The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States Congress in March 2010. It is intended to assist US efforts to improve compliance with US tax laws and will impose certain due diligence and reporting obligations on foreign (non-US) financial institutions.
In response to concerns about the impact of these obligations on Australian financial institutions and the Australian economy as a whole, the Australian Government is exploring the feasibility of an intergovernmental agreement with the US. The objective of such an agreement would be to minimise compliance costs for Australian stakeholders while enhancing the existing tax cooperation arrangements between Australia and the US.
Written submissions are invited on the advantages and disadvantages of an intergovernmental agreement (IGA) between Australia and the US, based on the published US Model IGA, as an alternative to individual agreements between Australian financial institutions and the US Internal Revenue Service.
On 26 July 2012, the U.S. Department of the Treasury published a Model IGA which will form the basis of bilateral IGAs with jurisdictions that wish to adopt this alternative means for their financial institutions to comply with FATCA while minimising compliance burdens.
The Model IGA follows the U.S. Department of the Treasury and Internal Revenue Service's release of proposed FATCA regulations, and the simultaneous announcement of an intergovernmental alternative to FATCA implementation, on 8 February 2012.
Further information on FATCA can be accessed at the U.S. Internal Revenue Service's website.