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Australia looks to import millionaire investors
The Queen Mary 2 luxury liner passes the Sydney Opera house in Sydney, Australia on March 7, 2012.
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Stacey Vanek Smith: If you have $5 million lying around and you like wide open spaces and crocodiles, you could find a new home down under. Australia has just announced a new class of visa intended to attract investor-types to the country.
But as Stuart Cohen reports, they're not expecting a lot of Americans to take the bait.
Stuart Cohen: Australia is rolling out the red carpet for millionaires. Starting July 1, they're offering permanent residency to anyone willing to invest $5 million in an Australian company, venture capital fund, or government bonds.
Immigration minister Chris Bowen says Australia wants to attract the kind of people able to keep the country's economy competitive.
Chris Bowen: What we're looking for is an investment in Australia financially, also an investment emotionally. Because these are people who can contribute a lot to investing in our capital and providing for investment in very important projects throughout the country.
But the government isn't looking to the West to import its millionaires. Instead, Australia expects most of the interest to come from countries in the East -- particularly China, where the super rich might want a better place to live.
Bowen: The private wealth market of China is ever increasing. Australia's well placed to attract investors who are looking for the financial security offered by a stable government and economy.
But critics complain the new program prioritizes the wealthy over refugees and others waiting to be reunited with their families.
In Sydney, I'm Stuart Cohen for Marketplace.
Clearly the market has spoken about the value of U.S. residency and citizenship compared to that of other countries: Australia's price for an investment visa is $5 million, Hong Kong's is HK$10 million (about US$1.25 million), and Canada's is $800,000 ... but U.S. EB-5 threshold is only $500,000 (and for an E-2 it's even cheaper: $50,000). The wealthy from Asia from aren't really looking for a new home country, they're looking for an escape hatch and a place to send their kids for an Anglophone education before they come back to their home countries to take over daddy's company. They certainly don't want to subject themselves to the ridiculous U.S. tax system which makes you keep paying long after you have left and stopped using any of their services.
Australians might be well placed to attract the best and the brightest investor-types from around the world, but it won't get any thinking U.S. citizens to apply. The unique U.S. citizenship taxation laws, current IRS jihad against offshore accounts, and press/Congressional damnation should you try to relinquish your citizenship so you can live there (see Facebook's Saverin for example) means few will or can take up the offer.
FATCA, FBAR, citizenship double taxation, exit taxes, and continuing uncertainty coming from DC on what new measures they are going to heap on top of the IRS offshore jihad means Americans should just stay home. No Australian investor would want to partner with you anyway, when they discover they too will be shackled with the new FATCA requirements. Their bank account information will also have to be reported to the IRS. Do you think they want to do that?
My advice, look for opportunity in North Dakota, if you a want flat boring landscape. There is plenty of that available inside the U.S. borders. The Outback might seem romantic, and Sydney is a great vacation destination. However, when you try to live there, open a bank account there, file and pay taxes back to the U.S. as well as as pay the extra Australian GST and tax on your U.S. IRA, it might just be too much. It is damn near impossible to be U.S. tax compliant these days with the complex 7000 pages of U.S. foreign tax law, with all its forms like 3520, 3520-A, 8938, 1116,FBAR to name just a few. They come with serious penalties for failures to file or just simple foot faults errors. My advice to you is to just forget it unless you are willing to pay BIG dollars to a international tax adviser, accountant and attorney!
The complexity and penalties will kill the adventure quickly. Besides, the Australian Banking Association knows you are a pariah. They probably don't want you to invest in any of their financial instruments anyway. The FATCA requirements being drafted right now, as the US media sleeps, is placing on them a BIG burden to report you to the IRS. The rules are very complex and expensive to maintain. FATCA is a real investment killer here. You haven't heard about that on Market Place Radio? Yea, I am surprised too.
So Australia, listen to me... You can have our special Operation Troops for Darwin. We will send you our drones and all the military crap you want, but our Citizens are ours! They are our chattel. We own them, a you can't have them! They belong to us, and it is our right to double tax them however we wish, where ever in the universe they live including Australia. We aren't going to make it easy for them to take up your offer, even if they could create export jobs for Americans at home. We really don't want to reduce our trade deficit anyway. So, nice try, but it will take more than an offer of Australian residency visa to over come the dominion we have over "our" citizens, thank you very much
Now Chinese, Indians, Asians, Europeans, go for it. Your countries wisely only engage in "Territorial Taxation", not "Citizenship Taxation". They will let you freely leave without continuing complex tax shackles and financial reporting regimes back to them. You have a great advantage over Americans. They can not compete with you, so I would certainly consider the offer.
And, you Australian Corporations that think you might want an American citizen engineer to assist with your Outback mining business, forget it. Trying to help him stay compliant with U.S. tax law will just be too expensive for you. Additionally he can not participate in your retirement Supra, as that will be taxable to the U.S. also. Hire that Chinese instead. He is much cheaper and comes without any China government tax and financial account reporting baggage.
If you homeland Americans don't understand what is happening to U.S. citizens abroad, and why you have lessening opportunities outside the U.S. borders, I would suggest that you visit American Citizens Abroad (ACA) web site, or Issac Brock Society.com. You are in for a rude awaking about why the world's opportunities are being denied to Americans. The only thing you can now do, is visit Sydney on the Queen Mary, fly in for a short jaunt to the tourist traps, but don't think you can really live there! The freedom to emigrant is being taken away from you. Like the crayfish being slowly cooked in a gradually warming pan of water, you are totally unaware what is happening to you. It is time for you to wake up to those incremental tax law changes like FATCA, FBAR, Ex-Patriot Act, etc, that are occurring back there in the so called homeland of the free! You are free in name only anymore. You are free to visit Australia on Google earth, but forget about living there. :)
