Second Reading Speech
This Bill amends the Taxation Administration Act 1953 to require Australian financial institutions to collect and report information to the Australian Taxation Office about their accountholders who are United States persons or United States controlled entities.
These amendments will give effect to Australia's obligations under the treaty-status intergovernmental Agreement between the Government of Australia and the Government of the United States ofAmerica to Improve International Tax Compliance and to Implement FATCA, which was signed by Australia and the United States on 28 April 2014.
The Bill and the intergovernmental agreement will enable Australian financial institutions to comply with the United States Foreign Account Tax Compliance Act (FATCA) without breaching Australian law.
FATCA is a unilateral anti-tax evasion regime aimed at detecting United States taxpayers who use accounts with financial institutions located outside the United States to conceal income and assets from the United States Internal Revenue Service. FATCA will commence on 1 July 2014 and will affect a large number of Australian financial institutions.
The Bill will require financial institutions to identify and report relevant accountholder information -as specified in the intergovernmental agreement -annually to the Australian Taxation Office which will subsequently forward it to the Internal
Revenue Service under existing taxpayer information-sharing arrangements authorised by the Australia-United States tax treaty.
In the absence of these requirements, and the intergovernmental agreement, Australian financial institutions would be exposed to significant economic costs; including the possibility of a 30 per cent withholding tax on their United States sourced income. The Bill will help to minimise those costs for financial institutions.
For this reason, Australian financial institutions strongly support the Bill and the intergovernmental agreement.
The Bill and the intergovernmental agreement will also improve cooperation between Australia and the United States for the purpose of preventing tax evasion. This will help to enhance the integrity of both countries' tax systems.
Full details of the measure are contained in the explanatory memorandum.
I commend the Bill to the House.
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