FATCA withholding postponed until 1 July 2014 (and grandfathering extended) - .PDF file.
The US government has postponed the commencement of 30 per cent withholding on payments of US source income under the US Foreign Account Tax Compliance Act (FATCA) until 1 July 2014.
Importantly, grandfathering has also been extended such that certain obligations (including debt instruments, derivatives transactions and associated collateral) outstanding on 1 July 2014 will be grandfathered under FATCA. Grandfathering does not apply to obligations that are treated as equity for US tax purposes, obligations that lack a stated expiration or term or to certain agreements or instruments (including custodial agreements, brokerage agreements, investment-linked annuity contracts or insurance contracts and master agreements). Grandfathering protection will be lost if the obligation is materially modified.
This six-month delay is particularly welcome for Australian financial institutions, given the uncertainty about when an intergovernmental agreement (IGA) between the Australian and US governments will be signed, and, equally importantly, when Australian implementing legislation will be enacted and effective…
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