The federal government needed to do more to minimise the compliance burden of the planned United States Foreign Account Tax Compliance Act (FATCA) for Australian financial institutions and superannuation funds, the Financial Services Council (FSC) said yesterday.
"It is clear from our discussions with US government officials that a strong public statement is required from the Australian government calling for the commencement of talks to enter into an intergovernmental agreement with the United States," FSC chief executive John Brogden said.
"An intergovernmental agreement has the potential to significantly reduce the FATCA compliance burden that will be faced by the Australian financial services industry and will ensure Australian firms are not placed in the position of having to breach local laws in order to comply with US laws."
Brogden is in Washington DC this week to continue discussions with senior US Treasury and Internal Revenue Service (IRS) officials, relevant members of Congress and congressional representatives on the FATCA regime.
Under the current proposals, Australian superannuation funds are not exempt from the requirements, which could lead to high compliance costs for the funds.
In April, the FSC made submissions on the draft regulations, which highlighted the nature of the Australian superannuation system and argued for its exemption from the regulations.
The organisation also called for an intergovernmental agreement to facilitate transfer of reported data from the Australian Taxation Office to the IRS.
"We are continuing to work closely with US Treasury officials on the development of the final regulations to ensure they are on board to effectively carve out our superannuation schemes," Brogden said.
"We are also meeting with key members of Congress to discuss the issue and to ensure that those responsible for writing the law in the first place know our predicament."
FATCA is a set of proposed US regulations that require financial institutions around the world to report account details of US citizens for taxation purposes.
If these institutions fail to do so, they will face a withholding tax of 30 per cent on any payments from US securities, including dividends, interest and sales proceeds.
FATCA is set to take effect in January 2013 and the final regulations are expected to be released in September 2012.
