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Citizenship matters – Take 2

Here we go again… another Australian politician, Deputy PM Barnaby Joycehas had his eligibility to sit in Parliament challenged based on claims he is a dual citizen!

John Richardson explains why the Australia should NOT allow foreign laws to dictate who can or cannot be a member of Australia’s Parliament. Where an individual has made no claim to citizenship and has not consented to become a citizen, must Australia recognise citizenship granted by a foreign country?

The Australian constitution was written in an era when dual citizenship was rare. Over the past few decades, dual citizenship has become almost common. With many countries granting citizenship by descent, it has become possible to be a citizen without any knowledge of that fact. In the past few weeks, it appears that Australian politicians have virtually weaponised citizenship.

Today’s Australian includes a list of MPs who may have citizenship problems, with leaders of both major parties threatening to refer members from the other side of the aisle to the High Court on this issue.

Citizenship was weaponised in another context when the Australian government agreed to sign an Intergovernmental Agreement (IGA) with the US over FATCA. There will be many Australians, born in Australia (or elsewhere outside the US) with a qualifying US-citizen parent, who may never have been registered as a US citizen, or who were registered as a minor without their consent. The US government considers them citizens, but, if they have never consented to that citizenship, should they be considered US citizens by their Australian bank? A High Court ruling that Barnaby Joyce or Matthew Canavan need not be considered dual citizens under Australian law could be useful for those that the US considers citizens who either have not consented to that citizenship or who believe they relinquished their US citizenship long ago, but do not have a US Certificate of Loss of Nationality.

Plan to Succeed (Part II) – Strategy Roadmap & Action Plan

Clearly articulating our group’s vision, objectives and action plans is essential if we are to be effective in achieving our aims. Many of you will recall that the Steering Committee members (Karen Alpert, Caroline Day and myself) have long been working on a Strategy Roadmap document, as previous discussed in a number of blog posts:

“A goal without a plan is just a wish.” ― Antoine de Saint-Exupéry

A good advocacy plan will help our group decide where to spend time and effort to achieve our goals and assist us to be as effective as possible with our limited resources.  The plan will be a key reference document that is periodically updated as we progress towards achieving our goals.

I’m pleased to announce that we have completed a final draft of our Strategy Roadmap.  You can view it here.

Continue reading “Plan to Succeed (Part II) – Strategy Roadmap & Action Plan”

Investment Constraints 3: Equity

60% of Australians own equity based investments (listed or non-listed) outside of institutional superannuation accounts, and 37% of Australians own listed shares (2017 ASX Australian Investor Study). There are two main ways to invest in equity – purchase shares directly on the share market or purchase a slice of a portfolio managed by a professional portfolio manager. For Australian investors who are claimed by the US, the US tax implications of these two choices are quite different.

This is the third instalment in our series of posts discussing the ways US tax laws constrain the investment choices of US taxpayers living in Australia. These are the areas we will be covering:

  1. Superannuation
  2. Homeownership
  3. Real Estate
  4. Australian Managed Funds
  5. Australian Shares
  6. Business Ownership Structures
  7. Investing in the US
  8. Record keeping

This series (and everything on this website) is general information only. I am not a lawyer, tax professional, or financial planner, just someone who has learned about US tax and wants to pass on general knowledge. Many areas of tax law are interdependent, so changes in one area may have unintended consequences in another. You should consult a professional who can consider your own personal circumstances before taking any action. Continue reading “Investment Constraints 3: Equity”

Investment Constraints 2: Real Property

Last week we started a series of posts discussing the ways US tax laws constrain the investment choices of US taxpayers living in Australia. These are the areas we will be covering:

  1. Superannuation
  2. Homeownership
  3. Real Estate
  4. Australian Managed Funds
  5. Australian Shares
  6. Business Ownership Structures
  7. Investing in the US
  8. Record keeping

This series (and everything on this website) is general information only. I am not a lawyer, tax professional, or financial planner, just someone who has learned about US tax and wants to pass on general knowledge. Many areas of tax law are interdependent, so changes in one area may have unintended consequences in another. You should consult a professional who can consider your own personal circumstances before taking any action. Continue reading “Investment Constraints 2: Real Property”

How do US Tax Rules Constrain the Investment Choices of US Taxpayers Living in Australia?

In the Facebook group last week, someone claimed that only the very wealthy are disadvantaged by the dual tax obligations imposed on US citizens and green card holders living in Australia. Certainly, for an Australian resident with only salary income, it is likely that foreign tax credits (FTC) or the Foreign Earned Income Exclusion (FEIE) will completely eliminate any US tax liability. However, for anyone who is considering investing for the future or running their own business, there are many pitfalls and traps in US tax law that need to be carefully considered. It seems like almost anything “foreign” is treated punitively by US tax law, and these xenophobic rules make it difficult for middle class US taxpayers to save effectively while living outside the US.

Over the next few weeks, I will be covering the following areas where US taxpayers living in Australia need to be particularly careful:

  1. Superannuation
  2. Homeownership
  3. Real Estate
  4. Australian Managed Funds
  5. Australian Shares
  6. Business Ownership Structures
  7. Investing in the US
  8. Record keeping

This series (and everything on this website) is general information only. I am not a lawyer, tax professional, or financial planner, just someone who has learned about US tax and wants to pass on general knowledge. Many areas of tax law are interdependent, so changes in one area may have unintended consequences in another. You should consult a professional who can consider your own personal circumstances before taking any action. Continue reading “How do US Tax Rules Constrain the Investment Choices of US Taxpayers Living in Australia?”

CRS – Coming soon to a bank near you…

From 1 July 2017, Australian financial institutions will be required to report account information of anyone with a tax residence outside of Australia to the ATO under the OECD’s Common Reporting Standard (CRS). Once the United States rolled out FATCA, countries in the OECD decided that cross-border reporting of financial accounts might be a good way to rein in use of tax havens for tax evasion. However, while the two are similar, there are some differences.  The key features of CRS are a common standard for: the scope of reporting (type of information, which account holders and which institutions), the due diligence required, format of the data to be exchanged.

With the current push for FATCA repeal, and the recent Hearing on The Unintended Consequences of FATCA, CRS is mentioned by some as a possible substitute for FATCA. Unfortunately, there seem to be a few misconceptions about the differences between the two Automated Exchange of Information (AEOI) schemes. As implemented in Australia, CRS is perfectly compatible with Citizenship Based Taxation.

While it is exceedingly unlikely that the U.S. Congress will ever sign on to CRS, it is important for those who advocate CRS as a more “benign” alternative to be clear on exactly what CRS entails.

This article covers:

  1. How is CRS being implemented in Australia?
  2. Who must report?
  3. Who and what must be reported?
  4. Reciprocity – FATCA vs CRS
  5. Penalties – FATCA vs CRS
  6. Implications for US Persons

Continue reading “CRS – Coming soon to a bank near you…”

Australia’s best investment pal?

The US Study Centre at the University of Sydney, with assistance from AmCham Australia, is producing a study on Australian investment in the US (and vice versa). While there are many factors that determine whether an Australian company will locate operations or marketing efforts in the US, the tax treatment of any Australian managers sent over to the US must be part of the equation. Unfortunately, I think most Aussies moving to the US for business are completely unaware of how the US tax system will see their existing Australian financial assets — until they’re already in the US tax system and it’s too late.
 
It would be great if USSC would include even just a page or paragraph on the way both the tax treaty and the xenophobic US tax code discourage movement of managers between the two countries.
 
AmCham has a blog post that reproduces the article from the Australian (and is not behind a paywall). At the bottom of the blog post (just above the comment box) is an email link. If you’re an Aussie who has relocated to the US for business and had to deal with these issues, please email AmCham and encourage them to include individual tax issues in their study.

“Just the facts, ma’am” … Introducing the Fix The Tax Treaty Wiki!

I was once involved in a contentious activity involving a polarised stakeholder group comprised of big business, activists, regulators and government representatives.   Despite all parties agreeing to fact-based outcomes, I observed “the facts” changed depending on the party involved and decision makers were often presented with inconsistent, confusing and unverifiable information even by different members within the same faction.    At times, I was contacted by policy makers or media with questions and frustratingly could not immediately respond as the information was not at my fingertips.

The lessons I learned from this were if you want to affect change, you must gather your supporting evidence (the “case for change“) early and it must be verifiable and readily accessible.

Continue reading ““Just the facts, ma’am” … Introducing the Fix The Tax Treaty Wiki!”

How can they do that?

Have you opened a bank or investment account lately? Were you asked about other citizenships? Place of birth? Since mid-2014 Australian financial institutions have been ferreting out US Persons. At most institutions, every new account holder is asked these questions. And, if you are found to be a US Person, you must complete a form W-9 (or equivalent) disclosing your US connection and Social Security Number. This data will be sent to the ATO, who will forward it on to the IRS.

Think about that.

Private Australian financial information of Australian citizens and permanent residents is being sent to a foreign government.

How can they do that? Do they really have the authority to send private financial data to the IRS?
Continue reading “How can they do that?”