COMMENT: Marty…: My respected Australian broker in Sydney, to my horror today, has, for the first time, just asked me to supply the USA Internal Revenue Service with my Tax File Number because of a new requirement in the W8-ben form, otherwise he advises me that I will run the risk that they may withhold 30 percent of my sale proceeds every time I sell my shares. This is completely different to tax being held on dividends paid by stocks that I may hold, which was the previous legislation which may still be applicable.
I present the following reasons why this new requirement is abhorrent:
Firstly it is illegal under Australian Law to disclose ones TFN to third parties let alone foreign governments, even so-called friendly ones like the USA! This is an affront therefore to Australian Law! Secondly if one doesn’t disclose one’s correct number the USA shouldn’t be able to corroborate this information without the collusion and illegal consent of the Australian Tax Office! If the Internal Revenue Service then disputes the correctness of the TFN then this would prove the illegal collusion, I would submit.
Thirdly and most importantly, no sane foreign investor would give his correct TFN to the USA when investing in the USA because he would be putting his head in a noose and asking to be hung for not eventually paying the correct capital gains tax and so when the news of this new requirement is leaked out investment in stocks and other businesses will cease and so will the economy of the USA.
Unfortunately I don’t have a copy of this new W8 form which presumably will have to be filed annually, but you, … should be able to get to the bottom of this very real threat to the USA economy and its previously flexible investment regime, which I submit is about to be ruined, possibly by a minor bureaucrat or more sinisterly by a government functionary, with probable Democrat socialist tendencies who wishes to crush the Trump and Republican’s rule and introduce Communism!!
Meanwhile, I don’t know whether to agree to my broker’s demands or not, so I hope you have enough contacts in the USA to get this extremely offensive deterrent to investing in the USA removed ASAP! A brief receipt of this important message would be appreciated!
JN, your client and retired lawyer (LLB.SYD.UNI.)
ANSWER: I suspect that they are either being overly cautious or they believe you are connected to an American someway by birth or marriage. In 2015, the IRS changed the due date from June 30 to April 15, starting with 2016 filings in 2017 concerning foreign assets. In recent years, many taxpayers omitted foreign bank account reports when they should have filed them. Many taxpayers just didn’t realize it. Some had financial interests in family accounts offshore if they were foreign nationals before moving to the USA. Or some taxpayers married a foreign person gaining that financial interest. Others may have international retirement or insurance accounts that they never realized were subject to Foreign Bank Account Reports or FBAR reporting.
The FBAR rule states “a financial interest in, signature authority or other authority over foreign financial accounts.” Traders and executives of hedge funds and other financial institutions and trustees typically have signature authority or other authority over foreign financial accounts triggering FBAR filings for them even though they are not personal accounts. Naturally, the IRS has a very highly complex and nuanced penalty regime in connection with late or incorrect FBAR filings.
Chances are that your broker somehow believes you have some connection that requires a FBAR filing. I attempted to wire a friend about $6,000 in Asia and HSBC refused to put the wire in his account. They stated that they could NOT confirm that I did not have some interest in his personal account. I had to send him a check. I can wire money to a foreign corporation, but I cannot send money to an account of any individual. This is all part of this hunt for taxes which is beyond belief. Every time I return from overseas, the questions are specific (1) my profession for economic profiling, and (2) how much money do you have on you.