Grandfather

To exempt pre-existing arrangements from subsequent more restrictive laws or regulation.

Grandfathering may be applied for the full natural life of pre-existing arrangements, or for a more limited period which is considered long enough to allow new and compliant arrangements to be put in place.

Example

The Internal Revenue Service is extending the grandfathering protection for non-US arrangements caught under the Foreign Account Tax Compliance Act (FATCA). The protection is extended from 1 January 2013 to six months after the regulations are finalised, estimated to be July 2013 at the earliest. FATCA imposes US withholding taxes and significant compliance obligations on financial institutions such as banks and insurance companies.

The Treasurer, December 2012/January 2013, page 11.