Part 2: Our FOI Journey – Learnings & Next Steps

In Part 1 of this two-part blog, we reviewed our lengthy and largely unsuccessful journey in exercising our Freedom of Information (FOI) rights to better understand the context behind the current 2001 tax treaty and to use this information to better frame our initiatives to improve this important agreement.

Although our FOI requests were largely unsuccessful, we did gain some knowledge and insights along the way.  The purpose of Part 2 is to discuss these learnings and suggest further activities we might consider.

Learnings

So what did we learn?

FOI Request #1:  Requested background objectives, negotiation and contextual information behind the current (2001) tax treaty, particularly information on how the tax treaty pertains to individual taxpayer (vs. businesses).

As discussed in Part 1 , our first FOI request was viewed as the most important yet proved to be the most problematic, despite multiple refinements and iterations.  It wasn’t that the information we sought does not exist, we were simply unable, given our current level of knowledge, to be specific enough with our requests to identify a limited, and therefore actionable, set of documents.   Broad keywords searches and document classes simply returned huge lists of documents which allowed Treasury to deny the request under “practical refusal” grounds as the “resource impact of processing the request would be substantial and unreasonable”.

Our learnings, albeit limited:

  • We learned that the ATO, not Treasury, held organisational accountability back when the 2001 Tax treaty was negotiated and executed, with organisational responsibilities for tax treaties transferred to Treasury afterwards. 
  • The tax treaty files provided to Treasury were paper rather than digital.  As these paper files are poorly indexed and consist of many boxes, any future FOI requests on this material are unlikely to be successful given the effort that would be required to identify and retrieve records from these archive boxes.  It is possible that the ATO kept digital records describing these files which could be tested with a future FOI request directed at the ATO.
  • Government files are only subject to the FOI regime for 20 years.  After this time, access to this material becomes subject to the Archives Act, which is a far less restrictive access regime managed by the National Archives of Australia.  Notionally, we should be able to access the 2001 tax treaty files in full from 1 January 2022, which is less than three years from now.  However, gaining access through the Archives Act is not guaranteed as several potential exemption grounds exist within this Act as well that could be applied to our requests, including where disclosure “…would damage international relations…” or “…would breach a confidence shared by a foreign government, an authority of a foreign government…” 

FOI Request #2:  Requested documents pertaining to the clarification of US Tax Treatment of Superannuation pursuant to Article 24, Mutual Agreement Procedure of the US – Australia Tax Treaty

Per Part 1, despite numerous iterations, we again found it impossible given our lack of internal process knowledge to formulate precise search requests that would return a small number of actionable documents to avoid the “practical refusal” trap.   Our various keyword searches (incl. emails) identified tens of thousands of documents all the way down to nil documents when we limited our searches to formal correspondence only.  It seems that in order to make a narrow and actionable request, we really need to know quite specifically what we are looking for… a classic chicken and the egg conundrum!

The key learning from this request came in the FOI decision letter where Treasury made the comment that the Mutual Agreement Procedure of the income tax treaty is undertaken by the relevant jurisdictions’ Competent Authorities and went on to point out that the ATO is the agency responsible for the Australian Competent Authority function.   Consequently, it is possible that a new FOI request on this topic directed to the ATO might achieve results. 

FOI Request #3:  Requested documents pertaining to taxation of Superannuation in regards to the 2001 Australia – US Agreement on Social Security (Totalisation) Agreement

Similar to our other FOI requests, our inability to name the precise documents we were after meant that we quickly ran into the Practical Refusal roadblock again.  However, unlike other groups, the Treasury team responsible for Social Security Agreements (SSA) actually went above and beyond the FOI requirements by offering to engage with us directly to better understand our request objectives, eventually leading to a teleconference discussion with the section manager and a policy analyst. 

This discussion was most useful as it gave us the opportunity to expand on our purpose and to seek informed advice whether the desired information existed.  During the discussion we learned that the Retirement Income Policy division that is responsible for the Social Security Agreements is primarily concerned with avoiding fragmented entitlements for persons who have lived in multiple countries under multiple retirement schemes.  The taxation treatment of retirement benefits is generally outside their remit.  Any activity to Social Security Agreements is driven by the Department of Social Services and, in fact, they confided that their department has not negotiated a new SSA in many years.

Subsequent to the meeting, they looked at their records further to determine if they had any information helpful to our cause and informally released two documents: 1) The 1999 Australian model Double Superannuation Coverage Provisions for insertion into bilateral Australian Social Security Agreements and 2) American  Chamber of Commerce (AmCham) 1999 submission regarding social security and pension/super issues

Review of these documents indicate they are of minor interest only and not directly relevant to our core objectives.    However, the AmCham submission is interesting as it shows that clearly a number of the double taxation issues were pointed out to Treasury in advance of the current 2001 taxation agreements yet none of these issues were resolved before the treaty execution. 

The most important lesson we learned from this request was the importance of developing and maintaining both formal and informal relationships within key government bureaucracies if our group wishes to be effective and timely in pursuing our objectives. 

FOI Request #4:  This request sought any close-out documents pertaining the OAIC recommendation that Treasury should conduct a Privacy Impact Assessment (PIA) of the proposed US Foreign Account Tax Compliance Act (FATCA) legislation[1].

Once again, keyword document searches including emails identified far too many records to be actionable.  Once we dropped emails as a source from the search and focused on formal documents only, no relevant documents were identified.

During reviews and our discussions with Treasury, we learned:

  • As the OAIC submission only suggested Treasury conduct a PIA, this was non-binding and there was no legal requirement for Treasury to conduct a PIA. 
  • Privacy implications and the OAIC’s submission were subsequently discussed in the FATCA Regulation Impact Statement (RIS) prepared by Treasury and available here.
  • A FATCA Regulation Impact Statement was prepared and certified by Treasury and assessed as adequate by the Office of Best Practice Regulation.  It was noted that given the significance of the legislation, a Post-implementation Review will be required within five years, presumably conducted sometime in 2019 (five years after the signing of the FATCA IGA in April 2014).

Next Steps

  1. Work needs to be undertaken to determine how we might go about building both formal and informal relationships within key bureaucracies such as the Tax Treaty unit within Treasury given how important informed knowledge is to our future plans and actions.
  2. Consider new FOI requests through the ATO:
    1. Determine if ATO retained digital tax treaty records or metadata on the paper 2001 Tax Treaty records transferred to Treasury
    2. Seek superannuation taxations documents through ATO’s role as the Australia Competent Authority for the treaty’s Mutual Agreement Procedure
  3. Undertake another FOI campaign targeting FATCA reporting:
    1. Obtain updated ATO statistics on FATCA reporting (done and refusal to provide is under appeal; will be subject of a future blog)
    2. Consider lodging a US FOI request, seeking to obtain US FATCA reporting statistics, describing what information they have they received and what information is being provided to other countries.  Note this is unlikely to be unsuccessful as this has been done by others within the US with respect to information received by the IRS. The IRS refused citing section 6105 (https://www.law.cornell.edu/uscode/text/26/6105 )
    3. Engage, if possible, into the FATCA post-implementation review which is due in 2019, including providing stakeholder feedback as required as part of the PIR.  At the minimum, request a copy of the FATCA post-implementation review which is due in 2019.

[1] Source: Items 26-29, made to Treasury by the Office of the Australian Information Commissioner (OAIC) submission on FATCA, September 2012.  (Reference: https://www.oaic.gov.au/engage-with-us/submissions/intergovernmental-agreement-to-implement-fatca)

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