Today I announce Australia has commenced formal discussions for an intergovernmental agreement with the United States to minimise the impact for Australians of the United States' Foreign Account Tax Compliance Act (FATCA) in Australia.
I make this announcement after meeting with United States' Treasury Secretary Tim Geithner in Washington DC this afternoon (Washington time).
FATCA was enacted by the United States Congress in March 2010 as part of US efforts to improve compliance with US tax laws. FATCA will impose certain due diligence and reporting obligations on foreign (non-US) financial institutions including Australian institutions.
A key objective of the intergovernmental agreement the Australian Government is negotiating with the US Administration is to facilitate Australian compliance with FATCA in a way that reduces its overall burden on Australian business.
An intergovernmental agreement would also improve existing reciprocal tax information sharing arrangements between the Australian Taxation Office and the United States Internal Revenue Service. This will help ensure Australian tax laws are effectively enforced so that Australian businesses and individuals who pay their fair share of tax are not disadvantaged by those who seek to evade their tax obligations.
The Government will continue to work with Australian stakeholders to ensure that their interests are reflected in discussions with the United States Treasury and to ensure there are appropriate safeguards in any future bilateral arrangements to protect the legitimate interests of Australian citizens.
The Government has been actively engaged with the United States to minimise the compliance impact of this legislation on Australian institutions, and this will continue over the coming months.