The agreement to exclude SMSFs and superannuation from the United States’ Foreign Account Tax Compliance Act (FATCA) has been welcomed by the SMSF Professionals’ Association of Australia (SPAA).
Announced by Treasurer Joe Hockey, the intergovernmental agreement between Australia and the US meant Australian financial institutions, including superannuation funds, would not have to comply with FATCA requirements.
As a result, effective 1 July 2014, SMSFs with a US citizen as a trustee will not have to adhere to the strict FATCA reporting compliance, saving time and considerable costs for trustees and their advisers.
SPAA chief executive Andrea Slattery labelled the decision an excellent outcome for Australian superannuation funds and SMSFs in particular.
“SPAA made strong representations to the Australian and US treasury departments to exclude SMSFs from FATCA for the simple reason Australian superannuation funds pose a low risk of tax evasion because they are subject to strict regulation and supervision in Australia, whether it is by APRA (Australian Prudential Regulation Authority) or the ATO (Australian Taxation Office),” Slattery said.
In lauding the decision, she also acknowledged the critical advocacy role taken on by the Financial Services Council in the process.
“We also congratulate the Treasurer and the federal Treasury on their work on negotiating this intergovernmental agreement that has produced such a good outcome for our SMSF sector and the Australian superannuation system,” she said.