The Financial Services Council (FSC) has made its case to Congress and Treasury in the US for an intergovernmental agreement to reduce the compliance burden of the Foreign Account Tax Compliance Act (FATCA) regime on Australian superannuation funds.
FSC chief executive John Brogden met with senior officials from US Treasury, the IRS and members of Congress in the United States to work on the final developments of the regime due to come into effect on 1 January 2013.
The FSC released a submission on draft regulations in April calling for an intergovernmental agreement to facilitate the transfer of data from the Australian Taxation Office to the Internal Revenue Service (IRS) and reduce the onus on superannuation funds.
"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 said.
The regime requires Australian foreign financial institutions (FFI) including super funds to collect detailed data to determine if a member's financial and residency arrangements make them a US taxpayer.
Failing the provision of information, the super fund is required to withhold 30 per cent tax on US connected payments.
But while the FSC is working closely with industry bodies in Australia and relevant US representatives, the Australian government will need to get involved to push for a resolution before final regulations are drawn up in September.
"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 agreement with the United States," he said.
