find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Lawyers cash in on FATCA

Lawyers cash in on FATCA

As the US pushes through anti-tax-avoidance legislation, lawyers in Australia are looking at work opportunities that will arise from the “monumental compliance burden” faced by financial institutions, an international tax expert has claimed.

On a visit to Australia, DLA Piper’s Alan Granwell (pictured), who advises multinationals on cross-border tax matters out of the firm’s Washington office, spoke with Lawyers Weekly in October ahead of the release of the final form of the US Foreign Account Tax Compliance Act (FATCA), scheduled for October.

He said Australian financial institutions are becoming increasingly cognisant of the looming legislation that will set in motion “a tremendous compliance and administrative undertaking”.

Under FATCA, financial institutions worldwide will need to identify and supply the details of any US account holder or withhold 30 per cent tax on interest or dividends to those who refuse to declare their obligations to pay US tax.

Granwell claimed financial institutions must comply with FATCA to remain competitive – and this spells work for firms that will advise on the legal requirements of new data management and reporting systems, among other necessary internal changes.

“In order to comply, financial institutions will have to modify their software systems, protocols, procedures and on-boarding – a whole slew of things.”

Lawyers will again be called upon by their clients to advise on planned Australian legislation that will prevent conflicts between FATCA and local privacy and discrimination laws, said Jock McCormack, head of DLA Piper Australia’s taxation practice. He explained that FACTA could potentially clash with the Privacy Act, which prevents the release of personal information to foreign tax bodies, and the Racial Discrimination Act, as US account holders alone are being targeted.

Importantly, the Government will, through an inter-governmental agreement (IGA), attempt to guarantee FATCA doesn’t undermine its double taxation treaty with the US, which prevents the levying of tax by two or more jurisdictions on the same declared income.

Last month, the UK government signed the inaugural IGA in relation to FATCA, which is expected to be the basis of a bilateral agreement between the US and Australia.

“First, we will see the model IGA and ascertain if the undertakings conform to Australian laws,” said McCormack.

But the “big money” for law firms, Granwell discovered, is in developing FATCA-compliant IT infrastructure for financial institutions. He revealed that DLA Piper has teamed up with a software company and IT management consultancy with the aim of rolling out a FACTA-compliant software solution so clients “can have confidence that they’re following the rules”.

“It’s probably wise to invest in a software company at the moment,” he added with a laugh.

He also advised firms that don’t have a taxation arm in the US to form alliances with taxation experts in the country before the legislation takes effect, which was recently postponed by the US Internal Revenue Service (IRS) until 2014.

“The smart move [for Australian lawyers] will be to alert financial institutions to the changes and then collaborate with US professionals.”

But until the Government enters into an agreement with the US, financial institutions will be stifled by the uncertainty, according to Granwell. He urged the Government to sign an IGA as soon as possible to provide “assurances” to institutions so they can begin the lengthy transition to FATCA-compliant systems.

The total cost of implementation will likely far exceed the projected $US8.7 billion the US government is hoping to recoup in lost tax dollars, Granwell added. He pointed out that the Australian Tax Office also faces “tremendous” administration costs as it moves towards a system of automatic information exchange with the IRS.

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Lawyers cash in on FATCA
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...