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Australia – FACTA: Intergovernmental Agreement Signed With US.

7 May, 2014


Legal News & Analysis – Asia Pacific – Australia – Tax


What You Need To Know

The governments of the US and Australia have signed an intergovernmental agreement (the US-Australia IGA) in relation to the tax information-reporting regime introduced under the US Foreign Account Tax Compliance Act or “FATCA”. Australia joins a growing list of countries that have partnered with the US in its efforts to promote tax disclosure and reporting on a worldwide basis under FATCA. The US-Australia IGA is, in all material respects, consistent with the Model 1 reciprocal IGA published by the US Treasury.
The US-Australia IGA is designed to assist the Australian operations of Australian financial institutions to comply with the obligations imposed by FATCA and includes due diligence procedures which Australian financial institutions can follow to determine whether they have any US-related accounts which must be reported. A number of Australian institutions will be exempted from FATCA or will be deemed to be compliant with FATCA, such as superannuation entities, certain government financial entities (eg the Reserve Bank and the Future Fund) and financial institutions which only have customers and operations in Australia. 

What You Need To Do

Australian financial institutions that do have reporting obligations will be required to report to the Australian Taxation Office (rather than the US Internal Revenue Service (IRS)) from 1 July 2014. The Australian Taxation Office will have the ability to impose penalties for non-compliance (in the same way that they do in relation to other Australian tax reporting obligations). As long as Australian financial institutions comply with their Australian reporting obligations, they should not be subject to any withholding tax on their US source income under FATCA. 

Australian financial institutions will also need to consider whether they have other obligations in relation to FATCA, such as a requirement to register with the IRS or a requirement to withhold from, or provide information in relation to, certain US source payments. Australian financial institutions with foreign branches or subsidiaries are likely to be subject to separate FATCA reporting obligations (either to the tax authority in the jurisdiction in which those branches and subsidiaries are located or to the IRS). 

US Australia IGA Draft Legislation 

The full text of the US-Australia IGA is at The Treasury website. Draft legislation to give effect to Australian’s obligations under the US-Australia IGA (also available at The Treasury website) has been released for comment by 9 May 2014.


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For further information, please contact:


Ian Kellock, Partner, Ashurst 
[email protected]


Paul O’Donnell, Partner, Ashurst 
paul.o’[email protected]


Ian Fullerton, Ashurst
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Marcus Ryan, Ashurst 
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