Foreign Account Tax Compliance Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) is a legislation enacted by the United States (US) to ensure that all US citizens living overseas as well as US tax residents comply with the US tax laws.

Australia and the US have signed an agreement to implement FATCA. Under this agreement, Australia Financial Institutes are required to report to the Australian Taxation Office, not to the US Internal Revenue Services. This ensures that both countries’ tax laws are effectively enforced. For more information on FATCA, please see here.

However, the federal government has announced that it has entered into an agreement with the US government such that SMSF’s do not need to comply with FATCA. This means that any SMSF’s that have a US citizen as a Member/Trustee do not need to adhere to FATCA reporting compliance. For more information, please see here.

Regardless, it is still important to note that there are certain residency requirements imposed by the ATO on anyone who wants to set up and manage an SMSF. For more information on the residency requirements, please see here.