Beleaguered compliance managers may breath a bit easier with the announcement that another regulatory requirement for dealer groups is to be delayed.
The US Internal Revenue Service (IRS) has pushed back the deadlines for a number of Foreign Account Tax Compliance Act (FATCA) requirements for six months to July 1, 2014.
The delay includes onerous procedures relating to new account identification, which will require Australian 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 so, the FATCA regime will require the fund to report this information to the IRS or, in Australia’s case, under an intergovernmental agreement to the Australian Tax Office.
Draft FATCA regulations released in February 2012 sent shockwaves through the Australian financial services industry when it became apparent that superannuation funds would not be exempt from the US reporting and withholding requirements under FATCA.
Local view
John Brogden, chief executive of the Financial Services Council, said the delay gives the industry breathing space while major reforms such as the Future of Financial Advice (FoFA) and MySuper are 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.
The FSC has been heavily involved in lobbying for an intergovernmental agreement with the US on FATCA. Treasury is continuing negotiations with the US on the finalisation of such an agreement.
“The FSC will provide any assistance required by Treasury to ensure the completion of the intergovernmental agreement occurs as quickly as possible,” said Brogden.
“A significant outcome of the IRS announcement is that countries entering into intergovernmental agreements will be protected by those agreements even if legislation in their own jurisdictions is not in place.”
FATCA was enacted in 2010 by the US congress as part of the Hiring Incentives to Restore Employment Act.
