Foreign Account Tax Compliance Act


From 1 July 2014, the Foreign Account Tax Compliance Act (FATCA) requires Australian financial institutions to review customer accounts to determine whether they are held by US citizens, US tax residents or US entities (or in some cases non-US entities controlled by US persons).

Customers may be contacted by their financial institution (for example, by letter) about confirming whether they are a US citizen, tax resident or otherwise a US person. If customers have any further questions about this process, they should contact their financial institution.

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The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States Congress in March 2010 to improve compliance with US tax laws. FATCA imposes certain due diligence and reporting obligations on foreign (non-US) financial institutions, including Australian institutions. These institutions will be required to report to the US Internal Revenue Service (IRS) information on US citizens with financial accounts.

On 28 April 2014, Australia and the US signed an intergovernmental agreement to assist in the facilitation of FATCA for Australian financial institutions. A key objective of the intergovernmental agreement is to support Australian compliance with FATCA in a way that reduces its overall burden on Australian business. This includes reporting the information via the Australian Taxation Office (ATO) under the existing Australia–US tax treaty arrangements.

Legislation to give effect to Australia’s obligations under the intergovernmental agreement received Royal Assent on 30 June 2014.

A broad range of Australian financial institutions are affected, including banks, some building societies and credit unions, specified life insurance companies, investment funds, custodial institutions and some brokers. In order to be treated as compliant under FATCA these financial institutions are required to:

  • Register with the IRS.
  • From 1 July 2014, review customer accounts to determine whether they are reportable accounts (accounts held by US citizens or US tax residents) under the intergovernmental agreement.
  • Report to the ATO in the 2015 calendar year the required account information for the 2014 calendar year (supplied in the IRS FATCA XML Schema format).

The information reported to the ATO will then be passed on to the IRS.

An intergovernmental agreement improves existing reciprocal tax information-sharing arrangements between the IRS and the ATO. It will help ensure Australian tax laws are effectively enforced so Australian businesses and individuals who pay the correct amount of tax are not disadvantaged by those who seek to evade their tax obligations.

Media release

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This page will be updated to include links to additional information as it becomes available.

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    Last modified: 27 Mar 2015QC 26959