Question:
Australian banks suffer big expense helping collect US taxes
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
More than half of the financial institutions surveyed by Thomson Reuters will exceed their budgets for complying with new reporting requirements on US individuals and entities. Banks must report details to the Tax Office and it will then on-send that information to the US Internal Revenue Service. More than a quarter of those financial institutions expect to spend between USD 100,000 and USD 1 million to comply with the new rules.
The United States legislature passed new legislation in 2010 called the Foreign Account Tax Compliance Act (FATCA). The intention is to use the dominant strength of the US banking market to force foreign banks to disclose offshore monies and accounts held by US citizens or entities. Banks must comply with the legislation to operate in the US or face a massive 30% withholding tax burden.
The Australian Government struck a deal and has changed our legislation so that Australian banks will provide the required information to the Tax Office who will then pass the information onto the US Internal Revenue Service rather than the banks providing the information directly.
Where an individual held in excess of $50,000 in a bank account or an entity held in excess of $250,000 in a bank account at 30 June 2014, the bank must undertake due diligence to determine whether or not the bank customer is linked to the United States. They must report this information.
Mr Laurence Kiddle, Managing Director Thomson Reuters, said that the recently adopted Common Reporting Standard requires further increased reporting on a greater number of customers. “A financial institution needs to be able to identify the tax residence of each of their customers – not just whether or not they meet the definition of American Person – and have the ability to report this to the relevant authorities”.
Banks are required to complete their FATCA reporting by the end of March 2015.
Bank customers with substantial cash amounts on deposit may have already received confusing bank correspondence on this matter.
WTB 2014/49/1611
Andrew and Tony Lovett
5 December 2014
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