Superannuation funds and other Australian financial institutions which have frequent dealing with United States entities have been granted some breathing space with respect to complying with new, more exacting US regulations.
The Financial Services Council (FSC) confirmed this week that the US Internal Revenue Service (IRS) had announced that it would be delaying the deadlines for a number of Foreign Account Tax Compliance Act (FATCA) requirements for six months to 1 July, next year.
The FSC noted that the delay included onerous procedures relating to new account identification which will require Australian Foreign Financial Institutions to collect detailed information on their members to determine whether an individual member's financial and residency arrangements make them a US taxpayer.
If those members were deemed US taxpayers, the FATCA regime would require the fund to report this information to the IRS, or in Australia's case, under an Intergovernmental agreement (IGA), to the ATO.
Commenting on the delay for compliance, FSC chief executive John Brogden said it would give the Australian industry breathing space while major Australian reforms such as the Future of Financial Advice and MySuper were being implemented.
"The global financial crisis has not only been the catalyst for significant financial reform in Australia, but on an international scale, more than 10 pieces of major legislation are in the pipeline that will affect Australian financial institutions with international interests", he said.
Brogden pointed out that the FSC had been heavily involved in lobbying for an IGA with the US on FATCA and that the Australian Treasury was continuing negotiations with the US on the finalisation of an IGA.
