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Focus and simplicity…once you get there, you can move mountains.

 — Steve Jobs —

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Fix the Tax Treaty! (FTT) advocates for the Australian Government to renegotiate the underpinning legacy Australia-US tax treaties and intergovernmental agreements to provide a fair go for all Australians.

Sure, our group also provides other services like educating our members on US-Australian taxation issues and pitfalls, providing a wiki-style knowledge base and maintaining a private forum where members can seek advice and share experiences.

Nevertheless, our core purpose is all about effecting positive change here in Australia.   As a grass-roots volunteer organisation, FTT seeks to

1. find solutions to the many adverse impacts resulting from the US practices of citizenship-based taxation,
2. target its efforts in our home country of Australia, and
3. provide a vehicle for organised collective action.

Our group membership has grown to over 1,200 members in only four years and we are proud to provide help to those in need.  However, group administration demands have increasingly occupied our small Steering Committee leaving little time to actually pursue our core change agenda.  You may not be aware but our group has long had a strategy roadmap, albeit several years old and in need of updating. 

To address this, we are attempting to refocus our strategy and develop an achievable forward action plan.  Any initiatives must focus on key issues, emphasise greater group involvement and leverage the strengths of our membership.

What better way to start this process than to seek input and feedback directly from our group membership?  As such, we recently ran four focus group sessions (via Zoom VC) with volunteers from our group – huge thanks to those members who took the time to meet with us and contribute!

The purpose of these focus groups was to:

1. double check to see if we are focusing on the right issues and seek to prioritise them
2. get membership ideas on how we might approach the change process, and
3. solicit input on how we might translate this into an action plan.

You can view the introductory slides used at the Focus Groups at the end of this blog.

Pleasingly, we weren’t blindsided by any of the discussion content, with most of the key issues already recognised by the Steering Committee and previously documented in our initial strategy roadmap, blog posts, etc.

To summarise the focus group outcomes, I’ve grouped the outcomes into themes below with a brief discussion synopsis:

1. Top-3 “Pain” Issues
   • Double taxation of retirement accounts (Super, but also ATO taxation of US retirement accounts)
   • Taxation on sale of personal residence
   • Investments taxation restrictions (PFICs)

What was particularly helpful was prioritising the key taxation issues to those few critical issues that impact most of our membership.  The number one issue was clearly the taxation of retirement accounts, where current taxation laws results in double taxation while preventing expatriates from fully taking advantage of their country of residence’s retirement savings incentives.   In short, there is a huge need to reform both US and Australian taxation treatment of retirement accounts in order to provide retirement account portability, facilitate labour mobility and minimise economic leakage. 

Similarly, US taxation on the sale of personal residences in Australia becomes a major issue as high housing costs force Australian residents to tie up a large proportion of their savings in their home with the expectation that these illiquid savings can be “unlocked” during retirement through downsizing or other mechanisms such as reverse mortgages, home equity lines of credit, etc. 

Finally, the investment opportunities available to Australian residents are severely limited by US taxation laws such as PFIC legislation and regulations that punitively tax a wide variety of common non-US investments. 

2. Focus & simplicity
   • Prioritisation required
   • Wrap up in over-arching themes; eg economic advantages of retirement portability / labour mobility
   • Focus on messages that will resonate with our elected representatives
   • Simple messaging formats; 
   • Provide appropriate level of supporting analysis but avoid analysis paralysis

All focus groups were strongly of the view that in order to be more effective, we need prioritisation, increased focus and simplicity in our efforts.  Framing our requests into over-arching themes such as “effective labour mobility” and “retirement portability” is recommended.  Importantly, we need to focus on justification that will resonate with the key decisions makers, our elected representatives.  For example, we should aim to educate politicians that these changes will actually provide economic opportunities as Australia recovers from the COVID-19 recession. 

Messaging needs to be simple and direct; Infographics were recommended as an effective communication tool for both politicians and media.  Of course, some level of supporting analysis may be required to provide important quantification such as economic metrics, but this does not and should not be exhaustive or hugely time consuming as we need to avoid analysis paralysis. 

3. Develop and conduct sustained campaigns on key issues

Focus groups all agreed on the need to develop clear, ongoing and sustained campaigns on key issues.  Specifics however are challenging with no group consensus emerging.  Further work will certainly be required in this area.  

4. Seek to identify develop key alliances with political and Industry groups

Focus groups also recognised the need for alliances that would share our objectives and ideally have greater resources and lobbying connections.  Further work is required but potential allies could be State and Industry Development Groups, Australian Super or Investment organisations, etc.

So what comes next?  We’ll be updating our Strategy Roadmap and seeking to develop action plans and sustained campaigns around these simplified and prioritised objectives.  If you missed the focus groups, it’s not too late to provide input into our revised strategy – just drop Karen (karen@fixthetaxtreaty.org) or me (gstreet@fixthetaxtreaty.org) an email with your thoughts.  We are particularly interested in thoughts around how we might conduct effective campaigns on our key issues (Item 3 in the themes summary).

As always, “many hands make light work.”  To bring about positive change, we must leverage our group as a volunteer resource.  Please get involved!

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FG Introductory slides: