As indicated in my last post, the Australian Treasury is seeking submissions on priorities for updating Australia’s tax treaty network. Fix the Tax Treaty! has made a submission. This post explains what you can do to help. Now that we have finalised our submission, it’s time for you to add your voice to the demand for an updated tax treaty. Here’s what you can do: Make your own submission to Treasury (the deadline is 31 October). You can attach our submission as an appendix and voice your support for our proposed solutions. In writing your submission follow the submission guidelines and be aw ..read more

The Australian Treasury is currently asking for submissions on updating Australia’s tax treaty network. Submissions are due 31 October 2021. Fix the Tax Treaty has posted a draft of our submission in our Facebook Group. Comments and feedback are welcome. Everyone is encouraged to make a submission of their own as well ..read more

There’s a lot of confusion about how foreign tax credits (FTCs) work when computing US tax liability. Questions about FTC come up regularly in our Facebook group, so it’s time to publish a quick primer that covers the basic concepts of FTC computation. Note that this post is necessarily a simplification of what is a very complex topic. The big picture is that you compute FTC in a five step process: Allocate your US taxable income into categories Use that allocation to apportion your US tax liability before FTC Allocate your Foreign taxable income into categories Use that allocation to apporti ..read more

What good is it to have a destination if you don’t know how to get there?  With this truism in mind, Let’s Fix the Tax Treaty! has long formally documented out strategy and action plans and made this document available to our membership at fixthetaxtreaty.org for public reference, comments and feedback.[1] However, this plan, last updated in 2018, badly needed an update.  Importantly, we wanted to refresh and update our 2021 action plans and objectives / scorecard.  So in the 2nd half of 2020 we launched a Strategy Refocus exercise, running a number of Focus Groups from our memb ..read more

Focus and simplicity…once you get there, you can move mountains.  — Steve Jobs — Fix the Tax Treaty! (FTT) advocates for the Australian Government to renegotiate the underpinning legacy Australia-US tax treaties and intergovernmental agreements to provide a fair go for all Australians. Sure, our group also provides other services like educating our members on US-Australian taxation issues and pitfalls, providing a wiki-style knowledge base and maintaining a private forum where members can seek advice and share experiences. Nevertheless, our core purpose is all about effecting positive cha ..read more

In my last blog post I discussed how Australia taxes distributions from US retirement accounts. But that’s only half of the picture because the US may also tax these distributions. For US citizens, the US tax treatment is clear and well known. But, what if you’re not a US citizen (or green card holder) when you withdraw your US retirement savings? These issues were the subject of a series of three podcasts I recorded with John Richardson last week (links below). The purpose of this post is to summarise the key points covered in those podcasts. The US tax code starts off with the presumption th ..read more

For those who have moved between the US and Australia, access to and tax treatment of retirement accounts is a common issue. We’ve covered the US taxation of superannuation in several posts, but the tax treatment by both countries of 401k and IRA accounts held in the US is also important. Today’s post will cover the Australian side of this equation. My next post will discuss what happens to your US retirement accounts when you renounce US citizenship (or for Australian expats returning from the US). Is an IRA or 401k a “Foreign Superannuation fund”? Australian tax law has special rules for tax ..read more

This morning I participated in two short podcasts hosted by John Richardson covering the basics of the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC). Keith Redmond, Laura Snyder and Suzanne Herman also participated. We discussed persistent myth that these two US tax provisions “fix” the problems that arise due to the US practice of taxing the residents of other countries under the fiction that all US citizens are US tax residents. Each of these podcasts is a short 15-minute introduction to the complexities surrounding US tax compliance for non-resident US citizens. Edite ..read more

Several of us participated in a conversation today about the issues that must be considered when deciding how to deal with the extraterritorial impact of US citizenship based taxation. For those who are just realising that the US requires ALL citizens to comply with US tax obligations, we discussed the various considerations that come into play when deciding how (or whether) to comply. We also discussed the issues that must be considered when deciding whether it is time to renounce US citizenship. As with many momentous life decisions, there is no one-size-fits-all prescription – US citizenshi ..read more

There has been much speculation among American expat groups about how the recently passed US tax rebates / stimulus will impact Americans living outside of the United States. After all, the US claims the right to tax based on citizenship rather than residence – so shouldn’t the US provide tax rebates based on citizenship as well? As you will see in this post, the complexity introduced by taxing non-residents is not well understood, even by the tax writing committees in Congress. There appear to be some unintended consequences in this bill – though for once, some of these consequences benefit r ..read more