Australia Accounts & FBAR
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Australia Accounts & FBAR
Australia Accounts & FBAR: When it comes to Australia and FBAR reporting, there are a few mainstays that Taxpayers with foreign accounts and assets in Australia should be aware of. While not all accounts in Australia are reportable — a majority of them are reported to the IRS each year on the annual FBAR. Even though there is a tax treaty, that does not mean US account holders with assets in Australia are exempt from reporting the accounts on their US tax return — although the treaty may limit the taxation of certain income — but that is a separate issue.
Let’s review the basics of what types of Australian bank accounts and other financial accounts are reported to the US government:
Bank Accounts
When a US person has bank accounts in Australia, those foreign financial accounts are reportable each year on the FBAR. The individual balances of each account is not the determining factor as to whether the accounts are reportable. Instead, the US government requires the taxpayer to look at the annual aggregate total of all the accounts of the taxpayer worldwide. And, if the annual aggregate total exceeds $10,000 on any given day of the year, then all of the accounts are reportable — including dormant accounts, zero balance accounts, and accounts that do not generate any income.
Investment Accounts/Commonwealth
There are many different types of investment accounts in Australia. Whether it is a mutual or equity fund account, stock account or other investment account — the accounts are reportable each year on the annual FBAR. While many of these accounts may overlap on the Form 8938, not all accounts are reported on both forms — so it is important to be sure whether or not the specific account is required on the FBAR, 8938 or both.
Mortgage Accounts
Mortgage accounts are common in Australia and are (generally) included on the FBAR.
Employer Pension/Life Insurance & FBAR
Many Taxpayers who are originally from Australia — or previously worked in Australia may have employer pension (distinct from a Superannuation).This is a type of an investment account that would need to be reported on the FBAR. For many of our clients, the taxpayer has not touched the investment for many years — but still, it must be included on the FBAR.
Superannuation
Our international tax law firm is one of the main tax law firms that represents clients with Australian Superannuation funds for their US tax and reporting requirements. Generally, a Superannuation is considered a foreign financial account and reported on the FBAR.
The extent of the reporting may differ based on whether it is a Self-Managed Superannuation Fund and whether or not the filer is at retirement.
Australian FBAR Reporting is Complex
In conclusion, when a US person has foreign financial accounts and bank accounts in Australia, chances are those accounts are going to be included on the annual FBAR. Oftentimes, the filer is unaware that they have any reporting requirement to the US government for their foreign accounts until they have already missed one or multiple years of reporting. If this is the case, they should consider getting into compliance for prior years by using FBAR Amnesty, before filing the current year FBAR — and risking a Quiet Disclosure.
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