Self-managed super funds (SMSFs) will no longer be subject to the United States’ Foreign Account Tax Compliance Act (FATCA), after Joe Hockey announced an intergovernmental agreement to reduce the burden on Australian financial institutions.
As a result of the agreement, Australian SMSFs with an American trustee or member will be exempt from the FATCA regime. Instead, Australia and the United States will enhance tax information-sharing arrangements, by automatically exchanging account information held by each other’s citizens.
According to the SMSF Professionals’ Association of Australia (SPAA), there will be considerable savings on costs for trustees and their advisers following this decision.
CEO of SPAA, Andrea Slattery, says “SPAA made strong representations to the Australian and US Treasury departments to exclude SMSFs from FATCA for the simple reason Australian superannuation funds pose a low risk of tax evasion because they are subject to strict regulation and supervision in Australia, whether it is by APRA or the ATO.”
“We also congratulate the Treasurer and the Federal Treasury on their work on negotiating this intergovernmental agreement that has produced such a good outcome for our SMSF sector and the Australian superannuation system,” she says.