Questions for the ATO

Another year, another deadline. The ATO has until 30 September to hand over another tranche of Australian bank details to the IRS under the FATCA IGA. Last year they were almost a week early when they handed over details of more than 30,000 accounts containing more than $5 billion for an average balance greater than $160,000. What will they send this year?

Of course, governments around the world are sending data to the IRS. Some lawmakers are beginning to question whether this is appropriate. In Canada earlier this year, an opposition MP tabled a series of questions for the Canada Revenue Agency on that country’s 2015 FATCA data transmission. The answers were less than satisfactory. For many of the questions the answer was simply that they didn’t know. About all they learned was that about 62% of the records were associated with Canadian addresses; 35.5% were associated with US addresses; and the remaining 2.5% were from elsewhere. So significantly more than half of the records were reporting the income of Canadian residents to a foreign government so that government could assess and collect tax on Canadian source income!

It’s time to get some answers here in Australia about exactly what information is being turned over to the IRS. The following questions should be put to the ATO:

  • Of the records sent to the IRS in both 2015 and 2016, how many were individual accounts; how many were entity accounts?
  • How many account holders were: Australian residents; US residents; residents of other jurisdictions?
  • Of the Australian resident individual account holders (or beneficial owners of entity accounts), how many were Australian citizens, permanent residents, temporary residents?
  • Can the ATO confirm that all reported accounts were above the USD 50,000 threshold?
  • Were the account holders of reported accounts informed that their information was sent to the IRS? Were they given the opportunity to verify that the information sent was correct?
  • Regarding reciprocity, has the ATO received any information from the IRS that it would not have received without the FATCA IGA? If so, how many records/accounts and what is the total/average account balance? When was this information received?
  • The IRS has had some well publicised data breaches, as well as identity theft rings working inside the agency. In the event that the FATCA data entrusted to the IRS is compromised, what steps will the ATO take to help the affected individuals and entities deal with the risk of identity theft?

7 thoughts on “Questions for the ATO”

  1. These questions MUST be sent to the ATO
    .Is there a fear of sending the questions? If so then we engage a legal representative to send on behalf of the steering committee or advocacy group.
    We engaged a couple lawyers but spent most time and money educating them on FATCA.
    The lawyer suggested he woukd send similar questions to ATO whilst we retained anonymity.

    1. Yes, Alby, the questions will be sent to the ATO. I don’t mind putting my name to them – but I wonder whether we are more likely to get actual answers if the questions are asked by either a journalist or by our MPs.

      One of the reasons I posted this while I was away on holiday was that I hoped to generate a bit of discussion – are there any other questions we should be asking?

      The ATO should have sent another batch of data late last month. I have not seen any news of this (and I have a Google Alert set that should pick it up). If anyone sees this information, please post a link here (and/or in the facebook group).

      1. As you know, I am Canadian, and so am unfamiliar with issues, laws, context etc. of Australia. However, perhaps the FATCAnization of Australians such as lawyers (re trust accounts, client privilege, etc.) might also pique the interest of your MPs (in Canada many are lawyers). For ex. in NZ this story continues to evolve https://www.lawsociety.org.nz/practice-resources/practice-briefings/FATCA-and-New-Zealand-Law-Firms_Oct-2016.pdf

        Can a foreign country (US) compel Australian lawyers to deliver up information regarding their firm’s accounts and their client trust, escrow, and other accounts merely on the basis that someone associated with the accounts might be born in the US, of US parentage, etc.? It might be a case where FATCA particularly offends an Australian value or law that affects professionals like lawyers who the government may care about more than it cares about individuals. Could the Australian lawyers in a law firm be compelled to report on ALL the firms accounts no matter who they actually belong to just because the lawyer in question with signatory/co-signatory powers is considered by the US to be a ‘UStaxableperson’? What does Australian law say about lawyer-client privilege? What if the lawyer is a USP but the client is not? What if the lawyer is a deemed USP on estate or trust accounts where the actual estate or beneficial owners are NOT USPs?

        I have found some law society guidance being publicly published in Canada, though have not found it for all provincial law societies;
        http://lawsociety.ab.ca/law-society-today/articles/articles-list/2016/06/10/the-impact-of-the-american-foreign-account-tax-compliance-on-lawyers-trust-accounts
        http://isaacbrocksociety.ca/2015/10/25/how-the-fatca-iga-has-made-u-s-citizenship-a-disability-in-canada-and-highlighted-the-issue-of-law-firm-trust-accounts/

        And then there is the impact of US extraterritorial CBT on Australians with a professional practice, like doctors or others who the US may consider are operating ‘foreign corporations’ – with predictably punitive extraterritorial treatment by the US. Though it was not enough to stop Canada from signing the IGA, the CMA (Canadian Medical Association) was concerned enough to issue a letter to the then Finance Minister https://www.cma.ca/Assets/assets-library/document/en/advocacy/CMA-letter-Flaherty-Nov21.pdf http://isaacbrocksociety.ca/2012/04/23/canadian-medical-association-position-on-fatca-and-fbarmust-read/

        We also have some provincial laws which the FATCA IGA may not be able to override if tested, even if our federal government pretends that it does. Ex. https://fipa.bc.ca/wordpress/wp-content/uploads/2014/03/MoF-consult-sub-signed-Mar-10-2014.pdf

        I send this just in case there may be some utility for the Australian context if there may be similarities in the regulation of professions (ex. lawyers, doctors), of non-bank financial institutions (similar to Canadian credit unions?), and of jurisdiction (federal vs. provincial if Australia has similar division of powers between its federal government and regional governments).

        Law societies, physicians and other professionals frequently have more of a lobby voice and resonate more with MPs and lawmakers than individuals do.

        1. Thanks for that information, Badger. There are many legal similarities between Australia and Canada, but I haven’t seen anyone raise those issues here – I’ll have to find out why.

  2. Question for the ATO: Why does their website mislead on the Australia-US Tax Treaty by just saying tax treaties prevent double taxation. A mission of their website (I believe) is to provide complete and accurate information as to Australian resident tax obligations under Australian law. The tax treaty and FATCA IGA are Australian law.

    I see this as part of the problem. They are saying no double tax here. Politicians think the treaty is all good. “If it is not broke, don’t fix it” mentality. We need to communicate that the tax treaty is broke and the ATO could help in this regard. The CRA (Canada) is clear on their website in regards to double taxation.

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