U.S., Australia Agree to Battle Tax Evasion

U.S., Australia Agree to Battle Tax Evasion

Tax evasion is currently a major topic of conversation, with a Senate Hearing in the near future focusing on Swiss banks. In another major move, U.S. Treasury Secretary Jacob Lew said that Australia has agreed to sign a tax evasion agreement, according to Bloomberg Businessweek. The U.S. and Australia have yet to sign the agreement, but plan to do so at the G-20 summit

Tax law strictly prohibits storing money in foreign bank accounts to avoid taxes, but that hasn’t stopped people in the past. This agreement with Australia is a good step toward reducing the amount of safe havens people have to avoid being taxed.

Australia has agreed to terms based on the Foreign Account Tax Compliance Act, which requires financial institutions to report on information about accounts held by U.S. tax payers to the Internal Revenue Service.

“Automatic exchange of information has quickly become the new global standard,” said Lew, who’s in Sydney, Australia to attend a meeting of finance ministers from G-20 major economies. “The G-20 should continue to provide its full support and encourage all nations to adopt the standard.”

Australian treasurer Joe Hockey said in a meeting with Lew that he hopes the G-20 nations can come up with methods to “ensure that there is a greater transparency and better outcomes in the disclosure of tax liabilities and tax collections.”

With the Senate Hearing on Swiss banks coming up, and this agreement between the U.S. and Australia, it is becoming more difficult for people to store funds in offshore accounts for tax purposes. But, there are still plenty of nations that accept these funds, so there is likely a long way to go before offshore-tax evasion is a thing of the past.