The Foreign Account Tax Compliance Act (FATCA) is a U.S. tax law that requires foreign financial institutions to report information about U.S. account holders to the Internal Revenue Service (IRS). The law was introduced in 2010 as a way to combat tax evasion by U.S. citizens and residents who hold assets overseas.

Australia is one of more than 110 countries that have signed an intergovernmental agreement (IGA) with the United States to implement FATCA. The IGA allows Australian financial institutions to comply with FATCA reporting requirements without violating Australian privacy laws.

Under the agreement, Australian financial institutions must collect and report certain information about their U.S. account holders to the Australian Taxation Office (ATO), which then shares the information with the IRS. The information includes the account holder`s name, address, taxpayer identification number, account number, account balance, and gross interest, dividends, and other income earned on the account.

Financial institutions that do not comply with FATCA reporting requirements risk penalties and could be subject to withholding taxes on their U.S. source income.

To comply with FATCA reporting requirements, Australian financial institutions must register with the IRS and obtain a Global Intermediary Identification Number (GIIN). The GIIN is used to identify financial institutions that are compliant with FATCA.

The ATO has also published guidance for Australian financial institutions on how to comply with FATCA reporting requirements and submit information to the ATO.

Overall, the FATCA agreement between Australia and the United States is designed to help prevent tax evasion and ensure that U.S. citizens and residents are complying with their tax obligations. It is important for Australian financial institutions to understand their obligations under the agreement and take steps to comply with FATCA reporting requirements.