For US expats who moved to Australia decades ago, the idea that they should be filing annual US tax returns may be unreal. Many have been non-compliant for years. Because of this, FATCA and the resulting compliance push have (probably on purpose to some extent) entrapped long-term expats, who have found that the rules have changed while they weren’t looking.
Back in 2014, we met with our federal MP who sent a letter on our behalf to the Assistant Treasurer asking about taxation of our superannuation accounts by the US. This is an extract of the response we received from then Acting Assistant Treasurer, Matthias Cormann:
Too often, when members of our government refer to the problems caused by FATCA or US CBT, they speak of “Americans residing in Australia”. This fails to recognise that many of us are Australian citizens, with all the rights that citizenship confers. This also fails to recognise that all Australians have a stake in this issue as FATCA and CBT drain money from the Australian economy, both in the form of US tax paid and as excess compliance costs forced on Australian financial institutions (and paid for by all account holders through higher fees).
As I’ve said elsewhere, there are two fronts to the battle against US extra-territorial taxation: 1) the US and 2) the countries that allow the US to steal from their tax base.
If we are to pursue this struggle on the Australian front, we do it as Australians (which is not to diminish any connection we may still have to our American heritage).
So, how do we frame our letters and communication with our MPs and others to avoid having them frame the issue as one of “Americans in Australia”?
This site is a volunteer effort. We are not lawyers or tax professionals. Everything published on the site is based on our layperson’s understanding of the complex interaction between two sets of tax laws – an interaction that frequently leads to unjust results.
So, why are we here? Since the passage of FATCA in 2010, more and more US citizens living in Australia (and elsewhere outside the US) have been learning about their (previously unknown for many) obligation to pay US taxes on their worldwide income. Taxation of non-resident US citizens is not a new law; it dates from the US Civil War. But FATCA ushered in a new era of enforcement, with every bank on the planet being enlisted to identify US taxpayers and report them (directly or indirectly) to the IRS.
As the level of compliance by US expats rises, the inequity and injustice of the interaction between US tax rules and Australian tax rules has become more apparent.