts to the ATO;
- deduct FATCA withholding on ‘U.S. Source Withholdable Payments’ made to non-participating Foreign Financial Institutions (FFIs) (except in limited circumstances); and
- deduct FATCA withholding from the accounts of “recalcitrant account holders” or close such accounts.
In our submission to the Federal Treasury, we outlined a series of advantages and disadvantages of an IGA and, for a series of practical, legal and competitive neutrality reasons, endorse the entry into an IGA with the United States based on the Model IGA.
To see a full list of the advantages and disadvantages of an IGA, please view the King and Wood Mallesons submission here.
Stuck in the middle of FATCA?
To help you understand the fundamentals of FATCA, we’ve also produced a short brochure outlining the key facts, dates and considerations for Australian FFIs. To view our brochure, please click here.