Australian super funds may have costly obligations under the Foreign Account Tax Compliance Act (FATCA), a new chapter of the US Internal Revenue code aimed at boosting the tax take from Americans living overseas, warns the financial services division of Deloitte.
A partner specialising in forensics and financial crime at the firm, Graham Dillon, said Australian super funds had not even responded adequately to years-old anti-money laundering obligations, so he doubted how well-prepared they would be for a further test of their know-your-customer procedures.
Noelle Kelleher from Deloitte’s superannuation practice observed many funds wrongly assumed their members would be granted an exemption from FATCA, whereas only single-employer corporate funds had been definitively relieved. More information on exemptions will be provided throughoutt his year and next, before the planned start of FATCA on the first day of 2013.
FATCA seeks to identify US taxpayers with accounts at foreign financial institutions (FFIs), and attempts to enforce reporting of those accounts by imposing withholding tax. Apart from the extra account verification requirements, which Dillon said required funds to “prove a negative” in terms of their members’ non-American status, the costs of non-compliance with FATCA are real – a withholding agent is obliged to withhold 30 per cent on withholdable payments to FFIs whose procedures are found wanting by US Internal Revenue.
