Australia Us Intergovernmental Agreement Fatca

The Australia-US Intergovernmental Agreement (IGA) on Foreign Account Tax Compliance Act (FATCA) is a bilateral agreement that was signed on 28 April 2014. The agreement facilitates automatic exchange of information concerning financial accounts held by US taxpayers in Australia and Australian taxpayers in the United States, with the aim of combatting tax evasion.

FATCA was introduced in the United States in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. The legislation requires foreign financial institutions (FFIs) to report on the financial accounts held by their US customers to the Internal Revenue Service (IRS).

The implementation of FATCA has had a significant impact on the global financial industry as FFIs have had to implement new systems and processes to enable them to identify and report on their US account holders.

The Australia-US IGA is important because it provides clarity and certainty for FFIs operating in Australia. The agreement sets out the scope of the information that FFIs must report to the Australian Taxation Office (ATO) and the procedures they must follow to comply with FATCA.

Under the agreement, the ATO is responsible for collecting the information from Australian FFIs and transmitting it to the IRS. This process takes place automatically each year, with the first reporting period taking place in 2015.

The information that is reported includes the name, address and taxpayer identification number of the account holder, as well as the account number, account balance and income earned on the account.

The Australia-US IGA has been in force since 1 July 2014 and has been implemented smoothly. The ATO has reported that the number of Australian financial institutions registering under FATCA has exceeded expectations, with over 1,000 entities registering in the first year of implementation.

The implementation of the Australia-US IGA has been a positive development for the global fight against tax evasion. The agreement has enabled the automatic exchange of information between two major economies and has provided a framework for other countries to follow.

In conclusion, the Australia-US IGA on FATCA is an important agreement that sets out the procedures for financial institutions in Australia to comply with FATCA. The agreement has been successfully implemented and has enabled the automatic exchange of information between two major economies. Its impact is likely to be felt for years to come as other countries look to follow its lead in the fight against tax evasion.

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