international tax agreements act 1953
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International Tax Agreements Act 1953
Act No. 82 of 1953 as amended
This compilation was prepared on 27 November 2008
taking into account amendments up to Act No. 117 of 2008
Volume 1 includes: Sections 1–24
Schedules 1–24
The text of any of those amendments not in force
on that date is appended in the Notes section
The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section
Volume 2 includes: Schedules 25–47
Note 1
Table of Acts
Act Notes
Table of Amendments
Table A
Prepared by the Office of Legislative Drafting and Publishing,
Attorney-General’s Department, Canberra
International Tax Agreements Act 1953 iii
Contents 1 Short title [see Note 1] ....................................................................... 1 2 Commencement [see Note 1]............................................................. 1 3 Interpretation ..................................................................................... 1 3AA Source of income from funds management activities ...................... 16 3A Alienation of real property through interposed entities ................... 17 4 Incorporation of Assessment Act ..................................................... 18 4AA Incorporation of Fringe Benefits Tax Assessment Act .................... 18 4A Treasurer to notify entry into force of agreements, exchanges
of letters under agreements etc. ....................................................... 18 5 The 2003 United Kingdom convention............................................ 19 5A Previous United Kingdom agreements etc. ...................................... 19 6 Convention with United States of America ..................................... 19 6AA Protocol with the United States of America .................................... 20 6A Convention with Canada ................................................................. 20 6AB Protocol with Canada ...................................................................... 21 6B Agreement with New Zealand ......................................................... 21 6C New Zealand protocol ..................................................................... 22 7 Agreement with Singapore .............................................................. 22 7A Protocol with Singapore .................................................................. 22 8 Convention with Japan .................................................................... 22 9 The 2006 French convention ........................................................... 23 9A Previous French agreements etc. ..................................................... 23 10 Airline profits agreement with Italy ................................................. 23 10A Convention with Italy ...................................................................... 23 11 Agreement with the Federal Republic of Germany ......................... 24 11A Agreement with the Kingdom of the Netherlands ........................... 24 11AA Second protocol with the Kingdom of the Netherlands ................... 25 11B Airline profits agreement with the Hellenic Republic ..................... 25 11C Agreement with the Kingdom of Belgium ....................................... 25 11CA Protocol with the Kingdom of Belgium ........................................... 26 11D Agreement with the Republic of the Philippines ............................. 26 11E Agreement with the Swiss Federal Council ..................................... 26 11F Agreement with Malaysia ................................................................ 27 11FA First protocol with Malaysia ............................................................ 27 11FB Second protocol with Malaysia ....................................................... 28 11G Agreement with Sweden .................................................................. 28 11H Agreement with the Kingdom of Denmark ..................................... 28 11K Agreement with Ireland ................................................................... 29 11L Convention with the Republic of Korea .......................................... 29 11M The 2006 Norwegian convention ..................................................... 30 11MA The 1982 Norwegian convention ..................................................... 30
iv International Tax Agreements Act 1953
11N Agreement with Malta ..................................................................... 30 11P The 2006 Finnish agreement ........................................................... 30 11PA Previous Finnish agreements etc. .................................................... 31 11Q Airline profits agreement with the People’s Republic of
China ............................................................................................... 31 11R Agreement with the Republic of Austria ......................................... 31 11S Agreement with the People’s Republic of China ............................. 31 11T Agreement with the Independent State of Papua New Guinea ........ 32 11U Agreement with Thailand ................................................................ 32 11V Agreement with Sri Lanka ............................................................... 32 11W Agreement with Fiji ......................................................................... 32 11X Agreement with the Republic of Hungary ....................................... 33 11Y Agreement with Kiribati .................................................................. 33 11Z Agreement with the Republic of India ............................................. 33 11ZA Agreement with the Republic of Poland .......................................... 33 11ZB Agreement with the Republic of Indonesia ..................................... 33 11ZC Agreement with the Socialist Republic of Vietnam ......................... 34 11ZCA Exchange of Notes between Australia and the Socialist
Republic of Vietnam ........................................................................ 34 11ZD Agreement with the Kingdom of Spain ........................................... 34 11ZE Agreement with the Czech Republic ............................................... 34 11ZF Agreement with Taipei Economic and Cultural Office ................... 34 11ZG Agreement with the Republic of South Africa ................................. 36 11ZGA Protocol with the Republic of South Africa ..................................... 36 11ZH Agreement with the Slovak Republic .............................................. 36 11ZI Argentine agreement ....................................................................... 36 11ZJ Agreement with Romania ................................................................ 37 11ZK Agreement with Russia .................................................................... 37 11ZL Agreement with Mexico .................................................................. 37 16 Rebates of excess tax on income included in assessable
income ............................................................................................. 37 17A Withholding tax ............................................................................... 38 18 Source of dividends ......................................................................... 39 20 Collection of tax due to the United States of America ..................... 39 21 Regulations ...................................................................................... 40 22 Application of this Act .................................................................... 41 23 Gathering and exchanging information ........................................... 41 24 Relief from double taxation where profits adjusted ......................... 42
International Tax Agreements Act 1953 v
Schedules 43
Schedule 1—2003 United Kingdom convention and notes 43
Schedule 2—Convention between the Government of Australia
and the Government of the United States of America
for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on
Income 107
Schedule 2A—United States protocol 135
Schedule 3—Convention between Australia and Canada for the
Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income 164
Schedule 3A—Canadian protocol 185
Schedule 4—Agreement between the Government of Australia
and the Government of New Zealand for the
Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income 200
Schedule 4A—The New Zealand protocol 224
Schedule 5—Agreement between the Government of the
Commonwealth of Australia and the Government of
the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income 231
Schedule 5A—Protocol amending the Agreement between the
Government of the Commonwealth of Australia and
the Government of the Republic of Singapore for the
Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income 251
Schedule 6—Convention between Australia and Japan for the
avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income 264
Schedule 8—Agreement between the Government of the
Commonwealth of Australia and the Government of
Italy for the Avoidance of Double Taxation of Income
derived from International Air Transport 319
vi International Tax Agreements Act 1953
Schedule 9—The Commonwealth of Australia and the Federal
Republic of Germany 323
Schedule 10—Agreement between Australia and the Kingdom
of the Netherlands for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income 344
Schedule 10A—Second Protocol amending the Agreement
between Australia and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes
on Income with Protocol 367
Schedule 11—2006 French convention 370
Schedule 12—Agreement between the Government of Australia
and the Government of the Hellenic Republic for the
Avoidance of Double Taxation of Income derived from
International Air Transport 419
Schedule 13—Agreement between Australia and the Kingdom
of Belgium for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes
on Income 422
Schedule 13A—Protocol amending the Agreement between
Australia and the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income signed
at Canberra on 13 October 1977 445
Schedule 14—Agreement between the Government of Australia
and the Government of the Republic of the Philippines
for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on
Income 448
Schedule 15—Agreement between Australia and Switzerland
for the Avoidance of Double Taxation with respect to
Taxes on Income 472
International Tax Agreements Act 1953 vii
Schedule 16—Agreement between the Government of Australia
and the Government of Malaysia for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income 493
Schedule 16A—Malaysian protocol 517
Schedule 16B—second Malaysian protocol 528
Schedule 17—Agreement between the Government of Australia
and the Government of Sweden for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income 536
Schedule 18—Agreement between the Government of Australia
and the Government of the Kingdom of Denmark for
the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with respect to Taxes on Income 558
Schedule 20—Agreement between the Government of Australia
and the Government of Ireland for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income and Capital Gains 580
Schedule 21—Convention between Australia and the Republic
of Italy for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on
Income 604
Schedule 22—Convention between the Government of
Australia and the Government of the Republic of
Korea for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on
Income 627
Schedule 23—2006 Norwegian convention 652
Schedule 24—Agreement between Australia and Malta for the
Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income 691
International Tax Agreements Act 1953 1
An Act to give the force of Law to certain
Conventions and Agreements with respect to Taxes
on Income and Fringe Benefits, and for purposes
incidental thereto
1 Short title [see Note 1]
This Act may be cited as the International Tax Agreements Act
1953.
2 Commencement [see Note 1]
This Act shall come into operation on the day on which it receives
the Royal Assent.
3 Interpretation
(1) In this Act, unless the contrary intention appears:
agreement means:
(a) a convention or agreement a copy of which is set out in a
Schedule to this Act; or
(b) the 1946 United Kingdom agreement; or
(ba) the 1967 United Kingdom agreement; or
(bb) the 1967 United Kingdom agreement as amended by the
1980 Protocol to the 1967 United Kingdom agreement; or
(bc) the 1969 French airline profits agreement; or
(bd) the 1976 French agreement; or
(be) the 1976 French agreement as amended by the 1989 French
protocol; or
(c) the 1960 New Zealand agreement; or
(ca) the 1972 New Zealand agreement; or
(cb) the 1982 Norwegian convention; or
(cc) the 1984 Finnish agreement; or
(cd) the 1984 Finnish agreement as amended by the 1997 Finnish
protocol; or
(d) the previous Canadian agreement; or
Section 3
2 International Tax Agreements Act 1953
(e) the previous United States convention; or
(f) the 1969 Japanese agreement.
Australian tax means:
(a) income tax imposed as such by an Act; or
(b) fringe benefits tax imposed by the Fringe Benefits Tax Act
1986.
calendar year means a year commencing on 1 January.
foreign tax means tax, other than Australian tax, which is the
subject of an agreement.
prescribed trust estate, in relation to a year of income, means a
trust estate that:
(a) is a corporate unit trust, within the meaning of Division 6B of
Part III of the Assessment Act, in relation to the year of
income; or
(b) is a public trading trust, within the meaning of Division 6C of
Part III of the Assessment Act, in relation to the year of
income.
the 1946 United Kingdom agreement means the Agreement
between the Government of Australia and the Government of the
United Kingdom for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income that
was signed at London on 29 October 1946.
the 1967 United Kingdom agreement means the Agreement
between the Government of the Commonwealth of Australia and
the Government of the United Kingdom of Great Britain and
Northern Ireland for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
capital gains that was signed at Canberra on 7 December 1967.
the 1969 French airline profits agreement means the Agreement
between the Government of Australia and the Government of the
French Republic for the avoidance of double taxation of income
derived from international air transport that was signed at Canberra
on 27 March 1969.
the 1969 Japanese agreement means the Agreement between the
Government of the Commonwealth of Australia and the
Section 3
International Tax Agreements Act 1953 3
Government of Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
the protocol to that agreement, being the agreement and protocol
that was signed at Canberra on 20 March 1969.
the 1976 French agreement means the Agreement between the
Government of Australia and the Government of the French
Republic for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income that was signed at
Canberra on 13 April 1976.
the 1980 Protocol to the 1967 United Kingdom agreement means
the Protocol, signed at Canberra on 29 January 1980, between the
Government of the Commonwealth of Australia and the
Government of the United Kingdom of Great Britain and Northern
Ireland amending the 1967 United Kingdom agreement.
the 1982 Norwegian convention means the Convention between
Australia and the Kingdom of Norway for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes
on income and on capital and the protocol to that convention, being
the convention and protocol that were signed at Canberra on 6 May
1982.
the 1984 Finnish agreement means the Agreement between
Australia and Finland for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
the protocol to that agreement, being the agreement and protocol
that were signed at Canberra on 12 September 1984.
the 1989 French protocol means the Protocol, signed at Paris on
19 June 1989, between the Government of Australia and the
Government of the French Republic amending the 1976 French
agreement.
the 1997 Finnish protocol means the Protocol, signed at Canberra
on 5 November 1997, between Australia and Finland amending the
1984 Finnish agreement.
the 2003 United Kingdom convention means the Convention
between the Government of Australia and the Government of the
United Kingdom of Great Britain and Northern Ireland for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and on capital gains, as affected by
Section 3
4 International Tax Agreements Act 1953
the 2003 United Kingdom notes. A copy of the convention and of
the notes is set out in Schedule 1.
the 2003 United Kingdom notes means the exchange of notes
between the Government of Australia and the Government of the
United Kingdom of Great Britain and Northern Ireland in
connection with the 2003 United Kingdom convention that was
carried out at Canberra on 21 August 2003. A copy of the notes is
set out in Schedule 1.
the 2006 Finnish agreement means the Agreement between the
Government of Australia and the Government of Finland for the
avoidance of double taxation with respect to taxes on income and
the prevention of fiscal evasion and the protocol to that agreement,
being the agreement and protocol a copy of each of which in the
English language is set out in Schedule 25.
the 2006 French convention means the Convention between the
Government of Australia and the Government of the French
Republic for the avoidance of double taxation with respect to taxes
on income and the prevention of fiscal evasion and the protocol to
that convention, being the convention and protocol a copy of each
of which in the English language is set out in Schedule 11.
the 2006 Norwegian convention means the Convention between
Australia and the Kingdom of Norway for the avoidance of double
taxation with respect to taxes on income and the prevention of
fiscal evasion, being the convention a copy of which is set out in
Schedule 23.
the 2008 Japanese convention means the Convention between
Australia and Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
the protocol to that convention, being the convention and protocol
a copy of each of which in the English language is set out in
Schedule 6.
the Argentine agreement means the Agreement between the
Government of Australia and the Government of the Argentine
Republic for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and the protocol
to that agreement, being the agreement and protocol a copy of each
of which in the English language is set out in Schedule 44.
Section 3
International Tax Agreements Act 1953 5
the Assessment Act means the Income Tax Assessment Act 1936 or
the Income Tax Assessment Act 1997.
the Austrian agreement means the Agreement between Australia
and the Republic of Austria for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on
income, being the agreement a copy of which in the English
language is set out in Schedule 27.
the Belgian agreement means the Agreement between Australia
and the Kingdom of Belgium for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on
income (being the agreement a copy of which in the English
language is set out in Schedule 13), as amended by the Belgian
protocol.
the Belgian protocol means the Protocol amending the Agreement
between Australia and the Kingdom of Belgium for the avoidance
of double taxation and the prevention of fiscal evasion with respect
to taxes on income, being the protocol a copy of which in the
English language is set out in Schedule 13A.
the Canadian convention means the Convention between the
Government of Australia and the Government of Canada for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income, being the convention a copy of
which in the English language is set out in Schedule 3, as amended
by the Canadian protocol.
the Canadian protocol means the Protocol amending the
Convention between the Government of Australia and the
Government of Canada for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
being the protocol a copy of which in the English language is set
out in Schedule 3A.
the Chinese agreement means the Agreement between the
Government of Australia and the Government of the People’s
Republic of China for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, being
the agreement a copy of which in the English language is set out in
Schedule 28.
Section 3
6 International Tax Agreements Act 1953
the Chinese airline profits agreement means the Agreement
between the Government of Australia and the Government of the
People’s Republic of China for the avoidance of double taxation of
income and revenues derived by air transport enterprises from
international air transport, being the agreement a copy of which in
the English language is set out in Schedule 26.
the Czech agreement means the Agreement between Australia and
the Czech Republic for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, being
the agreement a copy of which in the English language is set out in
Schedule 40.
the Danish agreement means the Agreement between the
Government of Australia and the Government of the Kingdom of
Denmark for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, being the
agreement a copy of which is set out in Schedule 18.
the Fijian agreement means the Agreement between Australia and
Fiji for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income, being the agreement
a copy of which is set out in Schedule 32.
the first Malaysian protocol means the Protocol, signed 2 August
1999, amending the Agreement between Australia and Malaysia
for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, being the protocol a copy
of which in the English language is set out in Schedule 16A.
the German agreement means the Agreement between the
Government of Australia and the Government of the Federal
Republic of Germany for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
capital and to certain other taxes and the protocol to that
agreement, being the agreement and protocol a copy of each of
which in the English language is set out in Schedule 9.
the Greek airline profits agreement means the Agreement between
the Government of Australia and the Government of the Hellenic
Republic for the avoidance of double taxation of income derived
from international air transport, being the agreement a copy of
which is set out in the English language in Schedule 12.
Section 3
International Tax Agreements Act 1953 7
the Hungarian agreement means the Agreement between
Australia and the Republic of Hungary for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes
on income, being the agreement a copy of which in the English
language is set out in Schedule 33.
the Indian agreement means the Agreement between the
Government of Australia and the Government of the Republic of
India for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income, being the agreement
a copy of which in the English language is set out in Schedule 35.
the Indonesian agreement means the Agreement between the
Government of Australia and the Government of the Republic of
Indonesia for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, being the
agreement a copy of which is set out in Schedule 37.
the Irish agreement means the Agreement between the
Government of Australia and the Government of Ireland for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and capital gains, being the
agreement a copy of which is set out in Schedule 20.
the Italian airline profits agreement means the Agreement
between the Government of Australia and the Government of Italy
for the avoidance of double taxation of income derived from
international air transport, being the agreement a copy of which in
the English language is set out in Schedule 8.
the Italian convention means the Convention between Australia
and the Republic of Italy for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income
and the protocol to that convention, being the convention and
protocol a copy of each of which in the English language is set out
in Schedule 21.
the Kiribati agreement means the Agreement between Australia
and the Republic of Kiribati for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on
income, being the agreement a copy of which is set out in
Schedule 34.
Section 3
8 International Tax Agreements Act 1953
the Korean convention means the Convention between the
Government of Australia and the Government of the Republic of
Korea for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income and the protocol to
that convention, being the convention and protocol a copy of each
of which in the English language is set out in Schedule 22.
the Malaysian agreement means the Agreement between Australia
and Malaysia for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, being
the agreement a copy of which is set out in the English language in
Schedule 16, as amended by the first and second Malaysian
protocols.
the Maltese agreement means the Agreement between Australia
and Malta for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, being the
agreement a copy of which is set out in Schedule 24.
the Mexican agreement means the Agreement between the
Government of Australia and the Government of the United
Mexican States for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income as
affected by the protocol to that agreement. A copy of the
agreement, and of the protocol, in the English language is set out in
Schedule 47.
the Netherlands agreement means the Agreement between the
Government of Australia and the Government of the Kingdom of
the Netherlands for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
the protocol to that agreement, being the agreement and protocol a
copy of each of which in the English language is set out in
Schedule 10, as amended by the second Netherlands protocol.
the 1960 New Zealand agreement means the Agreement between
the Government of Australia and the Government of New Zealand
for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income that was signed at
Canberra on 12 May 1960.
the 1972 New Zealand agreement means the Agreement between
the Government of Australia and the Government of New Zealand
for the avoidance of double taxation and the prevention of fiscal
Section 3
International Tax Agreements Act 1953 9
evasion with respect to taxes on income that was signed at
Melbourne on 8 November 1972.
the New Zealand agreement means the Agreement between the
Government of Australia and the Government of New Zealand for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, being the agreement a
copy of which is set out in Schedule 4, as amended by the New
Zealand protocol.
the New Zealand protocol means the Protocol amending the
Agreement between the Government of Australia and the
Government of New Zealand for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on
income. A copy of the protocol is set out in Schedule 4A.
the Papua New Guinea agreement means the Agreement between
Australia and the Independent State of Papua New Guinea for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income, being the agreement a copy of
which is set out in Schedule 29.
the Philippine agreement means the Agreement between the
Government of Australia and the Government of the Republic of
the Philippines for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, being
the agreement a copy of which is set out in Schedule 14.
the Polish agreement means the Agreement between Australia and
the Republic of Poland for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
being the agreement a copy of which in the English language is set
out in Schedule 36.
the previous Canadian agreement means the Agreement between
the Government of Australia and the Government of Canada for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income that was signed at Mont
Tremblant on 1 October 1957.
the previous United States convention means the Convention
between the Government of Australia and the Government of the
United States of America for the avoidance of double taxation and
Section 3
10 International Tax Agreements Act 1953
the prevention of fiscal evasion with respect to taxes on income
that was signed at Washington on 14 May 1953.
the Romanian agreement means the Agreement between Australia
and Romania for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
the protocol to that agreement, being the agreement and protocol a
copy of each of which in the English language is set out in
Schedule 45.
the Russian agreement means the Agreement between the
Government of Australia and the Government of the Russian
Federation for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and the protocol
to that agreement, being the agreement and protocol a copy of each
of which in the English language is set out in Schedule 46.
the second Malaysian protocol means the Protocol, signed 28 July
2002, amending the agreement between Australia and Malaysia for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, being the protocol a copy
of which in the English language is set out in Schedule 16B.
the second Netherlands protocol means the protocol a copy of
which in the English language is set out in Schedule 10A, being the
Second Protocol amending the Agreement between Australia and
the Kingdom of the Netherlands for the avoidance of double
taxation and the prevention of fiscal evasion with respect to tax on
income with Protocol.
the Singapore agreement means the Agreement between the
Government of Australia and the Government of the Republic of
Singapore for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, being the
agreement a copy of which is set out in Schedule 5, as amended by
the Singapore protocol.
the Singapore protocol means the Protocol amending the
Agreement between the Government of the Commonwealth of
Australia and the Government of the Republic of Singapore for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income, being the protocol a copy of
which is set out in Schedule 5A.
Section 3
International Tax Agreements Act 1953 11
the Slovak agreement means the Agreement between Australia and
the Slovak Republic for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, being
the agreement a copy of which in the English language is set out in
Schedule 43.
the South African agreement means the Agreement between the
Government of Australia and the Government of the Republic of
South Africa for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
the protocol to that agreement, being the agreement and protocol a
copy of each of which in the English language is set out in
Schedule 42, as amended by the South African protocol.
the South African protocol means the Protocol amending the
Agreement between the Government of Australia and the
Government of the Republic of South Africa for the avoidance of
double taxation and the prevention of fiscal evasion with respect to
taxes on income. A copy of the protocol is set out in Schedule 42A.
the Spanish agreement means the Agreement between Australia
and the Kingdom of Spain for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
being the agreement a copy of which in the English language is set
out in Schedule 39.
the Sri Lankan agreement means the Agreement between
Australia and the Democratic Socialist Republic of Sri Lanka for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, being the agreement a
copy of which in the English language is set out in Schedule 31.
the Swedish agreement means the Agreement between the
Government of Australia and the Government of Sweden for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income, being the agreement a copy of
which in the English language is set out in Schedule 17.
the Swiss agreement means the Agreement between the
Government of Australia and the Swiss Federal Council for the
avoidance of double taxation with respect to taxes on income and
the protocol to that agreement, being the agreement and protocol a
copy of each of which in the English language is set out in
Schedule 15.
Section 3
12 International Tax Agreements Act 1953
the Taipei agreement means:
(a) the Agreement between the Australian Commerce and
Industry Office and the Taipei Economic and Cultural Office
concerning the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income;
and
(b) the annex to that agreement;
a copy of each of which in the English language is set out in
Schedule 41.
the Thai Agreement means the Agreement between Australia and
the Kingdom of Thailand for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
being the agreement a copy of which in the English language is set
out in Schedule 30.
the United States convention means the Convention between the
Government of Australia and the Government of the United States
of America for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, being the
convention a copy of which is set out in Schedule 2, as amended by
the United States protocol.
the United States protocol means the Protocol amending the
Convention between the Government of Australia and the
Government of the United States of America for the avoidance of
double taxation and the prevention of fiscal evasion with respect to
taxes on income, being the protocol a copy of which is set out in
Schedule 2A.
the Vietnamese agreement means the Agreement between the
Government of Australia and the Government of the Socialist
Republic of Vietnam for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, being
the agreement a copy of which in the English language is set out in
Schedule 38, as amended by the Vietnamese notes.
the Vietnamese notes means the Exchange of Notes between the
Government of Australia and the Government of the Socialist
Republic of Vietnam amending the Vietnamese agreement, that
was carried out on 22 November 1996. A copy of the Notes is set
out in Schedule 38A.
Section 3
International Tax Agreements Act 1953 13
(2) For the purpose of this Act and the Assessment Act, a reference in
an agreement to profits of an activity or business shall, in relation
to Australian tax, be read, where the context so permits, as a
reference to taxable income derived from that activity or business.
(2A) After the commencement of this subsection, a reference in an
agreement to income from shares, or to income from other rights
participating in profits, does not include a reference to a return on a
debt interest (as defined in Subdivision 974-B of the Income Tax
Assessment Act 1997).
(3) For the purposes of this Act, an amount of income derived by a
person, being income other than interest or royalties, shall be
deemed to be income attributable to interest or royalties, as the
case may be:
(a) if the person derived the amount of income by reason of
being beneficially entitled to an amount representing the
interest or royalties; or
(b) if the person derived the amount of income as a beneficiary
in a trust estate and the amount of income can be attributed,
directly or indirectly, to the interest or royalties or to an
amount that is to be deemed, by any application or successive
applications of this subsection, to be an amount of income
attributable to the interest or royalties.
(4) Where a beneficiary in a trust estate, other than a trust estate that is
a prescribed trust estate, in relation to the year of income, is
presently entitled to income of the trust estate, that income shall,
for the purposes of this Act, be deemed to be an amount of income
derived by the person.
(7) For the purposes of this Act, the texts in English language of the
1976 French agreement, the 2006 French convention and the 1969
Japanese Agreement shall, unless the context otherwise requires,
be construed as if:
(a) words in the singular included the plural; and
(b) words in the plural included the singular.
(7A) For the purposes of this Act, a reference in the 1969 Japanese
Agreement to an area adjacent to Australia as specified in the
Second Schedule to the Petroleum (Submerged Lands) Act
1967-1968 is to be read as including a reference to an area adjacent
Section 3
14 International Tax Agreements Act 1953
to Australia as specified in Schedule 1 to the Offshore Petroleum
and Greenhouse Gas Storage Act 2006.
(8) Where, by virtue of a provision of an agreement, the expression
royalties as used in, or in a particular provision of, that agreement
has the meaning that that expression has under the law of Australia
relating to income tax, that expression has, for the purposes of that
agreement or of that particular provision, as the case may be, the
meaning that that expression has by virtue of subsection 6 (1) of
the Assessment Act.
(9) Where, by virtue of a provision of an agreement, expressions used
in, or in a particular provision of, that agreement and not otherwise
defined for the purposes of that agreement or of that particular
provision have the meanings that those expressions have under the
law of Australia relating to income tax, subsection (8) does not
affect the interpretation of that agreement or of that particular
provision, as the case may be, in relation to the meaning of
expressions other than the expression royalties.
(10) For the purposes of this Act, Medicare levy shall be deemed to be
income tax and to be imposed as such and, unless the contrary
intention appears, references to income tax or tax shall be
construed accordingly.
(11) Where:
(a) a beneficiary of a trust estate (not being a prescribed trust
estate) who is a resident of a country with which, or with the
government of which, Australia, or the Government of
Australia, has made an agreement before the commencement
of this subsection is presently entitled, either directly or
through one or more interposed trust estates, to a share of the
income of the trust estate derived from the carrying on by the
trustee in Australia of a business through a permanent
establishment in Australia; and
Section 3
International Tax Agreements Act 1953 15
(b) under the agreement, the income is to be dealt with in
accordance with the article (in this subsection referred to as
the business profits article) of the agreement relating to the
taxing of income of an enterprise of a Contracting State
where the enterprise carries on a business in the other
Contracting State through a permanent establishment in the
other Contracting State;
for the purpose of determining whether the beneficiary’s share of
the income may be taxed in Australia in accordance with the
business profits article:
(c) the beneficiary shall be deemed to carry on in Australia,
through a permanent establishment in Australia, the business
carried on in Australia by the trustee; and
(d) the beneficiary’s share of the income shall be deemed to be
attributable to that permanent establishment.
(11A) If:
(a) the licensee of a spectrum licence (within the meaning of the
Radiocommunications Act 1992), or a person authorised
under section 68 of that Act by the licensee, derives income
from operating radiocommunications devices (within the
meaning of that Act) under the licence or from authorising
others to do so; and
(b) the licensee or authorised person is a resident of a country
(other than Australia), or a territory (other than an
Australian--controlled territory), to whose residents an
agreement applies; and
(c) under the agreement, the income is to be dealt with in
accordance with the business profits article of the agreement
referred to in paragraph 3(11)(b);
for the purpose of determining whether the income may be taxed in
Australia in accordance with the business profits article:
(d) the licensee or authorised person is taken to carry on a
business, through a permanent establishment, in Australia;
and
(e) the income is taken to be attributable to that permanent
establishment.
Section 3AA
16 International Tax Agreements Act 1953
(12) In subsections (11) and (11A):
Contracting State, in relation to an agreement, means a country
which, or the government of which, is a party to the agreement.
income includes profit.
permanent establishment in relation to an agreement, has the same
meaning as in the agreement.
3AA Source of income from funds management activities
(1) This section applies to a beneficiary of a widely held unit trust if:
(a) the beneficiary is a resident of a country (other than
Australia) for the purposes of an agreement that is given the
force of law under this Act; and
(b) the beneficiary is presently entitled, either:
(i) directly; or
(ii) indirectly through fixed entitlements in one or more
interposed trust estates (whether widely held unit trusts
or not);
to a share of the income of the widely held unit trust derived
from the carrying on by the trustee in Australia of funds
management activities through a permanent establishment in
Australia (the funds management income).
(2) In working out for the purposes of the Assessment Act whether the
funds management income of the beneficiary is attributable to
sources in Australia, these provisions (the source of income
provisions) do not apply:
(a) Article 21 of the 2003 United Kingdom convention;
(b) a corresponding provision of another agreement;
(c) subsections 11(3), 11S(2) and 11ZF(2) of this Act, and any
provision of this Act of similar effect enacted after the
commencement of this section.
(3) However, the source of income provisions do apply to the extent to
which the income derived from the carrying on by the trustee of
funds management activities is adjusted under:
(a) Article 7(2) or 9(1) of the 2003 United Kingdom convention;
or
(b) a corresponding provision of another agreement.
Section 3A
International Tax Agreements Act 1953 17
(4) In this section:
closely held has the meaning given by section 272-105 in
Schedule 2F to the Income Tax Assessment Act 1936.
funds management activities means activities carried on by:
(a) a managed investment scheme (as defined by section 9 of the
Corporations Act 2001) that is a widely held unit trust; or
(b) a managed investment scheme (as so defined) that is a unit
trust that is closely held by one or more of these:
(i) a managed investment scheme (as so defined) that is a
widely held unit trust;
(ii) a complying superannuation entity;
(iii) a life insurance company.
permanent establishment, in relation to an agreement, has the
same meaning as in the agreement.
widely held unit trust has the meaning given by section 272-105 in
Schedule 2F to the Income Tax Assessment Act 1936.
3A Alienation of real property through interposed entities
(1) This section applies if:
(a) an agreement makes provision in relation to income, profits
or gains from the alienation or disposition of shares or
comparable interests in companies, or of interests in other
entities, whose assets consist wholly or principally of real
property (within the meaning of the agreement) or other
interests in relation to land; and
(b) this Act gave that provision the force of law before 27 April
1998.
(2) For the purposes of this Act, that provision is taken to extend to the
alienation or disposition of shares or any other interests in
companies, and in any other entities, the value of whose assets is
wholly or principally attributable, whether directly, or indirectly
through one or more interposed companies or other entities, to such
real property or interests.
(3) However, subsection (2) applies only if the real property or land
concerned is situated in Australia (within the meaning of the
relevant agreement).
Section 4
18 International Tax Agreements Act 1953
(4) If, after the commencement of this section, this Act is amended so
as to give the force of law to an amendment or substitution of a
provision mentioned in subsection (1), this section ceases to apply
to that provision from the time that the amendment of the Act takes
effect.
(5) In this section:
entity has the same meaning as in the Income Tax Assessment Act
1997, but does not include an individual in his or her personal
capacity.
4 Incorporation of Assessment Act
(1) Subject to subsection (2), the Assessment Act is incorporated and
shall be read as one with this Act.
(2) The provisions of this Act have effect notwithstanding anything
inconsistent with those provisions contained in the Assessment Act
(other than Part IVA of that Act) or in an Act imposing Australian
tax.
4AA Incorporation of Fringe Benefits Tax Assessment Act
(1) Subject to subsection (2), the Fringe Benefits Tax Assessment Act
1986 is incorporated and is to be read as one with this Act.
(2) The provisions of this Act have effect in spite of anything
inconsistent with those provisions contained in the Fringe Benefits
Tax Assessment Act 1986 (other than section 67 of that Act).
4A Treasurer to notify entry into force of agreements, exchanges of
letters under agreements etc.
(1) This section applies to the following events:
(a) the entry into force of an agreement;
(b) the giving of notice of termination of an agreement;
(c) the exchange of letters under a provision of an agreement;
(d) the exchange of instruments of ratification under an
agreement;
(e) the confirmation of receipt of a notice under a provision of an
agreement;
Section 5
International Tax Agreements Act 1953 19
(f) the occurrence of any similar thing.
(2) As soon as practicable after any such event occurs, the Treasurer
must cause to be published in the Gazette a notice setting out
particulars of the event.
5 The 2003 United Kingdom convention
Subject to this Act, on and after the date of entry into force of the
2003 United Kingdom convention, the provisions of the
convention, so far as those provisions affect Australian tax, have
the force of law according to their tenor.
5A Previous United Kingdom agreements etc.
The provisions of:
(a) the 1946 United Kingdom agreement; and
(b) the 1967 United Kingdom agreement; and
(c) the 1967 United Kingdom agreement as amended by the
1980 Protocol to the 1967 United Kingdom agreement;
so far as those provisions affect Australian tax, continue to have
the force of law for tax in respect of income in relation to which
the agreements remain effective.
Note 1: Paragraph 3 of Article 29 of the 2003 United Kingdom convention preserves the operation of Article 16 of the 1967 United Kingdom agreement (which exempts from tax the income of visiting professors and teachers). This applies to individuals who are entitled to the exemption at the time when the 2003 United Kingdom convention enters into force. The exemption is preserved until the individual concerned would have ceased to be entitled to it under the 1967 United Kingdom agreement.
Note 2: Article 16 of the 1967 United Kingdom agreement is affected by Article I of the 1980 Protocol to the 1967 United Kingdom agreement.
6 Convention with United States of America
(1) Subject to this Act, on and after the date of entry into force of the
United States convention, the provisions of Articles 1 to 22
(inclusive) and Articles 24 to 29 (inclusive) of the convention, so
far as those provisions affect Australian tax, have the force of law
in relation to tax in respect of:
(a) income, being dividends, interest or royalties to which
Article 10, 11 or 12, as the case may be, of the convention
Section 6AA
20 International Tax Agreements Act 1953
applies, derived on or after the first day of the second month
following the month in which the convention enters into
force, and in relation to which the convention remains
effective; and
(b) income to which paragraph (a) does not apply, being income
of a year of income commencing on or after the first day of
the second month following the month in which the
convention enters into force, and in relation to which the
convention remains effective.
(3) The provisions of the previous United States convention, so far as
those provisions affect Australian tax, continue to have the force of
law in relation to tax in respect of income in relation to which the
convention remains effective.
(4) The provisions of the convention with the United States of
America do not have the effect of subjecting to Australian tax any
interest paid by a resident of Australia to a resident of the United
States of America that, apart from that convention, would not be
subject to Australian tax.
6AA Protocol with the United States of America
Subject to this Act, on and after the date of entry into force of the
United States protocol, the provisions of the protocol, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
6A Convention with Canada
(1) Subject to this Act, on and after the date of entry into force of the
Canadian convention, the provisions of the convention, so far as
those provisions affect Australian tax, have, and shall be deemed to
have had, the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1975 and in relation to
which the convention remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
1975 and in relation to which the convention remains
effective.
Section 6AB
International Tax Agreements Act 1953 21
(3) The provisions of the previous Canadian agreement, so far as those
provisions affect Australian tax, continue to have the force of law
in relation to tax in respect of income in relation to which the
agreement remains effective.
6AB Protocol with Canada
Subject to this Act, on and after the date of entry into force of the
Canadian protocol, the provisions of the protocol, so far as those
provisions affect Australian tax, have, and are to be taken to have
had, the force of law according to their tenor.
6B Agreement with New Zealand
(1A) Subject to this Act, on and after the date of entry into force of the
New Zealand agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
(1) Subject to this Act, the provisions of the 1972 New Zealand
agreement, so far as those provisions affect Australian tax,
continue to have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1972, and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of the year of income that commenced on 1 July
1972, or of a subsequent year of income in relation to which
the agreement remains effective.
(2) Subject to this Act, the provisions of subparagraph (b) of
paragraph (3) of Article 18 of the 1972 New Zealand agreement
continue to have the force of law for the purposes of paragraph
23(q) of the Assessment Act in relation to income of the year of
income that ended on 30 June 1972, and of the 13 years of income
immediately preceding that year of income.
(3) The provisions of the 1960 New Zealand agreement, so far as those
provisions affect Australian tax, continue to have the force of law
in relation to tax in respect of income in relation to which the
agreement remains effective.
Section 6C
22 International Tax Agreements Act 1953
6C New Zealand protocol
Subject to this Act, on and after the date of entry into force of a
provision of the New Zealand protocol, the provision has the force
of law according to its tenor.
7 Agreement with Singapore
(1) Subject to this Act, the provisions of the Singapore agreement, so
far as those provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1969, and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of the year of income that commences on 1 July
1969, or of a subsequent year of income in relation to which
the agreement remains effective.
7A Protocol with Singapore
Subject to this Act, on and after the date of entry into force of the
Singapore protocol, the provisions of the protocol, so far as those
provisions affect Australian tax, have, and are to be taken to have
had, the force of law according to their tenor.
8 Convention with Japan
(1) Subject to this Act, on and after the date of entry into force of the
2008 Japanese convention, the provisions of the convention have
the force of law according to their tenor.
(2) The provisions of the 1969 Japanese agreement, so far as those
provisions affect Australian tax, continue to have the force of law
in relation to tax in respect of income in relation to which the
agreement remains effective.
Note: Paragraph 5 of Article 31 of the 2008 Japanese convention preserves the operation of Article 15 of the 1969 Japanese agreement (which provides that the income received in respect of teaching or conducting research by visiting professors and teachers is exempt from tax in the country where the teaching or research activities are conducted). This applies to individuals who are entitled to the benefit at the time when the 2008 Japanese convention enters into force. The benefit is preserved until the individual concerned would have ceased to be entitled to it under the 1969 Japanese agreement.
Section 9
International Tax Agreements Act 1953 23
9 The 2006 French convention
Subject to this Act, on and after the date of entry into force of a
provision of the 2006 French convention, the provision has the
force of law according to its tenor.
9A Previous French agreements etc.
The provisions of:
(a) the 1969 French airline profits agreement; and
(b) the 1976 French agreement; and
(c) the 1976 French agreement as amended by the 1989 French
protocol;
so far as those provisions affect Australian tax, continue to have
the force of law for tax in respect of income in relation to which
the agreements remain effective.
Note 1: Paragraph 3 of Article 30 of the 2006 French convention preserves the operation of Article 19 of the 1976 French agreement (which provides that the income received in respect of teaching or conducting research by visiting professors and teachers is taxed only in their home country). This applies to individuals who are entitled to the benefit at the time when the 2006 French convention enters into force. The benefit is preserved until the individual concerned would have ceased to be entitled to it under the 1976 French agreement.
Note 2: Article 19 of the 1976 French agreement is affected by Article 8 of the 1989 French protocol.
10 Airline profits agreement with Italy
(1) Subject to this Act, on and after the date of entry into force of the
Italian airline profits agreement, the provisions of the agreement,
so far as those provisions affect Australian tax, have, and shall be
deemed to have had, the force of law in relation to tax in respect of
income of the year of income that commenced on 1 July 1966, or
of a subsequent year of income in relation to which the agreement
remains effective.
10A Convention with Italy
(1) Subject to this Act, on and after the date of entry into force of the
Italian convention, the provisions of the convention, so far as those
provisions affect Australian tax, have, and shall be deemed to have
had, the force of law:
Section 11
24 International Tax Agreements Act 1953
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1976 and in relation to
which the convention remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
1976 and in relation to which the convention remains
effective.
11 Agreement with the Federal Republic of Germany
(1) Subject to this Act, on and after the date of entry into force of the
German agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have, and shall be deemed to have
had, the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1971 and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of the year of income that commenced on 1 July
1971 and of a subsequent year of income in relation to which
the agreement remains effective.
(3) For the purposes of the Assessment Act, income derived by a
person who is a resident of the Federal Republic of Germany for
the purposes of the German agreement, being income that under
Articles 6 to 8 and 10 to 16 of the agreement may be taxed in
Australia, shall be deemed to be derived from sources in Australia.
11A Agreement with the Kingdom of the Netherlands
(1) Subject to this Act, on and after the date of entry into force of the
Netherlands agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have, and shall be deemed to
have had, the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1975 and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of the year of income that commenced on 1 July
1975 and of a subsequent year of income in relation to which
the agreement remains effective.
Section 11AA
International Tax Agreements Act 1953 25
(3) For the purposes of the Assessment Act, income from a lease of
land, income from any other direct interest in or over land, whether
or not improved, and income from debt--claims of every kind,
excluding bonds or debentures, secured by mortgage of real
property or of any other direct interest in or over land, being
income that under Article 6 of the Netherlands agreement is to be
regarded as income from real property, shall be deemed to be
derived from sources in the place in which the land to which the
lease, other direct interest or mortgage relates is situated.
11AA Second protocol with the Kingdom of the Netherlands
(1) Subject to this Act, on and after the date of entry into force of the
second Netherlands protocol, the provisions of the protocol, so far
as those provisions affect Australian tax, have, and shall be deemed
to have had, the force of law in relation to tax in respect of:
(a) income, being income to which subparagraph (1)(a) of
Article 3 of the protocol applies, of any year of income
commencing on or after 1 July 1988; and
(b) income, being income to which subparagraph (1)(b) of
Article 3 of the protocol applies, of any year of income
commencing on or after 1 July 1986.
11B Airline profits agreement with the Hellenic Republic
(1) Subject to this Act, on and after the date of entry into force of the
Greek airline profits agreement, the provisions of the agreement, so
far as those provisions affect Australian tax, have, and shall be
deemed to have had, the force of law in relation to tax in respect of
income derived on or after 1 March 1972 and in relation to which
the agreement remains effective.
11C Agreement with the Kingdom of Belgium
(1) Subject to this Act, on and after the date of entry into force of the
Belgian agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January in the calendar year
immediately following that in which the agreement enters
into force and in relation to which the agreement remains
effective; and
Section 11CA
26 International Tax Agreements Act 1953
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year immediately following that in which the
agreement enters into force and in relation to which the
agreement remains effective.
11CA Protocol with the Kingdom of Belgium
(1) Subject to this Act, on and after the date of entry into force of the
Belgian protocol, the provisions of the protocol, so far as those
provisions affect Australian tax, have the force of law in relation to
tax in respect of income of any year of income commencing on or
after 1 July in the calendar year immediately following that in
which the protocol enters into force.
11D Agreement with the Republic of the Philippines
(1) Subject to this Act, on and after the date of entry into force of the
Philippine agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have, and shall be deemed to
have had, the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January in the calendar year in
which the agreement enters into force and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year in which the agreement enters into force
and in relation to which the agreement remains effective.
11E Agreement with the Swiss Federal Council
(1) Subject to this Act, on and after the date of entry into force of the
Swiss agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have, and shall be deemed to have
had, the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January 1979 and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of the year of income that commenced on 1 July
Section 11F
International Tax Agreements Act 1953 27
1979 and of a subsequent year of income in relation to which
the agreement remains effective.
11F Agreement with Malaysia
(1) Subject to this Act, on and after the date of entry into force of the
Malaysian agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have, and shall be deemed to
have had, the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July 1979 and in relation to
which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income that commenced on or after
1 July 1979 and in relation to which the agreement remains
effective.
(4) The provisions of the Malaysian agreement shall not have the
effect of subjecting to Australian tax interest or royalties paid by a
resident of Australia to a resident of Malaysia that, but for that
agreement, would not be subject to Australian tax.
11FA First protocol with Malaysia
(1) Subject to this Act, on and after the date of entry into force of the
first Malaysian protocol, the provisions of the protocol, so far as
those provisions affect Australian tax, have, and are taken to have
had, the force of law according to their tenor.
(2) Nothing in section 170 of the Income Tax Assessment Act 1936
prevents the amendment of an assessment made before the
commencement of this section for the purpose of giving effect to
the first Malaysian protocol.
(3) Nothing in former Division 19 of Part III of the Income Tax
Assessment Act 1936 prevents the amendment of a determination
made, or taken to have been made, under that Division before the
commencement of this section for the purpose of giving effect to
the first Malaysian protocol.
Section 11FB
28 International Tax Agreements Act 1953
11FB Second protocol with Malaysia
(1) Subject to this Act, on and after the date of entry into force of the
second Malaysian protocol, the provisions of that protocol, so far
as those provisions affect Australian tax, have, and are taken to
have had, the force of law according to their tenor.
(2) Nothing in section 170 of the Income Tax Assessment Act 1936
prevents the amendment of an assessment made before the
commencement of this section for the purpose of giving effect to
the second Malaysian protocol.
(3) Nothing in former Division 19 of Part III of the Income Tax
Assessment Act 1936 prevents the amendment of a determination
made, or taken to have been made, under that Division before the
commencement of this section for the purpose of giving effect to
the second Malaysian protocol.
11G Agreement with Sweden
(1) Subject to this Act, on and after the date of entry into force of the
Swedish agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January in the calendar year
immediately following that in which the agreement enters
into force and in relation to which the agreement remains
effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year immediately following that in which the
agreement enters into force and in relation to which the
agreement remains effective.
11H Agreement with the Kingdom of Denmark
(1) Subject to this Act, on and after the date of entry into force of the
Danish agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January in the calendar year
immediately following that in which the agreement enters
Section 11K
International Tax Agreements Act 1953 29
into force and in relation to which the agreement remains
effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year immediately following that in which the
agreement enters into force and in relation to which the
agreement remains effective.
(3) Where an amount of tax credit is to be treated as assessable income
of a taxpayer in accordance with paragraph (7) of Article 10 of the
Danish agreement:
(a) the amount of the tax credit shall be included in the
assessable income of the taxpayer of the year of income in
which the dividend to which the tax credit relates is paid; and
(b) the amount of the tax credit shall be added to the amount of
the dividend to which the tax credit relates and the sum of the
two amounts shall be deemed to be one dividend for the
purposes of this Act and the Assessment Act.
11K Agreement with Ireland
(1) Subject to this Act, on and after the date of entry into force of the
Irish agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 July in the calendar year
immediately following that in which the agreement enters
into force and in relation to which the agreement remains
effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year immediately following that in which the
agreement enters into force and in relation to which the
agreement remains effective.
11L Convention with the Republic of Korea
(1) Subject to this Act, on and after the date of entry into force of the
Korean convention, the provisions of the convention, so far as
those provisions affect Australian tax, have, and shall be deemed to
have had, the force of law:
Section 11M
30 International Tax Agreements Act 1953
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January 1982 and in relation to
which the convention remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
1982 and in relation to which the convention remains
effective.
11M The 2006 Norwegian convention
Subject to this Act, on and after the date of entry into force of a
provision of the 2006 Norwegian convention, the provision has the
force of law according to its tenor.
11MA The 1982 Norwegian convention
The provisions of the 1982 Norwegian convention, so far as those
provisions affect Australian tax, continue to have the force of law
for tax in respect of income in relation to which the convention
remains effective.
11N Agreement with Malta
(1) Subject to this Act, on and after the date of entry into force of the
Maltese agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January in the calendar year
next following that in which the agreement enters into force
and in relation to which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year next following that in which the
agreement enters into force and in relation to which the
agreement remains effective.
11P The 2006 Finnish agreement
Subject to this Act, on and after the date of entry into force of a
provision of the 2006 Finnish agreement, the provision has the
force of law according to its tenor.
Section 11PA
International Tax Agreements Act 1953 31
11PA Previous Finnish agreements etc.
The provisions of:
(a) the 1984 Finnish agreement; and
(b) the 1984 Finnish agreement as amended by the 1997 Finnish
protocol;
so far as those provisions affect Australian tax, continue to have
the force of law for tax in respect of income in relation to which
the agreements remain effective.
11Q Airline profits agreement with the People’s Republic of China
(1) Subject to this Act, on and after the date of entry into force of the
Chinese airline profits agreement, the provisions of the agreement,
so far as those provisions affect Australian tax, have, and shall be
deemed to have had, the force of law in relation to tax in respect of
income derived on or after 1 July 1984 and in relation to which the
agreement remains effective.
11R Agreement with the Republic of Austria
(1) Subject to this Act, on and after the date of entry into force of the
Austrian agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law:
(a) in relation to withholding tax—in respect of dividends or
interest derived on or after 1 January in the calendar year
next following that in which the agreement enters into force
and in relation to which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of
income of any year of income commencing on or after 1 July
in the calendar year next following that in which the
agreement enters into force and in relation to which the
agreement remains effective.
11S Agreement with the People’s Republic of China
(1) Subject to this Act, on and after the date of entry into force of the
Chinese agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
Section 11T
32 International Tax Agreements Act 1953
(2) For the purposes of the Assessment Act, income, profits or gains
derived by a person who is a resident of China for the purposes of
the Chinese agreement, being income, profits or gains that under
Articles 6 to 8, 10 to 17 and 19 to 22 of the agreement may be
taxed in Australia, are taken to be derived from sources in
Australia.
(3) The provisions of the Chinese agreement do not have the effect of
subjecting to Australian tax any interest or royalties paid by a
resident of Australia to a resident of China that, apart from that
agreement, would not be subject to Australian tax.
11T Agreement with the Independent State of Papua New Guinea
Subject to this Act, on and after the date of entry into force of the
Papua New Guinea agreement, the provisions of the agreement, so
far as those provisions affect Australian tax, have the force of law
according to their tenor.
11U Agreement with Thailand
Subject to this Act, on and after the date of entry into force of the
Thai agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11V Agreement with Sri Lanka
Subject to this Act, on and after the date of entry into force of the
Sri Lankan agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
11W Agreement with Fiji
Subject to this Act, on and after the date of entry into force of the
Fijian agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
Section 11X
International Tax Agreements Act 1953 33
11X Agreement with the Republic of Hungary
Subject to this Act, on and after the date of entry into force of the
Hungarian agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
11Y Agreement with Kiribati
Subject to this Act, on and after the date of entry into force of the
Kiribati agreement, the provisions of the agreement, as far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11Z Agreement with the Republic of India
Subject to this Act, on and after the date of entry into force of the
Indian agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11ZA Agreement with the Republic of Poland
(1) Subject to this Act, on and after the date of entry into force of the
Polish agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
(2) The provisions of the Polish agreement do not have the effect of
subjecting to Australian tax any interest or royalties paid by a
resident of Australia to a resident of Poland that, apart from that
agreement, would not be subject to Australian tax.
11ZB Agreement with the Republic of Indonesia
Subject to this Act, on and after the date of entry into force of the
Indonesian agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
Section 11ZC
34 International Tax Agreements Act 1953
11ZC Agreement with the Socialist Republic of Vietnam
Subject to this Act, on and after the date of entry into force of the
Vietnamese agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
11ZCA Exchange of Notes between Australia and the Socialist
Republic of Vietnam
(1) Subject to this Act, on or after the date of entry into force of the
Vietnamese notes, the provisions of the notes, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
(2) The Commissioner may amend an assessment made before the date
of entry into force of the Vietnamese notes for the purpose of
giving effect to subsection (1).
11ZD Agreement with the Kingdom of Spain
Subject to this Act, on and after the date of entry into force of the
Spanish agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11ZE Agreement with the Czech Republic
Subject to this Act, on and after the date of entry into force of the
Czech agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11ZF Agreement with Taipei Economic and Cultural Office
(1) Subject to this Act, on and after the date of entry into effect of the
Taipei agreement, the provisions of the agreement, so far as they
affect Australian tax, have, and are taken to have had, the force of
law according to their tenor.
(2) For the purposes of the Assessment Act, if:
(a) a person derives income, profits or gains; and
Section 11ZF
International Tax Agreements Act 1953 35
(b) for the purposes of the Taipei agreement, the person is a
resident of the foreign territory; and
(c) under any of Articles 6 to 8, 10 to 17 and 19 to 21 of the
agreement, the income, profits or gains may be taxed in the
Australian territory;
the income, profits or gains are taken to be derived from sources in
the Australian territory.
(3) For the purposes of the Assessment Act and Article 22 of the
Taipei agreement, if:
(a) a person derives income, profits or gains; and
(b) for the purposes of the agreement, the person is a resident of
the Australian territory; and
(c) under any of Articles 6 to 8, 10 to 17 and 19 to 21 of the
agreement, the income, profits or gains may be taxed in the
foreign territory;
the income, profits or gains are taken to have been derived from
sources in the foreign territory.
(4) The provisions of the Taipei agreement do not have the effect of
subjecting to Australian tax any interest or royalties paid by a
resident of the Australian territory to a resident of the foreign
territory that, apart from the agreement, would not be subject to
Australian tax.
(5) Section 170 of the Assessment Act does not prevent the
amendment of an assessment made before the commencement of
this section for the purpose of giving effect to the Taipei
agreement.
(6) If:
(a) an exchange of letters takes place for the purposes of
paragraph 2 of the Annex mentioned in paragraph (b) of the
definition of Taipei agreement in subsection 3(1); and
(b) as a result of the exchange, income, profits or gains derived
by an organisation before the exchange become taxable under
paragraph 2 of the Annex solely in the Australian territory or
solely in the foreign territory; and
(c) before the exchange and whether before or after the
commencement of this section, an assessment was made in
which the income, profits or gains were not taxed in that
way;
Section 11ZG
36 International Tax Agreements Act 1953
section 170 of the Assessment Act does not prevent the amendment
of the assessment for the purpose of taxing the income, profits or
gains in that way.
(7) In this section:
Australian territory means the territory mentioned in subparagraph
1(a) of Article 2 of the Taipei agreement.
foreign territory means the territory mentioned in subparagraph
1(b) of Article 2 of the Taipei agreement.
11ZG Agreement with the Republic of South Africa
Subject to this Act, on and after the date of entry into force of the
South African agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
11ZGA Protocol with the Republic of South Africa
Subject to this Act, on and after the date of entry into force of the
South African protocol, the provisions of the protocol have the
force of law according to their tenor.
11ZH Agreement with the Slovak Republic
Subject to this Act, on and after the date of entry into force of the
Slovak agreement, the provisions of the agreement so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11ZI Argentine agreement
(1) Subject to this Act, on and after the date of entry into force of the
Argentine agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have, and are taken to have
had, the force of law according to their tenor.
(2) Nothing in section 170 of the Income Tax Assessment Act 1936
prevents the amendment of an assessment made before the
commencement of this section for the purpose of giving effect to
the Argentine agreement.
Section 11ZJ
International Tax Agreements Act 1953 37
11ZJ Agreement with Romania
Subject to this Act, on and after the date of entry into force of the
Romanian agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
11ZK Agreement with Russia
Subject to this Act, on or after the date of entry into force of the
Russian agreement, the provisions of the agreement, so far as those
provisions affect Australian tax, have the force of law according to
their tenor.
11ZL Agreement with Mexico
Subject to this Act, on and after the date of entry into force of the
Mexican agreement, the provisions of the agreement, so far as
those provisions affect Australian tax, have the force of law
according to their tenor.
16 Rebates of excess tax on income included in assessable income
(1) This section applies in relation to each relevant part of a taxpayer’s
income of the year of income that consists of income in respect of
which a provision of an agreement limits the amount of Australian
tax payable.
(2) The taxpayer is entitled, in respect of each relevant part of the
taxpayer’s income of the year of income to which this section
applies, to a rebate of the amount (if any) by which the amount
ascertained in accordance with the last preceding section as the
amount of Australian tax payable in respect of that part exceeds the
limit applicable under the provisions of the agreement in relation to
that part.
(3) The rebate to which a taxpayer is entitled under this section in
respect of a relevant part of the taxpayer’s income shall be allowed
in the taxpayer’s assessment in respect of income of the year of
income in the assessable income of which that part is included.
(4) Where the taxpayer is liable to pay additional tax under section 104
of the Assessment Act in relation to the year of income referred to
Section 17A
38 International Tax Agreements Act 1953
in subsection (3), so much of the rebate as is not allowed in the
assessment referred to in that subsection shall be allowed in the
assessment of the additional tax.
(5) A rebate, or the sum of the rebates, to which, under subsection (2),
a taxpayer is entitled in respect of income of a year of income shall
not exceed the sum of:
(a) the amount of Australian tax payable in respect of the
taxpayer’s taxable income of that year of income after all
other rebates of, and deductions from, that tax have been
taken into account; and
(b) the amount, if any, of additional tax payable by the taxpayer
under section 104 of the Assessment Act in relation to that
year of income.
17A Withholding tax
(1) Where a provision of an agreement limits the amount of Australian
tax payable in respect of a dividend or a royalty, being a dividend
or a royalty in respect of which withholding tax is payable, and the
amount of that withholding tax exceeds the limit specified in the
agreement, the liability of the taxpayer for the withholding tax
shall be reduced by an amount equal to the amount of the excess.
(2) Where the liability of a taxpayer for withholding tax payable in
respect of a unit trust dividend would have been reduced in
pursuance of subsection (1) if that unit trust dividend had been a
dividend paid to the taxpayer by a company that is a resident, that
liability shall be reduced by an amount equal to the amount by
which the liability would have been reduced if the unit trust
dividend had been a dividend paid to the taxpayer by a company
that is a resident.
(3) In subsection (2):
unit trust dividend means a unit trust dividend within the meaning
of Division 6B or 6C of Part III of the Assessment Act.
(4) If:
(a) a provision (basic royalty provision) of an agreement is
covered by either of the following subparagraphs:
(i) paragraph 1 or 2 of Article 12 of the Chinese agreement;
(ii) a corresponding provision of another agreement; and
Section 18
International Tax Agreements Act 1953 39
(b) another provision of the agreement expressly excludes
particular royalties (excluded royalties) from the scope of the
basic royalty provision;
section 128B of the Assessment Act (which deals with liability for
withholding tax) does not apply to the excluded royalties.
(5) Section 128B of the Assessment Act (which deals with liability for
withholding tax) does not apply to the payment of a royalty as
defined in subsection 6(1) of that Act if:
(a) the royalty is paid to a person who is a resident of a
Contracting State or territory (other than Australia) for the
purposes of an agreement; and
(b) the agreement does not treat the amount paid as a royalty.
18 Source of dividends
(1) Where a company is not a resident of Australia but, for the
purposes of a law of a country with which, or with the government
of which, an agreement has been made (being a law which imposes
foreign tax), is resident in that other country, a dividend paid by the
company shall, for the purposes of the agreement, be deemed to be
derived from a source in that country.
(2) Subsection (1) does not limit the operation of a provision of an
agreement by virtue of which a dividend is deemed to be derived
from a source outside Australia.
20 Collection of tax due to the United States of America
(1) The purpose of this section is to enable the Government of
Australia to give effect to its obligation under paragraph (5) of
Article 25 of the United States convention and accordingly the
amounts of United States tax to which this section applies are
amounts of United States tax the collection of which is necessary
in order to ensure that the benefit of exemptions from United States
tax, or of reductions in rates of United States tax, provided for by
the convention is not received by a person not entitled to that
benefit.
(2) Where a person is liable to pay an amount of United States tax to
which this section applies, there is payable by that person to the
Commissioner as a debt due to the Queen on behalf of Australia an
amount equivalent to that amount, and the amount so payable may
Section 21
40 International Tax Agreements Act 1953
be sued for and recovered in any court of competent jurisdiction by
the Commissioner, a Second Commissioner or a Deputy
Commissioner suing in his or her official name.
(3) An amount payable to the Commissioner under the last preceding
subsection may be collected by the Commissioner under
section 218 of the Assessment Act and, for that purpose, a
reference in that section to a taxpayer shall be read as a reference
to the person by whom that amount is payable and a reference to an
amount due by a taxpayer in respect of tax shall be read as a
reference to the amount so payable.
(4) The Commissioner, a Second Commissioner or a Deputy
Commissioner may, by writing under his or her hand, certify:
(a) that, on a date specified in the certificate, a person specified
in the certificate was liable to pay an amount of United States
tax;
(b) that that amount was an amount of United States tax to which
this section applies; and
(c) that an amount specified in the certificate is an amount
equivalent to the amount of United States tax;
and such a certificate is, in all courts and for all purposes, evidence
of the matters stated in the certificate and that the person specified
in the certificate has, during the period from the date specified in
the certificate until the date of the certificate, continued to be liable
to pay the amount of United States tax.
(5) The Commissioner shall pay to the Government of the United
States of America an amount equal to any amount paid or
recovered by virtue of this section.
(6) In this section:
United States tax has the same meaning as in the United States
convention.
21 Regulations
The power to make regulations conferred by section 266 of the
Assessment Act shall be deemed to extend to the making of
regulations, not inconsistent with this Act, prescribing all matters
which by this Act are required or permitted to be prescribed, or
Section 22
International Tax Agreements Act 1953 41
which are necessary or convenient to be prescribed for carrying out
or giving effect to this Act.
22 Application of this Act
Nothing in this Act affects assessments in respect of income, or the
ascertainment of credits against tax on income, of a year of income
before the year of income that commenced on 1 July 1953.
23 Gathering and exchanging information
(1) The Commissioner or an officer authorised by the Commissioner
may use the information gathering provisions for the purpose of
gathering information to be exchanged in accordance with the
Commissioner’s obligations under an international agreement.
(2) Making a record of, and exchanging, information in accordance
with the Commissioner’s obligations under an international
agreement is not a breach of a provision of a taxation law that
prohibits the Commissioner or an officer from making a record of,
or disclosing, information.
Example: An example of such a provision is section 3C of the Taxation Administration Act 1953.
(3) Subsections (1) and (2) have effect whether or not the information
relates to Australian tax.
(4) In this section:
information gathering provision means a provision of a taxation
law that allows the Commissioner:
(a) to access land, premises, documents, information, goods or
other property; or
(b) to require or direct a person to provide information; or
(c) to require or direct a person to appear before the
Commissioner or an officer and give evidence or produce
documents.
international agreement means:
(a) an agreement given the force of law under this Act; or
(b) some other agreement that allows for the exchange of
information on tax matters between Australia and:
Section 24
42 International Tax Agreements Act 1953
(i) a foreign country or a constituent part of a foreign
country; or
(ii) an overseas territory.
taxation law has the same meaning as in the Income Tax
Assessment Act 1997.
24 Relief from double taxation where profits adjusted
Application
(1) This section applies if:
(a) Australia has an agreement with one of the following (a
treaty partner):
(i) a foreign country or a constituent part of a foreign
country;
(ii) an overseas territory; and
(b) the treaty partner taxes profits, or purports to tax profits, in
accordance with, or consistent with the principles of:
(i) if the treaty partner is the United Kingdom—Article 9
of the 2003 United Kingdom convention; or
(ii) otherwise—a corresponding provision of another
agreement.
Note: Article 9 of the 2003 United Kingdom Convention deals with associated enterprises.
Object
(2) The object of this section is to prevent double taxation of the
profits, to the extent that the Commissioner considers the taxation
of the profits by the treaty partner to be in accordance with the
agreement.
Adjustment of taxable income or tax loss
(3) The Commissioner may determine the amount of a taxpayer’s
taxable income or tax loss of a year of income to be an amount that
is appropriate having regard to the object of this section.
Note: The Commissioner may amend an assessment at any time to give effect to this section: see subsection 170(11) of the Income Tax Assessment Act 1936.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 43
Schedules
Schedule 1—2003 United Kingdom
convention and notes Note: See section 3.
CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND
THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN
AND NORTHERN IRELAND FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH
RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS
The Government of Australia and the Government of the United
Kingdom of Great Britain and Northern Ireland,
Desiring to conclude a Convention for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income and on
capital gains,
Have agreed as follows:
ARTICLE 1
Persons covered
This Convention shall apply to persons who are residents of one or both
of the Contracting States.
Schedule 1 2003 United Kingdom convention and notes
44 International Tax Agreements Act 1953
ARTICLE 2
Taxes covered
1 The existing taxes to which this Convention shall apply are:
(a) in the case of the United Kingdom:
(i) the income tax;
(ii) the corporation tax; and
(iii) the capital gains tax;
(b) in the case of Australia:
the income tax, the resource rent tax in respect of offshore projects
relating to exploration for or exploitation of petroleum resources,
and the fringe benefits tax, imposed under the federal law of
Australia.
2 This Convention shall also apply to any identical or substantially similar
taxes which are imposed under the federal law of Australia or the law of the
United Kingdom after the date of signature of this Convention in addition to, or
in place of, the existing taxes. The competent authorities of the Contracting
States shall notify each other of any substantial changes that have been made in
the law of their respective States relating to the taxes to which this Convention
applies within a reasonable period of time after those changes.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 45
ARTICLE 3
General definitions
1 For the purposes of this Convention, unless the context otherwise
requires:
(a) the term “United Kingdom” means Great Britain and Northern
Ireland, including any area outside the territorial sea of the United
Kingdom which in accordance with international law has been or
may hereafter be designated, under the laws of the United Kingdom
concerning the Continental Shelf, as an area within which the rights
of the United Kingdom with respect to the seabed and subsoil and
their natural resources may be exercised;
(b) the term “Australia”, when used in a geographical sense, excludes
all external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
(vi) the Coral Sea Islands Territory,
Schedule 1 2003 United Kingdom convention and notes
46 International Tax Agreements Act 1953
and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in this subparagraph) in respect
of which there is for the time being in force, consistently with
international law, a law of Australia dealing with the exploration
for or exploitation of any of the natural resources of the seabed and
subsoil of the Continental Shelf;
(c) the term “Australian tax” means tax imposed by Australia, being
tax to which this Convention applies by virtue of Article 2;
(d) the term “United Kingdom tax” means tax imposed by the United
Kingdom, being tax to which this Convention applies by virtue of
Article 2;
(e) the terms “a Contracting State” and “the other Contracting State”
mean the United Kingdom or Australia, as the context requires;
(f) the term “person” includes an individual, a company and any other
body of persons, but subject to paragraph 2 of this Article does not
include a partnership;
(g) the term “company” means any body corporate or anything that is
treated as a company or body corporate for tax purposes;
(h) the term “enterprise” applies to the carrying on of any business;
(i) the terms “enterprise of a Contracting State” and “enterprise of the
other Contracting State” mean respectively an enterprise carried on
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 47
by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State;
(j) the term “international traffic” means any transport by a ship or
aircraft operated by an enterprise of a Contracting State, except
when the ship or aircraft is operated solely from a place or between
places in the other Contracting State;
(k) the term “competent authority” means:
(i) in the case of the United Kingdom, the Commissioners of
Inland Revenue or their authorised representative;
(ii) in the case of Australia, the Commissioner of Taxation or an
authorised representative of the Commissioner;
(l) the term “national” means:
(i) in relation to the United Kingdom, any British citizen, or any
British subject not possessing the citizenship of any other
Commonwealth country or territory, provided that individual
has the right of abode in the United Kingdom; and any
company deriving its status as such from the law in force in
the United Kingdom;
(ii) in relation to Australia, an Australian citizen or an individual
not possessing citizenship who has been granted permanent
residency status; and any company deriving its status as such
from the law in force in Australia;
Schedule 1 2003 United Kingdom convention and notes
48 International Tax Agreements Act 1953
(m) the term “business” includes the performance of professional
services and of other activities of an independent character;
(n) the term “tax” means Australian tax or United Kingdom tax as the
context requires, but does not include any penalty or interest
imposed under the law of either Contracting State relating to its
tax;
(o) the term “recognised stock exchange” means:
(i) the Australian Stock Exchange and any other Australian
stock exchange recognised as such under Australian law;
(ii) the London Stock Exchange and any other United Kingdom
investment exchange recognised under United Kingdom law;
or
(iii) any other stock exchange agreed upon by the competent
authorities.
2 A partnership deriving its status from Australian law as a limited
partnership which is treated as a taxable unit under the law of Australia shall be
treated as a person for the purposes of this Convention.
3 As regards the application of this Convention at any time by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning that it has at that time under the laws of
that State for the purposes of the taxes to which this Convention applies, any
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 49
meaning under the applicable tax laws of that State prevailing over a meaning
given to the term under other laws of that State.
ARTICLE 4
Residence
1 For the purposes of this Convention, a person is a resident of a
Contracting State:
(a) in the case of the United Kingdom, if the person is a resident of the
United Kingdom for the purposes of United Kingdom tax; and
(b) in the case of Australia, if the person is a resident of Australia for
the purposes of Australian tax.
A Contracting State or a political subdivision or local authority of that State is
also a resident of that State for the purposes of this Convention.
2 A person is not a resident of a Contracting State for the purposes of this
Convention if that person is liable to tax in that State in respect only of income
or gains from sources in that State.
3 The status of an individual who, by reason of the preceding provisions of
this Article is a resident of both Contracting States, shall be determined as
follows:
(a) that individual shall be deemed to be a resident only of the
Contracting State in which a permanent home is available to that
individual; but if a permanent home is available in both States, or
Schedule 1 2003 United Kingdom convention and notes
50 International Tax Agreements Act 1953
in neither of them, that individual shall be deemed to be a resident
only of the State with which the individual’s personal and
economic relations are closer (centre of vital interests);
(b) if the Contracting State in which the centre of vital interests is
situated cannot be determined, the individual shall be deemed to be
a resident only of the State of which that individual is a national;
(c) if the individual is a national of both Contracting States or of
neither of them, the competent authorities of the Contracting States
shall endeavour to resolve the question by mutual agreement.
4 Where by reason of the preceding provisions of this Article a person
other than an individual is a resident of both Contracting States, then it shall be
deemed to be a resident only of the State in which its place of effective
management is situated.
5 Notwithstanding paragraph 4 of this Article, where by reason of
paragraph 1 of this Article a company, which is a participant in a dual listed
company arrangement, is a resident of both Contracting States then it shall be
deemed to be a resident only of the Contracting State in which it is
incorporated, provided it has its primary stock exchange listing in that State.
6 The term “dual listed company arrangement” as used in this Article
means an arrangement pursuant to which two publicly listed companies, while
maintaining their separate legal entity status, shareholdings and listings, align
their strategic directions and the economic interests of their respective
shareholders through:
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 51
(a) the appointment of common (or almost identical) boards of
directors;
(b) management of the operations of the two companies on a unified
basis;
(c) equalised distributions to shareholders in accordance with an
equalisation ratio applying between the two companies, including
in the event of a winding up of one or both of the companies;
(d) the shareholders of both companies voting in effect as a single
decision-making body on substantial issues affecting their
combined interests; and
(e) cross-guarantees as to, or similar financial support for, each other’s
material obligations or operations, except where the effect of the
relevant regulatory requirements prevents such guarantees or
financial support.
ARTICLE 5
Permanent establishment
1 For the purposes of this Convention, the term “permanent establishment”
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2 The term “permanent establishment” includes especially:
Schedule 1 2003 United Kingdom convention and notes
52 International Tax Agreements Act 1953
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place relating to the
exploration for or exploitation of natural resources; and
(g) an agricultural, pastoral or forestry property.
3 An enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent
establishment if:
(a) it has a building site or construction or installation project in that
State, or it undertakes a supervisory or consultancy activity in that
State connected with such a site or project, but only if that site,
project or activity lasts more than 12 months;
(b) it maintains substantial equipment for rental or other purposes
within that other State (excluding equipment let under a
hire-purchase agreement) for a period of more than 12 months; or
(c) a person acting in a Contracting State on behalf of an enterprise of
the other Contracting State manufactures or processes in the
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first-mentioned State for the enterprise goods or merchandise
belonging to the enterprise.
4 (a) The duration of activities under subparagraph (a) of paragraph 3
will be determined by aggregating the periods during which activities are
carried on in a Contracting State by associated enterprises provided that the
activities of the enterprise in that State are connected with the activities carried
on in that State by its associate.
(b) The period during which two or more associated enterprises are
carrying on concurrent activities will be counted only once for the purpose of
determining the duration of activities.
(c) Under this Article, an enterprise shall be deemed to be associated
with another enterprise if:
(i) one is controlled directly or indirectly by the other; or
(ii) both are controlled directly or indirectly by a third person or
persons.
5 Notwithstanding the preceding provisions of this Article, an enterprise
shall not be deemed to have a permanent establishment merely by reason of:
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of storage, display or delivery;
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(c) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of processing by another
enterprise;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or collecting information, for
the enterprise; or
(e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory
or auxiliary character.
6 Notwithstanding the provisions of paragraphs 1 and 2 of this Article,
where a person - other than an agent of an independent status to whom
paragraph 7 of this Article applies - is acting on behalf of an enterprise and has,
and habitually exercises, in a Contracting State an authority to conclude
contracts on behalf of the enterprise, that enterprise shall be deemed to have a
permanent establishment in that State in respect of any activities which that
person undertakes for that enterprise unless the activities of such person are
limited to those mentioned in paragraph 5 of this Article which, if exercised
through a fixed place of business, would not make this fixed place of business a
permanent establishment under the provisions of that paragraph.
7 An enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that State through a
broker, general commission agent or any other agent of an independent status,
provided that such brokers or agents are acting in the ordinary course of their
business as such.
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8 The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself make either
company a permanent establishment of the other.
ARTICLE 6
Income from real property
1 Income derived by a resident of a Contracting State from real property
may be taxed in the Contracting State in which the real property is situated.
2 The term “real property” shall have the meaning which it has under the
law of the Contracting State in which the property is situated. The term shall in
any case include:
(a) a lease of land or any other interest in or over land;
(b) property accessory to real property;
(c) livestock and equipment used in agriculture and forestry;
(d) usufruct of real property;
(e) a right to explore for mineral, oil or gas deposits or other natural
resources, and a right to mine those deposits or resources; and
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(f) a right to receive variable or fixed payments either as consideration
for or in respect of the exploitation of, or the right to explore or
exploit, mineral, oil or gas deposits, quarries or other places of
extraction or exploitation of natural resources.
Ships and aircraft shall not be regarded as real property.
3 Any interest or right referred to in paragraph 2 shall be regarded as
situated where the land, mineral, oil or gas deposits, quarries or natural
resources, as the case may be, are situated or where the exploration may take
place.
4 The provisions of paragraph 1 of this Article shall apply to income
derived from the direct use, letting, or use in any other form of real property.
5 The provisions of paragraphs 1, 3 and 4 of this Article shall also apply to
the income from real property of an enterprise.
ARTICLE 7
Business profits
1 The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated in that other State. If the enterprise
carries on business in that manner, the profits of the enterprise may be taxed in
the other State but only so much of them as is attributable to that permanent
establishment.
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2 Subject to the provisions of paragraph 3 of this Article, where an
enterprise of a Contracting State carries on business in the other Contracting
State through a permanent establishment situated in that other State, there shall
in each Contracting State be attributed to that permanent establishment the
profits which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or similar
conditions and dealing wholly independently with the enterprise of which it is a
permanent establishment or with other enterprises.
3 In determining the profits of a permanent establishment, there shall be
allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment, including executive
and general administrative expenses so incurred, whether in the Contracting
State in which the permanent establishment is situated or elsewhere.
4 Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person in
cases where the information available to the competent authority of that State is
inadequate to determine the profits to be attributed to a permanent
establishment. In such cases that law shall be applied, having regard to the
information that is available, consistently with the principles of this Article.
5 No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
6 Where profits include items of income or gains which are dealt with
separately in other Articles of this Convention, then the provisions of those
Articles shall not be affected by the provisions of this Article.
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7 Nothing in this Article shall affect the operation of any law of a
Contracting State relating to tax imposed on profits from insurance with
non-residents provided that if the relevant law in force in either Contracting
State at the date of signature of this Convention is varied (otherwise than in
minor respects so as not to affect its general character) the Contracting States
shall consult with each other with a view to agreeing to any amendment of this
paragraph that may be appropriate.
ARTICLE 8
Shipping and air transport
1 Profits of an enterprise of a Contracting State from the operation of ships
or aircraft in international traffic shall be taxable only in that State.
2 Notwithstanding the provisions of paragraph 1 of this Article, profits of
an enterprise of a Contracting State from the operation of ships or aircraft may
be taxed in the other Contracting State to the extent that they are profits derived
from ship or aircraft operations confined solely to places in that other State.
3 For the purposes of this Article, profits from the operation of ships or
aircraft in international traffic include:
(a) profits from the rental on a bareboat basis of ships or aircraft; and
(b) profits from the use, maintenance or rental of containers (including
trailers and related equipment for the transport of containers) used
for the transport of goods or merchandise;
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provided such rental or such use, maintenance or rental, as the case may be, is
directly connected or ancillary to the operation of ships or aircraft in
international traffic.
4 The provisions of paragraphs 1 and 2 of this Article shall also apply to
profits from the participation in a pool, a joint business or an international
operating agency, but only to so much of the profits so derived as is attributable
to the participant in proportion to its share in the joint operation.
5 For the purposes of this Article, profits derived from:
(a) the carriage by ships or aircraft of passengers, livestock, mail,
goods or merchandise which are shipped in a Contracting State and
are discharged at the same or another place in that State; or
(b) the use of a ship or aircraft for haulage, survey or dredging
activities, or for exploration or extraction activities in relation to
natural resources, where such activities are undertaken in a
Contracting State;
shall be treated as profits from ship or aircraft operations confined solely to
places in that State.
ARTICLE 9
Associated enterprises
1 Where:
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(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise of
the other Contracting State; or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State;
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which might, but for those
conditions, have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
2 Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person in
cases where the information available to the competent authority of that State is
inadequate to determine the profits accruing to an enterprise. In such cases that
law shall be applied, having regard to the information that is available,
consistently with the principles of this Article.
3 Where profits on which an enterprise of a Contracting State has been
charged to tax in that State are also included, by virtue of the provisions of
paragraphs 1 or 2, in the profits of an enterprise of the other Contracting State
and charged to tax in that other State, and the profits so included are profits
which might have been expected to have accrued to that enterprise of the other
State if the conditions operative between the enterprises had been those which
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might have been expected to have operated between independent enterprises
dealing wholly independently with one another, then the first-mentioned State
shall make an appropriate adjustment to the amount of tax it has charged on
those profits. In determining such adjustment, due regard shall be had to the
other provisions of this Convention and the competent authorities of the
Contracting States shall if necessary consult each other.
ARTICLE 10
Dividends
1 Dividends paid by a company which is a resident of a Contracting State
for the purposes of its tax, being dividends beneficially owned by a resident of
the other Contracting State, may be taxed in that other State.
2 However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident for the purposes of its
tax, and according to the law of that State, but the tax charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends, if the beneficial
owner of the dividends is a company which holds directly at least
10 per cent of the voting power in the company paying the
dividends; and
(b) 15 per cent of the gross amount of the dividends in all other cases.
3 Notwithstanding the provisions of paragraph 2 of this Article, dividends
shall not be taxed in the Contracting State of which the company paying the
dividends is a resident if the beneficial owner of the dividends is a company
that is a resident of the other Contracting State that has owned shares
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62 International Tax Agreements Act 1953
representing 80 per cent or more of the voting power of the company paying the
dividends for a 12 month period ending on the date the dividend is declared and
the company that is the beneficial owner of the dividends:
(a) has its principal class of shares listed on a recognised stock
exchange specified in subparagraph (i) or (ii) of subparagraph (o)
of paragraph 1 of Article 3 and regularly traded on one or more
recognised stock exchanges;
(b) is owned directly or indirectly by one or more companies whose
principal class of shares is listed on a recognised stock exchange
specified in subparagraph (i) or (ii) of subparagraph (o) of
paragraph 1 of Article 3 and regularly traded on one or more
recognised stock exchanges; or
(c) does not meet the requirements of subparagraphs (a) or (b) of this
paragraph but the competent authority of the first-mentioned
Contracting State determines, in accordance with the law of that
State, that the establishment, acquisition or maintenance of the
company that is the beneficial owner of the dividends and the
conduct of its operations did not have as one of its principal
purposes the obtaining of benefits under this Convention. The
competent authority of the first-mentioned Contracting State shall
consult the competent authority of the other Contracting State
before refusing to grant benefits of this Convention under this
subparagraph.
4 The term “dividends” as used in this Article means income from shares or
other rights, not being debt-claims, participating in profits, as well as income
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from other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident and also includes any other item which, under the laws
of the Contracting State of which the company paying the dividend is a
resident, is treated as a dividend or distribution of a company.
5 The provisions of paragraphs 1, 2 and 3 of this Article shall not apply if
the beneficial owner of the dividends, being a resident of a Contracting State,
carries on business in the other Contracting State of which the company paying
the dividends is a resident, through a permanent establishment situated in that
other State and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment. In such case the
provisions of Article 7 of this Convention shall apply.
6 Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State may not
impose any tax on the dividends paid by the company, being dividends
beneficially owned by a person who is not a resident of the other Contracting
State, except insofar as the holding in respect of which such dividends are paid
is effectively connected with a permanent establishment situated in that other
State, nor subject the company’s undistributed profits to a tax on undistributed
profits, even if the dividends paid or the undistributed profits consist wholly or
partly of profits or income arising in such other State. This paragraph shall not
apply in relation to dividends paid by any company which is a resident of
Australia for the purposes of Australian tax and which is also a resident of the
United Kingdom for the purposes of United Kingdom tax.
7 No relief shall be available under this Article if it was the main purpose
or one of the main purposes of any person concerned with the creation or
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assignment of the shares or other rights in respect of which the dividend is paid
to take advantage of this Article by means of that creation or assignment.
8 For the purposes of paragraph 3 of this Article, the term “principal class
of shares” means the ordinary or common shares of the company, provided that
such class of shares represents the majority of the voting power and value of the
company. If no single class of ordinary or common shares represents the
majority of the voting power and value of the company, the “principal class of
shares” is that class or those classes that in the aggregate represent a majority of
the voting power and value of the company.
ARTICLE 11
Interest
1 Interest arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.
2 However, that interest may also be taxed in the Contracting State in
which it arises, and according to the law of that State, but the tax so charged
shall not exceed 10 per cent of the gross amount of the interest.
3 Notwithstanding paragraph 2, interest arising in a Contracting State and
beneficially owned by a resident of the other Contracting State may not be
taxed in the first-mentioned State if:
(a) the interest is derived by a Contracting State or by a political or
administrative sub-division or a local authority thereof, or by any
other body exercising governmental functions in a Contracting
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State, or by a bank performing central banking functions in a
Contracting State; or
(b) the interest is derived by a financial institution which is unrelated
to and dealing wholly independently with the payer. For the
purposes of this Article, the term “financial institution” means a
bank or other enterprise substantially deriving its profits by raising
debt finance in the financial markets or by taking deposits at
interest and using those funds in carrying on a business of
providing finance.
4 Notwithstanding paragraph 3, interest referred to in subparagraph (b) of
that paragraph may be taxed in the State in which it arises at a rate not
exceeding 10 per cent of the gross amount of the interest if the interest is paid
as part of an arrangement involving back-to-back loans or other arrangement
that is economically equivalent and intended to have a similar effect to
back-to-back loans.
5 The term “interest” as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage and whether or
not carrying a right to participate in the debtor’s profits, and in particular,
income from government securities and income from bonds or debentures, and
income from any other form of indebtedness. The term “interest” also includes
income which is subjected to the same taxation treatment as income from
money lent by the law of the Contracting State in which the income arises. The
term “interest” shall not include any item which is treated as a dividend under
the provisions of Article 10 of this Convention.
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6 The provisions of paragraphs 1 and 2, subparagraph (b) of paragraph 3
and paragraph 4 of this Article shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State, in which the interest arises, through a permanent
establishment situated in that other State and the indebtedness in respect of
which the interest is paid or credited is effectively connected with such
permanent establishment. In such case, the provisions of Article 7 of this
Convention shall apply.
7 Interest shall be deemed to arise in a Contracting State when the payer is
a resident of that State for the purposes of its tax. Where, however, the person
paying the interest, whether the person is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment in connection with
which the indebtedness on which the interest is paid was incurred, and that
interest is borne by that permanent establishment, then the interest shall be
deemed to arise in the State in which the permanent establishment is situated.
8 Where, by reason of a special relationship between the payer and the
beneficial owner of the interest, or between both of them and some other
person, the amount of the interest paid or credited exceeds, for whatever reason,
the amount which might reasonably have been expected to have been agreed
upon by the payer and the beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the amount of the interest paid or credited shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Convention.
9 No relief shall be available under this Article if it was the main purpose
or one of the main purposes of any person concerned with the creation or
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assignment of the debt-claim in respect of which the interest is paid to take
advantage of this Article by means of that creation or assignment.
ARTICLE 12
Royalties
1 Royalties arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.
2 However, those royalties may also be taxed in the Contracting State in
which they arise, and according to the law of that State, but the tax so charged
shall not exceed 5 per cent of the gross amount of the royalties.
3 The term “royalties” in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design or
model, plan, secret formula or process, trademark or other like
property or right;
(b) the supply of scientific, technical, industrial or commercial
knowledge or information;
(c) the supply of any ancillary and subsidiary assistance that is
furnished as a means of enabling the application or enjoyment of
any such item as is mentioned in subparagraph (a) or (b) of this
paragraph;
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68 International Tax Agreements Act 1953
(d) the use of or the right to use:
(i) motion picture films; or
(ii) films or audio or video tapes or disks, or any other means of
image or sound reproduction or transmission for use in
connection with television, radio or other broadcasting; or
(e) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4 The provisions of paragraphs 1 and 2 of this Article shall not apply if the
beneficial owner of the royalties, being a resident of a Contracting State, carries
on business in the other Contracting State, in which the royalties arise, through
a permanent establishment situated in that other State, and the right or property
in respect of which the royalties are paid or credited is effectively connected
with that permanent establishment. In that case the provisions of Article 7 of
this Convention shall apply.
5 Royalties shall be deemed to arise in a Contracting State when the payer
is a resident of that State for the purposes of its tax. Where, however, the
person paying the royalties, whether the person is a resident of a Contracting
State or not, has in a Contracting State a permanent establishment in connection
with which the liability to pay the royalties was incurred, and the royalties are
borne by the permanent establishment, then the royalties shall be deemed to
arise in the State in which the permanent establishment is situated.
6 Where, by reason of a special relationship between the payer and the
beneficial owner of the royalties, or between both of them and some other
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person, the amount of the royalties paid or credited exceeds, for whatever
reason, the amount which might reasonably have been expected to have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess paid or credited shall remain taxable
according to the laws of each Contracting State, due regard being had to the
other provisions of this Convention.
7 The provisions of this Article shall not apply if it was the main purpose or
one of the main purposes of any person concerned with the creation or
assignment of the rights in respect of which the royalties are paid to take
advantage of this Article by means of that creation or assignment.
ARTICLE 13
Alienation of property
1 Income or gains derived by a resident of a Contracting State from the
alienation of real property situated in the other Contracting State may be taxed
in that other State.
2 Income or gains from the alienation of property, other than real property,
forming part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State, including
such income or gains from the alienation of such a permanent establishment
(alone or with the whole enterprise), may be taxed in that other State.
3 Income or gains derived by a resident of a Contracting State from the
alienation of ships or aircraft operated in international traffic, or of property
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(other than real property) pertaining to the operation of those ships or aircraft,
shall be taxable only in that Contracting State.
4 Income or gains derived by a resident of a Contracting State from the
alienation of any shares or other interests in a company, or of an interest of any
kind in a partnership, trust or other entity, where the value of the assets of such
entity, whether they are held directly or indirectly (including through one or
more interposed entities, such as, for example, through a chain of companies),
is principally attributable to real property situated in the other Contracting
State, may be taxed in that other State.
5 An individual who elects, under the taxation law of a Contracting State,
to defer taxation on income or gains relating to property which would otherwise
be taxed in that State upon the individual ceasing to be a resident of that State
for the purposes of its tax, shall, if the individual is a resident of the other State,
be taxable on income or gains from the subsequent alienation of that property
only in that other State.
6 Nothing in this Convention affects the application of a law of a
Contracting State relating to the taxation of gains of a capital nature derived
from the alienation of any property other than that to which any of the
preceding paragraphs of this Article apply.
7 In this Article, the term “real property” has the same meaning as it has in
Article 6.
8 The situation of interests or rights referred to in paragraph 2 of Article 6
shall be determined for the purposes of this Article in accordance with
paragraph 3 of Article 6.
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9 The provisions of this Article shall not affect the right of the United
Kingdom to levy according to its laws a tax chargeable in respect of income or
gains from the alienation of any property on a person who is a resident of the
United Kingdom at any time during the fiscal year in which the property is
alienated, or has been so resident at any time during the 6 years immediately
preceding that year.
ARTICLE 14
Income from employment
1 Subject to the provisions of Articles 17 and 18 of this Convention,
salaries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
2 Notwithstanding the provisions of paragraph 1 of this Article,
remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period
commencing or ending in the fiscal year or year of income of that
other State; and
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(b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other State; and
(c) the remuneration is not deductible in determining taxable profits of
a permanent establishment which the employer has in the other
State.
3 Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft
operated in international traffic may be taxed in the Contracting State of which
the enterprise operating the ship or aircraft is a resident.
4 In relation to remuneration of a director of a company derived from the
company the preceding provisions of this Article shall apply as if the
remuneration were remuneration of an employee in respect of an employment
and as if the references to an employer were references to the company.
ARTICLE 15
Fringe benefits
1 Where, except for the application of this Article, a fringe benefit is
taxable in both Contracting States the benefit will be taxable only in the
Contracting State which would have the primary taxing right over that benefit if
the value of the benefit were paid to the employee as ordinary employment
income.
2. For the purposes of this Article:
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(a) “fringe benefit” has the meaning it has under Australia’s Fringe
Benefits Tax Assessment Act 1986 (Commonwealth), as it may be
amended from time to time, and does not include a benefit arising
from the acquisition of an option over shares under an employee
share scheme;
(b) a Contracting State has a “primary taxing right” to the extent that it
has a taxing right under this Convention in respect of the
remuneration for the relevant employment and the other
Contracting State is required under this Convention to allow relief
for any taxes imposed in respect of such remuneration by the
first-mentioned Contracting State.
ARTICLE 16
Entertainers and sportspersons
1 Notwithstanding the provisions of Articles 7 and 14 of this Convention,
income derived by a resident of a Contracting State as an entertainer, such as a
theatre, motion picture, radio or television artiste, or a musician, or as a
sportsperson, from that person’s personal activities as such exercised in the
other Contracting State, may be taxed in that other State.
2 Where income in respect of personal activities exercised by an entertainer
or a sportsperson in that person’s capacity as such accrues not to that person but
to another person, that income may, notwithstanding the provisions of Articles
7 and 14 of this Convention, be taxed in the Contracting State in which the
activities of the entertainer or sportsperson are exercised.
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ARTICLE 17
Pensions and annuities
1 Pensions (including government pensions) and annuities paid to a
resident of a Contracting State shall be taxable only in that State.
2 The term “annuity” means a stated sum payable periodically to an
individual at stated times during life or during a specified or ascertainable
period of time under an obligation to make the payments in return for adequate
and full consideration in money or money’s worth.
ARTICLE 18
Government service
1 Salaries, wages and other similar remuneration, other than a pension or
annuity, paid by a Contracting State or a political subdivision or local authority
of that State to an individual in respect of services rendered in the discharge of
governmental functions shall be taxable only in that State. However, such
salaries, wages and other similar remuneration shall be taxable only in the other
Contracting State if the services are rendered in that other State and the
recipient is a resident of that other State who:
(a) is a national of that State; or
(b) did not become a resident of that State solely for the purpose of
rendering the services.
2 The provisions of paragraph 1 of this Article shall not apply to salaries,
wages and other similar remuneration in respect of services rendered in
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connection with any trade or business carried on by a Contracting State or a
political subdivision or local authority of that State. In that case, the provisions
of Article 14, 15 or 16, as the case may be, shall apply.
ARTICLE 19
Students
Where a student, who is a resident of a Contracting State or who was a
resident of that State immediately before visiting the other Contracting State
and who is temporarily present in that other State solely for the purpose of the
student’s education, receives payments from sources outside that other State for
the purpose of the student’s maintenance or education, those payments shall be
exempt from tax in that other State.
ARTICLE 20
Other income
1 Items of income beneficially owned by a resident of a Contracting State,
wherever arising, not dealt with in the foregoing Articles of this Convention
shall be taxable only in that State.
2 The provisions of paragraph 1 of this Article shall not apply to income,
other than income from real property as defined in paragraph 2 of Article 6 of
this Convention, derived by a resident of a Contracting State who carries on
business in the other Contracting State through a permanent establishment
situated therein and the right or property in respect of which the income is paid
Schedule 1 2003 United Kingdom convention and notes
76 International Tax Agreements Act 1953
is effectively connected with such permanent establishment. In that case the
provisions of Article 7 of this Convention shall apply.
3 Notwithstanding the provisions of paragraphs 1 and 2 of this Article,
items of income of a resident of a Contracting State not dealt with in the
foregoing Articles of this Convention from sources in the other Contracting
State may also be taxed in the other Contracting State.
4 Where, by reason of a special relationship between the person referred to
in paragraph 1 of this Article and some other person, or between both of them
and some third person, the amount of the income referred to in that paragraph
exceeds the amount (if any) which might reasonably have been expected to
have been agreed upon between them in the absence of such a relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such a case, the excess part of the income shall remain taxable according to the
laws of each Contracting State, due regard being had to the other applicable
provisions of this Convention.
5 A person may not rely on this Article to obtain relief from taxation if it
was the main purpose or one of the main purposes of any person concerned
with the creation or assignment of the rights in respect of which the income is
derived to take advantage of this Article by means of that creation or
assignment.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 77
ARTICLE 21
Source of income
Income or gains derived by a resident of the United Kingdom which,
under any one or more of Articles 6 to 8 and 10 to 16 and 18, may be taxed in
Australia shall for the purposes of the laws of Australia relating to its tax be
deemed to arise from sources in Australia.
ARTICLE 22
Elimination of double taxation
1 Subject to the provisions of the laws of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle of
this Article):
(a) United Kingdom tax paid under the laws of the United Kingdom
and in accordance with this Convention, whether directly or by
deduction, in respect of income or gains derived by a person who is
a resident of Australia from sources in the United Kingdom shall be
allowed as a credit against Australian tax payable in respect of that
income;
(b) Where a company which is a resident of the United Kingdom and is
not a resident of Australia for the purposes of Australian tax pays a
dividend to a company which is a resident of Australia and which
controls directly or indirectly at least 10 per cent of the voting
Schedule 1 2003 United Kingdom convention and notes
78 International Tax Agreements Act 1953
power of the first-mentioned company, the credit shall include the
United Kingdom tax paid by that first-mentioned company in
respect of that portion of its profits out of which the dividend is
paid.
2 Subject to the provisions of the law of the United Kingdom regarding the
allowance as a credit against United Kingdom tax of tax payable in a territory
outside the United Kingdom (which shall not affect the general principle
hereof):
(a) Australian tax payable under the laws of Australia and in
accordance with this Convention, whether directly or by deduction,
on income or chargeable gains from sources within Australia
(excluding in the case of a dividend, tax payable in respect of the
profits out of which the dividend is paid) shall be allowed as a
credit against any United Kingdom tax computed by reference to
the same income or chargeable gains by reference to which the
Australian tax is computed;
(b) in the case of a dividend paid by a company which is a resident of
Australia to a company which is a resident of the United Kingdom
and which controls directly or indirectly at least 10 per cent of the
voting power in the company paying the dividend, the credit shall
take into account (in addition to any Australian tax for which credit
may be allowed under the provisions of subparagraph (a) of this
paragraph) the Australian tax payable by the company in respect of
the profits out of which such dividend is paid.
3 For the purposes of paragraph 1 and 2 of this Article, income or gains
owned by a resident of a Contracting State which may be taxed in the other
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 79
Contracting State in accordance with this Convention shall be deemed to arise
from sources in that other Contracting State.
ARTICLE 23
Limitation of relief
1 Where under this Convention any income or gains are relieved from tax
in a Contracting State and, under the law in force in the other Contracting State,
a person in respect of that income or those gains is taxed by reference to the
amount thereof which is remitted to or received in that other State and not by
reference to the full amount thereof, then the relief to be allowed under this
Convention in the first-mentioned State shall apply only to so much of the
income or gains as is taxed in the other State.
2 Where under this Convention any income or gains are relieved from tax
in a Contracting State and, under the law in force in the other Contracting State,
an individual in respect of that income or those gains is exempt from tax by
virtue of being a temporary resident of the other State within the meaning of the
applicable tax laws of that other State, then the relief to be allowed under this
Convention in the first-mentioned State shall not apply to the extent that that
income or those gains are exempt from tax in the other State.
ARTICLE 24
Partnerships
Where a partnership is treated as a taxable unit under the law of a
Contracting State and under any provision of this Convention is entitled, as a
resident of that State, to relief from tax in the other Contracting State on any
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80 International Tax Agreements Act 1953
income or gains, that provision shall not be construed as restricting the right of
that other State to tax any member of the partnership who is a resident of that
other State on that member’s share of such income or gains; but any such
income or gains shall be treated for the purposes of Article 22 of this
Convention as income or gains from sources in the first-mentioned State.
ARTICLE 25
Non-discrimination
1 Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith,
which is other or more burdensome than the taxation and connected
requirements to which nationals of that other State in the same circumstances,
in particular with respect to residence, are or may be subjected.
2 The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other State than the taxation levied on enterprises of that other
State carrying on the same activities in similar circumstances.
3 Except where the provisions of paragraph 1 of Article 9, paragraph 8 or 9
of Article 11, paragraph 6 or 7 of Article 12, or paragraph 4 or 5 of Article 20
of this Convention apply, interest, royalties and other disbursements paid by an
enterprise of a Contracting State to a resident of the other Contracting State
shall for the purpose of determining the taxable profits of such enterprise, be
deductible under the same conditions as if they had been paid to a resident of
the first-mentioned State.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 81
4 Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other
similar enterprises of the first-mentioned State in similar circumstances are or
may be subjected.
5 Nothing contained in this Article shall be construed as obliging a
Contracting State to grant to individuals who are residents of the other
Contracting State any of the personal allowances, reliefs and reductions for tax
purposes which are granted to individuals so resident.
6 This Article shall not apply to any provision of the laws of a Contracting
State which:
(a) is designed to prevent the avoidance or evasion of taxes;
(b) does not permit the deferral of tax arising on the transfer of an asset
where the subsequent transfer of the asset by the transferee would
be beyond the taxing jurisdiction of the Contracting State under its
laws;
(c) provides for consolidation of group entities for treatment as a single
entity for tax purposes provided that Australian resident companies
that are owned directly or indirectly by residents of the United
Kingdom can access such consolidation treatment on the same
terms and conditions as other Australian resident companies;
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82 International Tax Agreements Act 1953
(d) provides deductions to eligible taxpayers for expenditure on
research and development; or
(e) is otherwise agreed to be unaffected by this Article in an Exchange
of Notes between the Government of Australia and the Government
of the United Kingdom.
7 The provisions of this Article shall apply to the taxes which are the
subject of this Convention.
ARTICLE 26
Mutual agreement procedure
1 Where a person who is a resident of a Contracting State considers that the
actions of one or both of the Contracting States result or will result for that
person in taxation not in accordance with this Convention, that person may,
irrespective of the remedies provided by the domestic law of those States
concerning taxes to which this Convention applies, present a case to the
competent authority of the Contracting State of which that person is a resident
or, if the case comes under paragraph 1 of Article 25 of this Convention, to that
of the Contracting State of which that person is a national.
2 The competent authority shall endeavour, if the case appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve
the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with this Convention.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 83
3 The competent authorities of the Contracting States shall jointly
endeavour to resolve by mutual agreement any difficulties or doubts arising as
to the interpretation or application of this Convention. They may also consult
together for the elimination of double taxation in cases not provided for in this
Convention.
4 The competent authorities of the Contracting States may communicate
with each other directly for the purpose of reaching an agreement in the sense
of the preceding paragraphs.
5 For the purposes of paragraph 3 of Article XXII (Consultation) of the
General Agreement on Trade in Services, the Contracting States agree that,
notwithstanding that paragraph, any dispute between them as to whether a
measure falls within the scope of this Convention may be brought before the
Council for Trade in Services, as provided by that paragraph, only with the
consent of both Contracting States. Any doubt as to the interpretation of this
paragraph shall be resolved under paragraph 3 of this Article or, failing
agreement under that procedure, pursuant to any other procedure agreed to by
both Contracting States.
ARTICLE 27
Exchange of information
1 The competent authorities of the Contracting States shall exchange such
information as is foreseeably relevant to the administration or enforcement of
the provisions of this Convention or of the domestic laws of the Contracting
States concerning taxes to which this Convention applies insofar as the taxation
under those laws is not contrary to this Convention. The exchange of
Schedule 1 2003 United Kingdom convention and notes
84 International Tax Agreements Act 1953
information is not restricted by Article 1 of this Convention. Any information
received by a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic law of that State and shall be disclosed
only to persons or authorities (including courts and administrative bodies)
concerned with the assessment or collection of, the enforcement or prosecution
in respect of, or the determination of appeals in relation to, the taxes to which
this Convention applies. Such persons or authorities shall use the information
only for such purposes. They may disclose the information in public court
proceedings or in judicial decisions.
2 If information is requested by a Contracting State in accordance with this
Article, the other Contracting State shall obtain that information in the same
manner and to the same extent as if the tax of the first-mentioned State were the
tax of that other State and were being imposed by that other State,
notwithstanding that the other State may not, at that time, need such
information for the purposes of its own tax.
3 In no case shall the provisions of paragraphs 1 or 2 of this Article be
construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws or
the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in
the normal course of the administration of that or of the other
Contracting State; or
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 85
supply information the disclosure of which would be contrary to
public policy.
ARTICLE 28
Members of diplomatic missions or permanent missions and consular posts
Nothing in this Convention shall affect the fiscal privileges of members
of diplomatic missions or permanent missions or consular posts under the
general rules of international law or under the provisions of special
international agreements.
ARTICLE 29
Entry into force
1 Each of the Contracting States shall notify the other in writing through
the diplomatic channel of the completion of the procedures required by its law
for the entry into force of this Convention. This Convention shall enter into
force on the date of the later notification, and shall thereupon have effect:
(a) in the case of Australia:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after 1 July
next following the date on which this Convention enters into
force;
Schedule 1 2003 United Kingdom convention and notes
86 International Tax Agreements Act 1953
(ii) in respect of fringe benefits tax, in relation to fringe benefits
provided on or after 1 April next following the date on which
this Convention enters into force;
(iii) in respect of other Australian tax, in relation to income or
gains of any year of income beginning on or after 1 July next
following the date on which this Convention enters into
force;
(b) in the case of the United Kingdom:
(i) in respect of taxes withheld at source, for amounts paid or
credited on or after 1 July next following the date on which
this Convention enters into force;
(ii) in respect of income tax not described in clause (i) of this
subparagraph and capital gains tax, for any year of
assessment beginning on or after 6 April next following the
date on which this Convention enters into force;
(iii) in respect of corporation tax, for any financial year beginning
on or after 1 April next following the date on which this
Convention enters into force.
2 The Agreement between the Government of the Commonwealth of
Australia and the Government of the United Kingdom of Great Britain and
Northern Ireland signed at Canberra on 7 December 1967 (as amended by the
Protocol signed at Canberra on 29 January 1980) (“the Agreement”) shall be
terminated and shall cease to have effect in respect of the taxes to which this
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 87
Convention applies in accordance with the provisions of paragraph 1 of this
Article. In relation to tax credits in respect of dividends paid by companies
which are residents of the United Kingdom, the Agreement shall be terminated
and shall cease to have effect in respect of dividends paid on or after 1 July next
following the date on which this Convention enters into force.
3 Notwithstanding the entry into force of this Convention, an individual
who is entitled to the benefits of Article 16 of the Agreement at the time of the
entry into force of this Convention shall continue to be entitled to such benefits
until such time as the individual would have ceased to be entitled to such
benefits if the Agreement had remained in force.
ARTICLE 30
Termination
This Convention shall remain in force until terminated by one of the
Contracting States. Either Contracting State may, on or before 30 June in any
calendar year beginning after the expiration of 5 years from the date of its entry
into force, give written notice of termination through the diplomatic channel
and, in that event, the Convention shall cease to have effect:
(a) in the case of Australia:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after
1 January in the calendar year next following that in which
the notice of termination is given;
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88 International Tax Agreements Act 1953
(ii) in respect of fringe benefits tax, in relation to fringe benefits
provided on or after 1 April in the calendar year next
following that in which the notice of termination is given;
(iii) in respect of other Australian tax, in relation to income or
gains of any year of income beginning on or after 1 July in
the calendar year next following that in which the notice of
termination is given;
(b) in the case of the United Kingdom:
(i) in respect of taxes withheld at source, for amounts paid or
credited on or after 1 January in the calendar year next
following that in which the notice of termination is given;
(ii) in respect of income tax not described in clause (i) of this
subparagraph and capital gains tax, for any year of
assessment beginning on or after 6 April in the calendar year
next following that in which the notice of termination is
given;
(iii) in respect of corporation tax, for any financial year beginning
on or after 1 April in the calendar year next following that in
which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto by
their respective Governments, have signed this Convention.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 89
DONE in duplicate at Canberra this 21st day of August 2003
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
AUSTRALIA THE UNITED KINGDOM OF
GREAT BRITAIN AND
NORTHERN IRELAND
PETER COSTELLO ALASTAIR GOODLAD
[Signatures omitted]
Schedule 1 2003 United Kingdom convention and notes
90 International Tax Agreements Act 1953
2003 UNITED KINGDOM NOTES
No LGB 03/170
The Department of Foreign Affairs and Trade presents its compliments to the
British High Commission to Australia and has the honour to refer to the
Convention between the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of Australia for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income and on Capital Gains which has been signed today (the “Convention”).
The Department has the honour to make the following proposals on behalf of
the Government of Australia:
1. With reference generally to the application of the Convention (including
these Notes),
the Contracting States agree that:
(a) the term “income or gains” includes “profits”;
(b) the term “laws” includes the full body of law, and is not limited to
statutory law;
(c) the terms “paid or credited” and “payments or credits” shall not include the
recording of internal transactions between a permanent establishment and
another part of the same enterprise;
(d) the expression “any provision of the laws of a Contracting State which is
designed to prevent the avoidance or evasion of taxes” includes:
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 91
(i) measures designed to address thin capitalisation, dividend stripping
and transfer pricing;
(ii) controlled foreign company, transferor trust and foreign investment
fund rules;
(iii) measures designed to ensure that taxes can be effectively recovered
(conservancy measures); and
(e) nothing in the Convention shall be construed as restricting, in any manner,
the application of any provision of the laws of a Contracting State which is
designed to prevent the avoidance or evasion of taxes.
2. With reference to Article 5 (Permanent establishment),
the Contracting States agree that the term “permanent establishment” fully
encompasses the concept of a “fixed base” used in other double tax treaties in
the context of independent personal services.
3. With reference to Article 7 (Business profits),
the Contracting States agree that:
(a) nothing in paragraph 3 of the Article shall permit the deduction of an
expense which would not be deductible if the permanent establishment
were an independent enterprise which incurred the expense; and
Schedule 1 2003 United Kingdom convention and notes
92 International Tax Agreements Act 1953
(b) where:
(i) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trust estates, to a share
of the business profits of an enterprise carried on in the other
Contracting State by the trustee of a trust estate other than a trust
estate which is treated as a company for tax purposes; and
(ii) in relation to that enterprise, that trustee would, in accordance with
the principles of Article 5, have a permanent establishment in that
other State,
the enterprise carried on by the trustee shall be deemed to be a business
carried on in the other State by that resident through a permanent
establishment situated in that other State and that share of business
profits shall be attributed to that permanent establishment.
4. With reference to Article 9 (Associated enterprises),
the Contracting States note that the expression “dealing wholly independently
with one another” is included in paragraph 1 of the Article to conform to
Australia’s consistent treaty practice and to address Australia’s concerns that
the appropriate benchmark for determining the conditions operating between the
associated enterprises should have regard to whether those dealings between the
enterprises occurred on a truly independent basis.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 93
5. With reference to Article 10 (Dividends),
the Contracting States agree that if the relevant law in either Contracting State
at the date of signature of the Convention is varied otherwise than in minor
respects so as not to affect its general character, the Contracting States shall
consult each other with a view to agreeing to any amendment of paragraph 2
and 3 of the Article as may be appropriate.
6. With reference to Article 11 (Interest),
the Contracting States agree that:
(a) the term “financial institution” shall not include a corporate treasury or a
member of a corporate group performing financing services for the group;
and
(b) nothing in the Convention shall have the effect of subjecting to tax in a
Contracting State any interest paid by a resident of that State to a resident
of the other State where the payer has outside both Contracting States a
permanent establishment in connection with which the indebtedness on
which the interest is paid was incurred, and that interest is borne by that
permanent establishment.
Schedule 1 2003 United Kingdom convention and notes
94 International Tax Agreements Act 1953
7. With reference to Article 12 (Royalties),
the Contracting States agree that:
(a) the term “royalties” shall not include payments for the use of spectrum
licences. The provisions of Article 7 of the Convention shall apply to such
payments; and
(b) nothing in the Convention shall have the effect of subjecting to tax in a
Contracting State any royalties paid by a resident of that State to a resident
of the other State where the payer has outside both Contracting States a
permanent establishment in connection with which the liability to pay the
royalties was incurred, and the royalties are borne by the permanent
establishment.
8. With reference to Article 14 (Income from employment),
the Contracting States agree that:
(a) income or gains derived by employees in relation to share option schemes
shall be treated as “other similar remuneration” for the purposes of Article
14;
(b) unless the facts otherwise indicate, the period of employment to which the
option relates shall be taken to be the period between the grant of the
option and the date on which all the conditions for its exercise have been
satisfied (the vesting of the option); and
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 95
(c) where a resident of a Contracting State derives such income or gains, and
(i) the period of employment to which the share option relates is the
period between grant and vesting of the option;
(ii) the employee remains in that employment at the date of alienation
or exercise of the option; and
(iii) that employment has been exercised by the employee in the other
Contracting State during all or part of the period between grant and
vesting of the option;
the proportion of the income or gain which shall be attributable to
employment exercised in the other Contracting State shall be determined
in accordance with the ratio of the number of days of employment
exercised in that State between grant and vesting of the option to the total
number of days of employment exercised between grant and vesting of
the option.
9. With reference to Article 25 (Non-discrimination),
the Contracting States agree that:
(a) in relation to paragraph 4 and subparagraph 6(c) of the Article, the
reference to capital being owned or controlled “directly or indirectly”
includes cases where the capital is held through a chain of companies or
other entities; and
Schedule 1 2003 United Kingdom convention and notes
96 International Tax Agreements Act 1953
(b) nothing in the Article shall be construed as obliging a Contracting State
to allow tax rebates and credits in relation to dividends received by a
person who is a resident of the other Contracting State.
10. With reference to Article 26 (Mutual agreement procedure) and Article
27 (Exchange of information),
the Contracting States agree that the provisions of the Articles shall have effect
from the date of entry into force of the Convention, without regard to the date of
the relevant transactions or the taxable or chargeable period to which the matter
relates.
11. With reference to Article 26 (Mutual agreement procedure),
the Contracting States agree that in relation to paragraph 1 of the Article, the
applicable time limits in the domestic laws bearing on the time available for
presenting a case to the relevant competent authority shall apply, whether or not
those applicable time limits specifically refer to the competent authority
process.
12. Miscellaneous
The Contracting States agree that the two Governments shall consult each other
at intervals of not more than five years regarding the terms, operation and
application of the Convention with a view to ensuring that it continues to serve
the purposes of avoiding double taxation and preventing fiscal evasion. The
first such consultation shall take place no later than the end of the fifth year
after the entry into force of the Convention.
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 97
If the foregoing proposals are acceptable to the Government of the United
Kingdom of Great Britain and Northern Ireland, the Department has the honour
to propose that the present Note and the High Commission’s confirmatory Note
in reply shall constitute an Agreement on certain matters between the
Government of the United Kingdom of Great Britain and Northern Ireland and
the Government of Australia for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital
Gains, which shall enter into force at the same time as the entry into force of the
Convention.
The Department of Foreign Affairs and Trade avails itself of this opportunity to
renew to the British High Commission to Australia the assurances of its highest
consideration.
[Seal omitted]
CANBERRA
21 August 2003
Schedule 1 2003 United Kingdom convention and notes
98 International Tax Agreements Act 1953
41/03
The British High Commission to Australia presents its compliments to the
Department of Foreign Affairs and Trade and has the honour to refer to the
Department’s Note No LGB 03/170 of 21 August 2003 which reads as follows:
“The Department of Foreign Affairs and Trade presents its compliments to the
British High Commission to Australia and has the honour to refer to the
Convention between the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of Australia for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income and on Capital Gains which has been signed today (the “Convention”).
The Department has the honour to make the following proposals on behalf of
the Government of Australia:
1. With reference generally to the application of the Convention (including
these Notes),
the Contracting States agree that:
(a) the term “income or gains” includes “profits”;
(b) the term “laws” includes the full body of law, and is not limited to
statutory law;
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 99
(c) the terms “paid or credited” and “payments or credits” shall not include
the recording of internal transactions between a permanent
establishment and another part of the same enterprise;
(d) the expression “any provision of the laws of a Contracting State which
is designed to prevent the avoidance or evasion of taxes” includes:
(i) measures designed to address thin capitalisation, dividend stripping
and transfer pricing;
(ii) controlled foreign company, transferor trust and foreign investment
fund rules;
(iii) measures designed to ensure that taxes can be effectively recovered
(conservancy measures); and
(e) nothing in the Convention shall be construed as restricting, in any
manner, the application of any provision of the laws of a Contracting
State which is designed to prevent the avoidance or evasion of taxes.
2. With reference to Article 5 (Permanent establishment),
the Contracting States agree that the term “permanent establishment” fully
encompasses the concept of a “fixed base” used in other double tax treaties in
the context of independent personal services.
Schedule 1 2003 United Kingdom convention and notes
100 International Tax Agreements Act 1953
3. With reference to Article 7 (Business profits),
the Contracting States agree that:
(a) nothing in paragraph 3 of the Article shall permit the deduction of an
expense which would not be deductible if the permanent establishment
were an independent enterprise which incurred the expense; and
(b) where:
(i) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trust estates, to a share
of the business profits of an enterprise carried on in the other
Contracting State by the trustee of a trust estate other than a trust
estate which is treated as a company for tax purposes; and
(ii) in relation to that enterprise, that trustee would, in accordance with
the principles of Article 5, have a permanent establishment in that
other State,
the enterprise carried on by the trustee shall be deemed to be a business
carried on in the other State by that resident through a permanent
establishment situated in that other State and that share of business
profits shall be attributed to that permanent establishment.
4. With reference to Article 9 (Associated enterprises),
the Contracting States note that the expression “dealing wholly independently
with one another” is included in paragraph 1 of the Article to conform to
2003 United Kingdom convention and notes Schedule 1
International Tax Agreements Act 1953 101
Australia’s consistent treaty practice and to address Australia’s concerns that
the appropriate benchmark for determining the conditions operating between the
associated enterprises should have regard to whether those dealings between the
enterprises occurred on a truly independent basis.
5. With reference to Article 10 (Dividends),
the Contracting States agree that if the relevant law in either Contracting State
at the date of signature of the Convention is varied otherwise than in minor
respects so as not to affect its general character, the Contracting States shall
consult each other with a view to agreeing to any amendment of paragraph 2
and 3 of the Article as may be appropriate.
6. With reference to Article 11 (Interest),
the Contracting States agree that:
(a) the term “financial institution” shall not include a corporate treasury or a
member of a corporate group performing financing services for the group;
and
(b) nothing in the Convention shall have the effect of subjecting to tax in a
Contracting State any interest paid by a resident of that State to a resident
of the other State where the payer has outside both Contracting States a
permanent establishment in connection with which the indebtedness on
which the interest is paid was incurred, and that interest is borne by that
permanent establishment.
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102 International Tax Agreements Act 1953
7. With reference to Article 12 (Royalties),
the Contracting States agree that:
(a) the term “royalties” shall not include payments for the use of spectrum
licences. The provisions of Article 7 of the Convention shall apply to
such payments; and
(b) nothing in the Convention shall have the effect of subjecting to tax in a
Contracting State any royalties paid by a resident of that State to a
resident of the other State where the payer has outside both Contracting
States a permanent establishment in connection with which the liability to
pay the royalties was incurred, and the royalties are borne by the
permanent establishment.
8. With reference to Article 14 (Income from employment),
the Contracting States agree that:
(a) income or gains derived by employees in relation to share option schemes
shall be treated as “other similar remuneration” for the purposes of
Article 14;
(b) unless the facts otherwise indicate, the period of employment to which
the option relates shall be taken to be the period between the grant of the
option and the date on which all the conditions for its exercise have been
satisfied (the vesting of the option); and
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(c) where a resident of a Contracting State derives such income or gains, and
(i) the period of employment to which the share option relates is
the period between grant and vesting of the option;
(ii) the employee remains in that employment at the date of
alienation or exercise of the option; and
(iii) that employment has been exercised by the employee in the
other Contracting State during all or part of the period between
grant and vesting of the option;
the proportion of the income or gain which shall be attributable to
employment exercised in the other Contracting State shall be determined
in accordance with the ratio of the number of days of employment
exercised in that State between grant and vesting of the option to the total
number of days of employment exercised between grant and vesting of
the option.
9. With reference to Article 25 (Non-discrimination),
the Contracting States agree that:
(a) in relation to paragraph 4 and subparagraph 6(c) of the Article, the
reference to capital being owned or controlled “directly or indirectly”
includes cases where the capital is held through a chain of companies or
other entities; and
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104 International Tax Agreements Act 1953
(b) nothing in the Article shall be construed as obliging a Contracting State
to allow tax rebates and credits in relation to dividends received by a
person who is a resident of the other Contracting State.
10. With reference to Article 26 (Mutual agreement procedure) and Article
27 (Exchange of information),
the Contracting States agree that the provisions of the Articles shall have effect
from the date of entry into force of the Convention, without regard to the date of
the relevant transactions or the taxable or chargeable period to which the matter
relates.
11. With reference to Article 26 (Mutual agreement procedure),
the Contracting States agree that in relation to paragraph 1 of the Article, the
applicable time limits in the domestic laws bearing on the time available for
presenting a case to the relevant competent authority shall apply, whether or not
those applicable time limits specifically refer to the competent authority
process.
12. Miscellaneous
The Contracting States agree that the two Governments shall consult each other
at intervals of not more than five years regarding the terms, operation and
application of the Convention with a view to ensuring that it continues to serve
the purposes of avoiding double taxation and preventing fiscal evasion. The
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first such consultation shall take place no later than the end of the fifth year
after the entry into force of the Convention.
If the foregoing proposals are acceptable to the Government of the United
Kingdom of Great Britain and Northern Ireland, the Department has the honour
to propose that the present Note and the High Commission’s confirmatory Note
in reply shall constitute an Agreement on certain matters between the
Government of the United Kingdom of Great Britain and Northern Ireland and
the Government of Australia for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital
Gains, which shall enter into force at the same time as the entry into force of the
Convention.
The Department of Foreign Affairs and Trade avails itself of this opportunity to
renew to the British High Commission to Australia the assurances of its highest
consideration.”
The High Commission has the honour to advise that the Department’s proposals
are acceptable to the Government of the United Kingdom of Great Britain and
Northern Ireland and that the Department’s Note and this confirmatory Note in
reply shall constitute an Agreement on certain matters between the Government
of the United Kingdom of Great Britain and Northern Ireland and the
Government of Australia for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital
Gains, which shall enter into force at the same time as the entry into force of the
Convention.
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106 International Tax Agreements Act 1953
The British High Commission to Australia avails itself of this opportunity to
renew to the Department of Foreign Affairs and Trade the assurances of its
highest consideration.
[Seal omitted]
CANBERRA
21 August 2003
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Schedule 2—Convention between the
Government of Australia and the
Government of the United States of
America for the Avoidance of Double
Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on
Income Section 3
The Government of Australia and the Government of the United States of
America,
Desiring to conclude a Convention for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with Respect to Taxes on Income,
Have agreed as follows:
ARTICLE 1
Personal Scope
(1) Except as otherwise provided in this Convention, this Convention shall
apply to persons who are residents of one or both of the Contracting States.
(2) This Convention shall not restrict in any manner any exclusion, exemption,
deduction, rebate, credit or other allowance accorded from time to time:
(a) by the laws of either Contracting State; or
(b) by any other agreement between the Contracting States.
(3) Notwithstanding any provision of this Convention, except paragraph (4) of
this Article, a Contracting State may tax its residents (as determined under
Article 4 (Residence)) and individuals electing under its domestic law to be
taxed as residents of that State, and by reason of citizenship may tax its citizens,
as if this Convention had not entered into force. For this purpose, the term
“citizen” shall, with respect to United States source income according to United
States law relating to United States tax, include a former citizen whose loss of
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of Fiscal Evasion with respect to Taxes on Income
108 International Tax Agreements Act 1953
citizenship had as one of its principal purposes the avoidance of tax, but only
for a period of 10 years following such loss.
(4) The provisions of paragraph (3) shall not affect:
(a) the benefits conferred by a Contracting State under paragraph (2) of
Article 9 (Associated Enterprises), paragraph (2) or (6) of Article 18
(Pensions, Annuities, Alimony and Child Support), Article 22 (Relief
from Double Taxation), 23 (Non--Discrimination), 24 (Mutual
Agreement Procedure) or paragraph (1) of Article 27 (Miscellaneous);
or
(b) the benefits conferred by a Contracting State under Article 19
(Governmental Remuneration), 20 (Students) or 26 (Diplomatic and
Consular Privileges) upon individuals who are neither citizens of, nor
have immigrant status in, that State (in the case of benefits conferred by
the United States), or who are not ordinarily resident in that State (in the
case of benefits conferred by Australia).
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Convention shall apply are:
(a) in the United States: the Federal income taxes imposed by the Internal
Revenue Code, but excluding the accumulated earnings tax and the
personal holding company tax; and
(b) in Australia: the Australian income tax, including the additional tax
upon the undistributed amount of the distributable income of a private
company.
(2) This Convention shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Convention in addition to, or in place of, the existing taxes. At the end of
each calendar year, the competent authority of each Contracting State shall
notify the competent authority of the other Contracting State of any substantial
changes which have been made during that year in the laws of his State relating
to the taxes to which this Convention applies or in the official interpretation of
those laws or of this Convention.
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ARTICLE 3
General Definitions
(1) For the purposes of this Convention, unless the context otherwise requires:
(a) the term “person” includes an individual, an estate of a deceased
individual, a trust, a partnership, a company and any other body of
persons;
(b) the term “company” means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(c) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean an enterprise carried on by a
resident of Australia or an enterprise carried on by a resident of the
United States, as the context requires;
(d) the term “international traffic” means any transport by a ship or aircraft,
except where such transport is solely between places within a
Contracting State;
(e) the term “competent authority” means:
(i) in the case of the United States: the Secretary of the Treasury or
his delegate; and
(ii) in the case of Australia: the Commissioner of Taxation or his
authorized representative;
(f) the terms “Contracting State”, “one of the Contracting States” and “the
other Contracting State” mean the United States or Australia, as the
context requires;
(g) (i) the term “United States corporation” means a corporation which,
under United States law relating to United States tax, is a
domestic corporation or an unincorporated entity treated as a
domestic corporation, and which is not, under the law of
Australia relating to Australian tax, a resident of Australia; and
(ii) the term “Australian corporation” means a company, as defined
under the law of Australia relating to Australian tax, which, under
that law, is a resident of Australia, and which is not, under United
States law relating to United States tax, a domestic corporation or
an unincorporated entity treated as a domestic corporation;
(h) the term “State” means any National State, whether or not one of the
Contracting States;
(i) the term “United States tax” means tax imposed by the United
States to which this Convention applies by virtue of Article 2
(Taxes Covered) and the term “Australian tax” means tax
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imposed by Australia to which this Convention applies by virtue
of Article 2 (Taxes Covered), but neither term includes any
amount which represents a penalty or interest imposed under the
law of either Contracting State relating to United States tax or
Australian tax;
(j) (i) the term “United States” means the United States of America;
and
(ii) when used in a geographical sense, the term “United States”
means the states thereof and the District of Columbia and also
includes:
(A) the territorial waters thereof; and
(B) the sea--bed and subsoil of the submarine areas adjacent to
the coast thereof, but beyond the territorial waters, over
which the United States exercises rights, in accordance
with international law, for the purposes of exploration for,
or exploitation of, the natural resources of those areas;
(k) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or of
a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(l) the terms “resident of one of the Contracting States” and “resident of
the other Contracting State” mean a resident of Australia or a resident
of the United States, as the context requires.
(2) As regards the application of this Convention by one of the Contracting
States, any term not defined herein shall, unless the context otherwise requires,
have the meaning which it has under the laws of that State relating to the taxes
to which this Convention applies.
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ARTICLE 4
Residence
(1) For the purposes of this Convention:
(a) a person is a resident of Australia if the person is:
(i) an Australian corporation; or
(ii) any other person (except a company as defined under the law of
Australia relating to Australian tax) who, under that law, is a
resident of Australia,
provided that, in relation to any income, a person who:
(iii) is subject to Australian tax on income which is from sources in
Australia; or
(iv) is a partnership, an estate of a deceased individual or a trust
(other than a trust that is a provident, benefit, superannuation or
retirement fund, or that is established for public charitable
purposes or for the purpose of enabling scientific research to be
conducted by or in conjunction with a public university or public
hospital, the income of which is exempt from tax under the law
of Australia relating to Australian tax),
shall not be treated as a resident of Australia except to the extent that
the income is subject to Australian tax as the income of a resident,
either in the hands of that person or in the hands of a partner or
beneficiary, or, if that income is exempt from Australian tax, is so
exempt solely because it is subject to United States tax; and
(b) a person is a resident of the United States if the person is:
(i) a United States corporation; or
(ii) any other person (except a corporation or unincorporated entity
treated as a corporation for United States tax purposes) resident
in the United States for purposes of its tax, provided that, in
relation to any income derived by a partnership, an estate of a
deceased individual or a trust, such person shall not be treated as
a resident of the United States except to the extent that the
income is subject to United States tax as the income of a resident,
either in its hands or in the hands of a partner or beneficiary, or, if
that income is exempt from United States tax, is exempt other
than because such person, partner or beneficiary is not a United
States person according to United States law relating to United
States tax.
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(2) Where by application of paragraph (1) an individual is a resident of both
Contracting States, he shall be deemed to be a resident of the State:
(a) in which he maintains his permanent home;
(b) if the provisions of sub--paragraph (a) do not apply, in which he has an
habitual abode if he has his permanent home in both Contracting States
or in neither of the Contracting States; or
(c) if the provisions of sub--paragraphs (a) and (b) do not apply, with which
his personal and economic relations are closer if he has an habitual
abode in both Contracting States or in neither of the Contracting States.
For the purposes of this paragraph, in determining an individual’s permanent
home, regard shall be given to the place where the individual dwells with his
family, and in determining the Contracting State with which an individual’s
personal and economic relations are closer, regard shall be given to his
citizenship (if he is a citizen of one of the Contracting States).
(3) An individual who is deemed to be a resident of one of the Contracting
States for any year of income, or taxable year, as the case may be by reason of
the provisions of paragraph (2) shall, for all purposes of this Convention, be
deemed to be a resident only of that State for such year.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Convention, the term “permanent establishment”
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
(2) The term “permanent establishment” shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, assembly or installation project which
exists for more than 9 months; and
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(i) an installation, drilling rig or ship that, for an aggregate period of at
least 6 months in any 24 month period, is used by an enterprise of one
of the Contracting States in the other Contracting State for dredging or
for or in connection with the exploration or exploitation of natural
resources of the sea--bed and subsoil.
(3) Notwithstanding paragraphs (1) and (2), an enterprise of one of the
Contracting States shall not be regarded as having a permanent establishment
solely as a result of one or more of the following:
(a) the use of facilities for the purpose of storage, display or delivery of
goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business for the purpose of activities
which have a preparatory or auxiliary character, such as advertising or
scientific research, for the enterprise;
(f) the maintenance of a building site or construction, assembly or
installation project which does not exist for more than 9 months; or
(g) the use by that enterprise in the other Contracting State, of an
installation, drilling rig or ship for dredging, or for or in connection
with the exploration or exploitation of natural resources of the sea--bed
and subsoil, provided that such use is not for an aggregate period of at
least 6 months in any 24 month period.
(4) Notwithstanding paragraphs (1) and (2), an enterprise of one of the
Contracting States shall be deemed to have a permanent establishment in the
other Contracting State if:
(a) it carries on business in that other State through a person, other than an
agent of independent status to whom paragraph (5) applies, who has
authority to conclude contracts on behalf of that enterprise and
habitually exercises that authority in that other State, unless the
activities of such person are limited to those mentioned in paragraph (3)
which, if exercised through a fixed place of business, would not make
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that fixed place of business a permanent establishment under the
provisions of that paragraph;
(b) it maintains substantial equipment for rental or other purposes within
that other State (excluding equipment let under a hire--purchase
agreement) for a period of more than 12 months;
(c) it engages in supervisory activities in that other State for more than 9
months in any 24 month period in connection with a building site or
construction, assembly or installation project in that other State; or
(d) it has goods or merchandise belonging to it that:
(i) were purchased by it in that other State, and not subjected to prior
substantial processing outside that other State; or
(ii) were produced by it or on its behalf in that other State,
and are, after such purchase or production, subjected to substantial
processing in that other State by an enterprise where either enterprise
participates directly or indirectly in the management, control or capital
of the other enterprise, or where the same persons participate directly or
indirectly in the management, control or capital of the other enterprise,
or where the same persons participate directly or indirectly in the
management, control or capital of both enterprises.
(5) An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because that
enterprise carries on business in that other State through a broker, general
commission agent, or any other agent of independent status, where such broker
or agent is acting in the ordinary course of his business as a broker, general
commission agent or other agent of independent status.
(6) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself constitute
either company a permanent establishment of the other.
(7) The principles set forth in the preceding paragraphs of this Article shall be
applied in determining for purposes of this Convention whether there is a
permanent establishment in a State other than one of the Contracting States and
whether an enterprise other than an enterprise of one of the Contracting States
has a permanent establishment in one of the Contracting States.
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ARTICLE 6
Income from Real Property
(1) Income from real property may be taxed by the Contracting State in which
such real property is situated.
(2) For the purposes of this Convention:
(i) a leasehold interest in land, whether or not improved, shall be
regarded as real property situated where the land to which the interest
relates is situated; and
(ii) rights to exploit or to explore for natural resources shall be regarded as
real property situated where the natural resources are situated or
sought.
ARTICLE 7
Business Profits
(1) The business profits of an enterprise of one of the Contracting States shall
be taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the business profits of the enterprise
may be taxed in the other State but only so much of them as is attributable to
that permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the business profits which it might
be expected to make if it were a distinct and independent enterprise engaged in
the same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the business profits of a permanent establishment,
there shall be allowed as deductions expenses which are reasonably connected
with the profits (including executive and general administrative expenses) and
which would be deductible if the permanent establishment were an independent
entity which paid those expenses, whether incurred in the Contracting State in
which the permanent establishment is situated or elsewhere.
(4) No business profits shall be attributed to a permanent establishment by
reason of the mere purchase by that permanent establishment of goods or
merchandise for the enterprise.
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(5) For the purposes of the preceding paragraphs of this Article, the business
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
(6) Where business profits include items of income which are dealt with
separately in other Articles of this Convention, then the provisions of those
Articles shall not be affected by the provisions of this Article.
(7) Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person in
cases where the information available to the competent authority of that State is
inadequate to determine the profits to be attributed to a permanent
establishment, provided that, on the basis of the available information, the
determination of the profits of the permanent establishment is consistent with
the principles stated in this Article.
(8) Nothing in this Article shall in a Contracting State prevent the operation in
that State of its law relating specifically to the taxation of any person who
carries on the business of any form of insurance (as long as that law as in effect
on the date of signature of this Convention is not varied otherwise than in minor
respects so as not to affect its general character).
ARTICLE 8
Shipping and Air Transport
(1) Profits derived by a resident of one of the Contracting States from the
operation in international traffic of ships or aircraft shall be taxable only in that
State. For the purposes of this Article, profits from the operation in international
traffic of ships or aircraft include:
(a) profits from the lease on a full basis of ships or aircraft operated in
international traffic by the lessee, provided that the lessor either
operates ships or aircraft otherwise than solely between places in the
other Contracting State or regularly leases ships or aircraft on a full
basis; and
(b) profits from the lease of ships or aircraft on a bare boat basis or of
containers and related equipment, provided that such lease is merely
incidental to the operation in international traffic of ships or aircraft by
the lessor and the leased ships or aircraft are operated in international
traffic, or the containers and related equipment are used in international
traffic, by the lessee.
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(2) The provisions of paragraph (1) shall apply to the share of the profits from
the operation in international traffic of ships or aircraft derived by a resident of
one of the Contracting States through participation in a pool service, in a joint
transport operating organization or in an international operating agency.
(3) For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise shipped in a
Contracting State for discharge at another place in that State shall not be treated
as profits from the operation in international traffic of ships or aircraft and may
be taxed in that State.
ARTICLE 9
Associated Enterprises
(1) Where:
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) Where profits on which an enterprise of one of the Contracting States has
been charged to tax in that State are also included, by virtue of paragraph (1), in
the profits of an enterprise of the other Contracting State and taxed accordingly,
and the profits so included are profits which might have been expected to have
accrued to that enterprise of the other State if the conditions operative between
the enterprises had been those which might have been expected to have
operated between independent enterprises dealing wholly independently with
one another, then the first--mentioned State shall make an appropriate
adjustment to the amount of tax charged on those profits in the first--mentioned
State. In determining such an adjustment, due regard shall be had to the other
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provisions of this Convention and the competent authorities of the Contracting
States shall if necessary consult each other.
(3) Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including determinations in cases where the information available to the
competent authority of that State is inadequate to determine the income to be
attributed to an enterprise, provided that, on the basis of the available
information, the determination of that tax liability is consistent with the
principles stated in this Article.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the Contracting
States for the purposes of its tax, being dividends to which a resident of the
other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15
percent of the gross amount of the dividends.
(3) The term “dividends” in this Article means income from shares and other
income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident for
the purposes of its tax.
(4) The provisions of paragraph (2) shall not apply if the person beneficially
entitled to the dividends, being a resident of one of the Contracting States,
carries on business in the other Contracting State, being the State of which the
company paying the dividends is a resident, through a permanent establishment
situated therein, or performs in that other State independent personal services
from a fixed base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent establishment
or fixed base. In such a case, the provisions of Article 7 (Business Profits) or
Article 14 (Independent Personal Services), as the case may be, shall apply.
(5) Where a company is a resident of one of the Contracting States, the other
Contracting State may not impose any tax on dividends paid by the company,
except insofar as:
(a) a resident of that other State is beneficially entitled to the dividends;
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(b) the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment or a fixed base situated in
that other State; or
(c) that other State does not impose a tax of the kind described in
paragraph (6) (excluding the accumulated earnings tax and the personal
holding company tax imposed by the United States) and the dividends
are paid out of profits attributable to one or more permanent
establishments which such company had in that other State, provided
that the gross income attributable to such permanent establishments
constituted at least 50 percent of such company’s gross income from all
sources.
Where sub--paragraph (c) applies and sub--paragraphs (a) and (b) do not apply,
any such tax shall not exceed 15 percent of the dividends.
(6) Nothing in this Convention shall be construed as preventing a Contracting
State from imposing on the income of a company which is a resident of the
other Contracting State, tax in addition to the taxes referred to in Article 2 in
relation to the first--mentioned Contracting State which are payable by a
company which is a resident of the first--mentioned State, provided that any
such additional tax shall not exceed 15 percent of the amount by which the
taxable income of the first--mentioned company of a year of income exceeds the
tax payable on that taxable income to the first--mentioned State. Any tax
payable to a Contracting State on the undistributed profits of a company which
is a resident of the other Contracting State shall be calculated as if that company
were not liable to the additional tax referred to in this paragraph and had paid
dividends of such amount that tax equal to the amount of that additional tax
would have been payable on the dividends in accordance with paragraph (2) of
this Article.
ARTICLE 11
Interest
(1) Interest from sources in one of the Contracting States, being interest to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such interest may be taxed in the Contracting State in which it has its
source, and according to the law of that State, but the tax so charged shall not
exceed 10 percent of the gross amount of the interest.
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the United States of America for the Avoidance of Double Taxation and the Prevention
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(3) Paragraph (2) shall not apply if the person beneficially entitled to the
interest, being a resident of one of the Contracting States, has a permanent
establishment in the other Contracting State or performs independent personal
services in that other State from a fixed base situated therein and the
indebtedness giving rise to the interest is effectively connected with such
permanent establishment or fixed base. In such a case the provisions of Article
7 (Business Profits) or Article 14 (Independent Personal Services), as the case
may be, shall apply.
(4) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Convention.
(5) The term “interest” as used in this Convention includes income which,
under the taxation law of the Contracting State in which the income has its
source, is assimilated to income from money lent.
(6) A Contracting State may not impose any tax on interest paid by a resident
of the other Contracting State, except insofar as:
(a) such interest has its source in the first--mentioned State, or is interest to
which a resident of that State is beneficially entitled; or
(b) the indebtedness in respect of which the interest is paid is effectively
connected with a permanent establishment or a fixed base of the
beneficial owner of the interest situated in the first--mentioned State.
(7) Interest shall be treated as income from sources in a Contracting State
when the payer is that State itself or a political subdivision or local authority of
that State or a person who is a resident of that State for the purposes of its tax.
Where, however, the person paying the interest, whether he is a resident of one
of the Contracting States or not, has in one of the Contracting States or outside
both Contracting States a permanent establishment or fixed base in connection
with which the indebtedness on which the interest is paid was incurred, and
such interest is borne by such permanent establishment or fixed base, then such
interest shall be deemed to have its source in the State in which the permanent
establishment or fixed base is situated.
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ARTICLE 12
Royalties
(1) Royalties from sources in one of the Contracting States, being royalties to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such royalties may be taxed in the Contracting State in which they have
their source, and according to the law of that State, but the tax so charged shall
not exceed 10 percent of the gross amount of the royalties.
(3) Paragraph (2) shall not apply if the person beneficially entitled to the
royalties, being a resident of one of the Contracting States, has a permanent
establishment in the other Contracting State or performs independent personal
services in that other State from a fixed base situated therein, and the property
or rights giving rise to the royalties are effectively connected with such
permanent establishment or fixed base. In such a case, the provisions of Article
7 (Business Profits) or Article 14 (Independent Personal Services), as the case
may be, shall apply.
(4) The term “royalties” in this Article means:
(a) payments or credits of any kind to the extent to which they are
consideration for the use of or the right to use any:
(i) copyright, patent, design or model, plan, secret formula or
process, trademark or other like property or right;
(ii) industrial, commercial or scientific equipment, other than
equipment let under a hire purchase agreement;
(iii) motion picture films; or
(iv) films or video tapes for use in connection with television or tapes
for use in connection with radio broadcasting;
(b) payments or credits of any kind to the extent to which they are
consideration for:
(i) the supply of scientific, technical, industrial or commercial
knowledge or information owned by any person;
(ii) the supply of any assistance of an ancillary and subsidiary nature
furnished as a means of enabling the application or enjoyment of
knowledge or information referred to in sub--paragraph (b) (i) or
of any other property or right to which this Article applies; or
(iii) a total or partial forbearance in respect of the use or supply of any
property or right described in this paragraph; or
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(c) income derived from the sale, exchange or other disposition of any
property or right described in this paragraph to the extent to which the
amounts realized on such sale, exchange or other disposition are
contingent on the productivity, use or further disposition of such
property or right.
(5) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person, the amount of the royalties paid or credited, having regard to what they
are paid or credited for, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid or credited shall remain taxable according to the law of each
Contracting State, but subject to the other provisions of this Convention.
(6) (a) Royalties shall be treated as income from sources in a Contracting State
when the payer is that State itself or a political subdivision or local
authority of that State or a person who is a resident of that State for the
purposes of its tax. Where, however, the person paying the royalties,
whether he is a resident of one of the Contracting States or not, has in
one of the Contracting States or outside both Contracting States a
permanent establishment or fixed base in connection with which the
liability to pay the royalties was incurred, and the royalties are borne by
the permanent establishment or fixed base, then the royalties shall be
deemed to have their source in the State in which the permanent
establishment or fixed base is situated.
(b) Where sub--paragraph (a) does not operate to treat royalties as being
from sources in one of the Contracting States, and the royalties relate to
use or the right to use in one of the Contracting States of any property
or right described in paragraph (4), the royalties shall be treated as
income from sources in that State.
ARTICLE 13
Alienation of Property
(1) Income or gains derived by a resident of one of the Contracting States from
the alienation or disposition of real property situated in the other Contracting
State may be taxed in that other State.
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(2) For the purposes of this Article:
(a) the term “real property situated in the other Contracting State”, where
the United States is that other Contracting State, includes a United
States real property interest, and real property referred to in Article 6
which is situated in the United States; and
(b) the term “real property”, in the case of Australia, shall have the
meaning which it has under the laws in force from time to time in
Australia and, without limiting the foregoing, includes:
(i) real property referred to in Article 6;
(ii) shares or comparable interests in a company, the assets of which
consist wholly or principally of real property situated in
Australia; and
(iii) an interst in a partership, trust or estate of a deceased individual,
the assets of which consist wholly or principally of real property
situated in Australia.
(3) Income or gains derived by an enterprise of one of the Contracting States
from the alienation of ships, aircraft or containers operated or used by it in
international traffic shall, except to the extent to which that enterprise has been
allowed depreciation in the other Contracting State in respect of those ships,
aircraft or containers, be taxable only in that State, and income described in
sub--paragraph (4) (c) of Article 12 (Royalties) shall be taxable only in
accordance with the provisions of Article 12.
(4) For the purposes of this Article, real property consisting of shares in a
company referred to in sub--paragraph (2) (b) (ii), and interests in a partnership,
trust or estate referred to in sub--paragraph (2) (b) (iii), shall be deemed to be
situated in Australia.
ARTICLE 14
Independent Personal Services
Income derived by an individual who is a resident of one of the Contracting
States from the performance of personal services in an independent capacity
shall be taxable only in that State unless such services are performed in the
other Contracting State and:
(a) the individual is present in that other State for a period or periods
aggregating more than 183 days in the taxable year or year of income of
that other State; or
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(b) the individual has a fixed base regularly available to him in that other
State for the purpose of performing his activities, in which case so much
of the income as is attributable to that fixed base may be taxed in such
other State.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 18 (Pensions, Annuities, Alimony and
Child Support) and 19 (Governmental Remuneration), salaries, wages and other
similar remuneration derived by an individual who is a resident of one of the
Contracting States in respect of an employment or in respect of services
performed as a director of a company shall be taxable only in that State unless
the employment is exercised or the services performed in the other Contracting
State. If the employment is so exercised or the services so performed, such
remuneration as is derived from that exercise or performance may be taxed in
that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by
an individual who is a resident of one of the Contracting States in respect of an
employment exercised in the other Contracting State or in respect of services
performed in the other Contracting State as a director of a company shall be
taxable only in the first--mentioned State if:
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the taxable year or year of
income of that other State;
(b) the remuneration is paid by, or on behalf of, an employer or company
who is not a resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment, a fixed base or a trade or business which the
employer or company has in that other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that State.
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ARTICLE 16
Limitation on Benefits
(1) A person (other than an individual) which is a resident of one of the
Contracting States shall not be entitled under this Convention to relief from
taxation in the other Contracting State unless:
(a) more than 75 percent of the beneficial interest in such person (or in the
case of a company, more than 75 percent of the number of shares of
each class of the company’s shares) is owned, directly or indirectly, by
any combination of one or more of:
(i) individuals who are residents of the United States;
(ii) citizens of the United States;
(iii) individuals who are residents of Australia;
(iv) companies as described in sub--paragraph (b); and
(v) the Contracting States;
(b) it is a company in whose principal class of shares there is substantial
and regular trading on a recognized stock exchange in one of the
Contracting States; or
(c) the establishment, acquisition and maintenance of such person and the
conduct of its operations did not have as one of its principal purposes
the purpose of obtaining benefits under the Convention.
(2) For the purposes of sub--paragraph (1) (b), the term “a recognized stock
exchange” includes, in relation to the United States, the NASDAQ System
owned by the National Association of Securities Dealers, Inc.
(3) Where:
(a) income derived by a trustee is to be treated for the purposes of this
Convention as income of a resident of one of the Contracting States;
and
(b) the trustee derived the income in connection with a scheme a principal
purpose of which was to obtain a benefit under this Convention,
then, notwithstanding any other provision of this Convention, the Convention
does not apply in relation to that income.
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the United States of America for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with respect to Taxes on Income
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ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 (Independent Personal
Services) and 15 (Dependent Personal Services), income derived by entertainers
(such as theatrical, motion picture, radio or television artistes, musicians and
athletes) from their personal activities as such may be taxed in the Contracting
State in which these activities are exercised, except where the amount of the
gross receipts derived by any such entertainer, including expenses reimbursed to
him or borne on his behalf, from such activities does not exceed ten thousand
United States dollars ($10,000) or its equivalent in Australian dollars for the
taxable year or year of income concerned.
(2) Where income in respect of activities exercised by an entertainer in his
capacity as such accrues not to the entertainer but to another person, that
income may, notwithstanding the provisions of Articles 7 (Business Profits), 14
(Independent Personal Services) and 15 (Dependent Personal Services), be
taxed in the Contracting State in which the activities of the entertainer are
exercised, unless it is established that neither the entertainer nor any person
related to him participates directly or indirectly in any profits of such other
person in any manner, including the receipt of deferred remuneration, bonuses,
fees, dividends, partnership distributions or other distributions.
ARTICLE 18
Pensions, Annuities, Alimony and Child Support
(1) Subject to the provisions of Article 19 (Governmental Remuneration),
pensions and other similar remuneration paid to an individual who is a resident
of one of the Contracting States in consideration of past employment shall be
taxable only in that State.
(2) Social security payments and other public pensions paid by one of the
Contracting States to an individual who is a resident of the other Contracting
State or a citizen of the United States shall be taxable only in the
first--mentioned State.
(3) Annuities paid to an individual who is a resident of one of the Contracting
States shall be taxable only in that State.
(4) The term “pensions and other similar remuneration”, as used in this
Article, means periodic payments made by reason of retirement or death, in
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consideration for services rendered, or by way of compensation paid after
retirement for injuries received in connection with past employment.
(5) The term “annuities”, as used in this Article, means stated sums paid
periodically at stated times during life, or during a specified or ascertainable
number of years, under an obligation to make the payments in return for
adequate and full consideration (other than services rendered or to be rendered).
(6) Any alimony or other maintenance payments, including payments for the
support of a minor child, arising in one of the Contracting States and paid to a
resident of the other Contracting State, shall be taxable only in the
first--mentioned State.
ARTICLE 19
Governmental Remuneration
Wages, salaries, and similar remuneration, including pensions, paid from
funds of one of the Contracting States, of a state or other political subdivision
thereof or of an agency or authority of any of the foregoing for labor or personal
services performed as an employee of any of the above in the discharge of
governmental functions to a citizen of that State shall be exempt from tax by the
other Contracting State.
ARTICLE 20
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State for the purpose of his
full--time education, receives payments from sources outside that other State for
the purpose of his maintenance or education, those payments shall be exempt
from tax in that other State.
ARTICLE 21
Income Not Expressly Mentioned
(1) Items of income of a resident of one of the Contracting States which are
not expressly mentioned in the foregoing Articles of this Convention shall be
taxable only in that State.
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the United States of America for the Avoidance of Double Taxation and the Prevention
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(2) However, if such income is derived by a resident of one of the Contracting
States from sources in the other Contracting State, such income may also be
taxed in the State in which it has its source.
(3) The provisions of paragraph (1) shall not apply to income derived by a
resident of one of the Contracting States which is effectively connected with a
permanent establishment situated in the other Contracting State. In such a case,
the provisions of Article 7 (Business Profits) shall apply.
ARTICLE 22
Relief from Double Taxation
(1) Subject to paragraph (4) and in accordance with the provisions and subject
to the limitations of the law of the United States (as it may be amended from
time to time without changing the general principle hereof), in the case of the
United States, double taxation shall be avoided as follows:
(a) the United States shall allow to a resident or citizen of the United States
as a credit against United States tax the appropriate amount of income
tax paid to Australia; and
(b) in the case of a United States corporation owning at least 10 percent of
the voting stock of a company which is a resident of Australia from
which it receives dividends in any taxable year, the United States shall
also allow as a credit against United States tax the appropriate amount
of income tax paid to Australia by that company with respect to the
profits out of which such dividends are paid.
Such appropriate amount shall be based upon the amount of income tax paid to
Australia. For purposes of applying the United States credit in relation to
income tax paid to Australia the taxes referred to in sub--paragraph (1) (b) and
paragraph (2) of Article 2 (Taxes Covered) shall be considered to be income
taxes. No provision of this Convention relating to source of income shall apply
in determining credits against United States tax for foreign taxes other than
those referred to in sub--paragraph (1) (b) and paragraph (2) of Article 2 (Taxes
Covered).
(2) Subject to paragraph (4), United States tax paid under the law of the United
States and in accordance with this Convention, other than United States tax
imposed in accordance with paragraph (3) of Article 1 (Personal Scope) solely
by reason of citizenship or by reason of an election by an individual under
United States domestic law to be taxed as a resident of the United States, in
respect of income derived from sources in the United States by a person who,
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under Australian law relating to Australian tax, is a resident of Australia shall
be allowed as a credit against Australian tax payable in respect of the income.
The credit shall not exceed the amount of Australian tax payable on the income
or any class thereof or on income from sources outside Australia. Subject to
these general principles, the credit shall be in accordance with the provisions
and subject to the limitations of the law of Australia as that law may be in force
from time to time.
(3) An Australian corporation that owns at least 10 percent of the voting power
in a United States corporation is, in accordance with the law of Australia as in
force at the date of signature of this Convention, entitled to a rebate in its
assessment, at the average rate of tax payable by it, in respect of dividends paid
by the United States corporation that are included in the taxable income of the
Australian corporation. However, should the law as so in force be amended so
that the rebate in relation to the dividends ceases to be allowable under that law,
Australia shall allow credit under paragraph (2) for the United States tax paid on
the profits out of which the dividends are paid as well as for the United States
tax paid on the dividends.
(4) For the purposes of computing United States tax, where a United States
citizen is a resident of Australia, the United States shall allow as a credit against
United States tax the income tax paid to Australia after the credit referred to in
paragraph (2). The credit so allowed against United States tax shall not reduce
that portion of the United States tax that is creditable against Australian tax in
accordance with paragraph (2).
ARTICLE 23
Non--Discrimination
(1) Each Contracting State in enacting tax measures shall ensure that:
(a) citizens of a Contracting State who are residents of the other
Contracting State shall not be subjected in that other State to any
taxation or any requirement connected therewith which is more
burdensome than the taxation or connected requirements to which
citizens of that other State who are residents of that other State in the
same circumstances are or may be subjected;
(b) except where the provisions of paragraph (1) of Article 9 (Associated
Enterprises), paragraph (4) of Article 11 (Interest) or paragraph (5) of
Article 12 (Royalties) apply, interest, royalties and other disbursements
paid by a resident of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable
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profits of the resident of the first--mentioned State, be deductible under
the same conditions as if they had been paid to a resident of the
first--mentioned State;
(c) a corporation of a Contracting State, the capital of which is wholly or
partly owned or controlled, directly or indirectly, by one or more
residents of the other Contracting State, shall not be subjected in the
first--mentioned State to any taxation or any requirement connected
therewith which is more burdensome than the taxation or connected
requirements to which other similar corporations of the first--mentioned
State in the same circumstances are or may be subjected; and
(d) the taxation on a permanent establishment which a resident of a
Contracting State has in the other Contracting State shall not be less
favorably levied in that other State than the taxation levied on residents
of that other State that carry on the same activities in the same
circumstances.
(2) Nothing in this Article relates to any provision of the taxation laws of a
Contracting State:
(a) in force on the date of signature of this Convention;
(b) adopted after the date of signature of this Convention but which is
substantially similar in general purpose or intent to a provision covered
by subparagraph (a); or
(c) reasonably designed to prevent the avoidance or evasion of taxes;
provided that, with respect to provisions covered by subparagraphs (b) or (c),
such provisions (other than provisions in international agreements) do not
discriminate between citizens or residents of the other Contracting State and
those of any third State.
(3) Without limiting by implication the interpretation of this Article, it is
hereby declared that, except to the extent expressly so provided, nothing in the
Article prevents a Contracting State from distinguishing in its taxation laws
between residents and non--residents solely on the ground of their residence.
(4) Where one of the Contracting States considers that the taxation measures
of the other Contracting State infringe the principles set forth in this Article the
Contracting States shall consult together in an endeavor to resolve the matter.
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ARTICLE 24
Mutual Agreement Procedure
(1) (a) Where a resident of one of the Contracting States considers that the
action of one or both of the Contracting States results or will result for
him in taxation not in accordance with this Convention, he may,
notwithstanding the remedies provided by the domestic laws of those
States, present his case to the competent authority of the Contracting
State of which he is a resident or citizen. The case must be presented
within three years from the first notification of that action.
(b) Should the claim be considered to have merit by the competent
authority of the Contracting State to which the claim is made, that
competent authority shall seek to come to an agreement with the
competent authority of the other Contracting State with a view to the
avoidance of taxation contrary to the provisions of this Convention.
Any agreement reached shall be implemented notwithstanding any time
limits or other procedural limitations in the domestic law of the
Contracting States.
(2) The competent authorities of the Contracting States shall seek to resolve by
agreement any difficulties or doubts arising as to the application or
interpretation of this Convention. In particular the competent authorities of the
Contracting States may agree:
(a) to the same attribution of income, deductions, credits, or allowances of
an enterprise of one of the Contracting States to its permanent
establishment situated in the other Contracting State;
(b) to the same allocation of income, deductions, credits, or allowances
between persons;
(c) to the same determination of the source of particular items of income;
(d) to the same meaning of any term used in this Convention; or
(e) to which of the Contracting States an individual described in
subparagraph (2) (c) of Article 4 (Residence) has closer personal and
economic relations.
(3) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of reaching an agreement in the sense of this
Article.
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the United States of America for the Avoidance of Double Taxation and the Prevention
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ARTICLE 25
Exchange of Information
(1) The competent authorities shall exchange such information as is necessary
for carrying out the provisions of this Convention or for the prevention of fraud
or for the administration of statutory provisions concerning taxes to which this
Convention applies provided the information is of a class that can be obtained
under the laws and administrative practices of each Contracting State with
respect to its own taxes.
(2) Any information so exchanged shall be treated as secret and shall not be
disclosed to any persons other than those (including a Court or administrative
body) concerned with the assessment, collection, administration or enforcement
of, or with litigation with respect to, the taxes to which this Convention applies.
(3) No information shall be exchanged which would be contrary to public
policy.
(4) If specifically requested by the competent authority of one of the
Contracting States, the competent authority of the other Contracting State shall
provide information under this Article in the form of copies of unedited original
documents (including books, papers, statements, records, accounts or writings)
to the same extent such documents can be obtained under the laws and
administrative practices of that other State with respect to its own taxes.
(5) Each of the Contracting States shall endeavor to collect on behalf of the
other Contracting State amounts equal to such taxes imposed by the other State
as will ensure that any exemption or reduction in rate of tax granted under this
Convention by that other State shall not be enjoyed by persons not entitled to
such benefits.
ARTICLE 26
Diplomatic and Consular Privileges
Nothing in this Convention shall affect diplomatic and consular privileges
under the general rules of international law or under the provisions of special
agreements.
ARTICLE 27
Miscellaneous
(1) (a) Income derived by a resident of the United States which, under this
Convention, may be taxed in Australia shall for the purposes of the
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income tax law of Australia and of this Convention be deemed to be
income from sources in Australia.
(b) Income derived by a resident of Australia which, under this Convention,
may be taxed in the United States, other than income taxed by the
United States in accordance with paragraph (3) of Article 1 (Personal
Scope) solely by reason of citizenship or by reason of an election by an
individual under United States domestic law to be taxed as a resident of
the United States, shall for the purposes of paragraph (2) of Article 22
(Relief from Double Taxation) and of the income tax law of Australia
be deemed to be income from sources in the United States.
(c) Where paragraph (4) of Article 22 (Relief from Double Taxation)
applies, income referred to in that paragraph shall be deemed to have its
source in Australia to the extent necessary to give effect to the
provisions of that paragraph.
(2) Any exemption from tax by one of the Contracting States provided for in
Article 14 (Independent Personal Services), 15 (Dependent Personal Services),
17 (Entertainers) or 19 (Governmental Remuneration) shall be inapplicable to
the extent that the income to which the exemption relates is not or, upon the
application of the relevant Article of this Convention (prior to application of
this paragraph), will not be subject to tax by the other Contracting State.
ARTICLE 28
Entry into Force
(1) This Convention shall be subject to ratification in accordance with the
applicable procedures of each Contracting State, and instruments of ratification
shall be exchanged at Washington, D.C., as soon as possible.
(2) The Convention shall enter into force upon the exchange of instruments of
ratification and its provisions shall have effect:
(a) with respect to those dividends, interest and royalties to which Articles
10 (Dividends), 11 (Interest) and 12 (Royalties), respectively, apply and
which are paid, credited or otherwise derived on or after the first day of
the second month following the date on which the Convention enters
into force; and
(b) with respect to all other income of a taxpayer, for the taxpayer’s years
of income or taxable years, as the case may be, commencing on or after
the first day of the second month following the date on which the
Convention enters into force.
Schedule 2 Convention between the Government of Australia and the Government of
the United States of America for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with respect to Taxes on Income
134 International Tax Agreements Act 1953
(3) Subject to paragraph (4), the Convention between the Government of the
United States of America and the Government of the Commonwealth of
Australia for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income signed at Washington on May 14,
1953 (in this Article referred to as the 1953 Convention) shall cease to have
effect with respect to taxes to which this Convention applies under
paragraph (2).
(4) The 1953 Convention shall terminate on the expiration of the last date on
which it has effect in accordance with the foregoing provisions of this Article.
ARTICLE 29
Termination
(1) This Convention shall remain in force until terminated by a Contracting
State. Either Contracting State may terminate the Convention at any time after 5
years from the date on which the Convention enters into force, provided that at
least 6 months prior notice of termination has been given through the diplomatic
channel. In such event, the Convention shall cease to have effect:
(a) with respect to those dividends, interest and royalties to which Articles
10 (Dividends), 11 (Interest) and 12 (Royalties) respectively apply, and
which are paid, credited or otherwise derived on or after the first day of
January following the expiration of the 6 month period; and
(b) with respect to all other income of a taxpayer, for the taxpayer’s years
of income or taxable years, as the case may be, commencing on or after
the first day of January following the expiration of the 6 month period.
(2) Notwithstanding the provisions of paragraph (1), upon prior notice to be
given through the diplomatic channel, the provisions of paragraph (2) of Article
18 (Pensions, Annuities, Alimony and Child Support) may be terminated by
either Contracting State at any time after this Convention enters into force.
DONE in duplicate at Sydney this sixth day of August 1982.
JOHN HOWARD R.D. NESEN
FOR THE GOVERNMENT OF
AUSTRALIA
FOR THE GOVERNMENT OF THE
UNITED STATES OF AMERICA
United States protocol Schedule 2A
International Tax Agreements Act 1953 135
Schedule 2A—United States protocol Note: See section 3.
PROTOCOL AMENDING THE CONVENTION BETWEEN THE
GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE
UNITED STATES OF AMERICA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL
EVASION WITH RESPECT TO TAXES ON INCOME
The Government of Australia and the Government of the United States of
America,
Desiring to amend the Convention between the Government of Australia and
the Government of the United States of America for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
signed at Sydney on the sixth day of August 1982 (in this Protocol referred to as
“the Convention”),
Have agreed as follows:
ARTICLE 1
Article 1 of the Convention is amended by:
(a) inserting in the last sentence of paragraph (3) “or long-term
resident” after “include a former citizen”; and
Schedule 2A United States protocol
136 International Tax Agreements Act 1953
(b) by omitting in the last sentence of paragraph (3) “citizenship” and
substituting “such status”.
ARTICLE 2
Article 2 of the Convention is amended by omitting paragraph (1) and
substituting:
“(1) The existing taxes to which this Convention shall apply are:
(a) in the United States: the Federal income taxes imposed by
the Internal Revenue Code; and
(b) in Australia:
(i) the Australian income tax, including tax on capital gains;
and
(ii) the resource rent tax in respect of offshore projects relating
to exploration for or exploitation of petroleum resources,
imposed under the federal law of Australia.”.
ARTICLE 3
Article 4 of the Convention is amended by:
(a) deleting “or” at the end of sub-paragraph (1)(b)(i) and inserting
after that sub-paragraph the following:
“(ii) a United States citizen, other than a United States citizen
who is a resident of a State other than Australia for the purposes
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International Tax Agreements Act 1953 137
of a double tax agreement between that State and Australia; or”;
and
(b) renumbering sub-paragraph (1)(b)(ii) as sub-paragraph (1)(b)(iii).
ARTICLE 4
Article 7 of the Convention is amended by inserting:
“(9) Where:
(a) a resident of one of the Contracting States is beneficially entitled,
whether directly or through one or more interposed fiscally transparent
entities, to a share of the business profits of an enterprise carried on in the
other Contracting State by the fiscally transparent entity (or, in the case of
a trust, by the trustee of the trust estate); and
(b) in relation to that enterprise, that fiscally transparent entity (or
trustee) would, in accordance with the principles of Article 5 (Permanent
Establishment), have a permanent establishment in that other State, that
enterprise carried on by that fiscally transparent entity (or trustee) shall be
deemed to be a business carried on in the other State by that resident
through a permanent establishment situated in that other State and that
share of business profits shall be attributed to that permanent
establishment.”.
Schedule 2A United States protocol
138 International Tax Agreements Act 1953
ARTICLE 5
Article 8 of the Convention is amended by:
(a) omitting sub-paragraph (1)(b) and substituting:
“(b) profits from the lease of ships or aircraft on a bare boat
basis, provided that such lease is merely incidental to the
operation in international traffic of ships or aircraft by the
lessor.”; and
(b) omitting paragraphs (2) and (3) and substituting:
“(2) Profits of an enterprise of one of the Contracting States
from the use, maintenance, or rental of containers (including
trailers, barges, and related equipment for the transport of
containers) used in international traffic shall be taxable only in
that State.
(3) The profits to which the provisions of paragraphs (1) and
(2) apply include profits from the participation in a pool service
or other profit sharing arrangement.
(4) For the purposes of this Article, profits derived from the
carriage by ships or aircraft of passengers, livestock, mail, goods
or merchandise taken on board in a Contracting State for
discharge in that State shall not be treated as profits from the
United States protocol Schedule 2A
International Tax Agreements Act 1953 139
operation in international traffic of ships or aircraft and may be
taxed in that State.”.
ARTICLE 6
Article 10 of the Convention is omitted and the following Article is substituted:
“ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) However, those dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident for the purposes of its tax,
and according to the law of that State, but:
(a) the tax charged shall not exceed 5 percent of the gross amount of
the dividends, if the person beneficially entitled to those dividends is a
company which holds directly at least 10 percent of the voting power in
the company paying the dividends; and
(b) the tax charged shall not exceed 15 percent of the gross amount
of the dividends to the extent to which those dividends are not within
sub-paragraph (a),
Schedule 2A United States protocol
140 International Tax Agreements Act 1953
provided that if the relevant law in either Contracting State is varied after the
effective date of this provision otherwise than in minor respects so as not to
affect its general character, the Contracting States shall consult each other with
a view to agreeing to any amendment of this paragraph that may be appropriate.
(3) Notwithstanding the provisions of paragraph (2), dividends shall
not be taxed in the Contracting State of which the company paying the
dividends is a resident if the person who is beneficially entitled to the
dividends is a company that is a resident of the other Contracting State that
has owned shares representing 80 percent or more of the voting power of
the company paying the dividends for a 12-month period ending on the
date the dividend is declared and:
(a) is a qualified person by reason of sub-paragraph (c) of
paragraph (2) of Article 16 (Limitation on Benefits); or
(b) is entitled to benefits with respect to the dividends under
paragraph (5) of that Article.
(4) (a) Sub-paragraph (a) of paragraph (2) and paragraph (3) shall not
apply in the case of dividends paid by a Regulated Investment Company
(RIC) or a Real Estate Investment Trust (REIT).
(b) In the case of dividends paid by a RIC, sub-paragraph (b) of
paragraph (2) shall apply.
United States protocol Schedule 2A
International Tax Agreements Act 1953 141
(c) In the case of dividends paid by a REIT, sub-paragraph (b) of
paragraph (2) shall apply only if:
(i) the person beneficially entitled to the dividends is an
individual holding an interest of not more than 10 percent
in the REIT;
(ii) the dividends are paid with respect to a class of stock that
is publicly traded and the person beneficially entitled to the
dividends holds an interest of not more than 5 percent of
any class of the REIT’s stock; or
(iii) the person beneficially entitled to the dividends holds an
interest of not more than 10 percent in the REIT and the
gross value of no single interest in real property held by the
REIT exceeds 10 percent of the gross value of the REIT’s
total interest in real property.
(d) Notwithstanding sub-paragraph (c), sub-paragraph (b) of
paragraph (2) shall apply with respect to dividends paid by a REIT to a
listed Australian property trust (“LAPT”). However, if the responsible
entity for the LAPT knows or has reason to know that one or more
unitholders each owns 5 percent or more of the beneficial interests in the
LAPT, each of such 5 percent or more unitholders shall, for purposes of
this paragraph, be deemed to hold such proportion of the LAPT’s direct
Schedule 2A United States protocol
142 International Tax Agreements Act 1953
interest in the REIT as equals that person’s proportionate interest in the
LAPT and shall be deemed to be beneficially entitled to the REIT
dividends paid with respect thereto, and the provisions of
sub-paragraph (c) shall apply to that person. For purposes of this
paragraph, dividends paid with respect to REIT shares held by an LAPT
shall be deemed to be paid with respect to a class of stock that is publicly
traded. For these purposes, a “listed Australian property trust” means an
Australian unit trust registered as a “Managed Investment Scheme” under
the Australian Corporations Act in which the principal class of units is
listed on a recognized stock exchange in Australia and regularly traded on
one or more recognized stock exchanges (as defined in Article 16
(Limitation on Benefits)).
(5) The above provisions of this Article shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business in the other Contracting State of which the company
paying the dividends is a resident, through a permanent establishment situated
in that other State, or performs in that other State independent personal services
from a fixed base situated in that other State, and the holding in respect of
which the dividends are paid is effectively connected with that permanent
establishment or fixed base. In that case the provisions of Article 7 (Business
United States protocol Schedule 2A
International Tax Agreements Act 1953 143
Profits) or Article 14 (Independent Personal Services), as the case may be, shall
apply.
(6) The term “dividends” as used in this Article means income from shares,
as well as other amounts which are subjected to the same taxation treatment as
income from shares by the law of the State of which the company making the
distribution is a resident for the purposes of its tax.
(7) Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State may not
impose any tax on the dividends paid by the company—being dividends to
which a person who is not a resident of the other Contracting State is
beneficially entitled—except insofar as the holding in respect of which such
dividends are paid is effectively connected with a permanent establishment or a
fixed base situated in that other State, nor may it impose tax on a company’s
undistributed profits, except as provided in paragraph (8), even if the dividends
paid consist wholly or partly of profits or income arising in such other State.
(8) A company which is a resident of one of the Contracting States
and that has a permanent establishment in the other State or that is subject
to tax in the other State on a net basis on its income or gains that may be
taxed in the other State under Article 6 (Income from Real Property) or
under paragraph (1) or (3) of Article 13 (Alienation of Property) may be
subject in that other State to a tax in addition to the tax allowable under the
Schedule 2A United States protocol
144 International Tax Agreements Act 1953
other provisions of this Convention. Such tax, however, may be imposed
on only the portion of the business profits of the company attributable to
the permanent establishment and the portion of the income or gains
referred to in the preceding sentence that is subject to tax under Article 6
(Income from Real Property) or under paragraph (1) or (3) of Article 13
(Alienation of Property) that, in the case of the United States, represents
the dividend equivalent amount of such profits, income or gains and, in the
case of Australia, is an amount that is analogous to the dividend equivalent
amount. This paragraph shall not apply in the case of a company which:
(a) is a qualified person by reason of sub-paragraph (c) of
paragraph (2) of Article 16 (Limitation on Benefits) of this Convention;
or
(b) is entitled to benefits with respect to the dividends under
paragraph (5) of that Article.
(9) The tax referred to in paragraph (8) may not be imposed at a rate in
excess of the rate specified in sub-paragraph (a) of paragraph (2).”.
ARTICLE 7
Article 11 of the Convention is omitted and the following Article is substituted:
“ARTICLE 11
Interest
United States protocol Schedule 2A
International Tax Agreements Act 1953 145
(1) Interest arising in one of the Contracting States, being interest to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) However, that interest may also be taxed in the Contracting State in
which it arises, and according to the law of that State, but the tax so charged
shall not exceed 10 percent of the gross amount of the interest.
(3) Notwithstanding paragraph (2), interest arising in one of the
Contracting States to which a resident of the other Contracting State is
beneficially entitled may not be taxed in the first-mentioned State if:
(a) the interest is derived by one of the Contracting States or by a
political or administrative sub-division or a local authority thereof, or
by any other body exercising governmental functions in a Contracting
State, or by a bank performing central banking functions in a
Contracting State;
(b) the interest is derived by a financial institution which is unrelated
to and dealing wholly independently with the payer. For the purposes of
this Article, the term “financial institution” means a bank or other
enterprise substantially deriving its profits by raising debt finance in the
financial markets or by taking deposits at interest and using those funds
in carrying on a business of providing finance.
Schedule 2A United States protocol
146 International Tax Agreements Act 1953
(4) (a) Notwithstanding paragraph (3), interest referred to in
sub-paragraph (b) of that paragraph may be taxed in the State in which
it arises at a rate not exceeding 10 percent of the gross amount of the
interest if the interest is paid as part of an arrangement involving
back-to-back loans or other arrangement that is economically equivalent
and intended to have a similar effect to back-to-back loans.
(b) Nothing in this Article shall be construed as restricting, in any
manner, the right of a Contracting State to apply any anti-avoidance
provisions of its taxation law.
(5) The term “interest” in this Article means interest from government
securities or from bonds or debentures (including premiums attaching to such
securities, bonds or debentures), whether or not secured by mortgage and
whether or not carrying a right to participate in profits, interest from any other
form of indebtedness, as well as income which is subjected to the same taxation
treatment as income from money lent by the law of the Contracting State in
which the income arises. Income dealt with in Article 10 (Dividends) and
penalty charges for late payment shall not be regarded as interest for the
purposes of this Article.
(6) The provisions of paragraphs (1), (2), (3) and (4) shall not apply if the
person beneficially entitled to the interest, being a resident of one of the
Contracting States, carries on business in the other Contracting State, in which
United States protocol Schedule 2A
International Tax Agreements Act 1953 147
the interest arises, through a permanent establishment situated in that other
State, or performs in that other State independent personal services from a fixed
base situated in that other State, and the indebtedness in respect of which the
interest is paid is effectively connected with that permanent establishment or
fixed base. In that case the provisions of Article 7 (Business Profits) or Article
14 (Independent Personal Services), as the case may be, shall apply.
(7) Interest shall be deemed to arise in a Contracting State when the payer
is a resident of that State for the purposes of its tax. Where, however, the person
paying the interest, whether the person is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment or fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and that interest is borne by that permanent establishment or fixed
base, then the interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
(8) Where, by reason of a special relationship between the payer and the
person beneficially entitled to the interest, or between both of them and some
other person, the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might reasonably have been
expected to have been agreed upon by the payer and the person so entitled in the
absence of that relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In that case the excess part of the amount of the interest
Schedule 2A United States protocol
148 International Tax Agreements Act 1953
paid shall remain taxable according to the law of each Contracting State, due
regard being had to the other provisions of this Convention.
(9) Notwithstanding the provisions of paragraphs (1), (2), (3) and (4):
(a) interest that is paid by a resident of one of the Contracting
States and that is determined with reference to the profits of the issuer
or of one of its associated enterprises, as defined in sub-paragraph (a) or
(b) of paragraph (1) of Article 9 (Associated Enterprises), being interest
to which a resident of the other State is beneficially entitled, also may
be taxed in the Contracting State in which it arises, and according to the
laws of that State, at a rate not exceeding 15 percent of the gross
amount of the interest; and
(b) interest that is paid with respect to the ownership interests in a
person used for the securitization of real estate mortgages or other
assets, to the extent that the amount of interest paid exceeds the normal
rate of return on publicly-traded debt instruments with a similar risk
profile, may be taxed by each State in accordance with its domestic law.
(10) Where interest expense is deductible in determining the profits, income
or gains of a company resident in one of the Contracting States, being profits,
income or gains which:
(a) are attributable to a permanent establishment of that company in
the other Contracting State; or
United States protocol Schedule 2A
International Tax Agreements Act 1953 149
(b) may be taxed in the other Contracting State under Article 6
(Income from Real Property) or paragraph (1) or (3) of Article 13
(Alienation of Property),
and that interest expense exceeds the interest paid by that permanent
establishment or paid with respect to the debt secured by real property located
in the other Contracting State, the amount of that excess shall be deemed to be
interest arising in that other Contracting State to which a resident of the
first-mentioned Contracting State is beneficially entitled.”.
ARTICLE 8
Article 12 of the Convention is amended by:
(a) omitting “10” and substituting “5” in paragraph (2); and
(b) omitting sub-paragraph (a) of paragraph (4) and substituting:
“(a) payments or credits of any kind to the extent to which they are
consideration for the use of or the right to use any:
(i) copyright, patent, design or model, plan, secret formula or
process, trademark or other like property or right;
(ii) motion picture films; or
(iii) films or audio or video tapes or disks, or any other means
of image or sound reproduction or transmission for use in
connection with television, radio or other broadcasting;”.
Schedule 2A United States protocol
150 International Tax Agreements Act 1953
ARTICLE 9
Article 13 of the Convention is amended by:
(a) omitting paragraph (3) and substituting:
“(3) Income or gains from the alienation of property, other than
real property, that forms part of the business property of a permanent
establishment which an enterprise of one of the Contracting States has
in the other Contracting State or pertains to a fixed base available in that
other State to a resident of the first-mentioned State for the purpose of
performing independent personal services, including income or gains
from the alienation of that permanent establishment (alone or with the
whole enterprise) or of that fixed base, may be taxed in that other State.
(4) Income or gains derived by an enterprise of one of the
Contracting States from the alienation of ships, aircraft or containers
operated or used in international traffic or property, other than real
property, pertaining to the operation or use of such ships, aircraft, or
containers shall be taxable only in that State.
(5) Where an individual who, upon ceasing to be a resident of one
of the Contracting States, is treated under the taxation law of that State
as having alienated any property and is taxed in that State by reason
thereof, the individual may elect to be treated for the purposes of
United States protocol Schedule 2A
International Tax Agreements Act 1953 151
taxation in the other Contracting State as if the individual had,
immediately before ceasing to be a resident of the first-mentioned State,
alienated and re-acquired the property for an amount equal to its fair
market value at that time.
(6) An individual who elects, under the taxation law of a
Contracting State, to defer taxation on income or gains relating to
property which would otherwise be taxed in that State upon the
individual ceasing to be a resident of that State for the purposes of its
tax, shall, if the individual is a resident of the other State, be taxable on
income or gains from the subsequent alienation of that property only in
that other State.
(7) Except as provided in the preceding paragraphs of this Article,
each Contracting State may tax capital gains in accordance with the
provisions of its domestic law.”; and
(b) renumbering paragraph (4) as paragraph (8).
ARTICLE 10
Article 16 of the Convention is omitted and the following Article is substituted:
“ARTICLE 16
Limitation on Benefits
Schedule 2A United States protocol
152 International Tax Agreements Act 1953
(1) Except as otherwise provided in this Article, a resident of one of the
Contracting States that derives income from the other Contracting State shall
not be entitled to the benefits of this Convention otherwise accorded to residents
of one of the Contracting States unless such resident is a “qualified person” as
defined in paragraph (2).
(2) A resident of one of the Contracting States shall be a qualified person
for a taxable year if the resident is:
(a) an individual;
(b) that State, any political subdivision or local authority thereof or
any agency or instrumentality of such State;
(c) a company, if:
(i) the principal class of its shares is listed on a recognized
stock exchange specified in sub-paragraph (a) or (b) of
paragraph (6) of this Article and is regularly traded on one or
more recognized stock exchanges; or
(ii) at least 50 percent of the aggregate vote and value of the
shares in the company is owned directly or indirectly by five or
fewer companies entitled to benefits under clause (i) of this
sub-paragraph, provided that, in the case of indirect ownership,
each intermediate owner is a resident of either Contracting State;
United States protocol Schedule 2A
International Tax Agreements Act 1953 153
(d) a person other than an individual or a company, if:
(i) the principal class of units in that person is listed or
admitted to dealings on a recognized stock exchange specified in
sub-paragraph (a) or (b) of paragraph (6) of this Article and is
regularly traded on one or more of the recognized stock
exchanges; or
(ii) the direct or indirect owners of at least 50 percent of the
beneficial interests in that person are qualified persons by reason
of clause (i) of sub-paragraph (c) or clause (i) of this
sub-paragraph;
(e) an entity organized under the laws of one of the Contracting
States and established and maintained in that State exclusively for a
religious, charitable, educational, scientific, or other similar purpose,
even if the entity is generally exempt from tax in that State;
(f) an entity organized under the laws of one of the Contracting
States and established and maintained in that State to provide, pursuant
to a plan, pensions or other similar benefits to employed and
self-employed persons, even if the entity is generally exempt from tax
in that State, provided that more than 50 percent of the entity’s
beneficiaries, members or participants are individuals resident in either
Contracting State;
Schedule 2A United States protocol
154 International Tax Agreements Act 1953
(g) a person other than an individual, if:
(i) on at least half the days of the taxable year persons that are
qualified persons by reason of sub-paragraph (a), (b), (c)(i), or
(d)(i) of this paragraph own, directly or indirectly, at least 50
percent of the aggregate vote and value of the shares or other
beneficial interests in the person; and
(ii) less than 50 percent of the person’s gross income for the
taxable year is paid or accrued, directly or indirectly, to persons
who are not residents of either Contracting State in the form of
payments that are deductible for purposes of the taxes covered by
this Convention in the person’s State of residence (but not
including arm’s length payments in the ordinary course of
business for services or tangible property and payments in respect
of financial obligations to a bank, provided that where such a
bank is not a resident of one of the Contracting States such
payment is attributable to a permanent establishment of that bank
located in one of the Contracting States); or
(h) a recognized headquarters company for a multinational corporate
group. For purposes of this paragraph, a person shall be considered a
recognized headquarters company if:
United States protocol Schedule 2A
International Tax Agreements Act 1953 155
(i) it provides in its State of residence a substantial
portion of the overall supervision and
administration of a group of companies (which
may be part of a larger group of companies),
which may include, but cannot be principally,
group financing;
(ii) the group of companies consists of corporations
resident in, and engaged in an active business
in, at least five countries (or groupings of
countries), and the business activities carried on
in each of the five countries (or groupings of
countries) generate at least 10 percent of the
gross income of the group;
(iii) the business activities carried on in any one
country other than the Contracting State of
residence of the headquarters company generate
less than 50 percent of the gross income of the
group;
(iv) no more than 25 percent of its gross income is
derived from the other Contracting State;
Schedule 2A United States protocol
156 International Tax Agreements Act 1953
(v) it has, and exercises, independent discretionary
authority to carry out the functions referred to
in sub-paragraph (i);
(vi) it is subject to generally applicable rules of
taxation in its country of residence; and
(vii) the income derived in the other Contracting
State either is derived in connection with, or is
incidental to, the active business referred to in
sub-paragraph (ii).
If the income requirements for being considered a recognized
headquarters company (sub-paragraphs (ii), (iii), or (iv)) are not
fulfilled, they will be deemed to be fulfilled if the required percentages
are met when averaging the gross income of the preceding four years.
(3) (a) A resident of one of the Contracting States will be entitled to the
benefits of the Convention with respect to an item of income derived
from the other State, regardless of whether the resident is a qualified
person, if the resident is engaged in the active conduct of a trade or
business in the first-mentioned State (other than the business of making
or managing investments for the resident’s own account, unless these
activities are banking, insurance or securities activities carried on by a
bank, insurance company or a registered, licensed or authorized
United States protocol Schedule 2A
International Tax Agreements Act 1953 157
securities dealer), and the income derived from the other Contracting
State is derived in connection with, or is incidental to, that trade or
business.
(b) If the resident or any of its associated enterprises carries on a
trade or business activity in the other Contracting State which gives rise
to an item of income, sub-paragraph (a) of this paragraph shall apply to
such item only if the trade or business activity in the first-mentioned
State is substantial in relation to the trade or business activity in the
other State. Whether a trade or business activity is substantial for
purposes of this paragraph will be determined based on all the facts and
circumstances.
(c) In determining whether a person is “engaged in the active
conduct of a trade or business” in a Contracting State under
sub-paragraph (a) of this paragraph, activities conducted by a
partnership in which that person is a partner and activities conducted by
persons connected to such person shall be deemed to be conducted by
such person. A person shall be connected to another if one possesses at
least 50 percent of the beneficial interest in the other (or, in the case of a
company, at least 50 percent of the aggregate vote and value of the
company’s shares or of the beneficial equity interest in the company) or
another person possesses, directly or indirectly, at least 50 percent of
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158 International Tax Agreements Act 1953
the beneficial interest (or, in the case of a company, at least 50 percent
of the aggregate vote and value of the company’s shares or of the
beneficial equity interest in the company) in each person. In any case, a
person shall be considered to be connected to another if, based on all
the relevant facts and circumstances, one has control of the other or
both are under the control of the same person or persons.
(4) Notwithstanding the preceding provisions of this Article, if a company
that is a resident of one of the Contracting States, or a company that owns at
least 50 percent of the aggregate vote or value of such a company, has
outstanding a class of shares:
(a) which is subject to terms or other arrangements which entitle its
holders to a portion of the income of the company derived from the
other Contracting State that is larger than the portion such holders
would receive absent such terms or arrangements (“the disproportionate
part of the income”); and
(b) 50 percent or more of the voting power and value of which is
owned by persons who are not qualified persons,
the benefits of this Convention shall not apply to the disproportionate part of the
income.
(5) A resident of one of the Contracting States that is not a qualified person
pursuant to the provisions of paragraph (2) of this Article shall, nevertheless, be
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International Tax Agreements Act 1953 159
granted benefits of the Convention if the competent authority of the other
Contracting State determines, in accordance with the law of that other State,
that the establishment, acquisition or maintenance of such person and the
conduct of its operations did not have as one of its principal purposes the
obtaining of benefits under the Convention.
(6) For purposes of this Article the term “recognized stock exchange”
means:
(a) the NASDAQ System owned by the National Association of
Securities Dealers, Inc., and any stock exchange registered with the
U.S. Securities and Exchange Commission as a national securities
exchange under the U.S. Securities Exchange Act of 1934;
(b) the Australian Stock Exchange and any other Australian stock
exchange recognized as such under Australian law; and
(c) any other stock exchange agreed upon by the competent
authorities.
(7) Nothing in this Article shall be construed as restricting, in any manner,
the right of a Contracting State to apply any anti-avoidance provisions of its
taxation law.”.
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160 International Tax Agreements Act 1953
ARTICLE 11
Article 21 of the Convention is omitted and the following Article is substituted:
“ARTICLE 21
Other Income
(1) Items of income of a resident of one of the Contracting States, wherever
arising, not dealt with in the foregoing Articles of this Convention shall be
taxable only in that State.
(2) The provisions of paragraph (1) shall not apply to income, other than
income from real property as defined in paragraph (2) of Article 6 (Income from
Real Property), derived by a resident of one of the Contracting States where that
income is effectively connected with a permanent establishment or fixed base
situated in the other Contracting State. In that case the provisions of Article 7
(Business Profits) or Article 14 (Independent Personal Services), as the case
may be, shall apply.
(3) Notwithstanding the provisions of paragraphs (1) and (2), items of
income of a resident of one of the Contracting States not dealt with in the
foregoing Articles of this Convention from sources in the other Contracting
State may also be taxed in the other Contracting State.”.
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ARTICLE 12
Article 22 of the Convention is amended by omitting in paragraph (1)
“sub-paragraph (1)(b)” and substituting “sub-paragraph (1)(b)(i)” in each place
it occurs.
ARTICLE 13
(1) This Protocol shall be subject to ratification in accordance with the
applicable procedures of each Contracting State, and instruments of ratification
shall be exchanged as soon as possible.
(2) This Protocol, which shall form an integral part of the Convention, shall
enter into force upon the exchange of instruments of ratification and its
provisions shall have effect:
(a) in Australia:
(i) in respect of withholding tax on dividends, royalties and
interest that is derived by a non-resident, in relation to
income derived on or after the later of:
(A) the first day of the second month next following
the date on which the Protocol enters into force;
or
(B) 1 July, 2003;
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162 International Tax Agreements Act 1953
(ii) in respect of other Australian tax, in relation to income,
profits or gains of any year of income beginning on or
after 1 July in the calendar year next following that in
which the Protocol enters into force; and
(b) in the United States:
(i) in respect of withholding tax on dividends, royalties and
interest that is derived by a non-resident, in relation to
income derived on or after the later of:
(A) the first day of the second month next following
the date on which the Protocol enters into force;
or
(B) 1 July, 2003;
(ii) in respect of other taxes, for taxable periods beginning on
or after 1 January in the calendar year next following
that in which the Protocol enters into force.
(3) Notwithstanding paragraph (2), Article 6 of this Protocol shall not apply
to dividends paid by a REIT if the person beneficially entitled to the dividends
is an LAPT (as defined in paragraph (4) of Article 10 (Dividends) of the
Convention as amended by this Protocol) and the shares in respect of which the
dividends are paid were:
(a) owned by the LAPT on March 26, 2001;
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(b) acquired by the LAPT pursuant to a binding contract entered into
on or before March 26, 2001; or
(c) acquired by the LAPT pursuant to a reinvestment of dividends
(ordinary or capital) with respect to such shares.
In such case, the provisions of Article 10 (Dividends), as it was on March 26,
2001, shall apply.
IN WITNESS WHEREOF the undersigned, being duly authorized, have signed
this Protocol.
DONE in duplicate at Canberra, this twenty-seventh day of September 2001.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT
AUSTRALIA: OF THE UNITED STATES
OF AMERICA:
PETER COSTELLO J THOMAS SCHIEFFER
[Signatures omitted]
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164 International Tax Agreements Act 1953
Schedule 3—Convention between Australia
and Canada for the Avoidance of
Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes
on Income Section 3
The Government of Australia and the Government of Canada
Desiring to conclude a Convention for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE 1
Personal Scope
This Convention shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Convention shall apply are—
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in Canada:
the income taxes imposed by the Government of Canada.
(2) This Convention shall also apply to any identical or substantially
similar taxes which are imposed by either Contracting State after the date of
signature of this Convention in addition to, or in place of, the existing taxes. At
the end of each calendar year, each Contracting State shall notify the other
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Contracting State of any substantial changes which have been made in its laws
relating to the taxes to which this Convention applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Convention, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories which is an area where Australia may, in
accordance with its national legislation and international law,
exercise rights in respect of the seabed and sub--soil and their
natural resources.
(b) the term “Canada” used in a geographical sense, means the territory of
Canada, including any area beyond the territorial waters of Canada
which is an area where Canada may, in accordance with its national
legislation and international law, exercise rights with respect to the
seabed and sub--soil and their natural resources;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State” mean Australia or Canada, as the context requires;
(d) the term “person” includes an individual, an estate, a trust, a company
and any other body of persons;
(e) the term “company” means any body corporate or any entity which is
assimilated to a body corporate for tax purposes, in French, the term
“société” also means a “corporation” within the meaning of Canadian
Law;
(f) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean respectively an enterprise carried
on by a resident of one of the Contracting States and an enterprise
carried on by a resident of the other Contracting State;
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(g) the term “tax” means Australian tax or Canadian tax, as the context
requires;
(h) the term “Australian tax” means tax imposed by Australia, being tax to
which this Convention applies by virtue of Article 2;
(i) the term “Canadian tax” means tax imposed by Canada, being tax to
which this Convention applies by virtue of Article 2;
(j) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Canada, the Minister of National Revenue or his authorized
representative;
(k) words in the singular include the plural and words in the plural include
the singular.
(2) In this Convention, the terms “Australian tax” and “Canadian tax” do
not include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Convention applies by virtue of Article
2.
(3) In the application of this Convention by a Contracting State, any term
not otherwise defined shall, unless the context otherwise requires, have the
meaning which it has under the laws of that Contracting State relating to the
taxes to which this Convention applies.
ARTICLE 4
Residence
(1) Subject to paragraph (2), for the purposes of this Convention, a person
is a resident of one of the Contracting States if that person is a resident of that
State for the purposes of its tax.
(2) In relation to income from sources in Canada, a person who is subject to
Australian tax on income which is from sources in Australia shall not be treated
as a resident of Australia unless the income from sources in Canada is subject to
Australian tax or, if that income is exempt from Australian tax, it is so exempt
solely because it is subject to Canadian tax.
(3) Where by reason of the provisions of paragraph (1) an individual is a
resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
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(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
with which his personal and economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1) a person other than
an individual is a resident of both Contracting States, then the person’s status
shall be determined as follows:
(a) it shall be deemed to be a resident of the Contracting State in which it is
incorporated or otherwise constituted;
(b) if it is not incorporated or otherwise constituted in either of the
Contracting States, it shall be deemed to be a resident of the Contracting
State in which its place of effective management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Convention, the term “permanent
establishment” means a fixed place of business through which the business of
an enterprise is wholly or partly carried on.
(2) The term “permanent establishment” includes especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
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(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one
of the Contracting States and to carry on business through that permanent
establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or the exploitation of, natural resources or in activities connected with
such exploration or exploitation.
(5) A person acting in one of the Contracting States on behalf of an
enterprise of the other Contracting State—other than an agent of an independent
status to whom paragraph (6) applies—shall be deemed to be a permanent
establishment of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise.
(6) An enterprise of one of the Contracting States shall not be deemed to
have a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be
applied in determining for the purposes of this Convention whether there is a
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permanent establishment outside both Contracting States and whether an
enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or of the exploitation of any natural
resource, may be taxed in the Contracting State in which the real property,
mines, quarries, or natural resources are situated.
(2) Income from real property or from any direct interest in or over land
shall be regarded as income from real property situated where the real property
or land is situated.
(3) Ships, boats or aircraft shall not be regarded as real property.
(4) The provisions of paragraphs (1) and (2) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on or has carried on business as aforesaid, the profits of the
enterprise may be taxed in the other State, but only so much of them as is
attributable to that permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
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(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions expenses of the enterprise, being expenses which
are incurred for the purposes of the permanent establishment (including
executive and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(5) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, nothing in this Article shall affect the application
of any law of that State relating to the determination of the tax liability of a
person provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with the principles
of this Article.
(6) For the purposes of this Article, except as provided in the Articles
referred to in this paragraph, the profits of an enterprise do not include items of
income dealt with in Articles 6, 8, 10, 11, 12, 13, 14, 16 and 17 and
paragraphs (3) and (4) of Article 21.
(7) Nothing in this Article shall affect the operation of any law of a
Contracting State relating specifically to taxation of any person who carries on a
business of any form of insurance, provided that if the law in force in either
Contracting State at the date of signature of this Convention is varied (otherwise
than in minor respects so as not to affect its general character) the Contracting
States shall consult with each other with a view to agreeing to any amendment
of this paragraph that may be appropriate.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of
one of the Contracting States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be
taxed in the other Contracting State where they are profits from operations of
ships or aircraft confined solely to places in that other State.
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(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a resident
of one of the Contracting States through participation in a pool service, in a
joint transport operating organisation or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mail, goods or merchandise taken on
board in a Contracting State for discharge at another place in that State shall be
treated as profits from operations confined solely to places in that State.
ARTICLE 9
Associated Enterprises
(1) Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an enterprise,
nothing in this Article shall affect the application of any law of that State
relating to the determination of the tax liability of a person, provided that that
law shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of this Article.
(3) Where profits on which an enterprise of one of the Contracting States
has been charged to tax in that State are also included, by virtue of
paragraph (1) or (2), in the profits of an enterprise of the other Contracting State
and taxed accordingly, and the profits so included are profits which might have
been expected to have accrued to that enterprise of the other State if the
conditions operative between the enterprises had been those which might have
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been expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall, subject to
paragraph (4), make an appropriate adjustment to the amount of tax charged on
those profits in the first--mentioned State. In determining such an adjustment,
due regard shall be had to the other provisions of this Convention in relation to
the nature of the income, and for this purpose the competent authorities of the
Contracting States shall if necessary consult each other.
(4) The provisions of paragraph (3) relating to an appropriate adjustment
are not applicable after the expiration of six years from the end of the year of
income or taxation year in respect of which a Contracting State has charged to
tax the profits to which the adjustment would relate.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
(3) Dividends paid by a company which is a resident of one of the
Contracting States, being dividends to which a person who is not a resident of
the other Contracting State is beneficially entitled, shall be exempt from tax in
that other State except insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed base
situated in that other State. Provided that this paragraph shall not apply in
relation to dividends paid by any company which is a resident of Australia for
the purposes of Australian tax and which is also a resident of Canada for the
purposes of Canadian tax.
(4) The term “dividends” in this Article means income from shares and
other income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident.
(5) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business through a permanent establishment situated in the
other Contracting State, or performs professional services from a fixed base
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situated in that other State, being the State of which the company paying the
dividends is a resident and the holding in respect of which the dividends are
paid is effectively connected with that permanent establishment or fixed base.
In such a case, the provisions of Article 7 or 14, as the case may be, shall apply.
(6) Canada may impose tax, on the earnings attributable to a permanent
establishment in Canada of a company which is a resident of Australia, in
addition to the tax which would be chargeable on the earnings of a company
which is a resident of Canada; provided that any additional tax so imposed shall
not exceed 15 per cent of the amount of such earnings which have not been
subjected to such additional tax in previous taxation years. For the purpose of
this provision, the term “earnings” means the profits attributable to a permanent
establishment in Canada in a year and previous years, after deducting therefrom
all taxes, other than the additional tax referred to herein, imposed on such
profits in Canada.
(7) Australia may impose an income tax (in this paragraph called a “branch
profits tax”) on the reduced taxable income of a company that is a resident of
Canada in addition to the income tax (in this paragraph called “the general
income tax”) payable by the company in respect of its taxable income; provided
that any branch profits tax so imposed in respect of a year of income shall not
exceed 15 per cent of the amount by which the reduced taxable income of that
year of income exceeds the general income tax payable in respect of the reduced
taxable income of that year of income.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises,
and according to the law of that State, but the tax so charged shall not exceed 15
per cent of the gross amount of the interest.
(3) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to interest by
the taxation law of the Contracting State in which the income arises.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
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States, carries on business through a permanent establishment situated in the
other Contracting State, or performs professional services from a fixed base
situated in that other State, being the State in which the interest arises, and the
indebtedness giving rise to the interest is effectively connected with that
permanent establishment or fixed base. In such a case, the provisions of Article
7 or 14, as the case may be, shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a political sub--division or a local authority
thereof or a person who is a resident of that State for the purposes of its tax.
Where, however, the person paying the interest, whether he is a resident of one
of the Contracting States or not, has in a State other than that of which he is a
resident a permanent establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and that interest is
borne by that permanent establishment or fixed base, then such interest shall be
deemed to arise in the Contracting State in which the permanent establishment
or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest or between both of them and some
other person the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Convention.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such royalties may be taxed in the Contracting State in which they
arise, and according to the law of that State, but the tax so charged shall not
exceed 10 per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments (including credits),
whether periodical or not, and however described or computed, to the extent to
which they are paid as consideration for the use of, or the right to use, any
copyright, patent, design or model, plan, secret formula or process, trademark,
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or other like property or right, or industrial, commercial or scientific equipment,
or for the supply of scientific, technical, industrial or commercial knowledge or
information, or for the supply of any assistance of an ancillary and subsidiary
nature furnished as a means of enabling the application or enjoyment of such
knowledge or information or any other property or right to which this Article
applies and includes any payments to the extent to which they are paid as
consideration for the use of, or the right to use, motion picture films, films or
video tapes for use in connection with television or tapes for use in connection
with radio broadcasting, or for total or partial forbearance in respect of the use
of a property or right referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, carries on business through a permanent establishment situated in the
other Contracting State, or performs professional services from a fixed base
situated in that other State, being the State in which the royalties arise and the
asset giving rise to the royalties is effectively connected with that permanent
establishment or fixed base. In such a case, the provisions of Article 7 or 14, as
the case may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a political sub--division or a local authority
thereof or a person who is a resident of that State for the purposes of its tax.
Where, however, the person paying the royalties, whether he is a resident of one
of the Contracting States or not, has in a State other than that of which he is a
resident a permanent establishment or a fixed base in connection with which the
obligation to pay the royalties was incurred, and those royalties are borne by
that permanent establishment or fixed base, then such royalties shall be deemed
to arise in the Contracting State in which the permanent establishment or fixed
base is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties or between both of them and some
other person the amount of the royalties paid, having regard to what they are
paid for, exceeds the amount which might have been expected to have been
agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Convention.
Schedule 3 Convention between Australia and Canada for the Avoidance of Double
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176 International Tax Agreements Act 1953
ARTICLE 13
Alienation of Property
Income or gains from the alienation of real property or of a direct interest in
or over land or of a right to exploit, or to explore for, a natural resource may be
taxed in the Contracting State in which the real property, the land or the natural
resource is situated.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
(2) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by an individual who is a resident of one of the Contracting States in respect of
an employment exercised in the other Contracting State shall be taxable only in
the first--mentioned State if the recipient is present in the other State for a
period or periods not exceeding in the aggregate 183 days in the year of income
or the taxation year as the case may be, of that other State and either—
Convention between Australia and Canada for the Avoidance of Double Taxation and
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International Tax Agreements Act 1953 177
(a) the remuneration does not exceed in the said year the greater of the
following amounts:
(i) three thousand Canadian dollars
and
(ii) two thousand six hundred Australian dollars; or
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State and the remuneration is not deductible in
determining taxable profits of a permanent establishment or a fixed base
which the employer has in that other State.
(3) The Treasurer of Australia and the Minister of National Revenue of
Canada may agree, in letters exchanged for the purpose, to variations in the
amounts specified in sub--paragraph (a) of paragraph (2) and the variations so
agreed shall have effect according to the tenor of the letters.
(4) Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that State.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television artistes
and musicians and athletes) from their personal activities as such may be taxed
in the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as
such accrues not to the entertainer but to another person, that income may,
notwithstanding the provisions of Articles 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
Schedule 3 Convention between Australia and Canada for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
178 International Tax Agreements Act 1953
(3) The provisions of paragraph (2) shall not apply if it is established that
neither the entertainer nor persons related to the entertainer, participate directly
or indirectly in the profits of the other person referred to in that paragraph.
ARTICLE 18
Pensions and Annuities
(1) Pensions and annuities arising in a Contracting State for the benefit of
and paid to a resident of the other Contracting State may be taxed in that other
State.
(2) Pensions and annuities arising in a Contracting State in a year of
income or taxation year may be taxed in that State and according to the law of
that State, but the tax so charged shall not exceed the lesser of:
(a) 15 per cent of the pension or annuity received in the year; and
(b) the tax that would be payable in respect of the pension or annuity
received in the year if the recipient were a resident of the Contracting
State in which the pension or annuity arises.
However, the limitation on the tax that may be charged in the Contracting
State in which pensions and annuities arise does not apply to payments of any
kind under an income--averaging annuity contract.
(3) Any alimony or other maintenance payment arising in a Contracting
State and paid to a resident of the other Contracting State, shall be taxable only
in the first--mentioned State.
ARTICLE 19
Government Service
(1) Remuneration (other than a pension or annuity) paid by a Contracting
State or a political sub--division or a local authority thereof to any individual in
respect of services rendered in the discharge of governmental functions shall be
taxable only in that State. However, such remuneration shall be taxable only in
the other Contracting State if the services are rendered in that State and the
recipient is a resident of that State who:
(a) is a citizen of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) The provisions of paragraph (1) shall not apply to remuneration in
respect of services rendered in connection with any trade or business carried on
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the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 3
International Tax Agreements Act 1953 179
by one of the Contracting States or a political sub--division or a local authority
thereof. In such a case the provisions of Articles 15 and 16 shall apply.
ARTICLE 20
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in the other State solely for the purpose of
his education, receives payments from sources outside the other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in the other State.
ARTICLE 21
Income Not Expressly Mentioned
(1) Subject to the provisions of paragraph (2), items of income of a resident
of one of the Contracting States which are not expressly mentioned in the
foregoing Articles of this Convention shall be taxable only in that Contracting
State.
(2) However, if such income is derived by a resident of one of the
Contracting States from sources in the other Contracting State, such income
may also be taxed in the Contracting State in which it arises and, subject to
paragraph (3), according to the law of that State.
(3) Where the income is income derived from an estate or trust resident in
Canada by a resident of Australia the Canadian tax on that income shall not
exceed 15 per cent of the gross amount of the income if it is subject to tax in
Australia.
(4) The provisions of paragraph (3) shall not apply if the recipient of the
income, being a resident of Australia, carries on in Canada a business through a
permanent establishment situated therein, or performs in Canada professional
services from a fixed base situted therein, and the right or interest in the estate
or trust in respect of which the income is paid is effectively connected with such
permanent establishment or fixed base. In such a case the provisions of Article
7 or 14, as the case may be, shall apply.
Schedule 3 Convention between Australia and Canada for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
180 International Tax Agreements Act 1953
ARTICLE 22
Source of Income
(1) Income derived by a resident of one of the Contracting States which,
under any one or more of Articles 6 to 8 and 10 to 18 may be taxed in the other
Contracting State, shall for the purposes of Article 23, be deemed to be income
from sources in that other State.
(2) Income derived by a resident of Canada which, under any one or more
of Articles 6 to 8 and 10 to 18, may be taxed in Australia may be deemed, for
the purposes of the Australian income tax law, to be income from sources in
Australia.
CHAPTER IV
METHODS OF PREVENTION OF DOUBLE TAXATION
ARTICLE 23
Elimination of double taxation
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle
hereof), tax paid in Canada, whether directly or by deduction, in respect of
income derived by a person who is a resident of Australia from sources in
Canada (not including, in the case of a dividend, tax paid in respect of the
profits out of which the dividend is paid) shall be allowed as a credit against
Australian tax payable in respect of that income.
(2) In the case of Canada, double taxation shall be avoided as follows:
(a) Subject to the existing provisions of the law of Canada regarding the
deduction from tax payable in Canada of tax paid in a territory outside
Canada and to any subsequent modification of those provisions (which,
however, shall not affect the general principle hereof) and unless a
greater deduction or relief is provided under the law of Canada, tax paid
in Australia in accordance with this Convention on profits, income or
gains arising in Australia shall be deducted from any Canadian tax
payable in respect of such profits, income or gains.
(b) Subject to the existing provisions of the law of Canada regarding the
determination of the exempt surplus of a foreign affiliate and to any
subsequent modification of those provisions (which, however, shall not
affect the general principle hereof) for the purpose of computing
Canadian tax, a company which is a resident of Canada shall be allowed
Convention between Australia and Canada for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 3
International Tax Agreements Act 1953 181
to deduct in computing its taxable income any dividend received by it
out of the exempt surplus of a foreign affiliate which is a resident of
Australia.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 24
Mutual Agreement Procedure
(1) Where a resident of a Contracting State considers that the actions of the
competent authority of one or both of the Contracting States result or will result
for him in taxation not in accordance with this Convention, he may, without
prejudice to the remedies provided by the national laws of those States, present
his case in writing to the competent authority of the Contracting State of which
he is a resident.
(2) The competent authority shall endeavour, if the taxpayer’s claim
appears to it to be justified and if it is not itself able to arrive at an appropriate
solution, to resolve the case with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Convention.
(3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the application of
this Convention.
(4) The competent authorities of the Contracting States may consult
together with respect to the elimination of double taxation in cases not provided
for in the Convention.
(5) The competent authorities of the Contracting States may communicate
with each other directly for the purpose of giving effect to the provisions of this
Convention.
ARTICLE 25
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Convention or of the
domestic laws of the Contracting States concerning the taxes to which this
Convention applies insofar as the taxation thereunder is not contrary to this
Convention. The exchange of information is not restricted by Article 1. Any
Schedule 3 Convention between Australia and Canada for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
182 International Tax Agreements Act 1953
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment, collection or
enforcement of the taxes to which this Convention applies, or with the
determination of appeals in relation thereto, and shall be used only for such
purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and Consular Officials
(1) Nothing in this Convention shall affect the fiscal privileges of
diplomatic or consular officials under the general rules of international law or
under the provisions of special agreements.
(2) This Convention shall not apply to International Organizations, to
organs or officials thereof and to persons who are members of a diplomatic,
consular or permanent mission of a third State, being present in a Contracting
State and who are not liable in either Contracting State to the same obligations
in relation to tax on their total world income as are residents thereof.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 27
Entry Into Force
(1) This Convention shall come into force on the date on which the
Government of Australia and the Government of Canada exchange notes
through the diplomatic channel notifying each other that the last of such things
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the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 3
International Tax Agreements Act 1953 183
has been done as is necessary to give this Convention the force of law in
Australia and in Canada, as the case may be, and thereupon this Convention
shall have effect—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 July
1975
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July 1975
(b) in Canada—
(i) in respect of tax withheld at the source on amounts paid or
credited to non--residents on or after 1 January 1976
(ii) in respect of other Canadian tax, for taxation years beginning on
or after 1 January 1976.
(2) Subject to paragraph (3) of this Article, the Agreement between the
Government of the Commonwealth of Australia and the Government of Canada
for the avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income signed at Mont Tremblant on 1 October 1957 (in this
Article referred to as “the 1957 Agreement”) shall cease to have effect in
relation to any tax in respect of which this Convention comes into effect in
accordance with paragraph (1) of this Article.
(3) Where any provision of the 1957 Agreement would have afforded any
greater relief from tax in one of the Contracting States than is afforded by this
Convention, any such provision shall continue to have effect in that Contracting
State—
(a) in the case of Australia in respect of withholding tax on income that is
derived by a non--resident, in respect of income derived during any
financial year beginning before the date of signature of this Convention
and, in respect of other Australian tax, for any year of income beginning
before that date;
(b) in the case of Canada in respect of tax withheld at the source on
amounts paid or credited to non--residents before 31 December in the
calendar year during which this Convention was signed and, in respect
of other Canadian tax for any taxation year beginning on or before that
date.
(4) The 1957 Agreement shall terminate on the last date on which it has
effect in accordance with the foregoing provisions of this Article.
Schedule 3 Convention between Australia and Canada for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
184 International Tax Agreements Act 1953
ARTICLE 28
Termination
This Convention shall continue in effect indefinitely, but the Government of
Australia or the Government of Canada may, on or before 30 June in any
calendar year after the year 1983, give to the other Government through the
diplomatic channel written notice of termination and, in that event, this
Convention shall cease to be effective—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 July in
the calendar year next following that in which the notice of
termination is given;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July in the calendar year next following
that in which the notice of termination is given;
(b) in Canada—
(i) in respect of tax withheld at the source on amounts paid or
credited to non--residents on or after 1 January in the second
calendar year next following that in which the notice of
termination is given;
(ii) in respect of other Canadian tax, for any taxation year
beginning on or after 1 January in the second calendar year next
following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Convention.
DONE in Canberra on the twenty--first day of May 1980 in the English and
French languages, the two versions being equally authentic.
JOHN HOWARD EDWARD LUMLEY
For the Government of Australia For the Government of Canada
Canadian protocol Schedule 3A
International Tax Agreements Act 1953 185
Schedule 3A—Canadian protocol Note: See section 3.
PROTOCOL AMENDING THE CONVENTION BETWEEN
AUSTRALIA AND CANADA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH
RESPECT TO TAXES ON INCOME
The Government of Australia and the Government of Canada,
Desiring to amend the Convention between Australia and Canada for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income signed at Canberra on 21 May 1980 (in this Protocol
referred to as the “Convention”),
Have agreed as follows:
ARTICLE 1
Article 2 of the Convention shall be deleted and replaced by the
following:
“ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Convention shall apply are:
(a) in the case of Australia:
the income tax, and the resource rent tax in respect of
offshore projects relating to exploration for or
exploitation of petroleum resources, imposed under
the federal law of Australia;
(b) in the case of Canada:
the income taxes imposed by the Government of
Canada under the Income Tax Act.
Schedule 3A Canadian protocol
186 International Tax Agreements Act 1953
(2) This Convention shall apply also to any identical or
substantially similar taxes which are imposed under the federal law of
Australia or the law of Canada after the date of signature of this
Convention in addition to, or in place of, the existing taxes. The
competent authorities of the Contracting States shall notify each other of
any substantial changes which have been made in the law of their
respective States relating to the taxes to which this Convention applies
within a reasonable period of time after those changes.”.
ARTICLE 2
1. Subparagraphs (a) and (k) of paragraph (1) of Article 3 of the Convention
shall be deleted and respectively replaced by the following:
“(a) the term “Australia”, when used in a geographical sense,
excludes all external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands;
and
(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of
Australia (including the Territories specified in this
subparagraph) in respect of which there is for the time being
in force, consistently with international law, a law of
Australia dealing with the exploration for or the exploitation
of any of the natural resources of the seabed and subsoil of
the continental shelf;”; and
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International Tax Agreements Act 1953 187
“(k) the term “international traffic” means any voyage of a ship
or aircraft operated by an enterprise of a Contracting State to
transport passengers or property except where the principal
purpose of the voyage is to transport passengers or property
between places within the other Contracting State.”.
2. Paragraph (3) of Article 3 of the Convention shall be deleted and replaced
by the following:
“(3) As regards the application of this Convention at any time by
a Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning that it has at that time under the law
of that State concerning the taxes to which the Convention applies, any
meaning under the applicable tax law of that State prevailing over a
meaning given to the term under other law of that State.”.
ARTICLE 3
Paragraphs (1) and (2) of Article 4 of the Convention shall be deleted and
replaced by the following:
“(1) Subject to paragraph (2), for the purposes of this
Convention, a person is a resident of a Contracting State if that person is
a resident of that State for the purposes of its tax. A Contracting State or
any political subdivision or local authority thereof or any agency or
instrumentality of any such State, subdivision or authority is also a
resident of that State for the purposes of this Convention.
(2) A person is not a resident of a Contracting State for the
purposes of this Convention if the person is liable to tax in that State in
respect only of income from sources in that State.”.
ARTICLE 4
Subparagraph (b) of paragraph (4) of Article 5 of the Convention shall be
deleted and replaced by the following:
“(b) substantial equipment is being used in that State by, for or
under contract with the enterprise other than in connection
with a building site or construction, installation or assembly
project of the enterprise.”.
Schedule 3A Canadian protocol
188 International Tax Agreements Act 1953
ARTICLE 5
Article 6 of the Convention shall be deleted and replaced by the
following:
“ARTICLE 6
Income from Real Property
(1) Income from real property may be taxed in the Contracting
State in which the real property is situated.
(2) For the purposes of this Convention, the term “real property”
in relation to a Contracting State, shall have the meaning which it has
under the law of that State and shall include:
(a) a lease of land and any other interest in or over land, whether
improved or not, including a right to explore for mineral, oil
or gas deposits or other natural resources, and a right to mine
those deposits or resources; and
(b) a right to receive variable or fixed payments either as
consideration for or in respect of the exploitation of, or the
right to explore for or exploit, mineral, oil or gas deposits,
quarries or other places of extraction or exploitation of
natural resources.
(3) Any interest or right referred to in paragraph (2) shall be
regarded as situated where the land, mineral, oil or gas deposits, quarries
or natural resources, as the case may be, are situated or where the
exploration may take place.
(4) The provisions of paragraphs (1) and (3) shall also apply to
the income from real property of an enterprise and to income from real
property used for the performance of independent personal services.”.
ARTICLE 6
1. Paragraph (6) of Article 7 of the Convention shall be deleted and replaced
by the following:
Canadian protocol Schedule 3A
International Tax Agreements Act 1953 189
“(6) Where profits include items which are dealt with separately
in other Articles of this Convention, then the provisions of those Articles
shall not be affected by the provisions of this Article.”.
2. A new paragraph (8) shall be added to Article 7 of the Convention as
follows:
“(8) Where:
(a) a resident of Canada is beneficially entitled, whether directly
or through one or more interposed trusts, to a share of the
business profits of an enterprise carried on in Australia by
the trustee of a trust other than a trust which is treated as a
company for tax purposes; and
(b) in relation to that enterprise, that trustee would, in
accordance with the principles of Article 5, have a
permanent establishment in Australia,
the enterprise carried on by the trustee shall be deemed to be a business
carried on in Australia by that resident through a permanent
establishment situated in Australia and that share of business profits shall
be attributable to that permanent establishment.”.
ARTICLE 7
Paragraph (4) of Article 8 of the Convention shall be deleted and replaced
by the following:
“(4) For the purposes of this Article, profits derived from the
carriage by ships or aircraft of passengers, livestock, mail, goods or
merchandise taken on board in a Contracting State for discharge at a
place in that State shall be treated as profits from operations confined
solely to places in that State.”.
ARTICLE 8
1. Paragraphs (2), (4) and (6) of Article 10 of the Convention shall be
deleted and respectively replaced by the following:
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190 International Tax Agreements Act 1953
“(2) However, those dividends may also be taxed in the
Contracting State of which the company paying the dividends is a
resident for the purposes of its tax, and according to the law of that State,
but the tax so charged shall not exceed:
(a) (i) in the case of dividends paid by a company that is a
resident of Australia for the purposes of its tax, 5 per
cent of the gross amount of the dividends, to the
extent to which the dividends have been fully franked
in accordance with the law of Australia, if a company
that holds directly at least 10 per cent of the voting
power of the company paying the dividends is
beneficially entitled to those dividends; and
(ii) in the case of dividends paid by a company that is a
resident of Canada for the purposes of its tax, except
in the case of dividends paid by a non-resident-owned
investment corporation that is a resident of Canada for
the purposes of its tax, 5 per cent of the gross amount
of the dividends if a company that controls directly or
indirectly at least 10 percent of the voting power in
the company paying the dividends is beneficially
entitled to those dividends; and
(b) 15 per cent of the gross amount of the dividends in all other
cases,
and if the relevant law of either Contracting State is varied in a manner
that bears upon this provision, otherwise than in minor respects so as not
to affect its general character, the Contracting States shall consult each
other with a view to agreeing to any amendment of this paragraph that
may be appropriate.”;
“(4) The term “dividends” as used in this Article means income
from shares, as well as other amounts which are subjected to the same
taxation treatment as income from shares by the law of the State of which
the company making the distribution is a resident for the purposes of its
tax.”; and
“(6) Canada may impose, on the earnings attributable to a
permanent establishment in Canada of a company which is a resident of
Australia or on the earnings of such company attributable to the
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International Tax Agreements Act 1953 191
alienation of real property situated in Canada where the company is
carrying on a trade in real property, a tax (in this paragraph referred to as
a “branch tax”) in addition to the tax that would be chargeable on the
earnings of a company that is a resident of Canada, except that any
branch tax so imposed shall not exceed 5 per cent of the amount of such
earnings that have not been subjected to such branch tax in previous
taxation years. For the purposes of this provision, the term “earnings”
means the earnings attributable to the alienation of such real property
situated in Canada as may be taxed by Canada under the provisions of
Article 6 or paragraph (1) of Article 13, and the profits, including any
gains, attributable to a permanent establishment in Canada in a year and
previous years after deducting therefrom all other taxes, other than the
branch tax referred to herein, imposed on such profits in Canada.”.
2. The reference in paragraph (7) of Article 10 of the Convention to “15 per
cent” shall be deleted and replaced by a reference to “5 per cent”.
ARTICLE 9
The reference in paragraph (2) of Article 11 of the Convention to “15 per
cent” shall be deleted and replaced by a reference to “10 per cent”.
ARTICLE 10
1. Paragraph (3) of Article 12 of the Convention shall be deleted and
replaced by the following:
“(3) The term “royalties” as used in this Article means payments
or credits, whether periodical or not, and however described or computed,
to the extent to which they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design
or model, plan, secret formula or process, trade mark or
other like property or right; or
(b) the use of, or the right to use, any industrial, commercial or
scientific equipment; or
(c) the supply of scientific, technical, industrial or commercial
knowledge or information; or
Schedule 3A Canadian protocol
192 International Tax Agreements Act 1953
(d) the supply of any assistance that is ancillary and subsidiary
to, and is furnished as a means of enabling the application or
enjoyment of, any such property or right as is mentioned in
subparagraph (a), any such equipment as is mentioned in
subparagraph (b) or any such knowledge or information as is
mentioned in subparagraph (c); or
(e) the use of, or the right to use:
(i) motion picture films; or
(ii) films or videotapes or other means of reproduction for
use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use or supply of
any property or right referred to in this paragraph.”.
2. A new paragraph (7) shall be added to Article 12 of the Convention as
follows:
“(7) Without prejudice to whether or not such payments would be
dealt with as royalties under this Article in the absence of this paragraph,
the term “royalties” as used in this Article shall not include payments or
credits made as consideration for the supply of, or the right to use, source
code in a computer software program, provided that the right to use the
source code is limited to such use as is necessary to enable effective
operation of the program by the user.”.
3. A new paragraph (8) shall be added to Article 12 of the Convention as
follows:
“(8) Without prejudice to whether or not such payments would be
dealt with as royalties under this Article in the absence of this paragraph,
the term “royalties” as used in this Article shall include payments or
credits, whether periodical or not, and however described or computed, to
the extent to which they are made as consideration for:
(a) the reception of, or the right to receive, visual images or
sounds, or both, that are transmitted to the public by satellite
or by cable, optic fibre or similar technology; or
Canadian protocol Schedule 3A
International Tax Agreements Act 1953 193
(b) the use of, or the right to use, in connection with television
or radio broadcasting, visual images or sounds, or both, that
are transmitted by satellite or by cable, optic fibre or similar
technology; or
(c) total or partial forbearance in respect of the use or supply of
any property or right referred to in this paragraph.”.
ARTICLE 11
Article 13 of the Convention shall be deleted and replaced by the
following:
“ARTICLE 13
Alienation of Property
(1) Income, profits or gains derived by a resident of a
Contracting State from the alienation of real property situated in the other
Contracting State may be taxed in that other State.
(2) Income, profits or gains from the alienation of property,
other than real property, that forms part of the business property of a
permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or pertains to a fixed base available in that
other State to a resident of the first-mentioned State for the purpose of
performing independent personal services, including income, profits or
gains from the alienation of that permanent establishment (alone or with
the whole enterprise) or of that fixed base, may be taxed in that other
State.
(3) Income, profits or gains from the alienation of ships or
aircraft operated in international traffic, or of property, other than real
property, pertaining to the operation of those ships or aircraft, shall be
taxable only in the Contracting State of which the enterprise alienating
such ships, aircraft, or other property is a resident.
(4) Income, profits or gains derived by a resident of a
Contracting State from the alienation of any shares or other interests in a
company, or of an interest of any kind in a partnership, trust or other
entity, where the value of the assets of such entity is derived principally,
whether directly or indirectly (including through one or more interposed
Schedule 3A Canadian protocol
194 International Tax Agreements Act 1953
entities, such as, for example, through a chain of companies), from real
property situated in the other Contracting State, may be taxed in that
other State.
(5) Nothing in this Convention shall affect the application of a
law of a Contracting State relating to the taxation of gains of a capital
nature derived from the alienation of any property other than that to
which any of the preceding paragraphs of this Article apply.
(6) Where an individual who ceases to be a resident of a
Contracting State, and immediately thereafter becomes a resident of the
other Contracting State, is treated for the purposes of taxation in the
first-mentioned State as having alienated a property and is taxed in that
State by reason thereof, the individual may elect to be treated for the
purposes of taxation in the other State as if the individual had,
immediately before becoming a resident of that State, disposed of and
re-acquired the property for an amount equal to its fair market value at
that time.”.
ARTICLE 12
1. Paragraphs (2) and (3) of Article 15 of the Convention shall be deleted
and replaced by the following:
“(2) Notwithstanding the provisions of paragraph (1),
remuneration derived by an individual who is a resident of a Contracting
State in respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in any
twelve month period commencing or ending in the year of
income or taxation year of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of that other State; and
(c) the remuneration is not deductible in determining taxable
profits of a permanent establishment or a fixed base which
the employer has in that other State.”.
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2. Paragraph (4) of Article 15 of the Convention shall be renumbered as
paragraph (3).
ARTICLE 13
Article 22 of the Convention shall be deleted and replaced by the
following:
“ARTICLE 22
Source of Income
(1) Income, profits or gains derived by a resident of a
Contracting State which, under any one or more of Articles 6 to 8 and 10
to 19, may be taxed in the other Contracting State, shall for the purposes
of the law of that other Contracting State relating to its tax be deemed to
be income from sources in that other Contracting State.
(2) Income, profits or gains derived by a resident of a
Contracting State which, under any one or more of Articles 6 to 8 and 10
to 19, may be taxed in the other Contracting State, shall for the purposes
of Article 23 and of the law of the first-mentioned Contracting State
relating to its tax be deemed to be income from sources in the other
Contracting State.”.
ARTICLE 14
Article 23 of the Convention shall be deleted and replaced by the
following:
“ARTICLE 23
Elimination of Double Taxation
(1) In the case of Australia, double taxation shall be avoided as
follows:
(a) subject to the provisions of the law of Australia from time to
time in force which relate to the allowance of a credit against
Australian tax of tax paid in a country outside Australia
(which shall not affect the general principle of this Article),
Schedule 3A Canadian protocol
196 International Tax Agreements Act 1953
Canadian tax paid under the law of Canada and in
accordance with this Convention, whether directly or by
deduction, in respect of income derived by a person who is a
resident of Australia from sources in Canada shall be
allowed as a credit against Australian tax payable in respect
of that income;
(b) subject to the provisions of the law of Australia from time to
time in force which relate to the allowance of a credit against
Australian tax of tax paid in a country outside Australia
(which shall not affect the general principle of this Article),
where a company which is a resident of Canada and is not a
resident of Australia for the purposes of Australian tax pays
a dividend to a company which is a resident of Australia and
which controls directly or indirectly at least 10 per cent of
the voting power of the first-mentioned company, the credit
referred to in subparagraph (a) shall include the Canadian
tax paid by that first-mentioned company in respect of that
portion of its profits out of which the dividend is paid.
(2) In the case of Canada, double taxation shall be avoided as
follows:
(a) subject to the existing provisions of the law of Canada
regarding the deduction from tax payable in Canada of tax
paid in a territory outside Canada and to any subsequent
modification of those provisions (which shall not affect the
general principle hereof) and unless a greater deduction or
relief is provided under the laws of Canada, tax payable in
Australia on profits, income or gains from sources in
Australia shall be deducted from any Canadian tax payable
in respect of such profits, income or gains;
(b) subject to the existing provisions of the law of Canada
regarding the allowance as a credit against Canadian tax of
tax payable in a territory outside Canada and to any
subsequent modification of those provisions (which shall not
affect the general principle hereof) where a company which
is a resident of Australia pays a dividend to a company
which is a resident of Canada and which controls directly or
indirectly at least 10 per cent of the voting power in the
first-mentioned company, the credit shall take into account
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the tax payable in Australia by that first-mentioned company
in respect of the profits out of which such dividend is paid;
and
(c) where, in accordance with any provision of this Convention,
income derived by a resident of Canada is exempt from tax
in Canada, Canada may nevertheless, in calculating the
amount of tax on other income, take into account the
exempted income.”.
ARTICLE 15
A new paragraph (6) shall be added to Article 24 of the Convention as
follows:
“(6) For the purposes of paragraph 3 of Article XXII
(Consultation) of the General Agreement on Trade in Services, the
Contracting States agree that, notwithstanding that paragraph, any dispute
between them as to whether a measure falls within the scope of this
Convention may be brought before the Council for Trade in Services, as
provided by that paragraph, only with the consent of both Contracting
States. Any doubt as to the interpretation of this paragraph shall be
resolved under paragraph (3) of this Article or, failing agreement under
that procedure, pursuant to any other procedure agreed to by both
Contracting States.”.
ARTICLE 16
A new Article 26A shall be added to the Convention immediately after
Article 26 as follows:
“ARTICLE 26A
Various Interests of Canadian Residents
Nothing in this Convention shall be construed as preventing
Canada from imposing a tax on amounts included in the income of a
resident of Canada with respect to a partnership, trust, or controlled
foreign affiliate, in which that resident has an interest.”.
Schedule 3A Canadian protocol
198 International Tax Agreements Act 1953
ARTICLE 17
The Government of Australia and the Government of Canada shall notify
each other through the diplomatic channel of the completion of their respective
internal procedures required for the bringing into force of this Protocol which
shall form an integral part of the Convention. The Protocol shall enter into force
on the date of the later of these notifications and its provisions shall thereupon
have effect:
(a) in Australia:
(i) in respect of withholding tax on income that is derived
by a non-resident, in relation to income derived on or
after 1 January in the calendar year next following
that in which the Protocol enters into force; and
(ii) in respect of other Australian tax, in relation to
income, profits or gains of any year of income
beginning on or after 1 July in the calendar year next
following that in which the Protocol enters into force;
(b) in Canada:
(i) in respect of tax withheld at the source on amounts
paid or credited to non-residents, on or after 1 January
in the calendar year next following that in which the
Protocol enters into force; and
(ii) in respect of other Canadian tax, for taxation years
beginning on or after 1 January in the calendar year
next following that in which the Protocol enters into
force.
IN WITNESS WHEREOF the undersigned, duly authorised thereto by
their respective Governments, have signed this Protocol.
DONE at Canberra, this twenty-third day of January 2002, in the English
and French languages, the two versions being equally authentic.
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FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA: OF CANADA:
Helen Lloyd Coonan Jean T. Fournier
[Signatures omitted]
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
200 International Tax Agreements Act 1953
Schedule 4—Agreement between the
Government of Australia and the
Government of New Zealand for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income Section 3
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
NEW ZEALAND
DESIRING to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
HAVE AGREED as follows:
Article 1
Personal scope
This Agreement shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
Taxes covered
1. The existing taxes to which this Agreement shall apply are:
(a) In New Zealand:
the income tax and the fringe benefit tax;
(b) In Australia:
the income tax, the resource rent tax in respect of offshore projects
relating to exploration for or exploitation of petroleum resources and
the fringe benefits tax imposed under the federal law of Australia.
2. This Agreement shall apply also to any identical or substantially similar
taxes which are imposed under the federal law of Australia or the law of New
Zealand after the date of signature of this Agreement in addition to, or in place
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 201
of, the existing taxes. The competent authorities of the Contracting States shall
notify each other within a reasonable period of time of any significant changes
which have been made in the law of their respective States relating to the taxes
to which this Agreement applies.
Article 3
General definitions
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) (i) the term “New Zealand” means the territory of New Zealand but
does not include Tokelau or the Associated Self Governing States
of the Cook Islands and Niue; it also includes any area beyond the
territorial sea which by New Zealand legislation and in accordance
with international law has been, or may hereafter be, designated as
an area in which the rights of New Zealand with respect to natural
resources may be exercised;
(ii) the term “Australia”, when used in a geographical sense, excludes
all external territories other than:
(A) the Territory of Norfolk Island;
(B) the Territory of Christmas Island;
(C) the Territory of Cocos (Keeling) Islands;
(D) the Territory of Ashmore and Cartier Islands;
(E) the Territory of Heard Island and McDonald Islands; and
(F) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in this subparagraph) in respect
of which there is for the time being in force, consistently with
international law, a law of Australia dealing with the exploration
for or exploitation of any of the natural resources of the seabed and
subsoil of the continental shelf;
(b) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(c) the term “company” means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(d) the term “competent authority” means:
(i) in the case of New Zealand, the Commissioner of Inland Revenue
or an authorised representative of the Commissioner; and
(ii) in the case of Australia, the Commissioner of Taxation or an
authorised representative of the Commissioner;
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(e) the terms “a Contracting State” and “other Contracting State” mean
New Zealand or Australia, the Governments of which have concluded
this Agreement, as the context requires;
(f) the terms “enterprise of a Contracting State” and “enterprise of the other
Contracting State” mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;
(g) the term “international traffic” means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship
or aircraft is operated solely from a place or between places in the other
Contracting State;
(h) the term “New Zealand tax” means tax imposed by New Zealand, being
tax to which this Agreement applies by virtue of Article 2;
(i) the term “paid”, in relation to any amount, includes distributed (whether
in cash or other property), credited or dealt with on behalf of a person or
at that person’s direction; and the terms “pay, payable” and “payment”
have corresponding meanings;
(j) the term “person” includes an individual, a company and any other
body of persons;
(k) the term “tax” means New Zealand tax or Australian tax, as the context
requires, but does not include any penalty or interest imposed under the
law of either Contracting State relating to its tax.
2. For the purposes of Articles 10, 11 and 12, a trustee subject to tax in a
Contracting State in respect of dividends, interest or royalties shall be deemed
to be beneficially entitled to such dividends, interest or royalties.
3. In the application of this Agreement by a Contracting State, any term not
defined in this Agreement shall, unless the context otherwise requires, have the
meaning which it has under the law of that State from time to time in force
relating to the taxes to which this Agreement applies.
Article 4
Residence
1. For the purposes of this Agreement, a person is a resident of a Contracting
State:
(a) in the case of New Zealand, if the person is resident in New Zealand for
the purposes of New Zealand tax; and
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(b) in the case of Australia, if the person is a resident of Australia for the
purposes of Australian tax.
2. A person is not a resident of a Contracting State for the purposes of this
Agreement if the person is liable to tax in that State in respect only of income
from sources in that State.
3. Where by reason of the preceding provisions of this Article a person, being
an individual, is a resident of both Contracting States, then the status of the
person shall be determined in accordance with the following rules:
(a) the person shall be deemed to be a resident solely of the State in which
a permanent home is available to the person; if a permanent home is
available to the person in both States, the person shall be deemed to be a
resident solely of the State with which the person’s personal and
economic relations are closer;
(b) if the person is unable to be deemed to be a resident solely of a State in
accordance with the provisions of subparagraph (a), the person shall be
deemed to be a resident solely of the State in which the person has an
habitual abode;
(c) if the person has an habitual abode in both States or in neither of them,
the person shall be deemed to be a resident solely of the State of which
the person is a citizen.
4. Where by reason of the provisions of paragraphs 1 and 2 a person other
than an individual is a resident of both Contracting States then it shall be
deemed to be a resident solely of the Contracting State in which its place of
effective management is situated.
Article 5
Permanent establishment
1. For the purposes of this Agreement, the term “permanent establishment”
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2. The term “permanent establishment” includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
Schedule 4 Agreement between the Government of Australia and the Government of
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(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources; and
(g) an agricultural, pastoral or forestry property.
3. A building site, or a construction, installation or assembly project
constitutes a permanent establishment if it lasts for more than 6 months.
4. An enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent
establishment if:
(a) it carries on supervisory activities in that State for more than 6 months
in connection with a building site or a construction, installation or
assembly project which is being undertaken in that State; or
(b) in that State it carries on activities which consist of, or which are
connected with, the exploration for or exploitation of natural resources
situated in that State; or
(c) substantial equipment is being used in that State by, for or under
contract with the enterprise; or
(d) it performs in that State any operations for the felling, removal or other
exploitation of standing timber.
5. For the purposes of determining the duration of activities under paragraph
3 and subparagraph 4(a), the period during which activities are carried on in a
Contracting State by an enterprise associated with another enterprise shall be
aggregated with the period during which activities are carried on by the
enterprise with which it is associated if the firstmentioned activities are
connected with the activities carried on in that State by the lastmentioned
enterprise, provided that any period during which two or more associated
enterprises are carrying on concurrent activities is counted only once. An
enterprise shall be deemed to be associated with another enterprise if one is
controlled directly or indirectly by the other, or if both are controlled directly or
indirectly by a third person or persons.
6. An enterprise shall not be deemed to have a “permanent establishment”
merely by reason of:
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise; or
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery; or
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(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise; or
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or of collecting information, for the
enterprise; or
(e) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character, such as advertising or scientific research.
7. Notwithstanding the provisions of paragraphs 1 and 2, a person acting in a
Contracting State on behalf of an enterprise of the other Contracting State—
other than an agent of an independent status to whom paragraph 8 applies—
shall be deemed to be a permanent establishment of that enterprise in the
firstmentioned State if:
(a) the person has and habitually exercises in the firstmentioned State an
authority to conclude contracts on behalf of that enterprise, unless the
activities of that person are limited to those described in paragraph 6
and, if exercised through a fixed place of business, would not make this
fixed place of business a permanent establishment under the provisions
of that paragraph; or
(b) in so acting, the person manufactures or processes in that State for the
enterprise goods or merchandise belonging to that enterprise.
8. An enterprise of a Contracting State shall not be deemed to have a
permanent establishment in the other Contracting State merely because it carries
on business in that other State through a person who is a broker, general
commission agent or any other agent of an independent status and is acting in
the ordinary course of the person’s business as such a broker or agent.
9. The fact that a company which is a resident of a Contracting State controls
or is controlled by a company which is a resident of the other Contracting State,
or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself make either company a
permanent establishment of the other.
10. The principles set forth in the preceding paragraphs of this Article shall be
applied in determining for the purposes of paragraph 5 of Article 11 and
paragraph 5 of Article 12 whether there is a permanent establishment outside
both Contracting States, and whether an enterprise, not being an enterprise of a
Contracting State, has a permanent establishment in a Contracting State.
Schedule 4 Agreement between the Government of Australia and the Government of
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Evasion with respect to Taxes on Income
206 International Tax Agreements Act 1953
Article 6
Income from real property
1. Income derived by a resident of a Contracting State from real property
situated in the other Contracting State may be taxed in that other State.
2. The term “real property” shall have the meaning which it has under the law
of the Contracting State in which that property is situated and shall in any case
include:
(a) a lease of land and any other interest in or over land, whether that land
is improved or not;
(b) a right to explore for or exploit mineral, oil or gas deposits, or other
natural resources;
(c) a right to receive variable or fixed payments either:
(i) as consideration for or in respect of the exploitation of, or
(ii) for the right to explore for or exploit,
mineral, oil or gas deposits, or other natural resources.
3. The provisions of paragraph 1 shall apply to income derived from the
direct use, letting, or use in any other form of real property.
4. Any interest or right referred to in paragraph 2 shall be regarded as situated
where the land, mineral, oil or gas deposits, quarries or natural resources, as the
case may be, are situated or where the exploration or exploitation may take
place.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to income from
real property of an enterprise and to income from real property used for the
performance of independent personal services.
Article 7
Business profits
1. The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated in that other State. If the enterprise
carries on business in that manner, the profits of the enterprise may be taxed in
the other State but only so much of them as is attributable to that permanent
establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated in that other State, there shall in each
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
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International Tax Agreements Act 1953 207
Contracting State be attributed to that permanent establishment the profits
which it might be expected to make if it were a distinct and separate enterprise
engaged in the same or similar activities under the same or similar conditions
and dealing wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
3. In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise which are incurred for the
purposes of the permanent establishment (including executive and general
administrative expenses so incurred), whether incurred in the Contracting State
in which the permanent establishment is situated or elsewhere. However, no
deduction is allowable in respect of expenses which are not deductible under the
law of the Contracting State in which the permanent establishment is situated.
4. No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
5. Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person in
cases where the information available to the competent authority of that State is
inadequate to determine the profits to be attributed to a permanent
establishment, provided that that law shall be applied, so far as the information
available to the competent authority permits, consistently with the principles of
this Article.
6. For the purposes of the preceding paragraphs of this Article, the profits to
be attributed to the permanent establishment shall be determined by the same
method year by year unless there is good and sufficient reason to the contrary.
7. Where:
(a) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trusts, to a share of the
business profits of an enterprise carried on in the other Contracting
State by the trustee of a trust other than a trust which is treated as a
company for tax purposes; and
(b) in relation to that enterprise, that trustee would, in accordance with the
principles of Article 5, have a permanent establishment in that other
State,
the enterprise carried on by the trustee shall be deemed to be a business carried
on in the other State by that resident through a permanent establishment situated
Schedule 4 Agreement between the Government of Australia and the Government of
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208 International Tax Agreements Act 1953
in that other State and that share of business profits shall be attributed to that
permanent establishment.
8. Where profits include items of income or gains which are dealt with
separately in other Articles of this Agreement, then the provisions of those
Articles shall not be affected by the provisions of this Article.
9. Nothing in this Article shall affect the operation of any law of a
Contracting State relating to tax imposed on any income, profits or gains from
the business of any form of insurance. Provided that if the relevant law in force
in either Contracting State at the date of signature of this Agreement is varied
(otherwise than in minor respects so as not to affect its general character) the
Contracting States shall consult each other with a view to agreeing to any
amendment of this paragraph that may be appropriate.
Article 8
Ships and aircraft
1. Profits from ship or aircraft operations derived by a resident of a
Contracting State shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, such profits may be taxed
in the other Contracting State where they are profits from ship or aircraft
operations confined solely to places in that other State.
3. The provisions of paragraphs 1 and 2 shall apply in relation to the share of
the profits from ship or aircraft operations derived by a resident of a Contracting
State through participation in a pool service, in a joint business or operating
organisation or in an international operating agency.
4. For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise which are
shipped in a Contracting State for discharge at a place in that State shall be
treated as profits from ship or aircraft operations confined solely to places in
that State.
Article 9
Associated enterprises
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in
the management, control or capital of an enterprise of the other
Contracting State; or
Agreement between the Government of Australia and the Government of New Zealand
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International Tax Agreements Act 1953 209
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
2. Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including determinations in cases where the information available to the
competent authority of that State is inadequate to determine the income to be
attributed to an enterprise, provided that that law shall be applied, so far as it is
practicable to do so, consistently with the principles of this Article.
3. Where profits on which an enterprise of a Contracting State has been
charged to tax in that State are also included, by virtue of paragraph 1 or 2, in
the profits of an enterprise of the other Contracting State and charged to tax in
that other State, and the profits so included are profits which might have been
expected to have accrued to that enterprise of the other State if the conditions
operative between the enterprises had been those which might have been
expected to have operated between independent enterprises dealing wholly
independently with one another, then the firstmentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
firstmentioned State. In determining such an adjustment, due regard shall be had
to the other provisions of this Agreement and for this purpose the competent
authorities of the Contracting States shall if necessary consult each other.
Article 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State for
the purposes of its tax, being dividends to which a resident of the other
Contracting State is beneficially entitled, may be taxed in that other State.
2. Those dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
210 International Tax Agreements Act 1953
cent of the gross amount of the dividends. Provided that any deemed dividend
arising from the business of life insurance consequent upon an election made
and approved under section 204M of the Income Tax Act 1976 of New Zealand,
or any legislation enacted in substitution for that section, shall be taxed at a rate
not exceeding 5 per cent of the gross amount of such dividend.
3. The term “dividends” in this Article means income from shares and other
income assimilated to income from shares by the law, relating to tax, of the
Contracting State of which the company making the payment is a resident for
the purposes of its tax.
4. The provisions of paragraph 2 shall not apply if the person beneficially
entitled to the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident, through a permanent establishment situated in that other
State, or performs in that other State independent personal services from a fixed
base situated in that other State, and the holding in respect of which the
dividends are paid is effectively connected with that permanent establishment or
fixed base. In that case, the provisions of Article 7 or 14, as the case may be,
shall apply.
5. Dividends paid by a company which is a resident of a Contracting State,
being dividends to which a person who is not a resident of the other Contracting
State is beneficially entitled, shall be exempt from tax in that other State except
in so far as the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment or fixed base situated in that other
State. This paragraph shall not apply in relation to dividends paid by any
company which is a resident of Australia for the purposes of Australian tax and
which is also resident in New Zealand for the purposes of New Zealand tax.
Article 11
Interest
1. Interest arising in a Contracting State, being interest to which a resident of
the other Contracting State is beneficially entitled, may be taxed in that other
State.
2. That interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.
3. The term “interest” in this Article includes interest on indebtedness of
every kind, whether or not secured by mortgage and whether or not carrying a
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 211
right to participate in profits, and in particular, interest from government
securities and income from bonds or debentures, including premiums and prizes
attaching to such bonds or debentures, as well as all other income assimilated to
income from money lent by the law, relating to tax, of the Contracting State in
which the income arises, but does not include any income which is treated as a
dividend under Article 10.
4. The provisions of paragraph 2 shall not apply if the person beneficially
entitled to the interest, being a resident of a Contracting State, carries on
business in the other Contracting State, in which the interest arises, through a
permanent establishment situated in that other State, or performs in that other
State independent personal services from a fixed base situated in that other
State, and the indebtedness in respect of which the interest is paid is effectively
connected with that permanent establishment or fixed base. In that case the
provisions of Article 7 or 14, as the case may be, shall apply.
5. Interest shall be deemed to arise in a Contracting State when the payer is
that State itself or a political subdivision or a local authority of that State, or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the interest, whether the person is a resident of a
Contracting State or not, has in a Contracting State or outside both Contracting
States a permanent establishment or fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and that interest is
deductible in determining the income, profits or gains attributable to that
permanent establishment or fixed base, then the interest shall be deemed to arise
in the State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the
person beneficially entitled to the interest, or between both of them and some
other person, the amount of the interest, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon in the absence of that relationship by the payer and the person
beneficially entitled, the provisions of this Article shall apply only to the
lastmentioned amount. In that case the excess part of the amount of the interest
paid shall remain taxable according to the law, relating to tax, of each
Contracting State, subject to the other provisions of this Agreement.
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
212 International Tax Agreements Act 1953
Article 12
Royalties
1. Royalties arising in a Contracting State, being royalties to which a resident
of the other Contracting State is beneficially entitled, may be taxed in that other
State.
2. Those royalties may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
3. The term “royalties” in this Article means payments of any kind, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, trademark, design
or model, plan, secret formula or process, or other like property or right;
or
(b) the use of, or the right to use, any industrial, scientific or commercial
equipment; or
(c) the supply of scientific, technical, industrial or commercial knowledge
or information; or
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in subparagraph (a), any such
equipment as is mentioned in subparagraph (b) or any such knowledge
or information as is mentioned in subparagraph (c); or
(e) the use of, or the right to use, any:
(i) motion picture film; or
(ii) film or videotape for use in connection with television; or
(iii) tape for use in connection with radio broadcasting; or
(f) the reception of, or the right to receive, visual images or sounds, or
both, transmitted to the public by:
(i) satellite; or
(ii) cable, optic fibre or similar technology; or
(g) the use in connection with television broadcasting or radio
broadcasting, or the right to use in connection with television
broadcasting or radio broadcasting, visual images or sounds, or both,
transmitted by:
(i) satellite; or
(ii) cable, optic fibre or similar technology; or
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 213
(h) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4. The provisions of paragraph 2 shall not apply if the person beneficially
entitled to the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State, in which the royalties arise, through a
permanent establishment situated in that other State, or performs in that other
State independent personal services from a fixed base situated in that other
State, and the property or right in respect of which the royalties are paid is
effectively connected with that permanent establishment or fixed base. In that
case the provisions of Article 7 or 14, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is
that State itself or a political subdivision or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the royalties, whether the person is a resident of a
Contracting State or not, has in a Contracting State or outside both Contracting
States a permanent establishment or fixed base in connection with which the
liability to pay the royalties was incurred, and the royalties are deductible in
determining the income, profits or gains attributable to that permanent
establishment or fixed base, then the royalties shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the
person beneficially entitled to the royalties, or between both of them and some
other person, the amount of the royalties, having regard to what they are paid
for, exceeds the amount which might have been expected to have been agreed
upon in the absence of that relationship by the payer and the person beneficially
entitled, the provisions of this Article shall apply only to the lastmentioned
amount. In that case the excess part of the amount of the royalties paid shall
remain taxable according to the law, relating to tax, of each Contracting State,
subject to the other provisions of this Agreement.
Article 13
Alienation of property
1. Income, profits or gains derived by a resident of a Contracting State from
the alienation of real property situated in the other Contracting State may be
taxed in that other State.
2. Income, profits or gains from the alienation of property, other than real
property, forming part of the business property of a permanent establishment
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
214 International Tax Agreements Act 1953
which an enterprise of a Contracting State has in the other Contracting State or
pertaining to a fixed base available to a resident of a Contracting State in the
other Contracting State for the purpose of performing independent personal
services, including income, profits or gains from the alienation of that
permanent establishment (alone or with the whole enterprise) or of that fixed
base, may be taxed in that other State.
3. Income, profits or gains derived by a resident of a Contracting State from
the alienation of shares or comparable interests in a company, the assets of
which consist wholly or principally of real property situated in the other
Contracting State, may be taxed in that other State.
4. Income, profits or gains from the alienation of ships or aircraft operated in
international traffic, or of property (other than real property) pertaining to the
operation of those ships or aircraft, shall be taxable only in the Contracting
State in which the enterprise alienating such ships, aircraft or other property is a
resident.
5. Nothing in this Agreement affects the application of a law of a Contracting
State relating to the taxation of gains of a capital nature derived from the
alienation of any property other than that to which any of the preceding
paragraphs of this Article apply.
6. In this Article, the term “real property” has the same meaning as it has in
Article 6.
7. For the purposes of this Article, the situation of real property shall be
determined in accordance with paragraph 4 of Article 6.
Article 14
Independent personal services
1. Income derived by an individual who is a resident of a Contracting State in
respect of professional services or other independent activities shall be taxable
only in that State unless such services are performed in the other Contracting
State and:
(a) the individual is present in the other State for a period or periods
exceeding in the aggregate 183 days in any 12 month period
commencing or ending in the year of income concerned; or
(b) a fixed base is regularly available to the individual in the other State for
the purpose of performing the individual’s activities.
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 215
If the provisions of subparagraphs (a) or (b) are satisfied, the income may be
taxed in that other State but only so much of it as is attributable to activities
performed during such period or periods or from that fixed base.
2. The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the performance of the independent activities of
physicians, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent personal services
1. Subject to the provisions of Articles 16, 17, 19 and 20, salaries, wages and
other similar remuneration derived by an individual who is a resident of a
Contracting State in respect of an employment shall be taxable only in that State
unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by an
individual who is a resident of a Contracting State in respect of an employment
exercised in the other Contracting State shall be taxable only in the
firstmentioned State if:
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in any 12 month period
commencing or ending in the year of income concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining the taxable profits of
a permanent establishment or fixed base which the employer has in that
other State; and
(d) the remuneration is, or upon application of this Article will be, subject
to tax in the firstmentioned State.
3. Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft operated
in international traffic by a resident of a Contracting State may be taxed in that
State.
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
216 International Tax Agreements Act 1953
Article 16
Fringe benefits
1. Where, except for the application of this Article, a fringe benefit would be
subject to tax in both Contracting States the benefit will be taxable solely in the
Contracting State which has the sole or primary taxing right in respect of the
remuneration from the employment to which the benefit relates.
2. For the purposes of this Article:
(a) “fringe benefit” includes a benefit provided to an employee or to an
associate of an employee by:
(i) an employer,
(ii) an associate of an employer, or
(iii) a person under an arrangement between that person and the
employer, associate of an employer, or another person in
respect of the employment of that employee,
and includes an accommodation allowance or housing benefit so
provided;
(b) a Contracting State has a “primary taxing right” if it has a taxing right
under this Agreement in respect of the remuneration for the relevant
employment and the other Contracting State is required under this
Agreement to allow relief for any taxes imposed in respect of such
remuneration by the first Contracting State.
Article 17
Directors’ fees
Directors’ fees and similar payments derived by a resident of a Contracting
State in that person’s capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
Article 18
Entertainers
1. Notwithstanding the provisions of Articles 14 and 15, income derived by
entertainers (such as theatrical, motion picture, radio or television artistes,
musicians, athletes and other sportspersons) from their personal activities as
such may be taxed in the Contracting State in which these activities are
exercised.
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 217
2. Where income in respect of the personal activities of an entertainer as such
accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to the income of a
sportsperson, being a resident of one or both of the Contracting States for the
purposes of its tax, derived as a member or associate of a recognised team
regularly playing in a league competition organised and conducted solely in
both Contracting States, except in respect of performance as a member or
associate of a national representative team of either Contracting State.
4. The term “associate”, as used in paragraph 3 includes any manager, coach,
trainer, runner, physician, physiotherapist or other provider of a like support
service.
Article 19
Pensions and annuities
1. Pensions (including government pensions) and annuities paid to a resident
of a Contracting State shall be taxable only in that State.
2. The term “annuity” means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
3. Any alimony or other maintenance payment arising in a Contracting State
and paid to a resident of the other Contracting State shall be taxable only in the
firstmentioned State.
Article 20
Government service
1. Remuneration (other than a pension or annuity) paid by the Government of
Australia, any Australian State, the Australian Capital Territory or the Northern
Territory, or any other Australian political subdivision or local authority to an
individual in respect of services rendered to any such government in the
discharge of governmental functions shall be exempt from New Zealand tax if
the individual is not a resident of New Zealand for the purposes of New Zealand
tax or is resident in New Zealand for the purposes of New Zealand tax solely for
the purpose of rendering those services.
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
218 International Tax Agreements Act 1953
2. Remuneration (other than a pension or annuity) paid by the Government of
New Zealand, a New Zealand political subdivision or local authority to an
individual in respect of services rendered to that Government, subdivision or
authority in the discharge of governmental functions shall be exempt from
Australian tax if the individual is not a resident of Australia for the purposes of
Australian tax or is resident in Australia for the purposes of Australian tax
solely for the purpose of rendering those services.
3. The provisions of paragraphs 1 and 2 shall not apply to remuneration in
respect of services rendered in connection with any trade or business carried on
by a government referred to in those paragraphs. In that case the provisions of
Article 15 or 17, as the case may be, shall apply.
Article 21
Students
Where a student, who is a resident of a Contracting State or who was a resident
of that State immediately before visiting the other Contracting State and who is
temporarily present in that other State solely for the purpose of the student’s
education, receives payments from sources outside that other State for the
purpose of the student’s maintenance or education, those payments shall be
exempt from tax in that other State.
Article 22
Other income
1. Items of income of a resident of a Contracting State, wherever arising, not
dealt with in the preceding Articles of this Agreement shall be taxable only in
that State except that if such income is derived from sources within the other
Contracting State, that income may also be taxed in that other State.
2. The provisions of paragraph 1 shall not apply to income, other than income
from real property as defined in paragraph 2 of Article 6, derived by a resident
of a Contracting State where that income is effectively connected with a
permanent establishment or fixed base situated in the other Contracting State. In
that case the provisions of Article 7 or 14, as the case may be, shall apply.
Article 23
Source of income
1. Income, profits or gains derived by a resident of a Contracting State which,
under any one or more of Articles 6 to 8, 10 to 20 and 22, may be taxed in the
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 219
other Contracting State shall, for the purposes of the law of that other
Contracting State relating to its tax, be deemed to be income from sources in
that other Contracting State.
2. Income, profits or gains derived by a resident of a Contracting State which,
under any one or more of Articles 6 to 8, 10 to 20 and 22, may be taxed in the
other Contracting State shall, for the purposes of Article 24 and of the law of
the firstmentioned Contracting State relating to its tax, be deemed to be income
from sources in the other Contracting State.
Article 24
Elimination of double taxation
1. Subject to the provisions of the law of New Zealand from time to time in
force which relate to the allowance of a credit against New Zealand income tax
of tax paid in a country outside New Zealand (which shall not affect the general
principle of this Article), Australian tax paid under the law of Australia and
consistently with this Agreement, whether directly or by deduction, in respect of
income derived by a resident of New Zealand from sources in Australia
(excluding, in the case of a dividend, tax paid in respect of the profits out of
which the dividend is paid) shall be allowed as a credit against New Zealand tax
payable in respect of that income.
2. Subject to the provisions of the law of Australia from time to time in force
which relate to the allowance of a credit against Australian income tax of tax
paid in a country outside Australia (which shall not affect the general principle
of this Article), New Zealand tax paid under the law of New Zealand and in
accordance with this Agreement, whether directly or by deduction, in respect of
income derived by a person who is a resident of Australia from sources in New
Zealand (excluding, in the case of a dividend, tax paid in respect of the profits
out of which the dividend is paid) shall be allowed as a credit against Australian
income tax payable in respect of that income.
Article 25
Mutual agreement procedure
1. Where a person who is a resident of a Contracting State considers that the
actions of one or both of the competent authorities of the Contracting States
result or will result for the person in taxation not in accordance with the
provisions of this Agreement, the person may, irrespective of the remedies
provided by the domestic law of the Contracting States, present a case to the
competent authority of the Contracting State of which the person is a resident.
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
220 International Tax Agreements Act 1953
The case must be presented within three years from the first notification of the
action which results in taxation not in accordance with the provisions of this
Agreement.
2. The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at an appropriate solution, to resolve
the case with the competent authority of the other Contracting State, with a
view to the avoidance of taxation not in accordance with the provisions of this
Agreement. The solution so reached shall be implemented notwithstanding any
time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall jointly endeavour
to resolve any difficulties or doubts arising as to the interpretation or application
of the provisions of this Agreement.
4. The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Agreement.
Article 26
Exchange of information
1. The competent authorities of the Contracting States shall exchange such
information as is necessary for carrying out the provisions of this Agreement or
of the domestic law of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation under that law is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
law of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, the enforcement or prosecution in respect of, or the determination of appeals
in relation to, the taxes to which this Agreement applies. Such persons or
authorities shall use the information only for such purposes.
2. In no case shall the provisions of paragraph 1 be construed so as to impose
on the competent authority of a Contracting State the obligation:
(a) to carry out administrative measures at variance with the law or
administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the law or in the
normal course of the administration of that or of the other Contracting
State; or
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 221
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
Article 27
Diplomatic agents and consular officers
Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents
or consular officers under the general rules of international law or under the
provisions of special international agreements.
Article 28
Entry into force
1. This Agreement shall enter into force on the last date on which the
Contracting States exchange notes through the diplomatic channel notifying
each other that the last of such things has been done as is necessary to give this
Agreement the force of law in New Zealand and in Australia, as the case may
be, and, in that event, this Agreement shall have effect:
(a) in New Zealand:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 April
next following the date on which the Agreement enters into
force;
(ii) in respect of other New Zealand tax, for any income year
beginning on or after 1 April next following the date on which
the Agreement enters into force;
(b) in Australia:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 April
next following the date on which the Agreement enters into
force;
(ii) in respect of fringe benefits tax, in relation to fringe benefits
provided on or after 1 April next following the date on which
the Agreement enters into force;
(iii) in respect of other Australian tax, in relation to income, profits
or gains of any year of income beginning on or after 1 July next
following the date on which the Agreement enters into force.
Schedule 4 Agreement between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
222 International Tax Agreements Act 1953
2. The Agreement between the Government of the Commonwealth of
Australia and the Government of New Zealand signed at Melbourne on
8 November 1972 shall terminate and cease to have effect in relation to any tax
in respect of which this Agreement comes into effect in accordance with
paragraph 1.
Article 29
Termination
This Agreement shall continue in effect indefinitely, but either Contracting
State may, on or before 30 June in any calendar year beginning after the
expiration of 5 years from the date of its entry into force, give to the other
Contracting State through the diplomatic channel written notice of termination
and, in that event, this Agreement shall cease to be effective:
(a) in New Zealand:
(i) in respect of withholding tax on income that is derived by a
non--resident, on or after 1 April in the calendar year next
following that in which the notice of termination is given;
(ii) in respect of other New Zealand tax, for any income year
beginning on or after 1 April in the calendar year next following
that in which the notice of termination is given;
(b) in Australia:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 April
in the calendar year next following that in which the notice of
termination is given;
(ii) in respect of fringe benefits tax, in relation to fringe benefits
provided on or after 1 April in the calendar year next following
that in which the notice of termination is given;
(iii) in respect of other Australian tax, in relation to income, profits
or gains of any year of income beginning on or after 1 July in
the calendar year next following that in which the notice of
termination is given.
Agreement between the Government of Australia and the Government of New Zealand
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income Schedule 4
International Tax Agreements Act 1953 223
IN WITNESS WHEREOF the undersigned, duly authorised thereto by their
respective Governments, have signed this Agreement.
DONE in duplicate at MELBOURNE this 27th day of JANUARY, One
thousand nine hundred and ninety--five in the English language.
FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF NEW
ZEALAND:
RALPH WILLIS BILL BIRCH
Schedule 4A The New Zealand protocol
224 International Tax Agreements Act 1953
Schedule 4A—The New Zealand protocol Note: See section 6C
PROTOCOL
AMENDING THE AGREEMENT BETWEEN
THE GOVERNMENT OF AUSTRALIA
AND
THE GOVERNMENT OF NEW ZEALAND
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT TO
TAXES ON INCOME
Melbourne, 15 November 2005
The New Zealand protocol Schedule 4A
International Tax Agreements Act 1953 225
PROTOCOL AMENDING THE AGREEMENT BETWEEN THE
GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF NEW
ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON
INCOME.
The Government of Australia and the Government of New Zealand,
Desiring to amend the Agreement between the Government of New Zealand
and the Government of Australia for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income signed at
Melbourne on the 27th day of January 1995 (in this Protocol referred to as “the
Agreement”),
Have agreed as follows:
ARTICLE 1
Article 2 of the Agreement is amended by inserting:
“3. Notwithstanding paragraphs 1 and 2, the taxes to which Articles 26 and
27 shall apply are:
a) in the case of New Zealand, taxes of every kind and description
imposed under its tax laws; and
b) in the case of Australia, taxes of every kind and description
imposed under the federal tax laws administered by the
Commissioner of Taxation.”
Schedule 4A The New Zealand protocol
226 International Tax Agreements Act 1953
ARTICLE 2
Article 26 of the Agreement is omitted and the following Article is substituted:
“Article 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information as is forseeably relevant for carrying out the provisions of this
Agreement or to the administration or enforcement of the domestic law
concerning taxes referred to in Article 2, insofar as the taxation thereunder is
not contrary to the Agreement. The exchange of information is not restricted by
Article 1.
2. Any information received under paragraph 1 by a Contracting State
shall be treated as secret in the same manner as information obtained under the
domestic law of that State and shall be disclosed only to persons or authorities
(including courts and administrative bodies) concerned with the assessment or
collection of, the enforcement or prosecution in respect of, the determination of
appeals in relation to, the taxes referred to in paragraph 1, or the oversight of the
above. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as
to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the law
and administrative practice of that or of the other Contracting
State;
b) to supply information which is not obtainable by the competent
authority under the law or in the normal course of the
administration of that or of the other Contracting State;
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process,
or information, the disclosure of which would be contrary to
public policy (ordre public).
The New Zealand protocol Schedule 4A
International Tax Agreements Act 1953 227
4. If information is requested by a Contracting State in accordance with
this Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other State may
not need such information for its own tax purposes. The obligation contained in
the preceding sentence is subject to the limitations of paragraph 3 but in no case
shall such limitations be construed to permit a Contracting State to decline to
supply information solely because it has no domestic interest in such
information.
5. In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the
information is held by a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it relates to ownership
interests in a person.”
ARTICLE 3
Article 27, Article 28 and Article 29 of the Agreement are renumbered as
Article 28, Article 29 and Article 30 respectively.
ARTICLE 4
The Agreement is amended by inserting:
“Article 27
ASSISTANCE IN COLLECTION OF TAXES
1. The Contracting States shall lend assistance to each other in the
collection of revenue claims. This assistance is not restricted by Article 1. The
competent authorities of the Contracting States may by mutual agreement settle
the mode of application of this Article.
2. The term “revenue claim” as used in this Article means an amount
owed in respect of taxes referred to in Article 2, insofar as the taxation
thereunder is not contrary to this Agreement or any other instrument to which
the Contracting States are parties, as well as interest, administrative penalties
and costs of collection or conservancy related to such amount.
Schedule 4A The New Zealand protocol
228 International Tax Agreements Act 1953
3. When a revenue claim of a Contracting State is enforceable under the
law of that State and is owed by a person who, at that time, cannot, under the
law of that State, prevent its collection, that revenue claim shall, at the request
of the competent authority of that State, be accepted for purposes of collection
by the competent authority of the other Contracting State. That revenue claim
shall be collected by that other State in accordance with the provisions of its law
applicable to the enforcement and collection of its own taxes as if the revenue
claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of
which that State may, under its law, take measures of conservancy with a view
to ensure its collection, that revenue claim shall, at the request of the competent
authority of that State, be accepted for purposes of taking measures of
conservancy by the competent authority of the other Contracting State. That
other State shall take measures of conservancy in respect of that revenue claim
in accordance with the provisions of its law as if the revenue claim were a
revenue claim of that other State even if, at the time when such measures are
applied, the revenue claim is not enforceable in the first-mentioned State or is
owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim
accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in
that State, be subject to the time limits or accorded any priority applicable to a
revenue claim under the law of that State by reason of its nature as such. In
addition, a revenue claim accepted by a Contracting State for the purposes of
paragraph 3 or 4 shall not, in that State, have any priority applicable to that
revenue claim under the law of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a
revenue claim of a Contracting State shall not be brought before the courts or
administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State
under paragraph 3 or 4 and before the other Contracting State has collected and
remitted the relevant revenue claim to the first-mentioned State, the relevant
revenue claim ceases to be
a) in the case of a request under paragraph 3, a revenue claim of
the first-mentioned State that is enforceable under the law of
that State and is owed by a person who, at that time, cannot,
under the law of that State, prevent its collection, or
b) in the case of a request under paragraph 4, a revenue claim of
the first-mentioned State in respect of which that State may,
The New Zealand protocol Schedule 4A
International Tax Agreements Act 1953 229
under its law, take measures of conservancy with a view to
ensure its collection
the competent authority of the first-mentioned State shall promptly notify the
competent authority of the other State of that fact and, at the option of the other
State, the first-mentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to
impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the law
and administrative practice of that or of the other Contracting
State;
b) to carry out measures which would be contrary to public policy
(ordre public);
c) to provide assistance if the other Contracting State has not
pursued all reasonable measures of collection or conservancy,
as the case may be, available under its law or administrative
practice;
d) to provide assistance in those cases where the administrative
burden for that State is clearly disproportionate to the benefit to
be derived by the other Contracting State;
e) to provide assistance if that State considers that the taxes with
respect to which assistance is requested are imposed contrary to
generally accepted taxation principles.”
ARTICLE 5
With reference to Articles 10, 11 and 12, if in any future Agreement with any
other State, New Zealand should limit its taxation at source of dividends,
interest or royalties to a rate lower than the one provided for in any of those
Articles, the Government of New Zealand shall without undue delay inform the
Government of Australia and shall enter into negotiations with the Government
of Australia with a view to providing the same treatment.
Schedule 4A The New Zealand protocol
230 International Tax Agreements Act 1953
ARTICLE 6
1. The Government of New Zealand and the Government of Australia
shall notify each other in writing through the diplomatic channel of the
completion of their domestic requirements for the entry into force of this
Protocol.
2. The Protocol, which shall form an integral part of the Agreement, shall
enter into force on the date of the last notification, and thereupon the Protocol
shall have effect.
3. Notwithstanding paragraph 2, Article 4 shall have effect from the date
agreed in a subsequent exchange of notes through the diplomatic channel.
In WITNESS WHEREOF the undersigned, being duly authorised thereto by
their respective Governments, have signed this Protocol.
DONE at Melbourne in duplicate this fifteenth day of November two thousand
and five in the English language.
FOR THE GOVERNMENT OF
AUSTRALIA:
Peter Costello
FOR THE GOVERNMENT OF
NEW ZEALAND:
Kate Lackey
[Signatures omitted]
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 231
Schedule 5—Agreement between the
Government of the Commonwealth of
Australia and the Government of the
Republic of Singapore for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income Section 3
The Government of the Commonwealth of Australia and the Government of the
Republic of Singapore,
Desiring to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
1. The existing taxes to which this Agreement applies are—
(a) in Australia:
the Commonwealth income tax, including the additional tax upon
the undistributed amount of the distributable income of a private
company;
(b) in Singapore:
the income tax.
2. This Agreement applies also to any identical or substantially similar
taxes which are imposed subsequent to the date of signature of this Agreement
by Singapore or the Commonwealth in addition to, or in place of, the existing
taxes to which this Agreement applies.
ARTICLE 2
1. In this Agreement, unless the context otherwise requires—
(a) the term “the Commonwealth” means the Commonwealth of Australia;
Schedule 5 Agreement between the Government of the Commonwealth of Australia
and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
232 International Tax Agreements Act 1953
(b) the term “Australia” means the whole of the Commonwealth and
includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) any territory which, subsequent to the date of signature of this
Agreement, becomes a Territory of the Commonwealth; and
(vi) any area outside the territorial limits of the Commonwealth and
the said Territories in respect of which there is for the time
being in force a law of the Commonwealth or of a State or part
of the Commonwealth or of a Territory aforesaid dealing with
the exploitation of any of the natural resources of the sea--bed
and sub--soil of the continental shelf;
(c) the term “Singapore” means the Republic of Singapore;
(d) the terms “Contracting State”, “one of the Contracting States”, and
“other Contracting State” mean Australia or Singapore, as the context
requires;
(e) the terms “Australian tax” and “Singapore tax” mean tax imposed by
the Commonwealth and tax imposed by Singapore respectively, being
tax to which this Agreement applies by virtue of Article 1;
(f) the term “company” includes any body or association which is treated
as a company for tax purposes;
(g) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorised representative and in the
case of Singapore, the Minister for Finance or his authorised
representative;
(h) the term “enterprise” includes undertaking;
(i) the term “Malaysian company” means a company which, for the
purposes of income tax in Malaysia, is resident in Malaysia;
(j) the term “person” includes an individual, a company and any body of
persons, corporate or not corporate;
(k) the terms “profits of a Singapore enterprise” and “profits of an
Australian enterprise” mean profits of a Singapore enterprise or profits
of an Australian enterprise respectively, but do not include—
(i) dividends, interest (as defined in Article 9), or royalties
(including those payments which come within the meaning of
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 233
“royalties” for the purposes of Article 10) other than such
dividends, interest or royalties that are effectively connected
with a trade or business carried on through a permanent
establishment in one of the Contracting States by an enterprise
of the other Contracting State;
(ii) rent;
(iii) remuneration or other income for personal (including
professional) services;
(iv) profits from the operation of ships or aircraft;
(v) payments to the extent to which they are received as
consideration for the use of, or the right to use, motion picture
films, literary, dramatic, musical or artistic copyrights, films or
video tapes for use in connection with television or tapes for use
in connection with radio broadcasting; or
(vi) payments to the extent to which they are received as
consideration for the supply of scientific, technical, industrial or
commercial knowledge, information or assistance (other than
those payments which come within the meaning of “royalties”
for the purposes of Article 10);
(l) the term “resident in Singapore” has the meaning which it has under the
laws of Singapore relating to Singapore tax; and the term “resident of
Australia” has the meaning which it has under the laws of the
Commonwealth relating to Australian tax;
(m) the term “tax” means Australian tax or Singapore tax, as the context
requires;
(n) words in singular include the plural and words in the plural include the
singular.
2. The terms “Australian tax” and “Singapore tax” do not include any
amount which represents a penalty or interest imposed under the law in force in
Australia or Singapore relating to the taxes to which this Agreement applies.
3. Where under this Agreement income is relieved from tax in one of the
Contracting States and, under the law in force in the other Contracting State, a
person, in respect of the said income, is subject to tax by reference to the
amount thereof which is remitted to or received in that other Contracting State
and not by reference to the full amount thereof, then the relief to be allowed
under this Agreement in the first--mentioned Contracting State shall apply only
to so much of the income as is remitted to or received in the other Contracting
State.
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and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
234 International Tax Agreements Act 1953
4. Unless the context otherwise requires, any term of this Agreement not
otherwise defined shall have, in a Contracting State, the meaning which it has
under the laws in that Contracting State relating to the taxes to which this
Agreement applies.
ARTICLE 3
1. For the purposes of this Agreement—
(a) the term Australian company means any company which being a
resident of Australia—
(i) is incorporated in Australia and has its centre of administrative
or practical management in Australia whether or not any person
outside Australia exercises or is capable of exercising any
overriding control or direction of the company or of its policy
or affairs in any way whatsoever; or
(ii) is managed and controlled in Australia;
(b) the term Singapore company means any company which is managed
and controlled in Singapore and which is not an Australian company;
(c) the term Singapore resident means any Singapore company and any
person (other than a company) who is resident in Singapore; and
(d) the term Australian resident means any Australian company and any
other person (other than a Singapore company) who is a resident of
Australia.
2. Where by reason of the provisions of paragraph 1 of this Article an
individual is both a Singapore resident and an Australian resident—
(a) he shall be treated solely as a Singapore resident—
(i) if he has a permanent home available to him in Singapore and
has not a permanent home available to him in Australia;
(ii) if sub--paragraph (a) (i) of this paragraph is not applicable but
he has an habitual abode in Singapore and has not an habitual
abode in Australia;
(iii) if neither sub--paragraph (a) (i) nor sub--paragraph (a) (ii) of
this paragraph is applicable but the Contracting State with
which his personal and economic relations are closest is
Singapore;
(b) he shall be treated solely as an Australian resident—
(i) if he has a permanent home available to him in Australia and
has not a permanent home available to him in Singapore;
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Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 235
(ii) if sub--paragraph (b) (i) of this paragraph is not applicable but
he has an habitual abode in Australia and has not an habitual
abode in Singapore;
(iii) if neither sub--paragraph (b) (i) nor sub--paragraph (b) (ii) of
this paragraph is applicable but the Contracting State with
which his personal and economic relations are closest is
Australia.
3. Where by reason of the provisions of paragraph 1 of this Article a
person other than an individual is both a Singapore resident and an Australian
resident—
(a) it shall be treated solely as a Singapore resident if it is managed and
controlled in Singapore;
(b) it shall be treated solely as an Australian resident if it is managed and
controlled in Australia.
4. In this Agreement the term “resident of one of the Contracting States”
and the term “resident of the other Contracting State” mean a person who is a
Singapore resident or a person who is an Australian resident as the context
requires.
5. In this Agreement, the term “Singapore enterprise” and the term
“Australian enterprise” mean an industrial or commercial enterprise (including a
mining, agricultural, pastoral, forestry or plantation enterprise) carried on by a
Singapore resident or by an Australian resident respectively, and the term
“enterprise of one of the Contracting States” and the term “enterprise of the
other Contracting State” mean an Australian enterprise or a Singapore
enterprise, as the context requires.
ARTICLE 4
1. For the purposes of this Agreement the term “permanent establishment”
in relation to an enterprise means a fixed place of trade or business in which the
trade or business of the enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes—
(a) a management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
Schedule 5 Agreement between the Government of the Commonwealth of Australia
and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
236 International Tax Agreements Act 1953
(g) an agricultural, pastoral, forestry or plantation property;
(h) a building site or a construction, installation or assembly project which
exists for more than six months.
3. The term “permanent establishment” shall not be deemed to include—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of trade or business solely for the
purpose of purchasing goods or merchandise, or for collecting
information, for the enterprise; or
(e) the maintenance of a fixed place of trade or business solely for the
purpose of activities which have a preparatory or auxiliary character for
the enterprise, such as advertising or scientific research.
4. An enterprise of one of the Contracting States shall be deemed to have a
permanent establishment in the other Contracting State and to carry on trade or
business through that permanent establishment if—
(a) it carries on supervisory activities in that other Contracting State for
more than six months in connection with a building site, or a
construction, installation or assembly project which is being
undertaken, in that other Contracting State; or
(b) substantial equipment is in that other Contracting State being used or
installed by, for or under contract with the enterprise.
5. A person acting in one of the Contracting States on behalf of an
enterprise of the other Contracting State (other than an agent of independent
status to whom paragraph 6 of this Article applies) shall be deemed to be a
permanent establishment of that enterprise in the first--mentioned Contracting
State—
(a) if he has, and habitually exercises in that first--mentioned Contracting
State, an authority to conclude contracts on behalf of the enterprise and
his activities are not limited solely to the purchase of goods or
merchandise for the enterprise;
(b) if there is maintained in that first--mentioned Contracting State a stock
of goods or merchandise belonging to the enterprise from which he
habitually fills orders on behalf of the enterprise; or
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Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 237
(c) if in so acting he manufactures or processes in that first--mentioned
Contracting State any goods for the enterprise.
6. An enterprise of one of the Contracting States shall not be deemed to
have a permanent establishment in the other Contracting State merely because it
carries on trade or business in that other Contracting State through a broker, a
general commission agent or any other agent of independent status, where such
a person is acting in the ordinary course of his business as a broker, a general
commission agent or other agent of independent status.
7. The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on trade or business in that other Contracting
State (whether through a permanent establishment or otherwise), shall not of
itself constitute either company a permanent establishment of the other.
8. Where an enterprise of one of the Contracting States sells goods
manufactured, assembled, processed, packed or distributed in the other
Contracting State by an industrial or commercial enterprise for, or at, or to the
order of, that first--mentioned enterprise and—
(a) either enterprise participates directly or indirectly in the management,
control or capital of the other enterprise; or
(b) the same persons participate directly or indirectly in the management,
control or capital of both enterprises,
then, for the purposes of this Agreement that first--mentioned enterprise shall be
deemed to have a permanent establishment in the other Contracting State and to
carry on trade or business in the other Contracting State through that permanent
establishment
ARTICLE 5
1. Profits of an Australian enterprise shall not be subject to Singapore tax
unless the enterprise carries on trade or business in Singapore through a
permanent establishment in Singapore. If it carries on trade or business as
aforesaid, Singapore tax may be imposed on those profits but only on so much
of them as is attributable to that permanent establishment.
2. Profits of a Singapore enterprise shall not be subject to Australian tax
unless the enterprise carries on trade or business in Australia through a
permanent establishment in Australia. If it carries on trade or business as
aforesaid, Australian tax may be imposed on those profits but only on so much
of them as is attributable to that permanent establishment.
Schedule 5 Agreement between the Government of the Commonwealth of Australia
and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
238 International Tax Agreements Act 1953
3. Where an enterprise of one of the Contracting States carries on trade or
business in the other Contracting State through a permanent establishment
situated therein, there shall be attributed to that permanent establishment the
profits which it might be expected to make in that other Contracting State if it
were a distinct and separate enterprise engaged in the same or similar activities
and dealing wholly independently with the enterprise of which it is a permanent
establishment or with an independent enterprise; and the profits so attributed
shall be deemed to be income derived from sources in that other Contracting
State and shall be taxed accordingly.
4. In determining the profits attributable to a permanent establishment in
one of the Contracting States, there shall be allowed as deductions all expenses
of the enterprise, including executive and general administrative expenses,
which would be deductible if the permanent establishment were an independent
enterprise and which are reasonably allocable to the permanent establishment,
whether incurred in the Contracting State in which the permanent establishment
is situated or elsewhere, but where goods manufactured out of that Contracting
State by the enterprise are imported into that Contracting State, and the goods
are, either before or after importation, sold in that Contracting State by the
enterprise, the profits of the enterprise taxable in that Contracting State may be
determined by deducting from the sale price of the goods the amount for which,
at the date the goods were shipped to that Contracting State, goods of the same
nature and quality could be purchased by a wholesale buyer in the country of
manufacture, and the expenses incurred in transporting them to and selling them
in that Contracting State.
5. If the information available to the competent authority of the
Contracting State concerned is inadequate to determine the profits to be
attributed to the permanent establishment, nothing in this Article shall affect the
application of any law of that Contracting State in relation to the liability of the
enterprise to pay tax, in respect of the permanent establishment, on an amount
determined by the exercise of a discretion or the making of an estimate by the
competent authority of that Contracting State. Provided that the discretion shall
be exercised or the estimate shall be made, so far as the information available to
the competent authority permits, in accordance with the principles stated in this
Article.
6. Profits shall not be attributed to a permanent establishment by reason of
the mere purchase or mere purchase and transportation by that permanent
establishment of goods or merchandise for the enterprise.
7. Nothing in this Article shall apply to either Contracting State to prevent
the operation in the Contracting State of any provisions of its law relating
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 239
specifically to the taxation of any person who carries on a business of any form
of insurance or to the taxation of a non--resident who derives income under any
contract or agreement with any person in relation to the carrying on in the
Contracting State by that person of any form of film business controlled abroad.
Provided that if the law in force in either Contracting State at the date of
signature of this Agreement relating to the taxation of such persons is varied
(otherwise than in minor respects so as not to affect its general character), the
Contracting Governments shall consult with each other with a view to agreeing
to such amendment of this paragraph as may be necessary.
ARTICLE 6
1. Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and, in either case, conditions are operative between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between distinct and separate enterprises dealing wholly
independently with one another, then, if by reason of those circumstances
profits which might be expected to accrue to one of the enterprises do not
accrue to that enterprise, there may be included in the profits of that enterprise
the profits which might have been expected so to accrue to it if it were a distinct
and separate enterprise engaged in the same or similar activities and its dealings
with the other enterprise were dealings wholly independently with that
enterprise or an independent enterprise.
2. Profits included in the profits of an enterprise of one of the Contracting
States under paragraph 1 of this Article shall be deemed to be income of that
enterprise derived from sources in that Contracting State and shall be taxed
accordingly.
3. If the information available to the competent authority of a Contracting
State is inadequate to determine, for the purposes of paragraph 1 of this Article,
the profits which might have been expected to accrue to an enterprise, nothing
in this Article shall affect the application of any law of that Contracting State in
relation to the liability of that enterprise to pay tax on an amount determined by
the exercise of a discretion or the making of an estimate by the competent
Schedule 5 Agreement between the Government of the Commonwealth of Australia
and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
240 International Tax Agreements Act 1953
authority of that Contracting State. Provided that the discretion shall be
exercised or the estimate shall be made, so far as the information available to
the competent authority permits, in accordance with the principles stated in this
Article.
ARTICLE 7
1. The tax payable in a Contracting State by a resident of the other
Contracting State in respect of profits from the operation of ships, other than
profits from voyages or operations of ships confined solely to places in the
first--mentioned Contracting State, shall not exceed half the amount which
would be payable in respect of those profits but for this paragraph.
2. A resident of one of the Contracting States shall be exempt from tax in
the other Contracting State on profits from the operation of aircraft, other than
profits from flights of aircraft confined solely to places in the other Contracting
State.
3. The relief provided in paragraphs 1 and 2 of this Article shall apply in
relation to the share of the profits from the operation of ships or aircraft derived
by a resident of one of the Contracting States through participation in a pool
service, in a joint transport operating organisation or in an international
operating agency but only to the extent to which the share of the profits is not
attributable to profits from voyages, flights or operations confined solely to
places in the other Contracting State.
4. For the purpose of this Article profits derived from the carriage of
passengers, livestock, mails or goods shipped in one of the Contracting States
for discharge at another place in that Contracting State or, in the case of
Australia, at a place in the Territory of Papua or the Trust Territory of New
Guinea are profits from a voyage or flight of a ship or aircraft confined solely to
places in that Contracting State.
ARTICLE 8
1. The Australian tax on dividends, being dividends paid by a company
which is a resident of Australia, derived by a Singapore resident who is
beneficially entitled to the dividends, shall not exceed 15 per centum of the
gross amount of the dividends.
2. Subject to the provisions of this Article dividends paid by a company
which is resident in Singapore, and dividends paid by a Malaysian company out
of profits derived from sources in Singapore, being dividends derived by an
Australian resident who is beneficially entitled to the dividends, shall be exempt
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 241
from any tax in Singapore which may be chargeable on dividends in addition to
the tax chargeable in respect of the profits of the company.
3. Nothing in the preceding paragraph shall affect the provisions of
Singapore law under which the tax in respect of a dividend paid by a company
which is resident in Singapore, or by a Malaysian company out of profits
derived from sources in Singapore, from which Singapore tax has been, or has
been deemed to be, deducted may be adjusted by reference to the rate of tax
appropriate to the Singapore year of assessment immediately following that in
which the dividend was paid.
4. If Singapore, subsequent to the signing of this Agreement, imposes a
tax on dividends paid by a company which is resident in Singapore or by a
Malaysian company out of profits derived from sources in Singapore, which is
in addition to the tax chargeable in respect of the profits of the company, such
tax may be charged but the tax so charged on such dividends derived by an
Australian resident who is beneficially entitled to the dividends shall not exceed
15 per centum of the gross amount of the dividends.
5. Paragraphs 1, 2 and 4 of this Article shall not apply if the resident of
one of the Contracting States who is beneficially entitled to the dividends has in
the other Contracting State a permanent establishment and the holding giving
rise to the dividends is effectively connected with a trade or business carried on
through that permanent establishment.
6. Dividends paid by a company which is a resident of one of the
Contracting States, being dividends derived by a person who is beneficially
entitled to the dividends and who is not a resident of the other Contracting State,
shall be exempt from tax in that other Contracting State. This paragraph shall
not apply in relation to a Singapore company which is also a resident of
Australia or any Australian company which is also resident in Singapore.
ARTICLE 9
1. The Australian tax on interest derived by a Singapore resident who is
beneficially entitled to the interest shall not exceed 10 per centum of the gross
amount of the interest.
2. The Singapore tax on interest derived by an Australian resident who is
beneficially entitled to the interest shall not exceed 10 per centum of the gross
amount of the interest.
3. Paragraphs 1 and 2 of this Article shall not apply if the resident of one
of the Contracting States who is beneficially entitled to the interest has in the
other Contracting State a permanent establishment and the indebtedness giving
Schedule 5 Agreement between the Government of the Commonwealth of Australia
and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
242 International Tax Agreements Act 1953
rise to the interest is effectively connected with a trade or business carried on
through that permanent establishment.
4. Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest or between both of them and some
other person, the amount of the interest paid exceeds the amount which might
have been expected to have been agreed upon in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount.
5. In this Article the term “interest” means interest, and amounts in the
nature of interest, on bonds, securities, debentures or on any other form of
indebtedness.
ARTICLE 10
1. The Australian tax on royalties derived by a Singapore resident who is
beneficially entitled to the royalties shall not exceed 10 per centum of the gross
amount of the royalties.
2. The Singapore tax on royalties derived by an Australian resident who is
beneficially entitled to the royalties shall not exceed 10 per centum of the gross
amount of the royalties.
3. In this Article royalties means payments of any kind to the extent to
which they are received as consideration for—
(a) the use of, or the right to use, any—
(i) copyright (other than a literary, dramatic, musical or artistic
copyright), patent, design or model, plan, secret formula or
process, trademark, or other like property or right; or
(ii) industrial, commercial or scientific equipment; or
(b) the supply of information concerning industrial, commercial or
scientific experience,
but does not include royalties or other payments in respect of the operation of
mines or quarries or of the exploitation of natural resources or payments to the
extent to which they are received as consideration for the use of, or the right to
use, motion picture films, tapes for use in connection with radio broadcasting or
films or video tapes for use in connection with television.
4. Paragraphs 1 and 2 of this Article shall not apply if the resident of one
of the Contracting States who is beneficially entitled to the royalties has in the
other Contracting State a permanent establishment and the information, right or
property giving rise to the royalties is effectively connected with a trade or
business carried on through that permanent establishment.
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 243
5. Where, owing to a special relationship between the payer and the
person who is beneficially entitled to the royalties or between both of them and
some other person, the amount of the royalties paid exceeds the amount which
might have been expected to have been agreed upon in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount.
ARTICLE 11
1. Subject to this Article and to Articles 12, 13 and 14 remuneration or
other income derived by an individual who is a resident of one of the
Contracting States in respect of personal (including professional) services shall
be subject to tax only in that Contracting State unless the services are performed
or exercised in the other Contracting State. If the services are so performed or
exercised such remuneration or other income as is derived therefrom shall be
deemed to have a source in, and may be taxed in, that other Contracting State.
2. In relation to remuneration of a director of a company derived from the
company, the provisions of this Article and of Article 12 shall apply as if the
remuneration were remuneration in respect of personal services. Director’s fees
and similar payments derived by a resident of one of the Contracting States in
his capacity as a member of the board of directors of a company which is a
resident of the other Contracting State shall be deemed to be derived in respect
of personal services performed in, and may be taxed in, that other Contracting
State.
3. An individual who is a resident of one of the Contracting States shall be
exempt from tax in the other Contracting State on remuneration from an
employment exercised on ships or aircraft in international traffic.
ARTICLE 12
1. Remuneration or other income derived by an individual who is a
resident of one of the Contracting States in respect of personal (including
professional) services performed or exercised in the other Contracting State
shall be exempt from tax in the other Contracting State if—
(a) the recipient is present in the other Contracting State for a period or
periods not exceeding in the aggregate 183 days in the year of income
or in the basis period for the year of assessment as the case may be of
that other Contracting State;
(b) the services are performed or exercised for or on behalf of a person who
is a resident of the first--mentioned Contracting State; and
Schedule 5 Agreement between the Government of the Commonwealth of Australia
and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
244 International Tax Agreements Act 1953
(c) the remuneration or other income is not deductible in determining the
profits for tax purposes in the other Contracting State of a permanent
establishment in that other Contracting State of that person.
2. Paragraph 1 of this Article shall not apply to remuneration or other
income derived by public entertainers (such as stage, motion picture, radio or
television artistes, musicians and athletes) from their personal activities as such.
3. Notwithstanding anything contained in this Agreement, where an
enterprise of one of the Contracting States derives profits arising from, or in
relation to, contracts or obligations to provide in the other Contracting State
services of public entertainers referred to in paragraph 2 of this Article, the
profits may be taxed in the other Contracting State and shall be deemed to have
a source in that other Contracting State, except where the enterprise is, in
connection with the provisions of these services, substantially supported from
the public funds of a Government of the first--mentioned Contracting State, in
which case the profits shall be exempt from tax in the other Contracting State.
4. For the purposes of paragraph 3 of this Article, “a Government of the
first--mentioned Contracting State” means, in the case of Singapore, the
Government of Singapore and, in the case of Australia, the Government of the
Commonwealth or of any State of the Commonwealth.
ARTICLE 13
1. A pension or an annuity, derived from sources within one of the
Contracting States by an individual who is a resident of the other Contracting
State, shall be exempt from tax in the first--mentioned Contracting State.
2. The term “annuity” means a stated sum payable periodically at stated
times, during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
3. This Article shall not apply to a pension paid to an individual by the
Government of the Commonwealth or of any State of the Commonwealth or the
Government of Singapore in respect of services rendered in the discharge of
governmental functions.
ARTICLE 14
1. Remuneration (other than pensions) paid by the Government of the
Commonwealth or of any State of the Commonwealth to any individual for
services rendered to that Government in the discharge of governmental
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 245
functions shall be exempt from Singapore tax, except where the individual is
resident in Singapore and is not an Australian citizen.
2. Remuneration (other than pensions) paid by the Government of
Singapore to any individual for services rendered to that Government in the
discharge of governmental functions shall be exempt from Australian tax,
except where the individual is a resident of Australia and is not a Singapore
resident.
3. This Article shall not apply to any remuneration in respect of services
rendered in connection with any trade or business carried on by a Government
for purposes of profit.
ARTICLE 15
A student or trainee who is, or was immediately before visiting one of the
Contracting States, a resident of the other Contracting State and is present in the
first--mentioned Contracting State solely for the purpose of his education or
training shall not be taxed in that first--mentioned Contracting State on
payments which he receives for the purpose of his maintenance, education or
training provided that such payments are made to him from outside that
first--mentioned Contracting State.
ARTICLE 16
1. This Article shall apply to a person who is a resident of Australia and is
also resident in Singapore.
2. Where such a person is treated for the purposes of this Agreement
solely as a resident of one of the Contracting States he shall be exempt in the
other Contracting State from tax on any income in respect of which he is subject
to tax in the first--mentioned Contracting State if the income is derived—
(a) from sources in the first--mentioned Contracting State; or
(b) from sources outside both Contracting States.
ARTICLE 17
1. For the purposes of this Agreement—
(a) (i) dividends paid by a company which is a resident of Australia
shall be treated in Singapore as income from sources in
Australia;
(ii) dividends paid by a company which is resident in Singapore
shall be treated in Australia as income from sources in
Singapore;
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and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
246 International Tax Agreements Act 1953
(b) dividends paid by a Malaysian company out of profits derived from
sources in Singapore shall be treated in Australia as income from
sources in Singapore;
(c) profits derived by a resident of one of the Contracting States from the
carriage by ships or aircraft of passengers, livestock, mails or goods
shipped in the other Contracting State, or from the operations of ships
or aircraft in that other Contracting State, shall be treated as having a
source in that other Contracting State;
(d) an amount which is included, for the purposes of tax in one of the
Contracting States, in the taxable or chargeable income of a person who
is a resident of the other Contracting State, and which is so included
under any provision of the law of the first--mentioned Contracting State
for the time being in force regarding taxation of income of a business of
any form of insurance or of income derived under a contract or
agreement with a person who carries on in the first--mentioned
Contracting State any form of film business controlled abroad shall be
treated as having a source in that first--mentioned Contracting State;
(e) pensions paid by the Government of the Commonwealth or of any State
of the Commonwealth, or the Government of Singapore, in respect of
services rendered in the discharge of governmental functions shall be
treated as having a source in Australia or Singapore respectively.
2. Interest (as defined in Article 9) derived by a resident of one of the
Contracting States shall be treated as having a source in the other Contracting
State where the amount—
(i) is paid by a Government of the other Contracting State or by a resident
of the other Contracting State and is not incurred by the payer in
carrying on a trade or business through a permanent establishment of
the payer in a country outside the other Contracting State; or
(ii) is paid by a person who is not a resident of the other Contracting State
and is incurred by the payer in carrying on trade or business through a
permanent establishment of the payer in the other Contracting State.
3. For the purposes of paragraph 2 of this Article “a Government of the
other Contracting State” means, in relation to Singapore, the Government of
Singapore or an authority of Singapore and, in relation to Australia, means the
Government of the Commonwealth or of a State of the Commonwealth or an
authority of the Commonwealth or of such a State.
4. Royalties (as defined in Article 10) and payments referred to in
subparagraph (k) (v) and subparagraph (k) (vi) of paragraph 1 of Article 2 shall
Agreement between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 247
be treated as derived from sources within the Contracting State in which the
knowledge, assistance, information, right or property giving rise to the royalties
or payments is used.
5. Royalties in respect of the operation of mines, quarries or other places
of extraction of natural resources shall be treated as derived from sources within
the Contracting State in which such mines, quarries or other places of natural
resources are situated.
ARTICLE 18
1. Subject to any provisions of the law of the Commonwealth which may
from time to time be in force and which relate to the allowance of a credit
against Australian tax of tax paid in a country outside Australia (which shall not
affect the general principle hereof), Singapore tax paid, whether directly or by
deduction, in respect of income derived by a resident of Australia from sources
within Singapore (excluding in the case of a dividend, tax paid in respect of the
profits out of which the dividend is paid) shall be allowed as a credit against
Australian tax payable in respect of that income.
2. A company that is a resident of Australia and which beneficially owns
at least 10 per centum of the paid--up share capital in a company that is resident
in Singapore shall, in accordance with those provisions in the taxation law of
the Commonwealth in existence at the date of signature of this Agreement, be
entitled to a rebate in its assessment at the average rate of tax payable by the
company in respect of dividends paid by the second--mentioned company that
are included in its taxable income.
3. For the purposes of paragraph 1 of this Article and of the income tax
law of the Commonwealth—
(a) a resident of Australia deriving income from sources in Singapore
consisting of interest or royalties to which Article 9 or Article 10
applies, being income in respect of which an exemption from or
reduction of tax has been granted under Parts V and VI of the Economic
Expansion Incentives (Relief from Income Tax) Act, 1967, of
Singapore or any other provisions which may subsequently be enacted
granting an exemption from or reduction of tax which are agreed by the
Contracting Governments in Notes exchanged for these purposes to be
of a substantially similar character, shall be deemed to have paid
Singapore tax in an amount, or the Singapore tax paid shall be deemed
to have been increased by an amount, equal to the amount by which the
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and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
248 International Tax Agreements Act 1953
Singapore tax that otherwise would have been payable is reduced by the
exemption or reduction granted; and
(b) the amount of the said interest or royalties shall be deemed to be the
amount that would have been the amount of the interest or royalties if
no Singapore tax had been paid, increased by the amount by which the
tax that otherwise would have been payable is reduced by the said
exemption or reduction.
4. Paragraph 3 of this Article shall not apply in relation to income derived
in any year of income after the year of income that ends on 30th June, 1974 or
on any later date that may be agreed by the Contracting Governments in Notes
exchanged for this purpose.
5. Subject to the provisions of the laws of Singapore regarding the
allowance as a credit against Singapore tax of tax payable in any country other
than Singapore, Australian tax payable, whether directly or by deduction, in
respect of income from sources within Australia shall be allowed as a credit
against Singapore tax payable in respect of that income. Where such income is a
dividend paid by a company which is an Australian resident to a company
which is a Singapore resident and which owns directly or indirectly not less
than 10 per centum of the paid--up share capital in the first--mentioned
company the credit shall take into account (in addition to any Australian tax on
dividends) the Australian tax paid by the first--mentioned company in respect of
its profits.
6. Where profits, on which an enterprise of one of the Contracting States
has been charged to tax in that Contracting State, are also included, by virtue of
this Agreement, in the profits of an enterprise of the other Contracting State as
being profits which, because of the circumstances existing between the two
enterprises, might have been expected to accrue to the enterprise of the other
Contracting State, the profits so included shall be treated for the purposes of this
Article as profits of the enterprise of the first--mentioned Contracting State from
a source in the other Contracting State and relief shall be given in accordance
with this Article in respect of the extra tax chargeable in the other Contracting
State as a result of the inclusion of such profits.
ARTICLE 19
1. The competent authorities shall exchange such information (being
information which is at their disposal under their respective taxation laws in the
normal course of administration) as is necessary for carrying out the provisions
of this Agreement or for the prevention of fraud or for the administration of
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Government of the Republic of Singapore for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 5
International Tax Agreements Act 1953 249
statutory provisions against legal avoidance in relation to the taxes which are
the subject of this Agreement.
2. Any information so exchanged shall be treated as secret but may be
disclosed to persons (including a court or tribunal) concerned with the
assessment, collection, enforcement or prosecution in respect of the taxes which
are the subject of this Agreement.
3. No information as aforesaid shall be exchanged which would disclose
any trade, business, industrial or professional secret or trade process.
ARTICLE 20
1. Where a taxpayer considers that the action of the competent authority in
one of the Contracting States has resulted, or is likely to result, in double
taxation contrary to the provisions of this Agreement, he shall be entitled to
present the facts to the competent authority in the Contracting State of which he
is a resident and, should the taxpayer’s claim be deemed worthy of
consideration, the competent authority in that Contracting State shall endeavour
to come to an agreement with the competent authority in the other Contracting
State with a view to the avoidance of the double taxation in question.
2. The competent authority in a Contracting State may communicate
directly with the competent authority in the other Contracting State for the
purpose of giving effect to the provisions of this Agreement and in an
endeavour to assure its consistent interpretation and application. In particular,
the competent authorities may consult together to endeavour to resolve disputes
arising out of the application of paragraph 3 of Article 5 or Article 6.
ARTICLE 21
This Agreement shall come into force on the date on which the last of all
such things shall have been done in Australia and Singapore as are necessary to
give the Agreement the force of law in Australia and Singapore so far as its
provisions affect Australian tax and Singapore tax respectively and shall
thereupon have effect—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1st July,
1969;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1st July, 1969;
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and the Government of the Republic of Singapore for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
250 International Tax Agreements Act 1953
(b) in Singapore—
for any year of assessment beginning on or after 1st January, 1970.
ARTICLE 22
This Agreement shall continue in effect indefinitely, but either Contracting
State may, on or before 30th June in any calendar year give to the other
Contracting State notice of termination and, in that event, this Agreement shall
cease to be effective—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after the
commencement of the financial year beginning on 1st July in
the calendar year next following that in which the notice is
given;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1st July in the calendar year next
following that in which the notice is given;
(b) in Singapore—
for any year of assessment beginning on or after 1st January in the
second calendar year next following that in which the notice is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate at Canberra this Eleventh day of February in the year one
thousand nine hundred and sixty--nine in the English language:
William McMahon S. T. Stewart
FOR THE GOVERNMENT
OF THE
COMMONWEALTH OF AUSTRALIA
FOR THE GOVERNMENT
OF THE
REPUBLIC OF SINGAPORE
Protocol amending the Agreement between the Government of the Commonwealth of
Australia and the Government of the Republic of Singapore for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 5A
International Tax Agreements Act 1953 251
Schedule 5A—Protocol amending the
Agreement between the Government
of the Commonwealth of Australia
and the Government of the Republic
of Singapore for the Avoidance of
Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes
on Income Section 3
The Government of Australia and the Government of the Republic of
Singapore,
Desiring to amend the Agreement between the Government of the
Commonwealth of Australia and the Government of the Republic of Singapore
for the avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income signed at Canberra on 11 February 1969 (in this
Protocol referred to as “the Agreement”),
Have agreed as follows:
ARTICLE 1
The following Article is inserted before Article 1 of the Agreement:
“ARTICLE 1A
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.”.
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Commonwealth of Australia and the Government of the Republic of Singapore for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
252 International Tax Agreements Act 1953
ARTICLE 2
Article 1 of the Agreement is amended by omitting subparagraph (1) (a) and
substituting:
“(a) in Australia: the income tax, and the petroleum resource rent tax in
respect of offshore projects, imposed under the federal law of the
Commonwealth of Australia;”.
ARTICLE 3
Article 2 of the Agreement is amended by inserting in paragraph (4) “from
time to time in force” after “that Contracting State”.
ARTICLE 4
Article 4 of the Agreement is omitted and the following Article is
substituted:
“ARTICLE 4
(1) For the purposes of this Agreement, the term permanent establishment, in
relation to an enterprise, means a fixed place of business through which the
business of the enterprise is wholly or partly carried on.
(2) The term “permanent establishment” includes but is not limited to—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a store or other sales outlet;
(e) a factory;
(f) a workshop;
(g) a warehouse except where it is used solely for any of the purposes
mentioned in paragraph (4);
(h) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources; and
(i) a building site, or a construction, installation or assembly project, but
only where such site or project or any combination of them continues
for a period aggregating more than 6 months within any 12--month
period.
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Australia and the Government of the Republic of Singapore for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 5A
International Tax Agreements Act 1953 253
(3) An enterprise of a Contracting State shall be deemed to have a permanent
establishment and to carry on trade or business through that permanent
establishment in the other Contracting State if—
(a) it carries on supervisory activities in that other State for a period or
periods aggregating more than 6 months within any 12--month period in
connection with a building site, or a construction, installation or
assembly project or any combination of them which is being undertaken
in that other State; or
(b) substantial equipment is being used in that other State by, for or under
contract with the enterprise.
(4) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage or display of goods
or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising, the supply of information or scientific
research.
(5) A person acting in one of the Contracting States on behalf of an enterprise
of the other Contracting State, other than an agent of an independent status to
whom paragraph (6) applies, shall be deemed to be a permanent establishment
of the enterprise in the first--mentioned Contracting State if—
(a) the person has, and habitually exercises in the first--mentioned
Contracting State, an authority to conclude contracts for or on behalf of
the enterprise unless the exercise of such authority is limited to the
purchase of goods or merchandise for that enterprise; or
(b) there is maintained in the first--mentioned Contracting State a stock of
goods or merchandise belonging to the enterprise from which he or she
regularly fills orders on behalf of the enterprise; or
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Commonwealth of Australia and the Government of the Republic of Singapore for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
254 International Tax Agreements Act 1953
(c) the person habitually secures orders in the first--mentioned Contracting
State wholly or principally for the enterprise itself or for any other
enterprise which is controlled by it or has a controlling interest in it; or
(d) in so acting the person manufactures or processes in that State for the
enterprise goods or merchandise belonging to the enterprise.
(6) An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because that
enterprise carries on business in that other State through a broker, general
commission agent, or any other agent of an independent status, where such
broker or agent is acting in the ordinary course of that person’s business.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself constitute
either company a permanent establishment of the other.”.
ARTICLE 5
The following Article is inserted after Article 4 of the Agreement:
“ARTICLE 4A
(1) Income from real property may be taxed in the Contracting State in which
the real property is situated.
(2) In this Article, the term real property, in relation to one of the Contracting
States, has the meaning which it has under the laws of that State and also
includes—
(a) a lease of land and any other interest in or over land whether improved
or not, including a right to explore for or exploit mineral, oil or gas
deposits or other natural resources; and
(b) a right to receive variable or fixed payments either as consideration for
the exploitation of or the right to explore for or exploit, or in respect of
the exploitation of, mineral, oil or gas deposits, quarries or other places
of extraction or exploitation of natural resources.
(3) Any interest or right referred to in paragraph (2) shall be regarded as
situated where the land, mineral, oil or gas deposits, quarries or natural
resources, as the case may be, are situated or where the exploration may take
place.
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Australia and the Government of the Republic of Singapore for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 5A
International Tax Agreements Act 1953 255
(4) The provisions of paragraph (1) and (3) shall also apply to income from
real property of an enterprise and to income from real property used for the
performance of professional services.”.
ARTICLE 6
Article 5 of the Agreement is omitted and the following Article is
substituted:
“ARTICLE 5
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
(5) Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person in
cases where the information available to the competent authority of that State is
inadequate to determine the profits to be attributed to a permanent
establishment, provided that that law shall be applied, so far as the information
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Commonwealth of Australia and the Government of the Republic of Singapore for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
256 International Tax Agreements Act 1953
available to the competent authority permits, consistently with the principles of
this Article.
(6) Where profits include items of income which are dealt with separately in
other Articles of this Agreement, then the provisions of those Articles shall not
be affected by the provisions of this Article.
(7) Nothing in this Article shall affect the operation of any law of a
Contracting State relating to tax imposed on profits from insurance with
non--residents, provided that if the relevant law in force in either Contracting
State at the date of signature of this Agreement is varied (otherwise than in
minor respects so as not to affect its general character) the Contracting States
shall consult with each other with a view to agreeing to any amendment of this
paragraph that may be appropriate.
(8) Where—
(a) a resident of one of the Contracting States is beneficially entitled,
whether directly or through one or more interposed trust estates, to a
share of the business profits of an enterprise carried on in the other
Contracting State by the trustee of a trust estate other than a trust estate
which is treated as a company for tax purposes; and
(b) in relation to that enterprise, that trustee would, in accordance with the
principles of Article 4, have a permanent establishment in that other
State,
the enterprise carried on by the trustee shall be deemed to be a business carried
on in the other State by that resident through a permanent establishment situated
therein and that share of business profits shall be attributed to that permanent
establishment.”.
ARTICLE 7
Article 6 of the Agreement is omitted and the following Article is
substituted:
“ARTICLE 6
(1) Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
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Australia and the Government of the Republic of Singapore for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
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International Tax Agreements Act 1953 257
(b) the same person participates directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including determinations in cases where the information available to the
competent authority of that State is inadequate to determine the income to be
attributed to an enterprise, provided that that law shall be applied, so far as it is
practicable to do so, consistently with the principles of this Article.
(3) Where profits on which an enterprise of one of the Contracting States has
been charged to tax in that State are also included, by virtue of paragraph (1) or
(2), in the profits of an enterprise of the other Contracting State and charged to
tax in that other State, and the profits so included are profits which might have
been expected to have accrued to that enterprise of the other State if the
conditions operative between the enterprises had been those which might have
been expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Agreement and for this purpose the
competent authorities of the Contracting States shall if necessary consult each
other.”.
ARTICLE 8
Article 7 of the Agreement is omitted and the following Article is
substituted:
“ARTICLE 7
(1) Profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States shall be taxable only in that State.
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Commonwealth of Australia and the Government of the Republic of Singapore for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
258 International Tax Agreements Act 1953
(2) Notwithstanding the provisions of paragraph (1), such profits may be taxed
in the other Contracting State where they are profits from operations of ships or
aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the share
of the profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States through participation in a pool service, in a joint
transport operating organization or in an international operating agency.
(4) Interest earned on funds held in one of the Contracting States by a resident
of the other Contracting State in connection with the operation of ships or
aircraft, other than operations confined solely to places in the first--mentioned
State, shall be treated as profits from the operation of ships or aircraft.
(5) For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise shipped in one
of the Contracting States for discharge at another place in that Contracting
State, or at one or more structures used in connection with the exploration for or
exploitation of natural resources situated in waters adjacent to the territorial
waters of that Contracting State, shall be treated as profits from operations of
ships or aircraft confined solely to places in that State.”.
ARTICLE 9
Article 8 of the Agreement is amended by adding at the end of
paragraph (5):
“In any such case, the provisions of Article 5 shall apply.”.
ARTICLE 10
Article 9 of the Agreement is amended by:
(a) adding at the end of paragraph (3):
“In any such case, the provisions of Article 5 shall apply.”; and
(b) adding at the end of paragraph (5):
“The term does not include income to which paragraph (4) of Article 7
applies.”.
ARTICLE 11
Article 10 of the Agreement is amended by:
(a) omitting paragraph (3) and substituting:
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Australia and the Government of the Republic of Singapore for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 5A
International Tax Agreements Act 1953 259
“(3) In this Article royalties means payments or credits, whether
periodical or not, and however described or computed, to the
extent to which they are received as consideration for—
(a) the use of, or the right to use, any—
(i) copyright (other than a literary, dramatic, musical or
artistic copyright), patent, design or model, plan, secret
formula or process, trademark, or other like property or
right; or
(ii) industrial, commercial or scientific equipment;
(b) the supply of scientific, industrial or commercial knowledge or
information; or
(c) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph,
but does not include royalties or other payments in respect of the operation of
mines or quarries or of the exploitation of natural resources or payments to the
extent to which they are received as consideration for the use of, or the right to
use, motion picture films, tapes for use in connection with radio broadcasting or
films or video tapes for use in connection with television.”; and
(b) adding at the end of paragraph (4):
“In any such case, the provisions of Article 5 shall apply.”.
ARTICLE 12
The following Article is inserted after Article 10 of the Agreement:
“ARTICLE 10A
(1) Income or gains derived by a resident of one of the Contracting States from
the alienation of real property referred to in Article 4A and, as provided in that
Article, situated in the other Contracting State may be taxed in that other State.
(2) Income or gains from the alienation of property, other than real property
referred to in Article 4A, that forms part of the business property of a permanent
establishment which an enterprise of one of the Contracting States has in the
other Contracting State or pertains to a fixed base available to a resident of the
first--mentioned State in that other State for the purpose of performing
independent personal services, including income or gains from the alienation of
such a permanent establishment (alone or with the whole enterprise) or of such
a fixed base, may be taxed in that other State.
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Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
260 International Tax Agreements Act 1953
(3) Income or gains from the alienation of ships or aircraft operated in
international traffic, or of property (other than real property referred to in
Article 4A) pertaining to the operation of those ships or aircraft, shall be taxable
only in the Contracting State of which the enterprise which operated those ships
or aircraft is a resident.
(4) Income or gains derived by a resident of one of the Contracting States from
the alienation of shares or comparable interests in a company, the assets of
which consist wholly or principally of real property in the other Contracting
State of a kind referred to in Article 4A and, as provided in that Article, situated
in that other State, may be taxed in that other State.
(5) Nothing in this Agreement affects the application of a law of a Contracting
State relating to the taxation of gains of a capital nature derived from the
alienation of property other than that to which any of paragraphs (1), (2), (3)
and (4) apply.”.
ARTICLE 13
The following Article is inserted after Article 16 of the Agreement:
“ARTICLE 16A
Items of income which are not expressly mentioned in the foregoing Articles
of this Agreement shall be taxable according to the laws of the respective
Contracting States relating to tax.”.
ARTICLE 14
Article 17 of the Agreement is omitted and the following Article is
substituted:
“ARTICLE 17
Profits, income or gains derived by a resident of one of the Contracting
States which, under any one or more of Article 4A, Article 5, Articles 7 to 14
and Article 16A, may be taxed in the other Contracting State shall for the
purposes of Article 18 and of the laws of the respective Contracting States
relating to tax be deemed to be income from sources in that other State.”.
ARTICLE 15
Article 18 of the Agreement is omitted and the following Article is
substituted:
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Australia and the Government of the Republic of Singapore for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
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International Tax Agreements Act 1953 261
“ARTICLE 18
(1) Subject to the provisions of the law of Australia from time to time in force
which relate to the allowance of a credit against Australian tax of tax paid in a
country outside Australia (which shall not affect the general principle hereof),
Singapore tax paid under the law of Singapore and in accordance with this
Agreement, whether directly or by deduction, in respect of income derived by a
person who is a resident of Australia from sources in Singapore shall be allowed
as a credit against Australian tax payable in respect of that income.
(2) Where a company which is a resident of Singapore pays a dividend to a
company which is a resident of Australia and which controls directly or
indirectly not less than 10 per cent of the voting power of the first--mentioned
company, the credit referred to in paragraph (1) shall include the Singapore tax
paid by that first--mentioned company in respect of that portion of its profits out
of which the dividend is paid.
(3) For the purposes of paragraphs (1) and (2), Singapore tax paid shall be
deemed to include an amount equivalent to the amount of Singapore tax which,
under the law of Singapore relating to Singapore tax and in accordance with this
Agreement, would have been payable but for an exemption from or reduction of
Singapore tax granted under—
(a) section 13 (2) of the Income Tax Act 1985 of Singapore;
(b) Parts II, IIIA, IV, VI, VII, VIII, IX, X or XI of the Economic Expansion
Incentives (Relief from Income Tax) Act 1988 of Singapore; and
(c) Parts III, V, VIA or XII of the Economic Expansion Incentives (Relief
from Income Tax) Act 1988 of Singapore except where the exemption
or reduction is granted in respect of income attributable to the provision
of financial (including insurance) services provided directly or
indirectly to a person who is a resident of Australia,
insofar as those provisions were in force on, and have not been modified since,
the date of signature of the Protocol which first amended the Agreement
between the Government of the Commonwealth of Australia and the
Government of the Republic of Singapore for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income signed in
Canberra on 11 February 1969, or have been modified only in minor respects so
as not to affect their general character or any other provision which may
subsequently be made granting an exemption from or reduction of tax which the
Treasurer of Australia and the Minister for Finance of Singapore, or their
authorised representatives, agree from time to time in letters exchanged for this
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262 International Tax Agreements Act 1953
purpose to be of a substantially similar character, if that provision has not been
modified thereafter or has been modified only in minor respects so as not to
affect its general character.
(4) The provisions of paragraph (3) shall apply only in relation to income
derived in any of the 10 years of income beginning with the year of income that
commenced on 1 July 1987 and in any later year of income that may be agreed
in an exchange of letters for this purpose by the Treasurer of Australia and the
Minister for Finance of Singapore, or their authorised representatives.
(5) Subject to the provisions of the laws of Singapore regarding the allowance
as a credit against Singapore tax of tax payable in any country other than
Singapore, Australian tax payable, whether directly or by deduction, in respect
of income from sources within Australia shall be allowed as a credit against
Singapore tax payable in respect of that income. Where such income is a
dividend paid by a company which is a resident of Australia to a company
which is a resident of Singapore and which owns directly or indirectly not less
than 10 per cent of the voting power of the first--mentioned company, the credit
shall take into account the Australian tax paid by the first--mentioned company
in respect of that portion of its profits out of which the dividend is paid.”.
ARTICLE 16
Article 20 of the Agreement is amended by omitting (3) from paragraph (2)
and substituting (2).
ARTICLE 17
(1) This Protocol, which shall form an integral part of the Agreement, shall
enter into force on the date on which the Contracting Governments exchange
notes through the diplomatic channel notifying each other that the last of such
things has been done as is necessary to give this Protocol the force of law in
Australia and in Singapore respectively, and thereupon this Protocol shall,
subject to paragraph (2), have effect:
(a) in Australia:
(i) in the case of interest to which Article 8 and paragraph (b) of
Article 10 of the Protocol apply, in respect of tax on income of
any year of income beginning on or after 1 July 1983; and
(ii) in any other case, in respect of tax on income of any year of
income beginning on or after 1 July 1987;
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(b) in Singapore:
(i) in the case of interest to which Article 8 and paragraph (b) of
Article 10 of the Protocol apply, for any year of assessment
beginning on or after 1 January 1984; and
(ii) in any other case, for any year of assessment beginning on or
after 1 January 1988.
(2) Where any provision of the Agreement that is affected by this Protocol
would have afforded any greater relief from tax than is afforded by the
amendments made by this Protocol, that provision shall continue to have effect:
(a) in Singapore, for any year of assessment beginning before the date on
which this Protocol enters into force;
(b) in Australia:
(i) in the case of paragraph (2) of Article 18 of the Agreement,
only in respect of dividends paid before 12 March 1988;
(ii) in respect of other income for any year of income beginning
before the date on which this Protocol enters into force.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed this Protocol.
DONE in duplicate at Canberra this sixteenth day of October, one thousand
nine hundred and eighty--nine, in the English language
P. J. KEATING JOSEPH FRANCIS CONCEICAO
For the Government of
Australia
For the Government of the
Republic of Singapore.
NOTE ABOUT RECTIFICATION OF THE SINGAPORE PROTOCOL
1. In an exchange of Notes dated 20 October 1989, the Government of Australia and the Government of the Republic of Singapore agreed to regard the text of the Singapore Protocol as rectified ab initio in respect of format errors in Article 11 and Article 15.
2. These rectifications have been incorporated in the text of the copy of the Protocol that is set out in this Act.
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Schedule 6—Convention between Australia
and Japan for the avoidance of double
taxation and the prevention of fiscal
evasion with respect to taxes on
income Note: See section 3.
Australia and Japan,
Desiring to conclude a new Convention for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
Article 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
TAXES COVERED
1. This Convention shall apply to the following existing taxes:
a) in the case of Japan:
(i) the income tax; and
(ii) the corporation tax
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(hereinafter referred to as “Japanese tax”);
b) in the case of Australia:
(i) the income tax; and
(ii) the petroleum resource rent tax
(hereinafter referred to as “Australian tax”).
2. This Convention shall apply also to any identical or substantially
similar taxes that are imposed by Japan or under the federal law of Australia
after the date of signature of the Convention in addition to, or in place of, the
existing taxes referred to in paragraph 1. The competent authorities of the
Contracting States shall notify each other of any significant changes that have
been made in the law of their respective Contracting States relating to the taxes
to which the Convention applies within a reasonable period of time after such
changes.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise
requires:
a) the term “Japan”, when used in a geographical sense, means all the
territory of Japan, including its territorial sea, in which the laws
relating to Japanese tax are in force, and all the area beyond its
territorial sea, including the seabed and subsoil thereof, over which
Japan has sovereign rights in accordance with international law and in
which the laws relating to Japanese tax are in force;
b) the term “Australia”, when used in a geographical sense, excludes all
external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
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(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia
(including only the Territories specified in this subparagraph) in
respect of which there is for the time being in force, consistently with
international law, a law of Australia dealing with the exploration for
or exploitation of any of the natural resources of the exclusive
economic zone and the seabed and subsoil of the continental shelf;
c) the terms “a Contracting State” and “the other Contracting State”
mean Japan or Australia, as the context requires;
d) the term “tax” means Japanese tax or Australian tax, as the context
requires;
e) the term “person” includes an individual, a company and any other
body of persons;
f) the term “company” means any body corporate or any entity that is
treated as a company or body corporate for tax purposes;
g) the term “enterprise” applies to the carrying on of any business;
h) the terms “enterprise of a Contracting State” and “enterprise of the
other Contracting State” mean respectively an enterprise carried on by
a resident of a Contracting State and an enterprise carried on by a
resident of the other Contracting State;
i) the term “international traffic” means any transport by a ship or
aircraft operated by an enterprise of a Contracting State, except when
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the ship or aircraft is operated solely between places in the other
Contracting State;
j) the term “national”, in relation to a Contracting State, means:
(i) any individual possessing the nationality or citizenship of that
Contracting State; and
(ii) any juridical or legal person created or organised under the
law of that Contracting State and any organisation without
juridical or legal personality treated for the purposes of that
Contracting State’s tax as a juridical or legal person created or
organised under the law of that Contracting State;
k) the term “competent authority” means:
(i) in the case of Japan, the Minister of Finance or an authorised
representative of the Minister of Finance; and
(ii) in the case of Australia, the Commissioner of Taxation or an
authorised representative of the Commissioner of Taxation;
and
l) the term “business” includes the performance of professional services
and of other activities of an independent character.
2. As regards the application of this Convention at any time by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning that it has at that time under the law of
that Contracting State concerning the taxes to which the Convention applies,
any meaning under the applicable tax law of that Contracting State prevailing
over a meaning given to the term under other law of that Contracting State.
Article 4
RESIDENT
1. For the purposes of this Convention, the term “resident of a
Contracting State” means:
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a) in the case of Japan, any person who, under the laws of Japan, is liable
to tax therein by reason of the person’s domicile, residence, place of
head or main office, or any other criterion of a similar nature; and
b) in the case of Australia, a person who is a resident of Australia for the
purposes of Australian tax.
The Government of a Contracting State or a political subdivision or local
authority thereof is also a resident of that Contracting State for the purposes of
the Convention. A person is not a resident of a Contracting State for the
purposes of the Convention if the person is liable to tax in that Contracting State
in respect only of income from sources in that Contracting State.
2. Where by reason of the provisions of paragraph 1 an individual is a
resident of both Contracting States, then the individual’s status shall be
determined as follows:
a) the individual shall be deemed to be a resident only of the Contracting
State in which the individual has a permanent home available to that
individual; if that individual has a permanent home available to that
individual in both Contracting States, or in neither of them, that
individual shall be deemed to be a resident only of the Contracting
State with which the individual’s personal and economic relations are
closer (centre of vital interests);
b) if the Contracting State in which the individual’s centre of vital
interests is situated cannot be determined, the individual shall be
deemed to be a resident only of the Contracting State of which that
individual is a national;
c) if the individual is a national of both Contracting States or of neither
of them, the competent authorities of the Contracting States shall
endeavour to resolve the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than
an individual is a resident of both Contracting States, then the competent
authorities of the Contracting States shall endeavour to determine by mutual
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agreement the Contracting State of which that person shall be deemed to be a
resident for the purposes of this Convention, having regard to the place of its
head or main office, its place of effective management and any other relevant
factors.
4. In the absence of a mutual agreement under subparagraph c) of
paragraph 2 or paragraph 3 a person who is a resident of both Contracting States
by reason of the provisions of paragraph 1 shall not be considered a resident of
either Contracting State for the purposes of claiming any benefits provided by
this Convention, except those provided by Articles 26 and 27.
5. For the purposes of applying this Convention:
a) an item of income, profits or gains:
(i) derived from a Contracting State through an entity that is
organised in the other Contracting State; and
(ii) treated as the income, profits or gains of the beneficiaries,
members or participants of that entity under the tax law of
that other Contracting State,
shall be eligible for the benefits of the Convention that would be
granted if it were directly derived by a beneficiary, member or
participant of that entity who is a resident of that other Contracting
State, to the extent that such beneficiaries, members or participants
are residents of that other Contracting State and satisfy any other
conditions specified in the Convention, without regard to whether the
income, profits or gains are treated as the income, profits or gains of
such beneficiaries, members or participants under the tax law of the
first-mentioned Contracting State.
b) an item of income, profits or gains:
(i) derived from a Contracting State through an entity that is
organised in the other Contracting State; and
(ii) treated as the income, profits or gains of that entity under the
tax law of that other Contracting State,
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270 International Tax Agreements Act 1953
shall be eligible for the benefits of the Convention that would be
granted to a resident of that other Contracting State, without regard to
whether the income, profits or gains are treated as the income, profits
or gains of the entity under the tax law of the first-mentioned
Contracting State, if such entity is a resident of that other Contracting
State and satisfies any other conditions specified in the Convention.
c) an item of income, profits or gains:
(i) derived from a Contracting State through an entity that is
organised in a state other than the Contracting States; and
(ii) treated as the income, profits or gains of the beneficiaries,
members or participants of that entity under the tax law of the
other Contracting State,
shall be eligible for the benefits of the Convention that would be
granted if it were directly derived by a beneficiary, member or
participant of that entity who is a resident of that other Contracting
State, to the extent that such beneficiaries, members or participants
are residents of that other Contracting State and satisfy any other
conditions specified in the Convention, without regard to whether the
income, profits or gains are treated as the income, profits or gains of
such beneficiaries, members or participants under the tax law of the
first-mentioned Contracting State or such state.
d) an item of income, profits or gains:
(i) derived from a Contracting State through an entity that is
organised in a state other than the Contracting States; and
(ii) treated as the income, profits or gains of that entity under the
tax law of the other Contracting State,
shall not be eligible for the benefits of the Convention.
e) an item of income, profits or gains:
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(i) derived from a Contracting State through an entity that is
organised in that Contracting State; and
(ii) treated as the income, profits or gains of that entity under the
tax law of the other Contracting State,
shall not be eligible for the benefits of the Convention.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term “permanent
establishment” means a fixed place of business through which the business of
the enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop;
f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources; and
g) an agricultural, pastoral or forestry property.
3. A building site or construction or installation project constitutes a
permanent establishment only if it lasts more than 12 months.
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4. Notwithstanding the preceding paragraphs of this Article, where an
enterprise of a Contracting State:
a) undertakes supervisory or consultancy activities in the other
Contracting State in connection with a building site or construction or
installation project which is being undertaken in that other Contracting
State, and those activities last more than 12 months;
b) carries on activities (including the operation of substantial equipment)
in the other Contracting State in the exploration for or exploitation of
natural resources situated in that other Contracting State for a period
or periods exceeding in the aggregate 90 days in any 12 month period;
or
c) operates substantial equipment in the other Contracting State (other
than as provided in subparagraph b)) for a period or periods exceeding
in the aggregate 183 days in any 12 month period,
such activities shall be deemed to be performed through a permanent
establishment that the enterprise has in that other Contracting State.
5. a) The duration of activities under paragraphs 3 and 4 shall be
determined by aggregating the periods during which activities are
carried on in a Contracting State by associated enterprises provided
that the activities carried on in that Contracting State by an enterprise
are connected with the activities carried on in that Contracting State by
its associated enterprise.
b) The period during which two or more associated enterprises are
carrying on concurrent activities shall be counted only once for the
purpose of determining the duration of activities.
c) For the purposes of this Article, an enterprise shall be deemed to be
associated with another enterprise if:
(i) an enterprise participates directly or indirectly in the
management, control or capital of the other enterprise; or
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(ii) the same persons participate directly or indirectly in the
management, control or capital of the enterprises.
6. Notwithstanding the preceding paragraphs of this Article, an
enterprise shall not be deemed to have a permanent establishment merely by
reason of:
a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise; or
e) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character.
7. Notwithstanding the provisions of paragraphs 1 and 2, where a
person—other than an agent of an independent status to whom the provisions of
paragraph 8 apply—is acting on behalf of an enterprise and:
a) has, and habitually exercises, in a Contracting State an authority to
substantially negotiate on behalf of or conclude contracts in the name
of the enterprise; or
b) manufactures or processes in a Contracting State for the enterprise
goods or merchandise belonging to the enterprise,
that enterprise shall be deemed to have a permanent establishment in that
Contracting State in respect of any activities which that person undertakes for
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274 International Tax Agreements Act 1953
that enterprise, unless the activities are limited to those mentioned in paragraph
6 which, if exercised through a fixed place of business, would not make this
fixed place of business a permanent establishment under paragraph 1.
8. An enterprise shall not be deemed to have a permanent establishment
in a Contracting State merely because it carries on business in that Contracting
State through a person who is a broker, general commission agent or any other
agent of an independent status, provided that the person is acting in the ordinary
course of the person’s business as such a broker or agent.
9. The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other Contracting State
(whether through a permanent establishment or otherwise), shall not of itself
constitute either company a permanent establishment of the other.
10. The principles set forth in the preceding paragraphs of this Article
shall be applied in determining for the purposes of paragraph 7 of Article 11
and paragraph 5 of Article 12 whether there is a permanent establishment in a
state other than the Contracting States, and whether an enterprise, not being an
enterprise of either of the Contracting States, has a permanent establishment in a
Contracting State.
Article 6
INCOME FROM REAL PROPERTY
1. Income derived by a resident of a Contracting State from real property
situated in the other Contracting State may be taxed in that other Contracting
State.
2. The term “real property” shall have the meaning which it has under
the law of the Contracting State in which the property in question is situated.
The term shall in any case include:
a) a lease of land and any other interest in or over land, whether
improved or not;
b) property accessory to real property;
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c) rights to which the provisions of general law respecting landed
property apply;
d) usufruct of real property;
e) rights to explore for mineral, oil or gas deposits or other natural
resources, and a right to work those deposits or resources; and
f) rights to receive variable or fixed payments either as consideration for
or in respect of the exploitation of, or the right to explore for or
exploit, mineral, oil or gas deposits, quarries or other places of
extraction or exploitation of natural resources.
Ships and aircraft shall not be regarded as real property.
3. Any interest or right referred to in paragraph 2 shall be regarded as
situated where the land, mineral, oil or gas deposits, quarries or natural
resources, as the case may be, are situated or where the exploration may take
place.
4. The provisions of paragraph 1 shall apply to income derived from the
direct use, letting, or use in any other form of real property.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income
from real property of an enterprise.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only
in that Contracting State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in that other Contracting State but only so much of them as is attributable
to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
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permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
3. In determining the profits of a permanent establishment, there shall be
allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment, including executive
and general administrative expenses so incurred, and which would be deductible
if the permanent establishment were an independent enterprise which paid those
expenses, whether incurred in the Contracting State in which the permanent
establishment is situated or elsewhere.
4. Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person in
cases where the information available to the competent authority of that
Contracting State is inadequate to determine the profits to be attributed to a
permanent establishment, provided that, on the basis of the available
information, the determination of the profits of the permanent establishment is
consistent with the principles stated in this Article.
5. No profits shall be attributed to a permanent establishment by reason
of the mere purchase by that permanent establishment of goods or merchandise
for the enterprise.
6. For the purposes of the preceding paragraphs of this Article, the
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
7. Where profits include items of income or gains which are dealt with
separately in other Articles of this Convention, then the provisions of those
Articles shall not be affected by the provisions of this Article.
8. Nothing in this Article shall affect the application of any law of a
Contracting State relating to tax imposed on profits from insurance with a
person other than a resident of that Contracting State.
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9. Where:
a) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trusts, to a share of the
profits derived from business carried on in the other Contracting State
by the trustee of a trust (other than a trust which is treated as a
company for tax purposes) in its capacity as trustee; and
b) in relation to the carrying on of the business, that trustee, in
accordance with the principles stated in Article 5, has a permanent
establishment in that other Contracting State,
the business carried on by the trustee shall be deemed to be a business carried
on in that other Contracting State by that resident through a permanent
establishment situated therein and the share of the profits shall be attributed to
that permanent establishment.
Article 8
SHIPPING AND AIR TRANSPORT
1. Profits of an enterprise of a Contracting State derived from the
operation of ships or aircraft in international traffic shall be taxable only in that
Contracting State.
2. Notwithstanding the provisions of Article 2, provided that no political
subdivision or local authority of Australia levies a tax similar to the local
inhabitant taxes or the enterprise tax in Japan in respect of the operation of ships
or aircraft in international traffic carried on by an enterprise of Japan, an
enterprise of Australia shall be exempt from the local inhabitant taxes and the
enterprise tax in Japan in respect of the operation of ships or aircraft in
international traffic.
3. Notwithstanding the provisions of paragraph 1, profits of an enterprise
of a Contracting State derived from the operation of ships or aircraft may be
taxed in the other Contracting State to the extent that they are profits derived
directly or indirectly from the operation of ships or aircraft confined solely to
places in that other Contracting State.
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4. For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mail, goods or merchandise which are
shipped in a Contracting State and are discharged at a place in that Contracting
State shall be treated as profits from the operation of ships or aircraft confined
solely to places in that Contracting State.
5. The provisions of the preceding paragraphs of this Article shall also
apply to profits from the operation of ships or aircraft derived through
participation in a pool service, joint business or other profit sharing
arrangement.
Article 9
ASSOCIATED ENTERPRISES
1. Where:
a) an enterprise of a Contracting State participates directly or indirectly
in the management, control or capital of an enterprise of the other
Contracting State; or
b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to have accrued to one of the enterprises,
but, by reason of those conditions, have not so accrued, may be included in the
profits of that enterprise and taxed accordingly.
2. Nothing in this Article, other than paragraph 4, shall affect the
application of any law of a Contracting State relating to the determination of the
tax liability of a person in cases where the information available to the
competent authority of that Contracting State is inadequate to determine the
profits accruing to an enterprise, provided that, on the basis of the available
information, the determination of that tax liability of the enterprise is consistent
with the principles stated in paragraph 1.
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3. Where a Contracting State includes, in accordance with the provisions
of paragraph 1 or 2, in the profits of an enterprise of that Contracting State - and
taxes accordingly - profits on which an enterprise of the other Contracting State
has been charged to tax in that other Contracting State and where the competent
authorities of the Contracting States agree, upon consultation, that all or part of
the profits so included are profits which might have been expected to have
accrued to the enterprise of the first-mentioned Contracting State if the
conditions operative between the two enterprises had been those which might
have been expected to have operated between independent enterprises dealing
wholly independently with one another, then the other Contracting State shall
make an appropriate adjustment to the amount of the tax charged therein on
those agreed profits. In determining such adjustment, due regard shall be had to
the other provisions of this Convention.
4. Notwithstanding the provisions of paragraphs 1 and 2, a Contracting
State shall not change the profits of an enterprise of that Contracting State in the
circumstances referred to in those paragraphs, if an enquiry into the profits of
that enterprise is not initiated within seven years from the end of the taxable
year in which the profits that would be subject to such change, but for the
conditions referred to in those paragraphs, might have been expected to have
accrued to that enterprise. The provisions of this paragraph shall not apply in
the case of fraud or wilful default or if the inability to initiate an enquiry within
the prescribed period is attributable to the actions or inaction of that enterprise.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting
State for the purposes of its tax, being dividends beneficially owned by a
resident of the other Contracting State, may be taxed in that other Contracting
State.
2. However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident for the purposes of its tax
and according to the law of that Contracting State, but the tax so charged shall
not exceed:
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a) 5 per cent of the gross amount of the dividends if the beneficial owner
of the dividends is a company which owns directly shares representing
at least 10 per cent of the voting power of the company paying the
dividends;
b) 10 per cent of the gross amount of the dividends in all other cases.
3. Notwithstanding the provisions of paragraph 2, dividends shall not be
taxed in the Contracting State of which the company paying the dividends is a
resident for the purposes of its tax if the beneficial owner of the dividends is a
company that is a resident of the other Contracting State and that has owned
directly shares representing at least 80 per cent of the voting power of the
company paying the dividends for the 12 month period ending on the date on
which entitlement to the dividends is determined and the company that is the
beneficial owner of the dividends:
a) is a qualified person by reason of the provisions of subparagraph c) of
paragraph 2 of Article 23;
b) has at least 50 per cent of the aggregate vote and value of its shares
owned directly or indirectly by five or fewer companies referred to in
subparagraph a); or
c) is granted benefits with respect to those dividends under paragraph 5
of Article 23.
4. Notwithstanding the provisions of paragraphs 2 and 3, dividends paid by a
company that is a resident of Japan and that is entitled to a deduction for
dividends paid to its beneficiaries in computing its taxable income in Japan,
being dividends beneficially owned by a resident of Australia, may also be
taxed in Japan according to the law of Japan, but the tax so charged shall not
exceed:
a) 15 per cent of the gross amount of the dividends if more than 50
percent of the assets of such company consist, directly or indirectly, of
real property situated in Japan;
b) 10 per cent of the gross amount of the dividends in all other cases.
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5. The provisions of paragraphs 2, 3 and 4 shall not affect the taxation of the
company in respect of the profits out of which the dividends are paid.
6. The term “dividends” as used in this Article means income from shares or
other rights, not being debt-claims, participating in profits, as well as income or
other distributions which are subjected to the same taxation treatment as income
from shares by the law of the Contracting State of which the company making
the distribution is a resident for the purposes of its tax.
7. a) Distributions of income, profits or gains by a Real Estate Investment
Trust (hereinafter referred to as a “REIT”), being distributions
beneficially owned by a resident of Japan, may be taxed in Japan.
b) However, such distributions may also be taxed in Australia according
to the law of Australia, but the tax so charged shall not exceed 15 per
cent of the gross amount of the distributions if the beneficial owner of
the distributions is a resident of Japan other than a beneficial owner of
the distributions which holds, or has held at any time in the 12 month
period preceding the date on which the distributions are made, directly
or indirectly, capital that represents at least 10 percent of the value of
all the capital in the REIT.
c) For the purposes of this paragraph, the term “Real Estate Investment
Trust” means a managed investment trust created or organised under
the laws of Australia which carries on a business consisting of
investment, directly or indirectly, in real property for the main purpose
of deriving rent.
8. The provisions of paragraphs 1, 2, 3, 4 and 7 shall not apply if the
beneficial owner of the dividends or distributions, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident for the purposes of its tax (or, in
the case of a REIT to which paragraph 7 applies, in Australia) through a
permanent establishment situated therein and the holding in respect of which the
dividends or distributions are paid is effectively connected with such permanent
establishment. In such case the provisions of Article 7 shall apply.
9. Where a company which is a resident of a Contracting State derives profits
or income from the other Contracting State, that other Contracting State may
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not impose any tax on the dividends paid by the company — being dividends
beneficially owned by a person who is not a resident of that other Contracting
State — except insofar as the holding in respect of which such dividends are
paid is effectively connected with a permanent establishment situated in that
other Contracting State, nor subject the company’s undistributed profits to a tax
on the company’s undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in that
other Contracting State. However, in the case of dividends paid by a company
which is deemed to be a resident only of a Contracting State by reason of the
provisions of paragraph 3 of Article 4, the other Contracting State may tax such
dividends to the extent that they are paid out of profits or income arising in that
other Contracting State and, in the case of dividends beneficially owned by a
resident of the first-mentioned Contracting State, according to the provisions of
paragraphs 2 or 3.
10. A resident of a Contracting State shall not be considered the beneficial
owner of the dividends paid by a resident of the other Contracting State for the
purposes of its tax in respect of preferred shares or other similar interests if such
preferred shares or other similar interests might not have been expected to have
been established or acquired unless a person:
a) that is not entitled to benefits with respect to dividends paid by a
resident of that other Contracting State which are equivalent to, or
more favourable than, those available under this Convention to a
resident of the first-mentioned Contracting State; and
b) that is not a resident of either Contracting State,
owned equivalent preferred shares or other similar interests in the
first-mentioned resident.
11. No relief shall be available under this Article if it was the main purpose or
one of the main purposes of any person concerned with the assignment of the
dividends or distributions, the creation or assignment of the shares or other
rights in respect of which the dividends or distributions are paid, or the
establishment, acquisition or maintenance of the company which is the
beneficial owner of the dividends or distributions or the conduct of its
operations to take advantage of this Article.
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Article 11
INTEREST
1. Interest arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other Contracting
State.
2. However, such interest may also be taxed in the Contracting State in
which it arises and according to the law of that Contracting State, but the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a
Contracting State and beneficially owned by a resident of the other Contracting
State shall not be taxed in the first-mentioned Contracting State if:
a) the interest is derived by a Contracting State or a political subdivision
or local authority thereof, by any other body exercising governmental
functions in a Contracting State, or by the Bank of Japan or the
Reserve Bank of Australia;
b) the interest is derived by a financial institution which is unrelated to
and dealing wholly independently with the payer. For the purpose of
this Article, the term “financial institution” means a bank or other
enterprise substantially deriving its profits by raising debt finance in
the financial markets or taking deposits at interest and by using those
funds in carrying on a business of providing finance; or
c) the interest is derived by:
(i) in the case of Japan, the Japan Bank for International
Cooperation, or the Nippon Export and Investment Insurance;
(ii) in the case of Australia, the Export Finance and Insurance
Corporation, or a public authority that manages the
investments of the Future Fund; and
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(iii) any similar institution as may be agreed upon from time to
time between the Governments of the Contracting States
through an exchange of diplomatic notes.
4. Notwithstanding the provisions of paragraph 3, interest referred to in
subparagraph b) of that paragraph may be taxed in the Contracting State in
which it arises at a rate not exceeding 10 per cent of the gross amount of the
interest if the interest is paid as part of an arrangement involving back-to-back
loans or other arrangement that is economically equivalent and intended to have
a similar effect to an arrangement involving back-to-back loans.
5. The term “interest” as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage and whether or
not carrying a right to participate in the debtor’s profits, and in particular,
interest from government securities and interest from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or
debentures, and all other income that is subjected to the same taxation treatment
as income from money lent by the tax law of the Contracting State in which the
income arises. Income dealt with in Article 10 shall not be regarded as interest
for the purposes of this Convention.
6. The provisions of paragraphs 1 and 2, subparagraph b) of paragraph 3
and paragraph 4 shall not apply if the beneficial owner of the interest, being a
resident of a Contracting State, carries on business in the other Contracting
State in which the interest arises through a permanent establishment situated
therein and the debt-claims or other rights in respect of which the interest is
paid is effectively connected with such permanent establishment. In such case
the provisions of Article 7 shall apply.
7. Interest shall be deemed to arise in a Contracting State when the payer
is a resident of that Contracting State for the purposes of its tax. Where,
however, the person paying interest, whether such person is a resident of a
Contracting State or not, has in a Contracting State or a state other than the
Contracting States a permanent establishment in connection with which the
indebtedness on which the interest is paid were incurred, and such interest is
borne by such permanent establishment, then:
a) if the permanent establishment is situated in a Contracting State, such
interest shall be deemed to arise in that Contracting State; and
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b) if the permanent establishment is situated in a state other than the
Contracting States, such interest shall not be deemed to arise in either
Contracting State.
8. Where, by reason of a special relationship between the payer and the
beneficial owner of the interest, or between both of them and some other
person, the amount of the interest, having regard to the debt-claims or other
rights for which it is paid, exceeds the amount which might have been expected
to have been agreed upon by the payer and the beneficial owner in the absence
of such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the law of each Contracting State, due regard being
had to the other provisions of this Convention.
9. A resident of a Contracting State shall not be considered the beneficial
owner of the interest arising in the other Contracting State in respect of a
debt-claim or other right if such debt-claim or other right might not have been
expected to have been established unless a person:
a) that is not entitled to benefits with respect to the interest arising in that
other Contracting State which are equivalent to, or more favourable
than, those available under this Convention to a resident of the
first-mentioned Contracting State; and
b) that is not a resident of either Contracting State,
owned an equivalent debt-claim or other right against the first-mentioned
resident.
10. No relief shall be available under this Article if it was the main
purpose or one of the main purposes of any person concerned with the
assignment of the interest, the creation or assignment of the debt-claim or other
rights in respect of which the interest is paid, or the establishment, acquisition
or maintenance of the company which is the beneficial owner of the interest or
the conduct of its operations to take advantage of this Article.
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Article 12
ROYALTIES
1. Royalties arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other Contracting
State.
2. However, such royalties may also be taxed in the Contracting State in
which they arise and according to the law of that Contracting State, but the tax
so charged shall not exceed 5 per cent of the gross amount of the royalties.
3. The term “royalties” as used in this Article means payments or credits,
whether periodical or not, and however described or computed, to the extent to
which they are made as consideration for:
a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark or other like property or
right;
b) the supply of scientific, technical, industrial or commercial knowledge
or information;
c) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in subparagraph a) or any such
knowledge or information as is mentioned in subparagraph b);
d) the use of, or the right to use:
(i) motion picture films; or
(ii) films or audio or video tapes or disks, or any other means of
image or sound reproduction or transmission for use in
connection with television, radio or other broadcasting; or
e) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
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4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial
owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State in which the royalties arise through a
permanent establishment situated therein and the property or right in respect of
which the royalties are paid or credited is effectively connected with such
permanent establishment. In such case the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the
payer is a resident of that Contracting State for the purposes of its tax. Where,
however, the person paying royalties, whether such person is a resident of a
Contracting State or not, has in a Contracting State or a state other than the
Contracting States a permanent establishment in connection with which the
liability to pay or credit the royalties was incurred, and such royalties are borne
by such permanent establishment, then:
a) if the permanent establishment is situated in a Contracting State, such
royalties shall be deemed to arise in that Contracting State; and
b) if the permanent establishment is situated in a state other than the
Contracting States, such royalties shall not be deemed to arise in either
Contracting State.
6. Where, by reason of a special relationship between the payer and the
beneficial owner of the royalties, or between both of them and some other
person, the amount of the royalties, having regard to what they are paid or
credited for, exceeds the amount which might have been expected to have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments or credits shall remain
taxable according to the law of each Contracting State, due regard being had to
the other provisions of this Convention.
7. A resident of a Contracting State shall not be considered the beneficial
owner of the royalties arising in the other Contracting State in respect of the use
of the property or right if such royalties might not have been expected to have
been paid to the resident unless the resident paid royalties in respect of the same
property or right to a person:
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a) that is not entitled to benefits with respect to royalties arising in that
other Contracting State which are equivalent to, or more favourable
than, those available under this Convention to a resident of the
first-mentioned Contracting State; and
b) that is not a resident of either Contracting State.
8. No relief shall be available under this Article if it was the main
purpose or one of the main purposes of any person concerned with the
assignment of the royalties, the creation or assignment of the property or right
in respect of which the royalties are paid, or the establishment, acquisition or
maintenance of the company which is the beneficial owner of the royalties or
the conduct of its operations to take advantage of this Article.
Article 13
ALIENATION OF PROPERTY
1. Income, profits or gains derived by a resident of a Contracting State
from the alienation of real property referred to in Article 6 and situated in the
other Contracting State may be taxed in that other Contracting State.
2. Income, profits or gains derived by a resident of a Contracting State
from the alienation of shares in a company or of interests in a partnership, trust
or other entity may be taxed in the other Contracting State where the shares or
the interests derive at least 50 per cent of their value directly or indirectly from
real property referred to in Article 6 and situated in that other Contracting State.
3. Unless the provisions of paragraph 2 are applicable, income, profits or
gains derived by a resident of a Contracting State which are not subject to tax in
that Contracting State from the alienation of shares issued by a company being a
resident of the other Contracting State may be taxed in that other Contracting
State, if:
a) shares owned by the alienator (together with such shares owned by
any other related or connected persons as may be aggregated
therewith) amount to at least 25 per cent of the total issued shares of
such company at any time during the taxable year in which the
alienation takes place; and
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b) the total of the shares alienated by the alienator and such related or
connected persons during that taxable year in which the alienation
takes place amounts to at least 5 per cent of the total issued shares of
such company.
4. Notwithstanding the provisions of paragraph 3, income, profits or
gains from the alienation of property (other than real property) that forms part
of the business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State, including income, profits
or gains from the alienation of that permanent establishment (alone or with the
whole enterprise), may be taxed in that other Contracting State.
5. Income, profits or gains derived by an enterprise of a Contracting
State from the alienation of ships or aircraft operated by that enterprise in
international traffic, or of property (other than real property) pertaining to the
operation of such ships or aircraft, shall be taxable only in that Contracting
State.
6. Gains from the alienation of any property other than that referred to in
the preceding paragraphs of this Article shall be taxable only in the Contracting
State of which the alienator is a resident.
Article 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and
other similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that Contracting State unless
the employment is exercised in the other Contracting State. If the employment
is so exercised, such remuneration as is derived therefrom may be taxed in that
other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived
by a resident of a Contracting State in respect of an employment exercised in
the other Contracting State shall be taxable only in the first-mentioned
Contracting State if:
a) the recipient is present in the other Contracting State for a period or
periods not exceeding in the aggregate 183 days in any 12 month
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period commencing or ending in the taxable year of that other
Contracting State;
b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other Contracting State; and
c) the remuneration is not borne by a permanent establishment which the
employer has in the other Contracting State.
3. Notwithstanding the preceding paragraphs of this Article,
remuneration derived in respect of an employment exercised aboard a ship or
aircraft operated in international traffic by an enterprise of a Contracting State
may be taxed in that Contracting State.
Article 15
DIRECTORS’ FEES
Directors’ fees and other similar payments derived by a person who is a resident
of a Contracting State in that person’s capacity as a member of the board of
directors of a company which is a resident of the other Contracting State may be
taxed in that other Contracting State.
Article 16
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 7 and 14, income derived
by a person who is a resident of a Contracting State as an entertainer, such as a
theatre, motion picture, radio or television artiste, or a musician, or as a
sportsperson, from that person’s personal activities as such exercised in the
other Contracting State, may be taxed in that other Contracting State.
2. Where income in respect of personal activities exercised by an
entertainer or a sportsperson in that person’s capacity as such accrues not to that
person but to another person, that income may, notwithstanding the provisions
of Articles 7 and 14, be taxed in the Contracting State in which the activities of
the entertainer or sportsperson are exercised.
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Article 17
PENSIONS AND ANNUITIES
1. Subject to the provisions of paragraph 2 of Article 18, pensions and
other similar remuneration paid periodically to an individual who is a resident
of a Contracting State shall be taxable only in that Contracting State.
2. Annuities paid to an individual who is a resident of a Contracting State
shall be taxable only in that Contracting State.
3. Lump sums in lieu of the right to receive a pension or other similar
remuneration, or to receive an annuity, paid to an individual who is a resident of
a Contracting State shall be taxable only in that Contracting State. However,
such lump sums may also be taxed in the other Contracting State if they arise in
that other Contracting State.
4. The term “annuity” means a stated sum payable periodically at stated
times during the life or during a specified or ascertainable period of time under
an obligation to make the payments in return for adequate and full consideration
in money or money’s worth.
Article 18
GOVERNMENT SERVICE
1. a) Salaries, wages and other similar remuneration paid by a Contracting
State or a political subdivision or local authority thereof to an
individual in respect of services rendered to that Contracting State or
political subdivision or local authority, in the discharge of functions of
a governmental nature, shall be taxable only in that Contracting State.
b) However, such salaries, wages and other similar remuneration shall be
taxable only in the other Contracting State if the services are rendered
in that other Contracting State and the individual is a resident of that
other Contracting State who:
(i) is a national of that other Contracting State; or
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(ii) did not become a resident of that other Contracting State
solely for the purpose of rendering the services.
2. a) Notwithstanding the provisions of paragraph 1, pensions and other
similar remuneration paid periodically by, or out of funds to which
contributions are made or created by, a Contracting State or a political
subdivision or local authority thereof to an individual in respect of
services rendered to that Contracting State or political subdivision or
local authority shall be taxable only in that Contracting State.
b) However, such pensions and other similar remuneration shall be
taxable only in the other Contracting State if the individual is a
resident of, and a national of, that other Contracting State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries,
wages, pensions, and other similar remuneration in respect of services rendered
in connection with a business carried on by a Contracting State or a political
subdivision or local authority thereof.
Article 19
STUDENTS
Payments which a student or business apprentice who is or was immediately
before visiting a Contracting State a resident of the other Contracting State and
who is temporarily present in the first-mentioned Contracting State solely for
the purpose of that person’s education or training receives for the purpose of
that person’s maintenance, education or training shall not be taxed in the
first-mentioned Contracting State, provided that such payments arise from
sources outside that first-mentioned Contracting State. The exemption provided
by this Article shall apply to a business apprentice only for a period not
exceeding one year from the date the person first begins that person’s training in
the first-mentioned Contracting State.
Article 20
SLEEPING PARTNERSHIP (TOKUMEI KUMIAI)
Notwithstanding any other provisions of this Convention, other than those of
Article 26, any income, profits or gains derived by a sleeping partner in respect
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of a sleeping partnership (Tokumei Kumiai) contract or other similar contract
may be taxed in the Contracting State in which such income, profits or gains
arise, and according to the laws of that Contracting State.
Article 21
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising,
not dealt with in the foregoing Articles of this Convention shall be taxable only
in that Contracting State.
2. The provisions of paragraph 1 shall not apply to income, other than
income from real property as defined in paragraph 2 of Article 6, derived by a
resident of a Contracting State who carries on business in the other Contracting
State through a permanent establishment situated therein and the property or
right in respect of which the income is paid is effectively connected with such
permanent establishment. In such case the provisions of Article 7 shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, items of
income of a resident of a Contracting State not dealt with in the foregoing
Articles of this Convention from sources in the other Contracting State may also
be taxed in that other Contracting State.
Article 22
SOURCE OF INCOME
1. Income, profits or gains derived by a resident of a Contracting State
which, under any one or more of Articles 6 to 8 and 10 to 18, may be taxed in
the other Contracting State shall for the purposes of the law of that other
Contracting State relating to its tax be deemed to arise from sources in that
other Contracting State.
2. Income, profits or gains derived by a resident of a Contracting State
which, under any one or more of Articles 6 to 8, 10 to 18 and 20, may be taxed
in the other Contracting State shall for the purposes of Article 25 and of the law
of the first-mentioned Contracting State relating to its tax be deemed to arise
from sources in the other Contracting State.
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Article 23
LIMITATION ON BENEFITS
1. Except as otherwise provided in this Article, a resident of a
Contracting State that derives income, profits or gains described in Article 7; in
paragraph 3 of Article 10 or paragraph 3 of Article 11; or in Article 13 from the
other Contracting State shall be entitled to the benefits granted for a taxable
year by the provisions of those paragraphs or Articles only if such resident is a
qualified person as defined in paragraph 2 and satisfies any other specified
conditions in those paragraphs or Articles for the obtaining of such benefits.
2. A resident of a Contracting State shall be a qualified person for a
taxable year only if such resident is either:
a) an individual;
b) a qualified governmental entity;
c) a company (including a company participating in a dual listed
company arrangement), if its principal class of shares is listed or
registered on a recognised stock exchange specified in clause (i) or (ii)
of subparagraph d) of paragraph 6 and is regularly traded on one or
more recognised stock exchanges;
d) a person other than an individual or a company, if the principal class
of units in that person is listed or admitted to dealings on a recognised
stock exchange specified in clause (i) or (ii) of subparagraph d) of
paragraph 6 and is regularly traded on one or more recognised stock
exchanges;
e) a pension fund, provided that as of the end of the prior taxable year
more than 50 per cent of its beneficiaries, members or participants are
individuals who are residents of either Contracting State;
f) an organisation established under the law of that Contracting State and
operated exclusively for a religious, charitable, educational, scientific,
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artistic, cultural or public purposes, provided that all or part of its
income, profits or gains may be exempt from tax under the domestic
law of that Contracting State; or
g) a person other than an individual, if residents of either Contracting
State that are qualified persons by reason of the provisions of
subparagraphs a) to f) of this paragraph own, directly or indirectly, at
least 50 per cent of the aggregate vote and value of the shares of the
person, or at least 50 per cent of the beneficial interests in the person.
3. Where the provisions of subparagraph g) of paragraph 2 apply:
a) in respect of taxation by withholding at source, a resident of a
Contracting State shall be considered to satisfy the conditions
described in that subparagraph for the taxable year in which the
payment is made if such resident satisfies those conditions during the
12 month period preceding the date of payment of an item of income,
profits or gains (or, in the case of dividends, the date on which
entitlement to the dividends is determined);
b) in all other cases, a resident of a Contracting State shall be considered
to satisfy the conditions described in that subparagraph for the taxable
year in which the payment is made if such resident satisfies those
conditions on at least half the days of the taxable year.
4. a) Notwithstanding that a resident of a Contracting State may not be a
qualified person, that resident shall be entitled to the benefits granted
by the provisions of Article 7; of paragraph 3 of Article 10 or
paragraph 3 of Article 11; or of Article 13 with respect to an item of
income, profits or gains described in those paragraphs or Articles
derived from the other Contracting State if the resident is carrying on
business in the first-mentioned Contracting State (other than the
business of making or managing investments for the resident’s own
account, unless the business is banking, insurance or securities
business carried on by a bank, insurance company or securities dealer),
the income, profits or gains derived from the other Contracting State
are derived in connection with, or are incidental to, that business and
that resident satisfies any other specified conditions in those
paragraphs or Articles for the obtaining of such benefits.
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b) If a resident of a Contracting State derives an item of income, profits
or gains from a business carried on by that resident in the other
Contracting State or derives an item of income, profits or gains arising
in the other Contracting State from a person that has with the resident
a relationship described in subparagraph a) or b) of paragraph 1 of
Article 9, the conditions described in subparagraph a) of this
paragraph shall be considered to be satisfied with respect to such an
item of income, profits or gains only if the business carried on in the
first-mentioned Contracting State is substantial in relation to the
business carried on in the other Contracting State. Whether such
business is substantial for the purpose of this paragraph shall be
determined on the basis of all the facts and circumstances.
c) In determining whether a person is carrying on business in a
Contracting State under subparagraph a) of this paragraph, the
business conducted by a partnership in which that person is a partner
and the business conducted by persons connected to such person shall
be deemed to be conducted by such person. A person shall be
connected to another if one possesses, directly or indirectly, at least 50
per cent of the beneficial interests in the other (or, in the case of a
company, at least 50 per cent of the aggregate vote and value of the
shares of the company) or another person possesses, directly or
indirectly, at least 50 per cent of the beneficial interests (or, in the case
of a company, at least 50 per cent of the aggregate vote and value of
the shares of the company) in each person. In any case, a person shall
be considered to be connected to another if, on the basis of all the facts
and circumstances, one has control of the other or both are under the
control of the same person or persons.
5. A resident of a Contracting State that is neither a qualified person nor
entitled under paragraph 4 to the benefits granted by the provisions of Article 7;
of paragraph 3 of Article 10 or paragraph 3 of Article 11; or of Article 13 with
respect to an item of income, profits or gains described in those paragraphs or
Articles shall, nevertheless, be granted such benefits if the competent authority
of the other Contracting State determines, in accordance with its domestic law
or administrative practice, that the establishment, acquisition or maintenance of
such resident and the conduct of its operations are considered as not having the
obtaining of such benefits as one of the principal purposes.
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6. For the purposes of this Article:
a) the term “qualified governmental entity” means entities referred to in
subparagraphs a) and c) of paragraph 3 of Article 11;
b) the term “principal class of shares” means the ordinary shares of the
company, provided that such class of shares represents the majority of
the voting power and value of the company. If no single class of
ordinary shares represents the majority of the voting power and value
of the company, the principal class of shares is that class or those
classes that in the aggregate represent a majority of the voting power
and value of the company. For the purposes of the preceding
sentences, in the case of a company participating in a dual listed
company arrangement, the principal class of shares will be determined
after excluding the special voting shares which were issued as a means
of establishing that dual listed company arrangement;
c) the term “dual listed company arrangement” means an arrangement
pursuant to which two publicly listed companies, while maintaining
their separate legal entity status, shareholdings and listings, align their
strategic directions and the economic interests of their respective
shareholders through:
(i) the appointment of common (or almost identical) boards of
directors;
(ii) management of the operations of the two companies on a
unified basis;
(iii) equalised distributions to shareholders in accordance with an
equalisation ratio applying between the two companies,
including in the event of a winding up of one or both of the
companies;
(iv) the shareholders of both companies voting in effect as a
single decision-making body on substantial issues affecting
their combined interests; and
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(v) cross-guarantees as to, or similar financial support for, each
other’s material obligations or operations except where the
effect of the relevant regulatory requirements prevents such
guarantees or financial support;
d) the term “recognised stock exchange” means:
(i) any stock exchange established by a Financial Instruments
Exchange or an approved-type financial instruments firms
association under the terms of the Financial Instruments and
Exchange Law (Law No.25 of 1948) of Japan;
(ii) the Australian Securities Exchange and any other securities
exchange recognised as such under the Corporations Act
2001 of Australia; and
(iii) any other stock exchange which the competent authorities of
the Contracting States agree to recognise for the purposes of
this Article;
e) the term “units” includes any instrument, not being a debt-claim,
granting an entitlement to share in the asset or income of, or receive a
distribution from, the person;
f) the term “principal class of units” means the class of units which
represents the majority of the value of the person. If no single class of
units represents the majority of the value of the person, the principal
class of units is that class or those classes that in the aggregate
represent the majority of the value of the person; and
g) the term “pension fund” means any person that:
(i) is established under the law of a Contracting State; and
(ii) is operated principally to administer or provide pensions,
retirement benefits or other similar remuneration or to earn
income, profits or gains for the benefit of other pension funds.
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7. Nothing in this Article shall be construed as restricting, in any manner,
the application of any provisions of the law of a Contracting State which are
designed to prevent the avoidance or evasion of taxes.
Article 24
LIMITATION OF RELIEF
1. Where under this Convention any income, profits or gains are relieved
from tax in a Contracting State and, under the law in force in the other
Contracting State, an individual, in respect of that income or those profits or
gains, is taxed by reference to the amount thereof that is remitted to or received
in that other Contracting State and not by reference to the full amount thereof,
then the relief to be allowed under the Convention in the first-mentioned
Contracting State shall apply only to so much of that income or those profits or
gains as is taxed in the other Contracting State.
2. Where under this Convention any income, profits or gains are relieved
from tax in a Contracting State and, under the law in force in the other
Contracting State, an individual, in respect of that income or those profits or
gains, is exempt from tax by virtue of being a temporary resident of that other
Contracting State within the meaning of the applicable law of that other
Contracting State, then the relief to be allowed under the Convention in the
first-mentioned Contracting State shall not apply to the extent that that income
or those profits or gains are exempt from tax in the other Contracting State.
Article 25
ELIMINATION OF DOUBLE TAXATION
1. Subject to the provisions of the laws of Japan regarding the allowance
as a credit against Japanese tax of tax payable in any country other than Japan:
a) Where a resident of Japan derives income from Australia which may
be taxed in Australia in accordance with the provisions of this
Convention, the amount of Australian tax payable in respect of that
income shall be allowed as a credit against the Japanese tax imposed
on that resident. The amount of credit, however, shall not exceed that
part of the Japanese tax which is appropriate to that income.
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b) Where the income derived from Australia is dividends paid by a
company which is a resident of Australia to a company which is a
resident of Japan and which has owned at least 10 per cent either of
the voting shares or of the total issued shares of the company paying
the dividends during the period of six months immediately before the
day when the obligation to pay dividends is confirmed, the credit shall
take into account Australian tax payable by the company paying the
dividends in respect of its income.
2. Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle of
this Article), Japanese tax paid under the law of Japan and in accordance with
this Convention, whether directly or by deduction, in respect of income, profits
or gains derived by a person who is a resident of Australia from sources in
Japan shall be allowed as a credit against Australian tax payable in respect of
that income, profits or gains.
Article 26
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith,
which is other or more burdensome than the taxation and connected
requirements to which nationals of that other Contracting State in the same
circumstances, in particular with respect to residence, are or may be subjected.
The provisions of this paragraph shall, notwithstanding the provisions of Article
1, also apply to persons who are not residents of one or both of the Contracting
States.
2. The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other Contracting State than the taxation levied on enterprises of
that other Contracting State carrying on the same activities in similar
circumstances. The provisions of this paragraph shall not be construed as
obliging a Contracting State to grant to individuals who are residents of the
other Contracting State any personal allowances, reliefs and reductions for
taxation purposes which it grants to its own residents.
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3. Except where the provisions of paragraph 1 of Article 9, paragraph 8
of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the
other Contracting State shall, for the purpose of determining the taxable profits
of such enterprise, be deductible under the same conditions as if they had been
paid to a resident of the first-mentioned Contracting State.
4. Enterprises of a Contracting State, the capital of which is wholly or
partly owned or controlled, directly or indirectly, by one or more residents of
the other Contracting State, shall not be subjected in the first-mentioned
Contracting State to any taxation or any requirement connected therewith which
is other or more burdensome than the taxation and connected requirements to
which other similar enterprises of the first-mentioned Contracting State in
similar circumstances are or may be subjected.
5. The provisions of this Article shall, notwithstanding the provisions of
Article 2, apply to taxes of every kind and description imposed by a Contracting
State or a political subdivision or local authority thereof.
Article 27
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the
Contracting States result or will result for the person in taxation not in
accordance with the provisions of this Convention, the person may, irrespective
of the remedies provided by the domestic law of those Contracting States,
present a case to the competent authority of the Contracting State of which the
person is a resident or, if the case comes under paragraph 1 of Article 26, to that
of the Contracting State of which the person is a national. The case must be
presented within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the claim appears to it to
be justified and if it is not itself able to arrive at a satisfactory solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with the provisions of this Convention. Any agreement reached
shall be implemented notwithstanding any time limits in the domestic law of the
Contracting States.
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3. The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of this Convention. They may also consult together
for the elimination of double taxation in cases not provided for in the
Convention.
4. The competent authorities of the Contracting States may communicate
with each other directly for the purpose of reaching an agreement in the sense of
the preceding paragraphs of this Article.
5. For the purposes of paragraph 3 of Article XXII (Consultation) of the
General Agreement on Trade in Services, the Contracting States agree that,
notwithstanding the provisions of that paragraph, any dispute between them as
to whether a measure falls within the scope of this Convention may be brought
before the Council for Trade in Services, as provided by that paragraph, only
with the consent of both Contracting States. Any doubt as to the interpretation
of this paragraph shall be resolved under paragraph 3 of this Article or, failing
agreement under that procedure, pursuant to any other procedure agreed to by
both Contracting States.
Article 28
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange
such information as is foreseeably relevant for carrying out the provisions of
this Convention or to the administration or enforcement of the domestic law
concerning taxes of every kind and description imposed on behalf of the
Contracting States, insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State
shall be treated as secret in the same manner as information obtained under the
domestic law of that Contracting State and shall be disclosed only to persons or
authorities (including courts and administrative bodies) concerned with the
assessment or collection of, the enforcement or prosecution in respect of, the
determination of appeals in relation to the taxes referred to in paragraph 1, or
the oversight of the above. Such persons or authorities shall use the information
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only for such purposes. They may disclose the information in public court
proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so
as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the law and
administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the law or in the
normal course of the administration of that or of the other Contracting
State;
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public
policy.
4. If information is requested by a Contracting State in accordance with
this Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other
Contracting State may not need such information for its own tax purposes. The
obligation contained in the preceding sentence is subject to the limitations of
paragraph 3 but in no case shall such limitations be construed to permit a
Contracting State to decline to supply information solely because it has no
domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the
information is held by a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it relates to ownership
interests in a person.
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Article 29
MEMBERS OF DIPLOMATIC MISSIONS
AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal privileges of members of
diplomatic missions or consular posts under the general rules of international
law or under the provisions of special international agreements.
Article 30
HEADINGS
The headings of the Articles of this Convention are inserted for convenience of
reference only and shall not affect the interpretation of the Convention.
Article 31
ENTRY INTO FORCE
1. This Convention shall be approved in accordance with the legal
procedures of each of the Contracting States and shall enter into force on the
thirtieth day after the date of exchange of diplomatic notes indicating such
approval.
2. This Convention shall be applicable:
a) in the case of Japan:
(i) with respect to taxes withheld at source, for amounts taxable
on or after 1 January in the calendar year next following that
in which the Convention enters into force;
(ii) with respect to taxes on income which are not withheld at
source, as regards income for any taxable year beginning on
or after 1 January in the calendar year next following that in
which the Convention enters into force; and
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(iii) with respect to other taxes, as regards taxes for any taxable
year beginning on or after 1 January in the calendar year next
following that in which the Convention enters into force; and
b) in the case of Australia:
(i) with respect to withholding tax on income that is derived by a
resident of Japan, in relation to income derived on or after
1 January in the calendar year next following that in which
the Convention enters into force; and
(ii) with respect to other taxes, as regards any taxable year
beginning on or after 1 July in the calendar year next
following that in which the Convention enters into force.
3. The Agreement between Japan and the Commonwealth of Australia
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income signed at Canberra on 20 March, 1969
(hereinafter referred to as “the prior Agreement”) shall cease to be effective
from the date upon which this Convention has effect in respect of the taxes to
which the Convention applies in accordance with the provisions of paragraph 2.
4. The prior Agreement shall terminate on the last date on which it has
effect in accordance with this Article.
5. Notwithstanding the entry into force of this Convention, an individual
who is entitled to the benefits of Article 15 of the prior Agreement at the time of
the entry into force of the Convention shall continue to be entitled to such
benefits until such time as the individual would have ceased to be entitled to
such benefits if the prior Agreement had remained in force.
Article 32
TERMINATION
This Convention shall remain in force until terminated by a Contracting State.
Either Contracting State may terminate the Convention after the expiration of a
period of five years from the date of its entry into force, by giving to the other
Contracting State, through the diplomatic channel, six months prior written
notice of termination. In such event, the Convention shall cease to have effect:
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a) in the case of Japan:
(i) with respect to taxes withheld at source, for amounts taxable
on or after 1 January in the calendar year next following the
expiration of the six month period;
(ii) with respect to taxes on income which are not withheld at
source, as regards income for any taxable year beginning on
or after 1 January in the calendar year next following the
expiration of the six month period; and
(iii) with respect to other taxes, as regards taxes for any taxable
year beginning on or after 1 January in the calendar year next
following the expiration of the six month period; and
b) in the case of Australia:
(i) with respect to withholding tax on income that is derived by a
resident of Japan, in relation to income derived on or after
1 January in the calendar year next following the expiration of
the six month period; and
(ii) with respect to other taxes, as regards any taxable year
beginning on or after 1 July in the calendar year next
following the expiration of the six month period.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by
their respective Governments, have signed this Convention.
DONE in duplicate at Tokyo this thirty-first day of January, 2008, in the
English and Japanese languages, each text being equally authentic.
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For Australia
For Japan
Hon. Stephen Smith
Minister for Foreign Affairs
[Signatures omitted]
Hon. Masahiko Koumura
Minister for Foreign Affairs
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Protocol
At the signing of the Convention between Australia and Japan for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income (hereinafter referred to as “the Convention”),
Australia and Japan have agreed upon the following provisions, which shall
form an integral part of the Convention.
1. With reference to subparagraph b) of paragraph 1 of Article 2 (Taxes
Covered) of the Convention:
The term “the petroleum resource rent tax” means the resource rent tax, in
respect of offshore projects relating to the exploration for or exploitation of
petroleum resources, imposed under the Petroleum Resource Rent Tax Act
1987.
2. With reference to subparagraph d) of paragraph 1 of Article 3
(General Definitions) of the Convention:
The term “Australian tax” or “Japanese tax” shall not include any amount which
represents a penalty or interest imposed under the laws of Australia or Japan,
respectively, relating to the taxes to which the Convention applies.
3. With reference to paragraph 2 of Article 4 (Resident) of the
Convention:
It is understood that the fact of having an habitual abode in a Contracting State
rather than in the other Contracting State shall be taken into account in
determining where the individual’s centre of vital interests is situated.
4. With reference to paragraph 3 of Article 4 (Resident) of the
Convention:
It is understood that the term “any other relevant factors” includes:
a) where the senior day-to-day management is carried on;
b) which Contracting State’s law governs the legal status;
Convention between Australia and Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income Schedule 6
International Tax Agreements Act 1953 309
c) where the accounting records are held; and
d) where business is carried on.
5. With reference to subparagraphs b) and c) of paragraph 4 of Article 5
(Permanent Establishment) of the Convention:
a) It is understood that an enterprise of a Contracting State shall not be
considered to operate equipment in the other Contracting State where
the enterprise leases equipment under a lease contract that is solely for
the provision of equipment, including a bareboat lease contract.
b) It is understood that the factors of size, quantity or value of equipment
or the role of equipment in income producing activities are relevant in
determining whether the equipment is substantial on the basis of the
facts and circumstances of each particular case.
c) It is understood that the term “substantial equipment” may include:
(i) industrial earthmoving equipment or construction equipment
used in road building, dam building or powerhouse
construction;
(ii) manufacturing or processing equipment used in a factory; and
(iii) oil or drilling rigs, platforms and other structures used in the
petroleum or mining industry.
6. With reference to paragraph 7 of Article 5 (Permanent Establishment)
of the Convention:
It is understood that the term “substantially negotiate” is included in order to
remove any doubt as to the existence of a permanent establishment where
contracts that have been negotiated by an agent in a Contracting State are
formally concluded in the other Contracting State.
Schedule 6 Convention between Australia and Japan for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
310 International Tax Agreements Act 1953
7. With reference to Articles 6 (Income from Real Property), 7 (Business
Profits), 21 (Other Income) and 22 (Source of Income) of the Convention:
It is understood that nothing in these Articles shall prevent a Contracting State
from applying its domestic tax law in the case where income is derived by a
resident of that Contracting State from real property situated in that Contracting
State, even where such a resident carries on business in the other Contracting
State through a permanent establishment situated therein and the real property is
effectively connected with such permanent establishment. In this case, such
income shall not be deemed to arise from sources in that other Contracting State
for the purposes of applying the domestic tax law of the first-mentioned
Contracting State.
8. With reference to subparagraph f) of paragraph 2 of Article 6 (Income
from Real Property) of the Convention:
It is understood that the rights referred to in that subparagraph principally cover:
a) rights to receive payments where the person receiving the payments
grants rights to explore for or exploit natural resources; and
b) rights to receive payments which arise or are quantified by reference
to the exploitation of, or exploration for, natural resources in
circumstances where the person receiving the payments may not have
an interest in the natural resources or rights over the extraction of, or
exploration for, natural resources.
9. With reference to Articles 7 (Business Profits) and 13 (Alienation of
Property) of the Convention:
It is understood that, where an enterprise of a Contracting State which has
carried on business in the other Contracting State through a permanent
establishment situated therein, receives, after the enterprise has ceased to carry
on business as aforesaid, income, profits or gains attributable to the permanent
establishment, such income, profits or gains may be taxed in that other
Contracting State in accordance with the principles stated in Articles 7 and 13
of the Convention.
Convention between Australia and Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income Schedule 6
International Tax Agreements Act 1953 311
10. With reference to paragraph 6 of Article 7 (Business Profits) of the
Convention:
It is understood that, for the purposes of the paragraph, a good and sufficient
reason to the contrary shall be considered to exist where there is an alternative
method that gives the most appropriate determination of the profits in
accordance with the principles contained in the Article.
11. With reference to subparagraph a) of paragraph 9 of Article 7
(Business Profits) of the Convention:
It is understood that in the case of Japan the term “a trust which is treated as a
company for tax purposes” means a trust, the trustee of which is subject to tax
in respect of profits derived from business carried on by the use of trust estate.
12. With reference to Articles 10 (Dividends), 11 (Interest) and 12
(Royalties) of the Convention:
The term “for the purposes of its tax” in relation to a resident of a Contracting
State refers to the case where a person is a resident of a Contracting State by
virtue of paragraph 1 of Article 4 of the Convention, even if the person is
deemed to be a resident of the other Contracting State by virtue of paragraph 2
or 3 of that Article.
13. With reference to subparagraph a) of paragraph 3 of Article 11
(Interest) of the Convention:
It is understood that the term “any other body exercising governmental
function” shall be determined according to the law of the Contracting State in
which the interest arises.
14. With reference to subparagraph b) of paragraph 3 of Article 11
(Interest) of the Convention:
It is understood that:
a) a financial institution shall be unrelated to a payer of the interest
where, in considering the level of participation in the ownership or
control of either the financial institution or the payer by the other
Schedule 6 Convention between Australia and Japan for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
312 International Tax Agreements Act 1953
party, neither party is able to exert sufficient influence over the other
party;
b) an enterprise shall derive its profits substantially by a certain activity,
where the activity constitutes its main activity when compared to any
other activity that it undertakes in terms of its contribution to the
enterprise’s overall profits.
15. With reference to paragraph 4 of Article 11 (Interest) of the
Convention:
It is understood that the term “arrangement involving back-to-back loans”
would cover, inter alia, any kind of arrangement structured in such a way that a
financial institution which is a resident of a Contracting State receives interest
arising in the other Contracting State and the financial institution pays an
equivalent interest to another person who is a resident of the first-mentioned
Contracting State and, if it received the interest directly from the other
Contracting State, would not be entitled to the exemption from tax with respect
to that interest in that other Contracting State.
16. With reference to paragraph 3 of Article 12 (Royalties) of the
Convention:
The term “royalties” shall not include payments for the use of spectrum
licences. The provisions of Article 7 of the Convention shall apply to such
payments.
17. With reference to subparagraph e) of paragraph 3 of Article 12
(Royalties) of the Convention:
It is understood that the term “forbearance in respect of the use or supply of any
property or right” applies to cases where the holder of any property or right
receives a payment or provides credits, as consideration, for not making such
property or right available to another person.
18. With reference to paragraph 3 of Article 13 (Alienation of Property) of
the Convention:
It is understood that where, in the case of schemes of reorganisation of
companies, the laws of a Contracting State allow for the taxation of the gains
Convention between Australia and Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income Schedule 6
International Tax Agreements Act 1953 313
arising from the disposal of shares in a company to be deferred, such gains shall
be regarded as subject to tax unless any part of the deferred gains is as a result
of a later disposal or reorganisation subject to a statutory exemption under the
laws of that Contracting State.
19. With reference to paragraph 1 of Article 25 (Elimination of Double
Taxation) of the Convention:
For the purposes of the paragraph, the income tax and the petroleum resource
rent tax referred to in subparagraph b) of paragraph 1 of Article 2 of the
Convention shall be treated as a unified tax on income.
20. With reference to Article 26 (Non-Discrimination) of the Convention:
The provisions of the Article shall not apply to the following provisions of the
laws of Australia:
a) Subdivision A of Division 3 of Part III of the Income Tax Assessment
Act 1936 (hereinafter referred to as “ITAA 1936”), which provides
deductions to eligible taxpayers for research and development;
b) Section 26-25 of Part 2-5 of Chapter 2 of the Income Tax Assessment
Act 1997 (hereinafter referred to as “ITAA 1997”), which provides
measures to ensure that taxes can be effectively collected and
recovered, including conservancy measures under the general law; and
c) any provision adopted after the date of signature of the Convention
which is substantially similar in purpose or intent to a provision
covered by this paragraph, or is otherwise agreed between the
Governments of the Contracting States through an exchange of
diplomatic notes.
21. With reference to Article 26 (Non-Discrimination) of the Convention:
It is understood that nothing in the Article shall be construed as restricting the
application of any of the following provisions of the laws of Australia:
a) Subdivision D of Division 2 of Part III of the ITAA 1936, to the extent
those provisions do not allow tax rebates or credits to non-resident
Schedule 6 Convention between Australia and Japan for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
314 International Tax Agreements Act 1953
taxpayers in relation to dividends paid by a company that is a resident
of Australia for the purposes of its tax;
b) Division 6AAA of Part III of the ITAA 1936, which provides for the
taxation of certain residents in relation to non-resident trust estates;
c) Division 13 of Part III of the ITAA 1936, which deals with transfer
pricing;
d) Section 177E of Part IVA of the ITAA 1936, which addresses
dividend stripping arrangements;
e) Part X of the ITAA 1936, which provides for the taxation of certain
residents with interests in controlled foreign companies;
f) Part XI of the ITAA 1936, which provides for the taxation of certain
resident investors in foreign investment funds and foreign life
assurance policies;
g) Section 122-25 of Part 3-3 of Chapter 3 of the ITAA 1997, which does
not permit the deferral of tax arising on the transfer of an asset, where
the subsequent transfer of the asset by the transferee would be beyond
the taxing jurisdiction of Australia under its laws;
h) Part 3-90 of Chapter 3 of the ITAA 1997, which provides for
consolidation of group entities for treatment as a single entity for tax
purposes;
i) Division 820 of Part 4-5 of Chapter 4 of the ITAA 1997, which
addresses thin capitalisation; and
j) any provision adopted after the date of signature of the Convention
which is substantially similar in purpose or intent to a provision
covered by this paragraph, or is otherwise agreed between the
Governments of the Contracting States through an exchange of
diplomatic notes.
Convention between Australia and Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income Schedule 6
International Tax Agreements Act 1953 315
22. With reference to paragraph 1 of Article 28 (Exchange of Information)
of the Convention:
In the case of Australia, the term “taxes of every kind and description imposed
on behalf of the Contracting States” means taxes of every kind and description
imposed under the federal tax laws administered by the Commissioner of
Taxation.
23. It is understood that under paragraph 5 of Article 28 of the Convention
a refusal to supply information held by a bank, other financial institution,
nominee or person acting in an agency or a fiduciary capacity or information
relating to ownership interests must be based on reasons unrelated to the
person’s status as a bank, other financial institution, nominee, agent or
fiduciary, or the fact that the information relates to ownership interests. It is also
understood that under paragraph 5 of Article 28 a Contracting State may decline
to supply information relating to confidential communications between
attorneys, solicitors or other admitted legal representatives in their role as such
and their clients to the extent that the communications are protected from
disclosure under the domestic law of that Contracting State.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by
their respective Governments, have signed this Protocol.
DONE in duplicate at Tokyo this thirty-first day of January, 2008, in the
English and Japanese languages, each text being equally authentic.
For Australia
For Japan
Hon. Stephen Smith
Minister for Foreign Affairs
[Signatures omitted]
Hon. Masahiko Koumura
Minister for Foreign Affairs
Schedule 6 Convention between Australia and Japan for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
316 International Tax Agreements Act 1953
(Japanese Note)
Translation
Tokyo, 31 January, 2008 Excellency: I have the honour to refer to the Convention between Japan and Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income which was signed today (hereinafter referred to as “the Convention”) and to the Protocol also signed today which forms an integral part of the Convention, and to make, on behalf of the Government of Japan, the following proposals: 1. It is understood that both Contracting States shall cooperate for the avoidance of double taxation through appropriate application of the provisions of the Convention and other necessary measures. 2. With reference to Article 9 (Associated Enterprises) of the Convention: It is understood that both Contracting States shall undertake to conduct transfer pricing examinations of enterprises and evaluate applications for advance pricing arrangements in accordance with the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations of the Organisation for Economic Cooperation and Development (hereinafter referred to as “the OECD Transfer Pricing Guidelines”), which reflect the international consensus with respect to these issues. The domestic transfer pricing rules, including the transfer pricing methods, of each Contracting State may be applied in resolving transfer pricing cases under the Convention only to the extent that they are consistent with the OECD Transfer Pricing Guidelines. His Excellency The Hon. Stephen Smith Minister for Foreign Affairs of Australia
Convention between Australia and Japan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income Schedule 6
International Tax Agreements Act 1953 317
3. With reference to paragraph 3 of Article 10 (Dividends) and subparagraph a) of paragraph 3 of Article 23 (Limitation on Benefits) of the Convention: It is understood that the date on which entitlement to the dividends is determined is: a) in the case of Japan, the end of the accounting period for which
the distribution of profits takes place; or b) in the case of Australia, the date the dividends are declared. If the foregoing understanding is acceptable to the Government of Australia, I have the honour to suggest that the present note and Your Excellency’s reply to that effect should be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the Convention. I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.
Masahiko Koumura Minister for Foreign Affairs of Japan [Signature omitted]
Schedule 6 Convention between Australia and Japan for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
318 International Tax Agreements Act 1953
(Australian Note)
Tokyo, 31 January, 2008
Excellency: I have the honour to acknowledge receipt of Your Excellency’s Note of today’s date which in translation reads as follows:
“(Japanese Note)”
The foregoing understanding being acceptable to the Government of Australia, I have the honour to confirm that Your Excellency’s Note and this reply shall be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of the Convention. I take this opportunity to extend to Your Excellency the assurance of my highest consideration.
Stephen Smith Minister for Foreign Affairs
of Australia [Signature omitted]
His Excellency Mr. Masahiko Koumura Minister for Foreign Affairs of Japan
Agreement between the Government of the Commonwealth of Australia and the
Government of Italy for the Avoidance of Double Taxation of Income derived from
International Air Transport Schedule 8
International Tax Agreements Act 1953 319
Schedule 8—Agreement between the
Government of the Commonwealth of
Australia and the Government of Italy
for the Avoidance of Double Taxation
of Income derived from International
Air Transport Section 3
The Government of the Commonwealth of Australia and the Government of
Italy desiring to conclude an Agreement for the avoidance of double taxation of
income derived from international air transport,
Have agreed as follows:
ARTICLE 1
(1) The existing taxes to which the Agreement applies are—
(a) in Australia:
the Commonwealth income tax, including the additional tax upon
the undistributed amount of the distributable income of a private
company, (hereinafter referred to as “Australian tax”);
(b) in Italy:
(i) the tax on income from movable wealth (imposta sui redditi di
ricchezza mobile);
(ii) the complementary tax (imposta complementare progressiva sul
reddito);
(iii) the tax on companies insofar as the tax is charged on income
and not on capital (imposta sulle societa’, per la parte che grava
sul reddito e non sul partrimonio); and
(iv) the taxes on income imposed on behalf of provinces,
municipalities and Chambers of commerce (imposte provinciali,
comunali e camerali sul reddito), (hereinafter referred to as
“Italian tax”).
Schedule 8 Agreement between the Government of the Commonwealth of Australia
and the Government of Italy for the Avoidance of Double Taxation of Income derived
from International Air Transport
320 International Tax Agreements Act 1953
(2) This Agreement shall also apply to any indentical or substantially
similar taxes which are imposed after the date of signature of this Agreement in
addition to, or in place of, the existing taxes.
ARTICLE 2
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” includes any Territory of or under the authority of
the Commonwealth of Australia and any Territory governed by it under
a Trusteeship Agreement;
(b) the term “Italy” means the Italian Republic;
(c) the terms “Contracting State” and “other Contracting State” mean
Australia or Italy, as the context requires;
(d) the term “Australian enterprise” means an enterprise that has its place of
effective management in Australia;
(e) the term “Italian enterprise” means an enterprise that has its place of
effective management in Italy;
(f) the term “enterprise of a Contracting State” means an Australian
enterprise or an Italian enterprise, as the context requires;
(g) the term “tax” means Australian tax or Italian tax, as the context
requires;
(h) the term “operation of aircraft in international traffic” means the
operation of aircraft for the carriage of persons, livestock, goods or mail
between—
(i) Australia and Italy;
(ii) Australia and any other country;
(iii) Italy and any other country;
(iv) countries other than Australia or Italy or places in any such
country,
and in respect of an enterprise engaged in such operations includes the
sale of tickets for, and the provision of services connected with, such
carriage, either for the enterprise itself or for any other enterprise
engaged in such operations.
(2) In the application of the provisions of this Agreement in one of the
Contracting States, any term used but not defined herein shall, unless the
context otherwise requires, have the meaning which it has under the laws in
force in that Contracting State relating to the taxes to which this Agreement
applies.
Agreement between the Government of the Commonwealth of Australia and the
Government of Italy for the Avoidance of Double Taxation of Income derived from
International Air Transport Schedule 8
International Tax Agreements Act 1953 321
ARTICLE 3
(1) Profits derived by an enterprise of a Contracting State from the
operation of aircraft in international traffic or arising from the carriage by air of
persons, livestock, goods or mail between places in that Contracting State, shall
be exempt from tax in the other Contracting State.
(2) The exemption provided in paragraph 1 of this Article shall apply to a
share of the profits from the operation of aircraft in international traffic derived
by an enterprise of a Contracting State through participation in a pooled service,
in a joint air transport operation or in an international operating agency.
ARTICLE 4
(1) This Agreement shall be ratified and the instruments of ratification shall
be exchanged at Rome as soon as possible.
(2) This Agreement shall enter into force on the date of the exchange of the
instruments of ratification and its provisions shall have effect—
(a) in Australia, for the year of income that commenced on the first day of
July 1966 and subsequent years of income;
(b) in Italy, in respect of income assessable for any taxable period
commencing on or after the first day of January 1966.
ARTICLE 5
This Agreement shall continue in effect indefinitely but either Contracting
State may, on or before the thirtieth day of June in any calendar year after the
year 1973, give notice of termination to the other Contracting State and in such
event this Agreement shall cease to be effective—
(a) in Australia, for the year of income commencing on the first day of July
in the calendar year next following that in which the notice of
termination is given, and subsequent years of income; and
(b) in Italy, in respect of income assessable for any taxable period
commencing on or after the first day of January in the calendar year
next following that in which the notice of termination is given.
Schedule 8 Agreement between the Government of the Commonwealth of Australia
and the Government of Italy for the Avoidance of Double Taxation of Income derived
from International Air Transport
322 International Tax Agreements Act 1953
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed the present Agreement.
DONE in duplicate at Canberra the thirteenth day of April, 1972 in the
English and Italian languages, both texts being equally authoritative.
B. M. Snedden
For the Government
of the
Commonwealth of Australia
Paolo Canali
For the Government
of Italy
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 323
Schedule 9—The Commonwealth of Australia
and the Federal Republic of Germany Section 3
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and capital and
to certain other taxes,
Have agreed as follows:
ARTICLE 1
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
(1) The taxes to which this Agreement shall apply are—
(a) in Australia:
the Commonwealth income tax, including the additional tax upon
the undistributed amount of the distributable income of a private
company;
(b) in the Federal Republic of Germany:
the Einkommensteuer (income tax) including the Ergänzungsabgabe
(surcharge) thereon;
the Körperschaftsteuer (corporation tax) including the
Ergänzungsabgabe (surcharge) thereon;
the Vermögensteuer (capital tax); and
the Gewerbesteuer (trade tax).
(2) This Agreement shall also apply to any identical or substantially similar
taxes, on income or capital, which are subsequently imposed under the law of
the Commonwealth of Australia or the law of the Federal Republic of Germany
in addition to, or in place of, the existing taxes.
(3) The provisions of this Agreement in respect of taxation of income or
capital shall, subject to Article 22, likewise apply to the German trade tax,
computed on a basis other than income or capital.
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
324 International Tax Agreements Act 1953
ARTICLE 3
(1) In this Agreement, unless the context otherwise requires—
(a) the term ‘Australia’, when used in a geographical sense, means the
whole of the Commonwealth of Australia, and includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the Commonwealth or to any of the said
Territories in respect of which there is for the time being in
force, consistently with international law, a law of the
Commonwealth or of a State or Territory of the Commonwealth
dealing with the exploitation of any of the natural resources of
the sea--bed and sub--soil of the continental shelf;
(b) the term ‘Federal Republic of Germany’, when used in a geographical
sense, means the territory in which the Basic Law for the Federal
Republic of Germany is in force, as well as any area adjacent to the
territorial waters of the Federal Republic of Germany designated, in
accordance with international law as related to the rights which the
Federal Republic of Germany may exercise with respect to the sea--bed
and sub--soil and their natural resources, as a domestic area for tax
purposes;
(c) the terms ‘Contracting State’ and ‘the other Contracting State’ mean
Australia or the Federal Republic of Germany, as the context requires;
(d) the term ‘person’ means an individual, a company and any other entity
subject to tax;
(e) the term ‘company’ means any body corporate or any entity which is
assimilated to a body corporate for tax purposes;
(f) the terms ‘enterprise of a Contracting State’ and ‘enterprise of the other
Contracting State’ mean an industrial or commercial enterprise carried
on by a resident of Australia or an industrial or commercial enterprise
carried on by a resident of the Federal Republic of Germany, as the
context requires;
(g) the term ‘tax’ means Australian tax or German tax, as the context
requires;
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 325
(h) the term ‘Australian tax’ means tax imposed under the law of the
Commonwealth of Australia, being tax to which this Agreement applies
by virtue of Article 2;
(i) the term ‘German tax’ means tax imposed under the law of the Federal
Republic of Germany, being tax to which this Agreement applies by
virtue of Article 2;
(j) the term ‘competent authority’ means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of the Federal Republic of Germany, the Federal Minister of
Finance.
(2) As regards the application of this Agreement by a Contracting State,
any term not otherwise defined shall, unless the context otherwise requires,
have the meaning which it has under the laws of that Contracting State relating
to the taxes to which this Agreement applies.
ARTICLE 4
(1) For the purposes of this Agreement, a person is a resident of a
Contracting State if—
(a) where Australia is the Contracting State, the person is a resident of
Australia for the purposes of Australian tax and is not—
(i) by reason of his place of residence, not subject to Australian
tax; or
(ii) by that reason so subject only in relation to income from
sources in Australia;
(b) where the Federal Republic of Germany is the Contracting State, the
person is subject to unlimited tax liability in the Federal Republic of
Germany.
(2) Where by reason of the provisions of paragraph (1) an individual is a
resident of both Contracting States, then his case shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident of the Contracting State in which he
has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident of the Contracting State in
which he has an habitual abode, or where he has such habitual abode in
both Contracting States, or if he does not have such habitual abode in
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
326 International Tax Agreements Act 1953
either of them, he shall be deemed to be a resident of the Contracting
State with which his personal and economic relations are closest.
(3) Where by reason of the provisions of paragraph (1) a person other than
an individual is a resident of both Contracting States, then it shall be deemed to
be a resident of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
(1) For the purposes of this Agreement the term ‘permanent establishment’
means a fixed place of business in which the business of the enterprise is wholly
or partly carried on.
(2) The term ‘permanent establishment’ shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) land used for agricultural, pastoral or forestry purposes;
(h) a building site or construction, installation or assembly project which
exists for more than six months.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) A person acting in a Contracting State on behalf of an enterprise of the
other Contracting State—other than an agent of an independent status to whom
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 327
paragraph (5) applies—shall be deemed to be a permanent establishment of that
enterprise in the first--mentioned State—
(a) if he has, and habitually exercises in that State, an authority to conclude
contracts binding the enterprise, unless his activities are limited to the
purchase of goods or merchandise for the enterprise;
(b) if in so acting goods or merchandise belonging to the enterprise are
manufactured or processed by him in that State for the enterprise,
provided that this provision shall apply only in relation to the goods or
merchandise so manufactured or processed.
(5) An enterprise of a Contracting State shall not be deemed to have a
permanent establishment in the other Contracting State merely because it carries
on business in that other State through a broker, general commission agent or
any other agent of an independent status, where that person is acting in the
ordinary course of his business as such a broker or agent.
(6) The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself make either
company a permanent establishment of the other.
ARTICLE 6
Income from real property situated in a Contracting State, including royalties
or similar payments in respect of the exploitation of mines, quarries or other
natural resources so situated, may be taxed in that State.
ARTICLE 7
(1) The profits of an enterprise of a Contracting State shall be taxable only
in that State unless the enterprise carries on business in the other Contracting
State through a permanent establishment situated therein. If the enterprise
carries on business as aforesaid, the profits of the enterprise may be taxed in the
other State but only so much of them as is attributable to that permanent
establishment.
(2) Where an enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment situated therein,
there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a distinct
and separate enterprise engaged in the same or similar activities under the same
or similar conditions and dealing wholly independently with the enterprise of
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
328 International Tax Agreements Act 1953
which it is a permanent establishment. In the determination of such profits there
shall be allowed as deductions expenses which are incurred for the purposes of
the permanent establishment, including executive and general administrative
expenses so incurred, whether in the State in which the permanent
establishment is situated or elsewhere.
(3) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(4) For the purposes of this Article, except as provided in the Articles
referred to in this paragraph, the profits of an enterprise do not include income
or profits dealt with in Articles 6, 8, 10, 11, 12, 13, 15 and 16.
ARTICLE 8
(1) A resident of a Contracting State shall be exempt from tax in the other
Contracting State on profits from the operation of ships or aircraft.
(2) Notwithstanding the provisions of paragraph (1), a resident of a
Contracting State may be taxed in the other Contracting State on profits from
operations of ships or aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a resident
of a Contracting State through participation in a pool service, in a joint transport
operating organisation or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mails, goods or merchandise shipped
in a Contracting State for discharge at another place in that State or, in the case
of Australia, at a place in the Territory of Papua or the Trust Territory of New
Guinea are profits from operations confined solely to places in that State.
(5) The amount which shall be charged to tax in a Contracting State as
profits from the operation of ships or aircraft in respect of which a resident of
the other Contracting State may be taxed in the first--mentioned State under
paragraph (2) or (3) shall not exceed 5 per cent of the amount paid or payable
(net of rebates) in respect of carriage in such operations.
(6) Paragraph (5) shall not apply to profits derived from the operation of
ships or aircraft by a resident of a Contracting State whose principal place of
business is in the the other Contracting State, nor shall it apply to profits derived
from the operation of ships or aircraft by a resident of a Contracting State if
those profits are derived otherwise than from the carriage of passengers,
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 329
livestock, mails, goods or merchandise. In such cases, the provisions of Article
7 shall apply but there shall be excluded from the profits on which any such
person is charged to Australian tax any amount of profits taxed in the Territory
of Papua or the Trust Territory of New Guinea.
ARTICLE 9
Where—
(a) an enterprise of a Contracting State participates directly or indirectly in
the management, control or capital of an enterprise of the other
Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions are operative between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
ARTICLE 10
(1) Dividends paid by a company which is a resident of Australia for
purposes of Australian tax to a resident of the Federal Republic of Germany
may be taxed in Australia, but the tax so charged shall not exceed 15 per cent of
the gross amount of the dividends.
(2) Dividends paid by a company which is subject to unlimited tax liability
in the Federal Republic of Germany to a resident of Australia may be taxed in
the Federal Republic of Germany, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
(3) The term ‘dividends’ in this Article means income from shares and
other income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident,
and shall include, in the case of paragraph (2), the income of a sleeping partner
(stiller Gesellschafter) from his participation as such.
(4) The provisions of paragraphs (1) and (2) shall not apply if the recipient
of the dividends has in the Contracting State of which the company paying the
dividends is a resident a permanent establishment with which the holding by
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
330 International Tax Agreements Act 1953
virtue of which the dividends are paid is effectively connected. In such a case,
the provisions of Article 7 shall apply.
ARTICLE 11
(1) Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in the first--mentioned State, but the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
(2) The term ‘interest’ in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to interest by
the taxation law of the Contracting State in which the income arises.
(3) The provisions of paragraph (1) shall not apply if the recipient of the
interest has in the Contracting State in which the interest arises a permanent
establishment with which the indebtedness from which the interest arises is
effectively connected. In such a case, the provisions of Article 7 shall apply.
(4) Interest shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a State or a Land of that Contracting State or a
political subdivision or local authority of that Contracting State or a person who
is a resident of that Contracting State for the purposes of its tax. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a State other than that of which he is a resident a
permanent establishment in connection with which the indebtedness on which
the interest is paid was incurred, and the interest is borne by the permanent
establishment, then the interest shall be deemed to arise in the State in which the
permanent establishment is situated.
(5) Where, owing to a special relationship between the payer and the
recipient or between both of them and some other person, the amount of the
interest paid, having regard to the indebtedness for which it is paid, exceeds the
amount which might have been expected to have been agreed upon by the payer
and the recipient in the absence of such relationship, the provisions of this
Article shall apply only to the last--mentioned amount. In that case, the excess
part of the amount of the interest paid shall remain taxable according to the law
of each Contracting State, but subject to the other provisions of this Agreement.
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 331
ARTICLE 12
(1) Royalties arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in the first--mentioned State, but the tax
so charged shall not exceed 10 per cent of the gross amount of the royalties.
(2) The term ‘royalties’ in this Article means payments, whether periodical
or not, and however described and computed, to the extent to which they are
paid as consideration for the use of, or the right to use, any copyright, patent,
design or model, plan, secret formula or process, trade--mark, or other like
property or right, or industrial, commercial or scientific equipment, or for the
supply of scientific, technical, industrial or commercial knowledge or
information, or for the supply of any assistance connected with the supply of
such knowledge or information, and includes any payments to the extent to
which they are paid as consideration for the use of, or the right to use, motion
picture films, films or video tapes for use in connection with television or tapes
for use in connection with radio broadcasting.
(3) The provisions of paragraph (1) shall not apply if the recipient of the
royalties has in the Contracting State in which the royalties arise a permanent
establishment with which the asset giving rise to the royalties is effectively
connected. In such a case, the provisions of Article 7 shall apply.
(4) Royalties shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a State or a Land of that Contracting State or a
political subdivision or local authority of that Contracting State or a person who
is a resident of that Contracting State for the purposes of its tax. Where,
however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a State other than that of which he is a resident a
permanent establishment in connection with which the liability to pay the
royalties was incurred, and the royalties are borne by the permanent
establishment, then the royalties shall be deemed to arise in the State in which
the permanent establishment is situated.
(5) Where, owing to a special relationship between the payer and the
recipient or between both of them and some other person, the amount of the
royalties paid, having regard to what they are paid for, exceeds the amount
which might have been expected to have been agreed upon by the payer and the
recipient in the absence of such relationship, the provisions of this Article shall
apply only to the last--mentioned amount. In that case, the excess part of the
amount of the royalties paid shall remain taxable according to the law of each
Contracting State, but subject to the other provisions of this Agreement.
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
332 International Tax Agreements Act 1953
ARTICLE 13
Income derived by an individual who is a resident of a Contracting State in
respect of professional services or other independent activities of a similar
character shall be taxable only in that State unless he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing his
activities. If he has such a fixed base, the income may be taxed in the other
State but only so much of it as is attributable to that fixed base.
ARTICLE 14
(1) Subject to the provisions of Articles 15, 17, 18 and 19, remuneration
derived by an individual who is a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived from that exercise may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by an individual who is a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall, if—
(a) the period, or the aggregate of the periods, for which the recipient is
present in the other State in the year of income or the assessment
period, as the case may be, of the other State during which the
employment is exercised does not exceed 183 days;
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed
base which the employer has in the other State,
be taxable only in the first--mentioned State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that State.
ARTICLE 15
Directors’ fees and similar payments derived by a resident of a Contracting
State in his capacity as a member of the board of directors of a company which
is a resident of the other Contracting State may be taxed in that other State.
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 333
ARTICLE 16
(1) Notwithstanding the provisions of Articles 13 and 14, income derived
by public entertainers (such as theatrical, motion picture, radio or television
artists and musicians and athletes) from their personal activities as such may be
taxed in the Contracting State in which these activities are exercised.
(2) Notwithstanding anything contained in this Agreement, where the
services of a public entertainer mentioned in paragraph (1) are provided in a
Contracting State by an enterprise of the other Contracting State, the profits
derived by that enterprise from providing those services may be taxed in the
first--mentioned State if the public entertainer performing the services controls,
directly or indirectly, that enterprise.
ARTICLE 17
(1) Remuneration (other than a pension or annuity) paid by the
Commonwealth of Australia, a State of the Commonwealth or a political
subdivision or local authority of the Commonwealth or of a State to any
individual in respect of an employment shall be taxable only in Australia. If,
however, the employment is exercised in the Federal Republic of Germany by
an individual who is a German citizen or is subject to unlimited tax liability in
the Federal Republic of Germany such remuneration shall be taxable only in the
Federal Republic of Germany.
(2) Remuneration (other than a pension or annuity) paid by the Federal
Republic of Germany, a Land or a political subdivision or local authority
thereof to any individual in respect of an employment shall be taxable only in
the Federal Republic of Germany. If, however, the employment is exercised in
Australia by an individual who is an Australian citizen or is ordinarily resident
in Australia such remuneration shall be taxable only in Australia.
(3) This Article shall not apply to remuneration in respect of an
employment exercised in connection with any trade or business carried on by a
Government, a political subdivision or an authority referred to in paragraphs (1)
or (2).
ARTICLE 18
Pensions and annuities paid to a resident of a Contracting State shall be
taxable only in that State.
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
334 International Tax Agreements Act 1953
ARTICLE 19
(1) Remuneration which a professor or teacher who is a resident of a
Contracting State and who visits the other Contracting State for a period not
exceeding two years for the purpose of carrying out advanced study or research
or of teaching at a university, college, school or other educational institution
receives for those activities shall not be taxed in that other State.
(2) Payments which a student who is, or immediately before was, a resident
of a Contracting State and who is temporarily present in the other Contracting
State solely for the purpose of his education receives from sources outside that
other State for the purposes of his maintenance or education shall not be taxed
in that other State.
ARTICLE 20
Where a person, who by reason of the provisions of paragraph (1)of Article
4 is a resident of both Contracting States but by reason of the provisions of
paragraphs (2) or (3) of Article 4 is deemed for the purposes of this Agreement
to be a resident solely of one of the Contracting State, derives income—
(a) from sources in that Contracting State; or
(b) from sources outside both Contracting States,
that income shall be taxable only in that Contracting State.
ARTICLE 21
(1) Capital represented by real property may be taxed in the Contracting
State in which the property is situated.
(2) Capital represented by property, other than real property, forming part
of the business property of a permanent establishment of an enterprise, or by
property, other than real property, pertaining to a fixed base used for the
performance of professional services, may be taxed in the Contracting State in
which the permanent establishment or fixed base is situated.
(3) Capital represented by ships and aircraft operated in international traffic
by a resident of a Contracting State or by property, other than real property,
pertaining to the operation of such ships and aircraft, shall be taxable only in
that State.
ARTICLE 22
(1) Subject to any provisions of the law of Australia from time to time in
force regulating the allowance of a credit against Australian tax of tax paid in a
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 335
country outside Australia, German tax paid, whether directly or by deduction, in
respect of income derived by a person who is a resident of Australia from
sources in the Federal Republic of Germany (not including, in the case of a
dividend, tax paid in respect of the profits out of which the dividend is paid)
shall be allowed as a credit against Australian tax payable in respect of that
income.
(2) German tax shall be determined in the case of a resident of the Federal
Republic of Germany as follows:
(a) Unless the provisions of sub--paragraph (b) apply, there shall be
excluded from the basis upon which German tax is imposed, any item
of income from sources within Australia, and any item of capital falling
under paragraphs (1) and (2) of Article 21 and situated within Australia,
which, according to this Agreement, may be taxed in Australia. In the
determination of its rate of tax applicable to any item of income or
capital not so excluded, the Federal Republic of Germany will,
however, take into account the items of income and capital so excluded.
The first sentence of this sub--paragraph shall, in the case of income
from dividends, apply only to such dividends as are paid to a company
which is a resident of the Federal Republic of Germany by a company
which is a resident of Australia of which at least 25 per cent of the
voting shares or of the total shares issued are owned by the German
company. There shall also be excluded from the basis upon which
German tax is imposed any shareholding, the dividends on which it paid
would be excluded from the basis upon which tax is imposed according
to the immediately foregoing sentence.
(b) Subject to the provisions of German tax law regulating credit for
foreign tax, there shall be allowed as a credit against German tax on
income payable in respect of the following items of income the
Australian tax paid in accordance with this Agreement on those items of
income, namely—
(i) dividends to which sub--paragraph (a) does not apply;
(ii) profits from the operation of ships or aircraft which may be
taxed in Australia according to Article 8 and do not fall under
paragraph (6) of that Article;
(iii) interest to which paragraph (1) of Article 11 applies;
(iv) royalties to which paragraph (1) of Article 12 applies;
(v) remuneration to which Article 15 applies;
(vi) profits to which paragraph (2) of Article 16 applies;
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
336 International Tax Agreements Act 1953
(vii) any item of income not dealt with in the foregoing Articles of
this Agreement.
ARTICLE 23
(1) Where a resident of a Contracting State considers that the actions of one
or both of the Contracting States result or will result for him in taxation not in
accordance with this Agreement, he may, notwithstanding the remedies
provided by the national laws of those States, present his case to the competent
authority of the Contracting State of which he is a resident.
(2) The competent authority shall endeavour, if the objection appears to it
to be justified and if it is not itself able to arrive at an appropriate solution, to
resolve the case with the competent authority of the other Contracting State,
with a view to the avoidance of taxation not in accordance with this Agreement.
(3) The competent authorities of the Contracting States shall together
endeavour to resolve any difficulties or doubts arising as to the interpretation or
application of this Agreement.
(4) The competent authorities of the Contracting States may communicate
with each other directly for the purpose of reaching an agreement in the sense of
the preceding paragraphs.
ARTICLE 24
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or for the
prevention of fraud or for the administration of statutory provisions against
avoidance of the taxes which are the subject of this Agreement. Any
information so exchanged shall be treated as secret and shall not be disclosed to
any persons or authorities (including a court) other than those concerned with
the assessment or collection of the taxes which are the subject of this
Agreement, or the determination of appeals or the prosecution of offences in
relation thereto.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 337
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 25
(1) Nothing in this Agreement shall affect diplomatic or consular privileges
under the general rules of international law or under the provisions of special
international agreements.
(2) Insofar as, due to such privileges granted to a person under the general
rules of international law or under the provisions of special international
agreements, income or capital is not subject to tax in the receiving State, the
right to tax shall be reserved to the sending State.
ARTICLE 26
This Agreement shall also apply to Land Berlin, provided that the
Government of the Federal Republic of Germany has not made a contrary
declaration to the Government of the Commonwealth of Australia within three
months from the date of entry into force of this Agreement.
ARTICLE 27
(1) This Agreement may be extended, either in its entirety or with
modifications, to any Territory for whose international relations Australia is
responsible, and which imposes taxes substantially similar in character to those
which are the subject of this Agreement, and any such extension shall take
effect from such date and subject to such modifications and conditions
(including conditions as to termination) as may be specified and agreed between
the Contracting States in Letters to be exchanged through diplomatic channels
for this purpose.
(2) The termination of this Agreement under Article 29 shall, unless
otherwise expressly agreed by both Contracting States, terminate the application
of this Agreement to any Territory to which it has been extended under this
Article.
ARTICLE 28
(1) This Agreement shall be ratified and the instruments of ratification shall
be exchanged at Bonn as soon as possible.
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
338 International Tax Agreements Act 1953
(2) This Agreement shall enter into force on the thirtieth day after the date
of exchange of the instruments of ratification and shall have effect—
(a) in both Contracting States, as respects any withholding tax on
dividends, interest and royalties derived on or after 1 July 1971;
(b) in Australia, as respects tax on income of any year of income beginning
on or after 1 July 1971;
(c) in the Federal Republic of Germany, as respects taxes which are levied
for the assessment period 1971 and for subsequent assessment periods.
ARTICLE 29
This Agreement shall continue in effect indefinitely but either of the
Contracting States may, on or before the thirtieth day of June in any calendar
year, give to the other Contracting State, through diplomatic channels, written
notice of termination and, in that event, this Agreement shall cease to be
effective—
(a) in both Contracting States, as respects any withholding tax on
dividends, interest and royalties derived on or after 1 July in the
calendar year next following that in which the notice of termination is
given;
(b) in Australia, as respects tax on income of any year of income beginning
on or after 1 July in the calendar year next following that in which the
notice of termination is given;
(c) in the Federal Republic of Germany, as respects taxes which are levied
for the assessment period next following that in which the notice of
termination is given, and for subsequent assessment periods.
IN WITNESS WHEREOF the undersigned, being duly authorized thereto by
their respective Governments, have signed this Agreement.
DONE at Melbourne this twenty--fourth day of November 1972, in four
originals, two in the English language and two in the German language, all texts
being equally authentic.
B. M. SNEDDEN HEINZ VOIGT
FOR THE COMMONWEALTH
OF AUSTRALIA
FOR THE FEDERAL REPUBLIC
OF GERMANY
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 339
PROTOCOL
THE COMMONWEALTH OF AUSTRALIA AND THE FEDERAL
REPUBLIC OF GERMANY
HAVE AGREED AT THE SIGNING of the Agreement between the two
States for the avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and capital and to certain other taxes upon the
following provisions which shall form an integral part of the said Agreement.
(1) With reference to Article 5,
an enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent
establishement if it carries on supervisory activities in that State for
more than six months in connection with a building site, or a
construction, installation or assembly project which is being undertaken
in that State.
(2) With reference to Article 6,
income from real property shall be taken to include income from leases
of land.
(3) With reference to Articles 6 to 8 and 10 to 16,
income derived by a resident of the Federal Republic of Germany
which, under Articles 6 to 8 and 10 to 16 of the Agreement, may be
taxed in Australia may be deemed, for the purposes of the
Commonwealth income tax law, to be income from sources in
Australia.
(4) With reference to Article 7,
(a) insofar as it is customary in a Contracting State, in determining the
profits to be attributed to a permanent establishment, to do so on the
basis of an apportionment of the total profits of the enterprise to its
various parts, that method may be adopted for the purpose of the
application of Article 7 of the Agreement, provided that it shall be
applied in such a way that the result accords with the principles stated in
that Article.
(b) Article 7 of the Agreement shall not apply to profits of an enterprise
from carrying on a business of any form of insurance, other than life
insurance.
(5) With reference to Articles 7 and 9,
where the information available to the competent authority of a
Contracting State is inadequate to determine the profits of an enterprise
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
340 International Tax Agreements Act 1953
on which tax may be imposed in that State in accordance with Article 7
or Article 9 of the Agreement, nothing in those Articles shall prevent
the application to that enterprise of any law of that State making
provision for determining the tax liability of an enterprise in special
circumstances, provided that that law shall be applied, so far as the
information available to the competent authority permits, in accordance
with the principles applicable under Articles 7 and 9.
(6) With reference to Article 10,
notwithstanding the provisions of paragraph (2) of Article 10 of the
Agreement German tax on dividends to which that paragraph applies
paid to a company which is a resident of Australia by a company which
is a resident of the Federal Republic of Germany, at least 25 per cent of
the capital of which is held directly or indirectly by the Australian
company itself, or by it together with other persons controlling it or
being under common control with it, may be charged at a rate not
exceeding 25.75 per cent of the gross amount of the dividends if the rate
of German corporation tax on distributed profits is lower than that on
undistributed profits and the difference between those two rates is 20
percentage points or more.
(7) With reference to Articles 10 to 12,
the references in Articles 10 to 12 of the Agreement to dividends,
interest or royalties paid to a resident of a Contracting State refer to
dividends, interest or royalties to which a resident of the Federal
Republic of Germany is beneficially entitled, and to dividends, interest
or royalties to which a resident of Australia is entitled
(bezugsberechtigt), being economically the owner (wirtschaftlicher
Eigentumer) of the assets on which the dividends, interest or royalties
are paid, as the case may be.
(8) With reference to Articles 10 to 12 and 22,
for the purposes of Articles 10 to 12 and of paragraph (1) and
sub--paragraph (b) of paragraph (2) of Article 22 of the Agreement the
term ‘tax’ does not include any amount which represents a penalty or
interest relating to the taxes to which the Agreement applies, imposed
under the law in force in Australia or in the Federal Republic of
Germany.
(9) With reference to Article 11,
interest derived by the Government of a Contracting State, or by any
other body exercising governmental functions in, or in a part of, a
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 341
Contracting State, or by a bank performing central banking functions in
a Contracting State, shall be exempt from tax in the other Contracting
State.
(10) With reference to Article 22,
(a) where income derived by a resident of a Contracting State may, under
the provisions of Articles 6 to 8 and 10 to 16 of the Agreement, be
taxed, even at a limited rate, in the other Contracting State, such income
shall for the purposes of Article 22 of the Agreement be considered to
be income from sources in that other State;
(b) for the purposes of paragraph (1) of Article 22 of the Agreement the
term ‘German tax’ shall include German trade tax only where it is
levied on a basis other than capital or pay--roll;
(c) for the purposes of sub--paragraph (a) of paragraph (2) of Article 22 of
the Agreement, the term ‘Australia’ does not, in relation to an item of
income derived by a resident of the Federal Republic of Germany from
sources in a Territory or area referred to in sub--paragraph (a) (i) to (vi)
of paragraph (1) of Article 3, include that area if Australian tax does not
apply in relation to such income;
(d) sub--paragraph (a) of paragraph (2) of Article 22 of the Agreement shall
apply to the profits of a permanent establishment or to dividends paid
by a company only if the profits of the permanent establishement or the
income of the company are derived exclusively or almost exclusively—
(i) from producing, manufacturing or processing goods or from
similar activities, the exploration for or exploitation or
treatment of minerals, quarrying, primary production, building,
construction or assembly, transport, storage or communication,
giving advice or rendering services, leasing or renting, banking,
hire--purchase or money--lending or insurance, within
Australia, selling goods or merchandise within or from
Australia, or such other activities as may be agreed by the
Contracting States in Letters to be exchanged for this purpose;
or
Schedule 9 The Commonwealth of Australia and the Federal Republic of Germany
342 International Tax Agreements Act 1953
(ii) from dividends paid by one or more companies, being residents
of Australia, of which at least 25 per cent of the voting shares or
of the total shares issued are owned by the first--mentioned
company, which themselves derive their income exclusively or
almost exclusively from the activities referred to in (i).
If these conditions are not met, subparagraph (b) of paragraph (2) of
Article 22 of the Agreement shall extend to and shall apply both to the
income and capital concerned;
(e) where, as long as German trade tax is levied on income, Australian tax
paid in accordance with the Agreement on dividends, interest or
royalties derived from Australia exceeds the corresponding German
income or corporation tax against which credit is to be given by virtue
of sub--paragraph (b) of paragraph (2) of Article 22 of the Agreement,
there shall be deducted from such income, when computing the basis of
the trade tax, such part of that income as corresponds to the ratio
between the excess amount of Australian tax and the total amount of
Australian tax, paid in accordance with the Agreement.
(11) General
(a) in the event that Australia should cease to allow a company which is a
resident of Australia a rebate in its assessment at the average rate of tax
payable by the company in respect of dividends derived from sources in
the Federal Republic of Germany and included in the taxable income of
the company, the Commonwealth of Australia will immediately advise
the Federal Republic of Germany of the change and enter into
negotiations with the Federal Republic of Germany in order to establish
new provisions concerning the credit to be allowed by Australia against
its tax on the dividends;
(b) in the event that the Federal Republic of Germany, in relation to
dividends received by one company from another company, should
reduce in its corporation tax law or in an agreement for the avoidance of
double taxation with another country the percentage shareholding
entitling the receiving company to relief from German corporation tax,
the Federal Republic of Germany will immediately advise the
Commonwealth of Australia of the reduction and enter into negotiations
with the Commonwealth in order to introduce such lower percentage
test into the Agreement;
(c) unless the context of the Agreement and of this Protocol otherwise
requires, words in the singular include the plural and words in the plural
include the singular.
The Commonwealth of Australia and the Federal Republic of Germany Schedule 9
International Tax Agreements Act 1953 343
DONE at Melbourne on the twenty--fourth day of November 1972, in four
originals, two in the English language and two in the German language, all texts
being equally authentic.
B. M. SNEDDEN HEINZ VOIGT
FOR THE COMMONWEALTH OF
AUSTRALIA
FOR THE FEDERAL REPUBLIC
OF GERMANY
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Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
344 International Tax Agreements Act 1953
Schedule 10—Agreement between Australia
and the Kingdom of the Netherlands
for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion
with respect to Taxes on Income Section 3
The Government of Australia and the Government of the Kingdom of the
Netherlands,
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
CHAPTER I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are—
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in the Netherlands:
the Inkomstenbelasting (income tax);
the Loonbelasting (wages tax);
the Vennootschapsbelasting (corporation tax);
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the Dividendbelasting (dividend tax).
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by one of the States after the date of signature of this
Agreement in addition to, or in place of, the existing taxes. At the end of each
calendar year, the competent authority of each State shall notify the competent
authority of the other State of any substantial changes which have been made in
the taxation laws of his State to which this Agreement applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires:
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia and the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and sub--soil of the continental shelf;
(b) the term “the Netherlands” means that part of the Kingdom of the
Netherlands that is situated in Europe and the part of the seabed and its
sub--soil under the North Sea over which the Kingdom of the
Netherlands has sovereign rights in accordance with international law;
(c) the terms “State”, “one of the States” and “other State” mean Australia
or the Netherlands, as the context requires;
(d) the term “person” means an individual, a company and any other body
of persons;
(e) the term “company” means any body corporate or any entity which is
assimilated to a body corporate for tax puroses;
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(f) the term “tax” means Australian tax or Netherlands tax, as the context
requires;
(g) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(h) the term “Netherlands tax” means tax imposed by the Netherlands,
being tax to which this Agreement applies by virtue of Article 2;
(i) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorised representative, and in the
case of the Netherlands, the Minister of Finance or his authorised
representative;
(j) the terms “enterprise of one of the States” and “enterprise of the other
State” mean an enterprise carried on by a resident of Australia or an
enterprise carried on by a resident of the Netherlands, as the context
requires;
(k) words in the singular include the plural and words in the plural include
the singular.
(2) In this Agreement, the terms “Australian tax” and “Netherlands tax” do
not include any penalty or interest imposed under the law of either State relating
to the taxes to which this Agreement applies by virtue of Article 2.
(3) As regards the application of this Agreement by either of the States, any
term not otherwise defined shall, unless the context otherwise requires, have the
meaning which it has under the laws of that State relating to the taxes to which
this Agreement applies.
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
States—
(a) in the case of Australia, subject to paragraph (2), if the person is a
resident of Australia for the purposes of Australian tax; and
(b) in the case of the Netherlands, if the person is a resident of the
Netherlands for the purposes of Netherlands tax but not if he is liable to
tax in the Netherlands in respect only of income from sources therein.
(2) In relation to income from sources in the Netherlands, a person who is
subject to Australian tax on income which is from sources in Australia shall not
be treated as a resident of Australia unless the income from sources in the
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Netherlands is subject to Australian tax or, if that income is exempt from
Australian tax, it is so exempt solely because it is subject to Netherlands tax.
(3) Where by reason of the provisions of paragraph (1) an individual is a
resident of both States, then his status shall be determined in accordance with
the following rules:
(a) he shall be deemed to be a resident solely of the State in which he has a
permanent home available to him;
(b) if he has a permanent home available to him in both States, or if he does
not have a permanent home available to him in either of them, he shall
be deemed to be a resident solely of the State with which his personal
and economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1) a person other than
an individual is a resident of both States, then it shall be deemed to be a resident
solely of the State in which its place of effective management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement the term “permanent establishment”
means a fixed place of business in which the business of the enterprise is wholly
or partly carried on.
(2) The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
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(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one
of the States and to carry on business through that permanent establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or the exploitation of, natural resources, or in activities connected with
such exploration or exploitation.
(5) A person acting in one of the States on behalf of an enterprise of the
other State—other than an agent of an independent status to whom
paragraph (6) applies—shall be deemed to be a permanent establishment of that
enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise, provided that this
provision shall apply only in relation to the goods or merchandise so
manufactured or processed.
(6) An enterprise of one of the States shall not be deemed to have a
permanent establishment in the other State merely because it carries on business
in that other State through a broker, general commission agent or any other
agent of an independent status, where that person is acting in the ordinary
course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the States controls
or is controlled by a company which is a resident of the other State, or which
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carries on business in that other State (whether through a permanent
establishment or otherwise) shall not of itself make either company a permanent
establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be
applied in determining for the purposes of this Agreement whether there is a
permanent establishment outside both States, and whether an enterprise, not
being an enterprise of one of the States, has a permanent establishment in one of
the States.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or of the exploitation of any natural
resource, may be taxed in the State in which the real property, mines, quarries,
or natural resources are situated.
(2) Income from a lease of land and income from any other direct interest
in or over land, whether or not improved, shall be regarded as income from real
property. Income from debt--claims of every kind, excluding bonds or
debentures, secured by mortgage of real property or of any other direct interest
in or over land, shall also be regarded as income from real property. However,
income from ships, boats or aircraft shall not be regarded as income from real
property.
(3) The provisions of paragraphs (1) and (2) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the States shall be taxable only in
that State unless the enterprise carries on business in the other State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State, but only
so much of them as is attributable to that permanent establishment.
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(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the States carries on business in the other State through a permanent
establishment situated therein, there shall in each State be attributed to that
permanent establishment the profits which it might be expected to make if it
were a distinct and separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment or with other enterprises
with which it deals.
(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions expenses of the enterprise, which are incurred for
the purposes of the permanent establishment (including executive and general
administrative expenses so incurred) and which would be deductible if the
permanent establishment were an independent entity which paid those expenses,
whether incurred in the State in which the permanent establishment is situated
or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(5) For the purposes of this Article, except as provided in the Articles
referred to in this paragraph, the profits of an enterprise do not include items of
income dealt with in Articles 6, 8, 10, 11, 12, 13, 14, 16 and 17.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of
one of the States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be
taxed in the other State where they are profits from operations of ships or
aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a resident
of a State through participation in a pool service, in a joint transport operating
organisation or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage of
passengers, livestock, mail, goods or merchandise shipped in a State for
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discharge at another place in that State shall be treated as profits from
operations of ships or aircraft confined solely to places in that State.
(5) The amount which shall be charged to tax in one of the States as profits
from the operation of ships or aircraft in respect of which a resident of the other
State may be taxed in the first--mentioned State under paragraph (2) or (3) shall
not exceed 5 per cent of the amount paid or payable (net of rebates) in respect of
carriage in such operations.
(6) Paragraph (5) shall not apply to profits derived from the operation of
ships or aircraft by a resident of one of the States whose principal place of
business is in the other State, nor shall it apply to profits derived from the
operation of ships or aircraft by a resident of a State if those profits are derived
otherwise than from the carriage of passengers, livestock, mail, goods or
merchandise.
ARTICLE 9
Associated Enterprises
(1) Where—
(a) an enterprise of one of the States participates directly or indirectly in the
management, control or capital of an enterprise of the other State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the States and an enterprise
of the other State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) Where profits on which an enterprise of one of the States has been
charged to tax in that State are also included, by virtue of paragraph (1), in the
profits of an enterprise of the other State and taxed accordingly, and the profits
so included are profits which might have been expected to have accrued to the
enterprise of the other State if the conditions operative between the enterprises
had been those which might have been expected to have operated between
independent enterprises dealing wholly independently with one another, then
the first--mentioned State shall make an appropriate adjustment to the amount
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of tax charged on those profits in the first--mentioned State. In determining such
an adjustment due regard shall be had to the other provisions of this Agreement
in relation to the nature of the income, and for this purpose the competent
authorities of the States shall if necessary consult each other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the States
for the purposes of its tax, being dividends to which a resident of the other State
is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the State of which the company paying
the dividends is a resident for the purposes of its tax, and according to the law
of that State, but the tax so charged shall not exceed 15 per cent of the gross
amount of the dividends. The provisions of this paragraph shall not affect the
taxation of the company in respect of the profits out of which the dividends are
paid.
(3) The term “dividends” in this Article means—
(a) in the case of Australia, income from shares and other income
assimilated to income from shares by the taxation law of Australia; and
(b) in the case of the Netherlands, income which is subject to dividend tax.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the States,
carries on business through a permanent establishment situated in the other
State, being the State of which the company paying the dividends is a resident,
and the holding in respect of which the dividends are paid is effectively
connected with that permanent establishment. In such a case, the provisions of
Article 7 shall apply.
(5) Dividends paid by a company which is a resident of one of the States,
being dividends to which a person who is not a resident of the other State is
beneficially entitled, shall be exempt from tax in that other State except insofar
as the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment situated in that other State. Provided
that this paragraph shall not apply in relation to dividends paid by any company
which is a resident of Australia for the purposes of Australian tax and which is
also a resident of the Netherlands for the purposes of Netherlands tax.
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ARTICLE 11
Interest
(1) Interest arising in one of the States, being interest to which a resident of
the other State is beneficially entitled, may be taxed in that other State.
(2) Such interest may be taxed in the State in which it arises, and according
to the law of that State, but the tax so charged shall not exceed 10 per cent of
the gross amount of the interest.
(3) The term “interest” in this Article includes interest from Government
securities, or from bonds or debentures, and interest from any other form of
indebtedness as well as all the income assimilated to interest by the taxation law
of the State in which the income arises. The term does not include income to
which Article 6 or Article 10 applies.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the States, carries
on business through a permanent establishment situated in the other State, being
the State in which the interest arises, and the indebtedness giving rise to the
interest is effectively connected with that permanent establishment. In such a
case, the provisions of Article 7 shall apply.
(5) Interest shall be deemed to arise in a State when the payer is that State
itself or a political sub--division of that State or a local authority of that State or
a person who is a resident of that State. Where, however—
(a) the person paying the interest is a resident of one of the States and has
in the other State or outside both States a permanent establishment in
connection with which the indebtedness on which the interest is paid
was incurred, and the interest is borne by the permanent establishment,
then the interest shall be deemed to arise where the permanent
establishment is situated;
(b) the person paying the interest is not a resident of either of the States but
has in one of the States a permanent establishment in connection with
which the indebtedness on which the interest is paid was incurred, and
the interest is borne by the permanent establishment, then the interest
shall be deemed to arise where the permanent establishment is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest or between both of them and some
other person, the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might have been expected to
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have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each of the States, but
subject to the other provisions of this Agreement.
ARTICLE 12
Royalties
(1) Royalties arising in one of the States, being royalties to which a resident
of the other State is beneficially entitled, may be taxed in that other State.
(2) Such royalties may be taxed in the State in which they arise, and
according to the law of that State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments, whether periodical
or not, and however described or computed, to the extent to which they are paid
as consideration for the use of, or the right to use, any copyright, patent, design
or model, plan, secret formula or process, trade--mark, or other like property or
right, or industrial, commercial or scientific equipment, or for the supply of
scientific, technical, industrial or commercial knowledge or information, or for
the supply of any assistance of an ancillary and subsidiary nature furnished as a
means of enabling the application or enjoyment of such knowledge or
information or any other property or right to which this Article applies, and
includes any payments to the extent to which they are paid as consideration for
the use of, or the right to use, motion picture films, films or video tapes for use
in connection with television or tapes for use in connection with radio
broadcasting.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the States, carries
on business through a permanent establishment situated in the other State, being
the State in which the royalties arise, and the asset giving rise to the royalties is
effectively connected with that permanent establishment. In such a case, the
provisions of Article 7 shall apply.
(5) Royalties shall be deemed to arise in a State when the payer is that State
itself or a political sub--division of that State or a local authority of that State or
a person who is a resident of that State. Where, however—
(a) the person paying the royalties is a resident of one of the States and has
in the other State or outside both States a permanent establishment in
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connection with which the liability to pay the royalties was incurred,
and the royalties are borne by the permanent establishment, then the
royalties shall be deemed to arise where the permanent establishment is
situated;
(b) the person paying the royalties is not a resident of either of the States
but has in one of the States a permanent establishment in connection
with which the liability to pay the royalties was incurred, and the
royalties are borne by the permanent establishment, then the royalties
shall be deemed to arise where the permanent establishment is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties or between both of them and some
other person, the amount of the royalties paid, having regard to what they are
paid for, exceeds the amount which might have been expected to have been
agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid shall remain taxable according to the law of each of the States,
but subject to the other provisions of this Agreement.
ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the State in
which that property is situated.
(2) For the purposes of this Article
(a) the term “real property” shall include—
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
(iii) shares or comparable interests in a company, the assets of
which consist wholly or principally of direct interests in or over
land in one of the States or of rights to exploit, or to explore for,
natural resources in one of the States.
(b) real property shall be deemed to be situated—
(i) where it consists of direct interests in or over land—in the State
in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the State in which the natural resources are
situated or the exploration may take place; and
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(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the States or of rights to
exploit, or to explore for, natural resources in one of the
States—in the State in which the assets or the principal assets of
the company are situated.
(3) Gains from the alienation of shares or “jouissance” rights in a company
the capital of which is wholly or partly divided into shares and which is a
resident of the Netherlands for the purposes of Netherlands tax, derived by an
individual who is a resident of Australia, may be taxed in the Netherlands.
ARTICLE 14
Independent Personal Services
Income derived by an individual who is a resident of one of the States in
respect of professional services or other independent activities of a similar
character shall be taxable only in that State unless he has a fixed base regularly
available to him in the other State for the purpose of performing his activities. If
he has such a fixed base, the income may be taxed in the other State, but only so
much of it as is attributable to that fixed base.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages
and other similar remuneration derived by a resident of one of the States in
respect of an employment shall be taxable only in that State unless the
employment is exercised in the other State. If the employment is so exercised,
such remuneration as is derived from that exercise may be taxed in that other
State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by a resident of one of the States in respect of an employment exercised in the
other State shall be taxable only in the first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or the fiscal
year, as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
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(c) the remuneration is not deductible in determining the taxable profits of
a permanent establishment or a fixed base which the employer has in
that other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
derived by a resident of one of the States in respect of an employment exercised
aboard a ship or aircraft in international traffic shall be taxable only in that
State.
ARTICLE 16
Directors’ Remuneration
(1) Where a resident of the Netherlands is a “director” of a company, which
is a resident of Australia, and derives from that company fees and other
remuneration in respect of his services to the company, such fees and other
remuneration may be taxed in Australia.
(2) Where a resident of Australia is a “bestuurder” or a “commissaris” of a
company, which is a resident of the Netherlands, and derives from that
company fees and other remuneration in respect of his services to the company,
such fees and other remuneration may be taxed in the Netherlands.
(3) Where the remuneration mentioned in paragraph (1) or (2) is derived by
a person who exercises activities of a regular and substantial character in a
permanent establishment situated in the State other than the State of which the
company is a resident and the remuneration is deductible in determining the
taxable profits of that permanent establishment then, notwithstanding the
provisions of paragraph (1) or (2) of this Article, the remuneration, to the extent
to which it is so deductible, shall be taxable only in the State in which the
permanent establishment is situated.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television artistes,
and musicians and athletes) from their personal activities as such may be taxed
in the State in which these activities are exercised.
(2) Notwithstanding anything contained in Articles 5 and 7, where the
services of an entertainer mentioned in paragraph (1) are provided in one of the
States by an enterprise of the other State, the profits derived by that enterprise
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from providing those services may be taxed in the first--mentioned State if the
entertainer performing the services or a relative of such person, controls,
directly or indirectly, that enterprise.
(3) The term “relative” in this Article means a brother, sister, spouse,
ancestor or descendant.
ARTICLE 18
Pensions and Annuities
(1) Pensions, including pensions provided under the provisions of a public
social security system, but not including pensions to which Article 19 applies,
paid to a resident of one of the States, and annuities so paid, shall be taxable
only in that State.
(2) The term “annuity” means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
ARTICLE 19
Government Service
(1) Remuneration (including a pension) paid to any individual in respect of
services rendered in the discharge of governmental functions to one of the
States or to a political sub--division of one of the States or to a local authority of
one of the State may be taxed in that State. However, any such remuneration,
not being a pension, shall be taxable only in the other State if the services are
rendered in that other State and the recipient is a resident of that other State
who—
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) This Article shall not apply to remuneration (including a pension) in
respect of services rendered in connection with any trade or business carried on
by one of the States or a political sub--division of one of the States or a local
authority of one of the States. In such a case, the provisions of Articles 15, 16
and 18 shall apply.
Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 10
International Tax Agreements Act 1953 359
ARTICLE 20
Professors and Teachers
(1) Remuneration which a professor or teacher who is a resident of one of
the States and who visits the other State for a period not exceeding two years for
the purpose of teaching or carrying out advanced study or research at a
university, college, school or other educational institution, receives for those
activities shall be taxable only in the first--mentioned State.
(2) This Article shall not apply to remuneration which he receives for
conducting research if the research is undertaken primarily for the private
benefit of a specific person or persons.
ARTICLE 21
Students
Payments which a student who is, or was immediately before visiting one of
the States, a resident of the other State and who is temporarily present in the
first--mentioned State solely for the purpose of his education receives from
sources outside that first--mentioned State for the purpose of his maintenance or
education shall be exempt from tax in that first--mentioned State.
ARTICLE 22
Income of Dual Resident
Where a person, who by reason of the provisions of paragraph (1) of Article
4 is a resident of both States but by reason of the provisions of paragraph (3) or
(4) of that Article is deemed for the purposes of this Agreement to be a resident
solely of one of the States, derives income from sources in that State or from
sources outside both States, that income shall be taxable only in that State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 23
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle
hereof), Netherlands tax paid, whether directly or by deduction, in respect of
income derived by a person who is a resident of Australia from sources in the
Schedule 10 Agreement between Australia and the Kingdom of the Netherlands for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
360 International Tax Agreements Act 1953
Netherlands (not including, in the case of a dividend, tax paid in respect of the
profits out of which the dividend is paid) shall be allowed as a credit against
Australian tax payable in respect of that income.
(2) The Netherlands, when imposing tax on its residents, may include in the
basis upon which such taxes are imposed the items of income which according
to the provisions of this Agreement may be taxed in Australia.
(3) Without prejudice to the application of the provisions concerning the
compensation of losses in the unilateral regulations for the avoidance of double
taxation the Netherlands shall allow a deduction from the amount of tax
computed in conformity with paragraph (2) of this Article equal to such part of
that tax which bears the same proportion to the aforesaid tax, as the part of the
income which is included in the basis mentioned in paragraph (2) of this Article
and may be taxed in Australia according to Articles 6 and 7, paragraphs (2) and
(3) of Article 8, paragraph (4) of Article 10, paragraph (4) of Article 11,
paragraph (4) of Article 12, paragraph (1) of Article 13, Article 14,
paragraph (1) of Article 15, paragraph (1) of Article 16 and Article 19 of this
Agreement bears to the total income which forms the basis mentioned in
paragraph (2) of this Article.
Further, the Netherlands shall allow a deduction from the Netherlands tax so
computed for such items of income, as may be taxed in Australia according to
paragraph (2) of Article 10, paragraph (2) of Article 11, paragraph (2) of Article
12 and Article 17, and are included in the basis mentioned in paragraph (2) of
this Article. The amount of this deduction shall be the lesser of the following
amounts:
(a) the amount equal to the Australian tax;
(b) the amount of the Netherlands tax which bears the same proportion to
the amount of tax computed in conformity with paragraph (2) of this
Article, as the amount of the said items of income bears to the amount
of income which forms the basis mentioned in paragraph (2) of this
Article.
Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 10
International Tax Agreements Act 1953 361
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 24
Mutual Agreement Procedure
(1) Where a resident of a State considers that the actions of the competent
authority of one or both of the States result or will result for him in taxation not
in accordance with this Agreement, he may, notwithstanding the remedies
provided by the national laws of those States, present his case to the competent
authority of the State of which he is a resident. The case must be presented
within three years from the first notification of the action.
(2) The competent authority shall endeavour, if the taxpayer’s claim
appears to it to be justified and if it is not itself able to arrive at an appropriate
solution, to resolve the case with the competent authority of the other State,
with a view to the avoidance of taxation not in accordance with this Agreement.
The solution so reached shall be implemented notwithstanding any time limits
in the national laws of the States.
(3) The competent authorities of the States shall jointly endeavour to
resolve any difficulties or doubts arising as to the interpretation or application
of this Agreement.
(4) The competent authorities of the States may communicate with each
other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 25
Exchange of Information
(1) The competent authorities of the States shall exchange such information
as is necessary for the carrying out of this Agreement or of the domestic laws of
the States concerning the taxes to which this Agreement applies insofar as the
taxation thereunder is not contrary to this Agreement. The exchange of
information is not restricted by Article 1. Any information received by the
competent authority of a State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and shall be
disclosed only to persons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, enforcement or
prosecution in respect of, or the determination of appeals in relation to, the taxes
to which this Agreement applies and shall be used only for such purposes.
Schedule 10 Agreement between Australia and the Kingdom of the Netherlands for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
362 International Tax Agreements Act 1953
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other State;
(c) to supply information which would diclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
ARTICLE 27
Regulations
The competent authority of the Netherlands may prescribe regulations
necessary to carry out in the Netherlands the provisions of this Agreement.
ARTICLE 28
Territorial Extension
(1) This Agreement may be extended, either in its entirety or with any
necessary modifications, to the part of the Kingdom of the Netherlands which is
not situated in Europe and which imposes taxes substantially similar in
character to those to which this Agreement applies. Any such extension shall
take effect from such date and subject to such modifications and conditions,
including conditions as to termination, as may be specified and agreed in notes
to be exchanged through the diplomatic channel.
(2) Unless otherwise agreed, the termination of this Agreement shall not
also terminate the application of the Agreement to the part of the Kingdom of
the Netherlands to which it has been extended under this Article.
Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 10
International Tax Agreements Act 1953 363
CHAPTER VI
FINAL PROVISIONS
ARTICLE 29
Entry into Force
This Agreement shall come into force on the date on which the Government
of Australia and the Government of the Kingdom of the Netherlands exchange
notes through the diplomatic channel notifying each other that the last of such
things has been done as is necessary to give this Agreement the force of law in
Australia and in the Netherlands, as the case may be, and thereupon this
Agreement shall have effect—
(a) in both States, in respect of withholding tax on dividends and interest,
on dividends and interest derived on or after 1 July 1975;
(b) in Australia, in respect of tax on income of any year of income
beginning on or after 1 July 1975;
(c) in the Netherlands, in respect of taxes, other than the dividend tax, for
taxable years and periods beginning on or after 1 January 1975
ARTICLE 30
Termination
This Agreement shall continue in effect indefinitely, but the Government of
Australia or the Government of the Kingdom of the Netherlands may, on or
before 30 June in any calendar year after the year 1979, give to the other
Government through the diplomatic channel written notice of termination and,
in that event, this Agreement shall cease to be effective—
(a) in both States, in respect of withholding tax on dividends, interest and
royalties, on dividends, interest and royalties derived on or after 1 July
in the calendar year next following that in which the notice of
termination is given;
(b) in Australia, in respect of tax on income of any year of income
beginning on or after 1 July in the calendar year next following that in
which the notice of termination is given;
(c)in the Netherlands, in respect of taxes, other than withholding taxes referred
to in subparagraph (a), for taxable years and periods beginning after the
end of the calendar year in which the notice of termination is given.
Schedule 10 Agreement between Australia and the Kingdom of the Netherlands for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
364 International Tax Agreements Act 1953
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed this Agreement.
DONE in duplicate at Canberra this seventeenth day of March, one thousand
nine hundred and seventy--six, in the English and Netherlands languages, both
texts being equally authentic.
Phillip Lynch R. C. Pekelharing
FOR THE GOVERNMENT
OF AUSTRALIA
FOR THE GOVERNMENT OF THE
KINGDOM OF THE NETHERLANDS
PROTOCOL
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
THE KINGDOM OF THE NETHERLANDS
HAVE AGREED AT THE SIGNING of the Agreement between the two
States for the avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income upon the following provisions which shall form
an integral part of the said Agreement.
(1) With reference to Articles 6 to 8 and 10 to 17,
income derived by a resident of the Netherlands which under those
Articles may be taxed in Australia, shall for the purposes of the income
tax law of Australia be deemed to be income from sources in Australia.
(2) With reference to Articles 7 and 9,
where the information available to the competent authority of a State is
inadequate to determine the profits of an enterprise on which tax may
be imposed in that State in accordance with Article 7 or Article 9,
nothing in those Articles shall affect the application of any law of that
State relating to the determination of the tax liability of a person,
provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with the
principles of those Articles.
(3) With reference to Articles 7 and 23,
profits of an enterprise of one of the States from carrying on a business
of any form of insurance other than life insurance may be taxed in the
other State in accordance with the law of that other State relating
specifically to the taxation of any person who carries on such business,
and Article 23 shall apply for the elimination of double taxation as if the
Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 10
International Tax Agreements Act 1953 365
profits so taxed were attributable to a permanent establishment of the
enterprise in the State imposing the tax.
(4) With reference to Articles 10, 11 and 12,
applications for the restitution of tax levied by the Netherlands contrary
to the provisions of those Articles must be lodged with the competent
authority of the Netherlands within a period of three years after the
expiration of the calendar year in which the tax has been levied.
(5) With reference to Article 23,
(a) where income derived by a resident of Australia may, under the
provisions of Articles 6 to 8 and 10 to 17, be taxed in the Netherlands
such income shall, for the purposes of paragraph (1) of Article 23 and
of the provisions of the income tax law of Australia dealing with the
avoidance of double taxation, be deemed to be income from sources in
the Netherlands;
(b) in so far as the Netherlands income tax or company tax is concerned,
the basis mentioned in paragraph (2) of Article 23 is the “onzuivere
inkomen” or “winst” in terms of the Netherlands income tax law or
company tax law, respectively.
(6) General.
(a) Where one of the States is entitled to tax the profits of an enterprise,
that State may treat as profits of the enterprise, profits from the
alienation of capital assets of the enterprise, not being profits that
consist of income to which paragraph (1) of Article 13 applies.
(b) If, in an Agreement for the avoidance of double taxation that is
subsequently made between Australia and a third State being a State
that at the date of signature of this Protocol is a member of the
Organisation for Economic Co--operation and Development, Australia
shall agree to limit the rate of its taxation—
(i) on dividends paid by a company which is a resident of Australia
for the purposes of Australian tax to which a company that is a
resident of the third State is entitled, to a rate less than that
provided in paragraph (2) of Article 10; or
(ii) on interest arising in Australia to which a resident of the third
State is entitled, to a rate less than that provided in
paragraph (2) of Article 11; or
Schedule 10 Agreement between Australia and the Kingdom of the Netherlands for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
366 International Tax Agreements Act 1953
(iii) on royalities arising in Australia to which a resident of the third
State is entitled, to a rate less than that provided in
paragraph (2) of Article 12,
the Government of Australia shall immediately inform the Government
of the Kingdom of the Netherlands in writing through the diplomatic
channel and shall enter into negotiations with the Government of the
Kingdom of the Netherlands to review the provisions specified in
sub--paragraphs (i), (ii), and (iii) above in order to provide the same
treatment for the Netherlands as that provided for the third State.
DONE in duplicate at Canberra this seventeenth day of March, one thousand
nine hundred and seventy--six, in the English and Netherlands languages, both
texts being equally authentic.
Phillip Lynch R. C. Pekelharing
FOR THE GOVERNMENT
OF AUSTRALIA
FOR THE GOVERNMENT OF THE
KINGDOM OF THE NETHERLANDS
Second Protocol amending the Agreement between Australia and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income with Protocol Schedule 10A
International Tax Agreements Act 1953 367
Schedule 10A—Second Protocol amending
the Agreement between Australia and
the Kingdom of the Netherlands for
the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with
respect to Taxes on Income with
Protocol Section 3
Australia and the Kingdom of the Netherlands,
Desiring to amend the Agreement between Australia and the Kingdom of the
Netherlands for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, with Protocol, signed at Canberra on
17 March 1976 (in this Protocol referred to as “the Agreement”),
Have agreed as follows:
ARTICLE 1
Article 6 of the Agreement shall be amended by deleting the second sentence
of paragraph (2).
ARTICLE 2
Article 11 of the Agreement shall be amended by omitting paragraph (3) and
substituting the following paragraph:
‘(3) The term ‘interest’in this Article includes interest from
Government securities, or from bonds or debentures, whether or not
secured by mortgage and whether or not carrying a right to participate
in profits, and interest from any other form of indebtedness as well as
all other income assimilated to interest or to income from money lent by
the taxation law of the State in which the income arises. The term does
not include income to which Article 10 applies.’
Schedule 10A Second Protocol amending the Agreement between Australia and the
Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with respect to Taxes on Income with Protocol
368 International Tax Agreements Act 1953
ARTICLE 3
(1) This Protocol, which shall form an integral part of the Agreement, shall
enter into force on the first day of the second month after the date on which the
Contracting States exchange notes through the diplomatic channel notifying
each other that the last of such things has been done as is necessary to give this
Protocol the force of law in Australia and in the Kingdom of the Netherlands
respectively, and thereupon this Protocol shall have effect—
(a) in relation to income from debt claims of every kind, excluding bonds
or debentures, secured by mortgage of real property or of any other
direct interest in or over land, in pursuance of a contractual obligation
entered into before the date of signature of this Protocol—
(i) in Australia, in respect of tax on income of any year of income
beginning on or after the date of commencement of the
eighteenth month following that in which signature of the
Protocol occurs;
(ii) in the Netherlands, in respect of taxes for taxable years and
periods beginning on or after the date of commencement of the
eighteenth month following that in which signature of the
Protocol occurs;
(b) in any other case, including those referred to in paragraph (2)—
(i) in Australia, in respect of tax on income of any year of income
beginning on or after 1 July 1986;
(ii) in the Netherlands, in respect of taxes for taxable years and
periods beginning on or after 1 January 1986.
(2) Subparagraph (1) (a) does not apply in relation to:
(a) income which is derived before the commencement of the first year of
income or the first taxable year or period, as the case may be,
determined in accordance with that sub--paragraph, to the extent to
which that income is attributable to that or any subsequent year or
period; or
(b) income derived pursuant to a contractual obligation where the terms of
that obligation are varied, after the date of signature of this Protocol, so
as to extend or have the effect of extending the date on which
repayment of the relevant debt is due.
Second Protocol amending the Agreement between Australia and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income with Protocol Schedule 10A
International Tax Agreements Act 1953 369
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed this Protocol.
DONE in duplicate at Canberra this thirtieth day of June, One thousand nine
hundred and eighty--six, in the English and Netherlands languages, both texts
being equally authentic.
PAUL KEATING C. H. A. PLUG
For Australia For the Kingdom of the Netherlands
Schedule 11 2006 French convention
370 International Tax Agreements Act 1953
Schedule 11—2006 French convention Note: See section 3.
CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND
THE GOVERNMENT OF THE FRENCH REPUBLIC FOR THE
AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON
INCOME AND THE PREVENTION OF FISCAL EVASION
The Government of Australia and the Government of the French Republic,
Desiring to conclude a Convention for the avoidance of double taxation with
respect to taxes on income and the prevention of fiscal evasion,
Have agreed as follows:
Article 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both
of the Contracting States.
2006 French convention Schedule 11
International Tax Agreements Act 1953 371
Article 2
TAXES COVERED
1. The existing taxes to which this Convention shall apply are :
a) in the case of Australia:
the income tax, and the resource rent tax in respect of offshore
projects relating to exploration for or exploitation of petroleum
resources, imposed under the federal law of Australia;
b) in the case of France:
(i) the income tax (“l’impôt sur le revenu”);
(ii) the corporation tax (“l’impôt sur les sociétés”);
(iii) the additional taxes on corporations (“les contributions sur
l’impôt sur les sociétés”); and
(iv) widespread social security contributions (“contributions
sociales généralisées”) and contributions for the
reimbursment of the social debt (“contributions pour le
remboursement de la dette sociale”), including any
withholding tax with respect to the aforesaid taxes.
2. This Convention shall also apply to any identical or substantially
similar taxes which are subsequently imposed by a Contracting State in addition
to, or in place of the existing taxes to which this Convention applies. The
competent authorities of the Contracting States shall notify each other of
Schedule 11 2006 French convention
372 International Tax Agreements Act 1953
significant changes which have been made in their law relating to taxes to
which this Convention applies.
3. Notwithstanding paragraphs 1 and 2, the taxes to which Articles 25 and
26 shall apply are:
a) in the case of Australia, taxes of every kind and description imposed under
the federal taxes laws administered by the Commissioner of Taxation ; and
b) in the case of France, taxes of every kind and description imposed on behalf
of France or its political subdivisions or local authorities
Article 3
DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise
requires:
a) the term “Australia”, when used in a geographical sense, excludes
all external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
2006 French convention Schedule 11
International Tax Agreements Act 1953 373
(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in this subparagraph) in respect
of which there is for the time being in force, consistently with
international law, a law of Australia dealing with the exploration
for or exploitation of any of the natural resources of the seabed and
subsoil of the continental shelf;
b) the term “France” means the European and Overseas Departments
of the French Republic including the territorial sea, and any area
outside the territorial sea within which, in accordance with
international law, the French Republic has sovereign rights for the
purpose of exploring and exploiting the natural resources of the
seabed and its subsoil and the superjacent waters;
c) the terms “Contracting State”, “a Contracting State” and “the other
Contracting State” mean Australia or France, as the context
requires;
d) the term “person” includes an individual, a company and any other
body of persons;
e) the term “company” means any body corporate or any entity which
is treated as a company or body corporate for tax purposes;
f) the term “enterprise” applies to the carrying on of any business;
g) the terms “enterprise of a Contracting State” and “enterprise of the
other Contracting State” mean respectively an enterprise carried on
by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State;
Schedule 11 2006 French convention
374 International Tax Agreements Act 1953
h) the term “Australian tax” means tax imposed by Australia, being
tax to which this Convention applies by virtue of paragraphs 1 and
2 of Article 2;
i) the term “French tax” means tax imposed by France, being tax to
which this Convention applies by virtue of paragraphs 1 and 2 of
Article 2;
j) the term “competent authority” means in the case of Australia, the
Commissioner of Taxation or an authorised representative of the
Commissioner and in the case of France, the minister in charge of
the budget or an authorised representative of the minister;
k) the term “business” includes the performance of professional
services and of other activities of an independent character;
l) the term “international traffic” means any transport by a ship or
aircraft operated by an enterprise of a Contracting State, except
when the ship or aircraft is operated solely from a place or between
places in the other Contracting State.
2. In this Convention, the terms “Australian tax” and “French tax” do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes referred to in Article 2.
3. As regards the application of the Convention at any time by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning that it has at that time under the law of
that State concerning the taxes to which the Convention applies, any meaning
under the applicable tax law of that State prevailing over a meaning given to the
term under other law of that State.
2006 French convention Schedule 11
International Tax Agreements Act 1953 375
Article 4
RESIDENCE
1. For the purposes of this Convention, the term “resident of a Contracting
State” means:
a) in the case of Australia, a person who is a resident of Australia for
the purposes of Australian tax; and
b) in the case of France, a person who is domiciled in France for the
purposes of French tax.
A Contracting State or a political subdivision or statutory body or a local
authority thereof is also a resident of that State for the purposes of this
Convention.
2. A person is not a resident of a Contracting State for the purposes of this
Convention if the person is liable to tax in that State in respect only of income
from sources in that State.
3. Where by reason of the preceding provisions of this Article a person,
being an individual, is a resident of both Contracting States, the person’s status
shall be determined as follows:
a) the individual shall be deemed to be a resident only of the State in
which a permanent home is available to that individual; but if a
permanent home is available in both States, or in neither of them,
that individual shall be deemed to be a resident only of the State
Schedule 11 2006 French convention
376 International Tax Agreements Act 1953
with which the individual’s personal and economic relations are
closer (centre of vital interests);
b) if the State in which the centre of vital interests is situated cannot
be determined, the individual shall be deemed to be a resident only
of the State of which that individual is a national or citizen.
4. Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, it shall be deemed to
be a resident solely of the Contracting State in which its place of effective
management is situated.
5. The term “resident of a Contracting State” shall include, where that
State is France, any partnership or group of persons which has its place of
effective management in France and all partners, shareholders or other members
of which are personally liable to tax therein in respect of their part of the profits
of those partnerships or groups of persons pursuant to French domestic laws.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term “permanent
establishment” means a fixed place of business through which the business of
the enterprise is wholly or partly carried on.
2. The term “permanent establishment” shall include especially:
a) a place of management;
2006 French convention Schedule 11
International Tax Agreements Act 1953 377
b) a branch;
c) an office;
d) a factory;
e) a workshop;
f) a mine, quarry or other place of extraction of natural resources; and
g) an agricultural, pastoral or forestry property.
3. An enterprise shall not be deemed to have a permanent establishment
merely by reason of:
a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of processing by another
enterprise;
d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or for collecting information,
for the enterprise;
e) the maintenance of a fixed place of business solely for the purpose
of activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
Schedule 11 2006 French convention
378 International Tax Agreements Act 1953
4. An enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent
establishment if:
a) it has a building site or construction, installation or assembly
project in that State which exists for more than twelve months; or
b) it carries on supervisory activities in that State for more than six
months in connection with a building site, or a construction,
installation or assembly project which is being undertaken in that
State; or
c) it maintains substantial equipment for rental or other purposes
within that State (excluding equipment let under a hire-purchase
agreement) for more than six months.
5. a) The duration of activities under subparagraphs a) and b) of
paragraph 4 will be determined by aggregating the periods during
which activities are carried on in a Contracting State by associated
enterprises provided that the activities of the enterprise in that State
are connected with the activities carried on in that State by its
associate.
b) The period during which two or more associated enterprises are
carrying on concurrent activities will be counted only once for the
purpose of determining the duration of activities.
c) For the purposes of this Article, an enterprise shall be deemed to be
associated with another enterprise if:
(i) one is controlled directly or indirectly by the other ; or
2006 French convention Schedule 11
International Tax Agreements Act 1953 379
(ii) both are controlled directly or indirectly by the same person
or persons.
6. A person acting in a Contracting State on behalf of an enterprise of the
other Contracting State - other than an agent of an independent status to whom
paragraph 7 applies - shall be deemed to be a permanent establishment of that
enterprise in the first-mentioned State if:
a) the person has, and habitually exercises in that State, an authority
to conclude contracts on behalf of the enterprise, unless the
person’s activities are limited to the purchase of goods or
merchandise for the enterprise; or
b) in so acting the person manufactures or processes in that State for
the enterprise goods or merchandise belonging to the enterprise.
7. An enterprise of a Contracting State shall not be deemed to have a
permanent establishment in the other Contracting State merely because it carries
on business in that other State through a broker, general commission agent or
any other agent of an independent status, where that person is acting in the
ordinary course of the person’s business as such a broker or agent.
8. The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself make either
company a permanent establishment of the other.
9. The principles set forth in the preceding paragraphs of this Article shall
be applied in determining for the purposes of paragraph 7 of Article 11 and
paragraph 5 of Article 12 whether there is a permanent establishment outside
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both Contracting States, and whether an enterprise, not being an enterprise of a
Contracting State, has a permanent establishment in a Contracting State.
Article 6
INCOME FROM REAL PROPERTY
1. Income from real property, including income from an agricultural,
pastoral or forestry property, may be taxed in the Contracting State in which
that property is situated.
2. For the purposes of this Article, the term “real property”:
a) in the case of Australia, has the meaning which it has under the law
of Australia, and shall also include:
(i) a lease of land and any other interest in or over land, whether
improved or not including a right to explore for mineral, oil
or gas deposits or other natural resources, and a right to mine
those deposits or resources; and
(ii) a right to receive variable or fixed payments either as
consideration for or in respect of the exploitation of, or the
right to explore for or exploit, mineral, oil or gas deposits,
quarries or other places of extraction or exploitation of
natural resources; and
b) in the case of France, means such property which, according to the
law of France, is immovable property and shall in any case include:
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(i) property accessory to immovable property;
(ii) livestock and equipment used in agriculture and forestry;
(iii) rights to which the provisions of the general law respecting
landed property apply; and
(iv) usufruct of immovable property and rights to variable or
fixed payments as consideration for the working of or the
right to work mineral deposits, mineral sources and other
natural resources.
Ships and aircraft shall not be regarded as real property.
3. The provisions of paragraph 1 shall apply to income derived from the
direct use, letting or use in any other form of real property.
4. Notwithstanding the provisions of Article 7, where shares or other
rights in a company, trust or comparable institution entitle a person to the
enjoyment of real property of that company, trust or comparable institution,
income derived from the direct use, letting or use in any other form of that right
of enjoyment may be taxed in the Contracting State in which the real property is
situated.
5. The provisions of paragraphs 1, 3 and 7 shall also apply to income from
real property of an enterprise.
6. The provisions of paragraph 4 shall also apply to income of an
enterprise derived from the direct use, letting or use in any other form of a right
of enjoyment referred to in that paragraph.
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7. Any interest or right referred to in paragraph 2 or 4 shall be regarded as
situated where the buildings, land, mineral, oil or gas deposits, quarries, mineral
sources or natural resources, as the case may be, are situated or where the
exploration may take place.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only
in that State unless the enterprise carries on business in the other Contracting
State through a permanent establishment situated therein. If the enterprise
carries on business as aforesaid, the profits of the enterprise may be taxed in the
other State but only so much of them as is attributable to that permanent
establishment.
2. Where an enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment situated therein,
there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a distinct
and separate enterprise engaged in the same or similar activities under the same
or similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. In the determination of the profits of a permanent establishment there
shall be allowed as deductions expenses of the enterprise, including executive
and general administrative expenses, which are deductible according to the law
of the State in which the permanent establishment is situated whether incurred
in that State or elsewhere.
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4. If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, the competent authority may apply to that
enterprise for that purpose the provisions of the taxation law of that State,
provided that that law shall be applied, so far as the information available to the
competent authority permits, in accordance with the principles of this Article.
5. No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
6. Where profits include items of income which are dealt with separately
in other Articles of this Convention, then the provisions of those Articles shall
not be affected by the provisions of this Article.
7. Notwithstanding the preceding provisions of this Article, profits of an
enterprise of a Contracting State from carrying on a business of any form of
insurance other than life insurance may be taxed in the other Contracting State
in accordance with the law of that other State relating specifically to the
taxation of any person who carries on such a business, provided that if the law
in force in either Contracting State at the date of signature of this Convention
relating to the taxation of such a person is varied (otherwise than in minor
respects so as not to affect its general character), the Contracting States shall
consult with each other with a view to agreeing to such amendment of this
paragraph as may be necessary.
8. Where:
a) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trust estates, to a share
of the business profits of an enterprise carried on in the other
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Contracting State by the trustee of a trust estate other than a trust
estate which is treated as a company for tax purposes; and
b) in relation to that enterprise, that trustee would, in accordance with
the principles of Article 5, have a permanent establishment in that
other State,
the enterprise carried on by the trustee shall be deemed to be a business carried
on in the other State by that resident through a permanent establishment situated
in that other State and that share of business profits shall be attributed to that
permanent establishment.
Article 8
SHIPS AND AIRCRAFT
1. Profits of an enterprise of a Contracting State derived from the
operation of ships or aircraft in international traffic shall be taxable only in that
State.
2. Notwithstanding the provisions of paragraph 1, profits of an enterprise
of a Contracting State derived from the operation of ships or aircraft may be
taxed in the other Contracting State to the extent that they are profits derived
directly or indirectly from ship or aircraft operations confined solely to places in
that other State.
3. The amount which shall be charged to tax in a Contracting State under
paragraph 2 in respect of transport operations of ships shall not exceed 5 per
cent of the amount paid or payable (net of rebates) in respect of carriage.
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4. The provisions of paragraph 3 shall not apply to profits from the
operation of ships, where the profits are attributable to a permanent
establishment of the enterprise situated in the other Contracting State.
5. The profits to which the provisions of paragraphs 1 and 2 apply include
profits from the operation of ships or aircraft derived through participation in a
pool service or other profit sharing arrangement.
6. For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mail, goods or merchandise which are
shipped in a Contracting State and are discharged at a place in that State
(without having been discharged outside that State) shall be treated as profits
from ship or aircraft operations confined solely to places in that State.
Article 9
ASSOCIATED ENTERPRISES
1. Where:
a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise of
the other Contracting State; or
b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State,
and in either case conditions exist between the two enterprises in their
commercial or financial relations which differ from those which may be
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expected between independent enterprises dealing wholly independently with
one another, then any profits which might, but for those conditions, be expected
to accrue to one of the enterprises, but, by reason of those conditions, have not
so accrued, may be included in the profits of that enterprise and taxed
accordingly.
2. If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an enterprise, the
competent authority may apply to that enterprise for that purpose the provisions
of the taxation law of that State, provided that that law shall be applied, so far as
the information available to the competent authority permits, in accordance with
the principles of this Article.
3. Where, according to the provisions of paragraphs 1 and 2, profits are
included by a Contracting State in the profits of an enterprise, the other
Contracting State shall, on a claim being made by the other enterprise
concerned, consistently with its law consider the inclusion so made and the
provision of relief to that other enterprise in relation to the taxation of profits
which the other State determines to be profits which, but for the particular
conditions referred to in paragraphs 1 and 2, might have been expected to
accrue to the first-mentioned enterprise.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State
for the purposes of its tax, being dividends beneficially owned by a resident of
the other Contracting State may be taxed in that other State.
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2. However, those dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident for the purposes of its tax,
and according to the law of that State, but the tax so charged shall not exceed:
a) 0 per cent where those dividends are paid out of profits that have
borne the normal rate of company tax and those dividends are paid
to a company which, in the case of Australia, holds directly at least
10 per cent of the voting power of the company paying the
dividends, or in the case of France, holds directly at least 10 per
cent of the capital of the company paying the dividends; and
b) 5 per cent of the gross amount of other dividends, if the beneficial
owner of those dividends is a company which, in the case of
Australia, holds directly at least 10 per cent of the voting power of
the company paying the dividends, or in the case of France, holds
directly at least 10 per cent of the capital of the company paying
the dividends; and
c) 15 per cent of the gross amount of the dividends in all other cases,
provided that if the relevant law in either Contracting State at the date of
signature of this Convention is varied otherwise than in minor respects so as not
to affect its general character, the Contracting States shall consult each other
with a view to agreeing to any amendment of this paragraph that may be
appropriate.
3. The term “dividends” as used in this Article means income from shares
or other rights, not being debt-claims, participating in profits, as well as other
amounts which are subjected to the same taxation treatment as a distribution or
dividend by the law of the State of which the company making the distribution
is a resident for the purposes of its tax.
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4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial
owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident, through a permanent establishment situated in that other
State, and the holding in respect of which the dividends are paid is effectively
connected with that permanent establishment. In such case, the provisions of
Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State may not
impose any tax on the dividends paid by the company—being dividends
beneficially owned by a person who is not a resident of the other Contracting
State—except insofar as the holding in respect of which such dividends are paid
is effectively connected with a permanent establishment situated in that other
State, even if the dividends paid consist wholly or partly of profits or income
arising in such other State. This paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of France for the purposes of
French tax.
Article 11
INTEREST
1. Interest arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.
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2. However, that interest may also be taxed in the Contracting State in
which it arises, and according to the law of that State, but the tax so charged
shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding paragraph 2, interest arising in a Contracting State and
beneficially owned by a resident of the other Contracting State may not be taxed
in the first-mentioned State if:
a) the interest is derived from the investment of official reserve assets
by the government of a Contracting State or a political subdivision
or local authority thereof, its monetary institutions or a bank
performing central banking functions in that State; or
b) the interest is derived by a financial institution which is unrelated
to and dealing wholly independently with the payer. For the
purposes of this Article, the term “financial institution” means a
bank or other enterprise substantially deriving its profits by raising
debt finance in the financial markets or by taking deposits at
interest and using those funds in carrying on a business of
providing finance.
4. Notwithstanding paragraph 3, interest referred to in subparagraph b) of
that paragraph may be taxed in the State in which it arises at a rate not
exceeding 10 per cent of the gross amount of the interest if the interest is paid as
part of an arrangement involving back-to-back loans or other arrangement that
is economically equivalent and intended to have a similar effect to back-to-back
loans.
5. The term “interest” in this Article includes interest from government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, interest from any other
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form of indebtedness, as well as income which is subjected to the same taxation
treatment as income from money lent by the law of the Contracting State in
which the income arises. Penalty charges for late payment shall not be regarded
as interest for the purpose of this Article.
6. The provisions of paragraphs 1 and 2, subparagraph b) of paragraph 3
and paragraph 4 of this Article shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated in that other State, and the indebtedness in respect of
which the interest is paid is effectively connected with that permanent
establishment. In such case the provisions of Article 7 shall apply.
7. Interest shall be deemed to arise in a Contracting State when the payer
is a resident of that State for the purposes of its tax. Where, however, the person
paying the interest, whether the person is a resident of a Contracting State or
not, has in a Contracting State or outside both Contracting States a permanent
establishment in connection with which the indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment, then such interest shall be deemed to arise in the State in which
the permanent establishment is situated.
8. Where, by reason of a special relationship between the payer and the
beneficial owner of the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might reasonably have been
expected to have been agreed upon by the payer and the beneficial owner in the
absence of that relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
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remain taxable according to the law of each Contracting State, due regard being
had to the other provisions of this Convention.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.
2. However, those royalties may also be taxed in the Contracting State in
which they arise, and according to the law of that State, but the tax so charged
shall not exceed 5 per cent of the gross amount of the royalties.
3. The term “royalties” in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for:
a) the use of, or the right to use, any copyright, patent, design or
model, plan, secret formula or process, trademark or other like
property or right; or
b) the supply of scientific, technical, industrial or commercial
knowledge or information; or
c) the supply of any assistance that is ancillary and subsidiary to, and
is furnished as a means of enabling the application or enjoyment
of, any such property or right as is mentioned in subparagraph a) or
any such knowledge or information as is mentioned in
subparagraph b); or
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d) the use of, or the right to use:
(i) motion picture films; or
(ii) films or audio or video tapes or disks, or any other means of
image or sound reproduction or transmission for use in
connection with television, radio or other broadcasting; or
e) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial
owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State, in which the royalties arise, through a
permanent establishment situated in that other State, and the right or property in
respect of which the royalties are paid or credited is effectively connected with
such permanent establishment. In such case the provisions of Article 7 shall
apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer
is a resident of that State for the purposes of its tax. Where, however, the person
paying the royalties, whether the person is a resident of a Contracting State or
not, has in a Contracting State or outside both Contracting States a permanent
establishment in connection with which the liability to pay the royalties was
incurred, and the royalties are borne by the permanent establishment, then such
royalties shall be deemed to arise in the State in which the permanent
establishment is situated.
6. Where, by reason of a special relationship between the payer and the
beneficial owner of the royalties, or between both of them and some other
person, the amount of the royalties paid or credited, having regard to what they
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are paid or credited for, exceeds the amount which might reasonably have been
expected to have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only to
the last-mentioned amount. In such case, the excess part of the amount of the
payments or credits shall remain taxable according to the law of each
Contracting State, due regard being had to the other provisions of this
Convention.
Article 13
ALIENATION OF PROPERTY
1. Income, profits or gains derived by a resident of a Contracting State
from the alienation of real property situated in the other Contracting State may
be taxed in that other State.
2. Income, profits or gains from the alienation of property, other than real
property, that forms part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State,
including income, profits or gains from the alienation of that permanent
establishment (alone or with the whole enterprise), may be taxed in that other
State.
3. Income, profits or gains of an enterprise of a Contracting State from the
alienation of ships or aircraft operated by that enterprise in international traffic,
or of property (other than real property) pertaining to the operation of those
ships or aircraft, shall be taxable only in that State.
4. Income, profits or gains derived by a resident of a Contracting State
from the alienation of any shares or other interests in a company, or of an
interest of any kind in a partnership, trust or other entity, where the value of the
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assets of such entity, whether they are held directly or indirectly (including
through one or more interposed entities, such as, for example, through a chain
of companies), is principally attributable to real property situated in the other
Contracting State, may be taxed in that other State.
5. Where an individual who upon ceasing to be a resident of a Contracting
State, is treated under the taxation law of that State as having alienated any
property and is taxed in that State by reason thereof, the individual may elect to
be treated for the purposes of taxation in the other Contracting State as if the
individual had, immediately before ceasing to be a resident of the
first-mentioned State, alienated and reacquired the property for an amount equal
to its fair market value at that time.
6. Gains of a capital nature from the alienation of any property, other than
that referred to in the preceding paragraphs shall be taxable only in the
Contracting State of which the alienator is a resident.
7. In this Article, the term “real property” has the same meaning as it has
in Article 6.
8. The situation of real property shall be determined for the purposes of
this Article in accordance with paragraph 7 of Article 6.
Article 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17, and 18, remuneration
derived by an individual who is a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is
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exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived from that exercise may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived
by an individual who is a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first-mentioned State if:
a) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period
commencing or ending in the fiscal year of that other State; and
b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of that other State; and
c) the remuneration is not borne by a permanent establishment which
the employer has in that other State.
3. Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of a Contracting State may be taxed in that
State.
Article 15
DIRECTORS’ FEES
Directors’ fees and similar payments derived by a resident of a
Contracting State in that person’s capacity as a member of the board of directors
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of a company which is a resident of the other Contracting State may be taxed in
that other State.
Article 16
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 7 and 14, income derived by
entertainers (such as theatre, motion picture, radio or television artists and
musicians) and sports persons from their personal activities as such may be
taxed in the Contracting State in which these activities are exercised.
2. Where income in respect of personal activities exercised by an
entertainer or sports person in that person’s capacity as such accrues not to that
person but to another person, whether a resident of a Contracting State or not,
that income may, notwithstanding the provisions of Articles 7 and 14, be taxed
in the Contracting State in which the activities of the entertainer or sports
person are exercised.
Article 17
PENSIONS AND ANNUITIES
1. Subject to the provisions of paragraph 2 of Article 18, pensions and
annuities paid to a resident of a Contracting State shall be taxable only in that
State.
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2. The term “annuity” means any stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money's worth.
3. Notwithstanding anything in this Convention, any pension or allowance
that is paid by a Contracting State in respect of wounds, disabilities or death
caused by war, or in respect of war service, and is exempt from tax under the
law of that State, to a resident of the other Contracting State shall be exempt
from tax in that other State.
4. a) Contributions borne by an individual who is a resident of a
Contracting State, and who renders services in the course of an
employment in that State, to a pension scheme established and
recognised for tax purposes in the other Contracting State shall, in
determining the individual’s tax payable, be treated in the
first-mentioned State in the same way and subject to the same
conditions and limitations as contributions made to a pension
scheme that is recognised for tax purposes in that State, provided
that:
(i) the individual was not a resident of that State, and was
participating in the pension scheme, immediately before
beginning to exercise employment in that State; and
(ii) the pension scheme is accepted by the competent authority
of that State as generally corresponding to a pension scheme
recognised as such for tax purposes by that State.
b) For the purposes of subparagraph a):
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(i) the term “a pension scheme” means an arrangement in which
the individual participates in order to secure retirement
benefits payable in respect of the services referred to in
subparagraph a); and
(ii) a pension scheme is “recognised for tax purposes” in a State
if the contributions to the scheme would qualify for tax relief
in that State.
Article 18
GOVERNMENT SERVICE
1. a) Salaries, wages and other similar remuneration (other than a
pension or annuity) paid by a Contracting State or a political
subdivision or statutory body or local authority thereof to an
individual in respect of services rendered to that State, subdivision,
body or authority shall be taxable only in that State.
b) However, such salaries, wages and other similar remuneration shall
be taxable only in the other Contracting State if the services are
rendered in that State and the individual is a resident of, and a
national or citizen of, that State and is not also a national or citizen
of the first-mentioned State.
2. a) Any pension paid by, or out of funds created by, a Contracting State
or a political subdivision or statutory body or local authority thereof
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to an individual in respect of services rendered to that State,
subdivision, body or authority shall be taxable only in that State.
b) However, such pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a national or
citizen of, that State and is not also a national or citizen of the
first-mentioned State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries,
wages and other similar remuneration, or to pensions, in respect of services
rendered in connection with a business carried on by a Contracting State or a
political subdivision or statutory body or local authority thereof.
Article 19
STUDENTS
Payments which a student who is, or was immediately before visiting a
Contracting State, a resident of the other Contracting State and who is
temporarily present in the first-mentioned State solely for the purpose of the
student’s education receives from sources outside that first-mentioned State for
the purpose of the student’s maintenance or education shall not be taxed in that
first-mentioned State.
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Article 20
OTHER INCOME
1. Items of income of a resident of a Contracting State wherever arising
which are not dealt with in the foregoing Articles of this Convention shall be
taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than
income from real property as defined in paragraph 2 of Article 6, derived by a
resident of a Contracting State who carries on business in the other Contracting
State through a permanent establishment situated therein and the right or
property in respect of which the income is paid is effectively connected with
such permanent establishment. In such case the provisions of Article 7 shall
apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, items of income
of a resident of a Contracting State not dealt with in the foregoing Articles of
this Convention from sources in the other Contracting State may also be taxed
in the other Contracting State.
Article 21
SOURCE OF INCOME
1. Income, profits or gains derived by a resident of a Contracting State
which, under Articles 6 to 8, 10 to 16 and 18 may be taxed in the other
Contracting State, shall be deemed to be income from sources in that other
State.
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2. Profits included in the profits of an enterprise of a Contracting State
under paragraph 1 of Article 9 shall for purposes of the taxation of that
enterprise be deemed to be income of that enterprise derived from sources in
that Contracting State.
3. Income, profits or gains derived by a resident of a Contracting State
which, under any one or more of Articles 6 to 8, 10 to 16 and 18, may be taxed
in the other Contracting State shall for the purposes of Article 23 and of the law
of the first-mentioned Contracting State relating to its tax be deemed to arise
from sources in the other Contracting State.
Article 22
RULES OF TAXATION
Where conditions of commercial or financial relations between a person
who is a resident of Australia and a person who is a resident of France differ
from those which may be expected between independent persons dealing
wholly independently with one another, nothing in the Convention shall prevent
a Contracting State, by application of its domestic law, from including in the
profits of such persons and taxing accordingly the profits which, but for those
conditions, might have been expected to have accrued to them.
Article 23
ELIMINATION OF DOUBLE TAXATION
1. Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
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in a country outside Australia (which shall not affect the general principle of
this Article), French tax paid under the law of France and in accordance with
this Convention, whether directly or by deduction, in respect of income derived
by a person who is a resident of Australia from sources in France shall be
allowed as a credit against Australian tax payable in respect of that income.
2. In the case of France, double taxation shall be avoided in the following
manner:
a) Notwithstanding any other provision of this Convention, income
which may be taxed or shall be taxable only in Australia in
accordance with the provisions of this Convention shall be taken
into account for the computation of the French tax where the
beneficiary of such income is a resident of France and where such
income is not exempted from corporation tax according to French
domestic law. In that case, the Australian tax shall not be
deductible from such income but the resident of France shall,
subject to the conditions and limits provided for in subparagraph (i)
and (ii), be entitled to a tax credit against French tax. Such tax
credit shall be equal:
(i) in the case of income other than mentioned in
subparagraph (ii), to the amount of French tax attributable to
such income provided that the resident of France is subject
to Australian tax in respect of such income;
(ii) in the case of income referred to in Article 7 and paragraph 2
of Article 13 which is subject to the corporation tax, and in
the case of income referred to in Article 10, Article 11,
Article 12, paragraph 1 of Article 13 and paragraph 3 of
Article 14, Article 15, Article 16 and Article 20, to the
2006 French convention Schedule 11
International Tax Agreements Act 1953 403
amount of tax paid in Australia in accordance with the
provisions of those Articles. However, such tax credit shall
not exceed the amount of French tax attributable to such
income.
b) The term “amount of French tax attributable to such income” as
used in subparagraph a) means:
(i) where the tax of such income is computed by applying a
proportional rate, the amount of the net income concerned
multiplied by the rate which actually applies to that income;
(ii) where the tax on such income is computed by applying a
progressive scale, the amount of the net income concerned
multiplied by the rate resulting from the ratio of the tax
actually payable on the total net income taxable in
accordance with French law to the amount of that total net
income.
Article 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the
Contracting States result or will result for the person in taxation not in
accordance with this Convention, the person may, irrespective of the remedies
provided by the domestic law of those States concerning taxes to which this
Convention applies, present a case to the competent authority of the Contracting
State of which the person is a resident. The case must be presented within 3
Schedule 11 2006 French convention
404 International Tax Agreements Act 1953
years from the first notification of the action resulting in taxation not in
accordance with this Convention.
2. The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve
the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Convention. The solution so reached shall be implemented
notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of this Convention. In particular, they may consult
together to endeavour to agree to the same allocation of income between
associated enterprises mentioned in Article 9. They may also consult together
for the elimination of double taxation in cases not provided for in the
Convention.
4. The competent authorities of the Contracting States may communicate
with each other directly for the purpose of reaching an agreement in the sense of
the preceding paragraphs.
5. For the purposes of paragraph 3 of Article XXII (Consultation) of the
General Agreement on Trade in Services, the Contracting States agree that,
notwithstanding that paragraph, any dispute between them as to whether a
measure falls within the scope of this Convention may be brought before the
Council for Trade in Services, as provided by that paragraph, only with the
consent of both Contracting States. Any doubt as to the interpretation of this
paragraph shall be resolved under paragraph 3 of this Article or, failing
agreement under that procedure, pursuant to any other procedure agreed to by
both Contracting States.
2006 French convention Schedule 11
International Tax Agreements Act 1953 405
Article 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information as is foreseeably relevant for carrying out the provisions of this
Convention or to the administration or enforcement of the domestic laws
concerning taxes referred to in paragraph 3 of Article 2 insofar as the taxation
thereunder is not contrary to the Convention. The exchange of information is
not restricted by Article 1.
2. Any information received under paragraph 1 by a Contracting State
shall be treated as secret in the same manner as information obtained under the
domestic laws of that State and shall be disclosed only to persons or authorities
(including courts and administration bodies) concerned with the assessment or
collection of, the enforcement or prosecution in respect of, the determination of
appeals in relation to the taxes referred to in paragraph 1, or the oversight of the
above. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as
to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable by the competent
authority under the laws or in the normal course of the
administration of that or of the other Contracting State;
Schedule 11 2006 French convention
406 International Tax Agreements Act 1953
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information the disclosure of which would be contrary to public
policy (ordre public).
4. If information is requested by a Contracting State in accordance with
this Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other State may
not need such information for its own tax purposes. The obligation contained in
the preceding sentence is subject to the limitations of paragraph 3 except where
such limitations would preclude a Contracting State from supplying information
solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the
information is held by a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or relates to ownership interests in a
person.
Article 26
ASSISTANCE IN RECOVERY
1. The Contracting States shall lend assistance to each other in the
collection of revenue claims. This assistance is not restricted by Article 1. The
competent authorities of the Contracting States may by mutual agreement settle
the mode of application of this Article.
2006 French convention Schedule 11
International Tax Agreements Act 1953 407
2. The term “revenue claim” as used in this Article means an amount
owed in respect of taxes referred to in paragraph 3 of Article 2, insofar as the
taxation thereunder is not contrary to this Convention or any other instrument to
which the Contracting States are parties, as well as interest, administrative
penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the
laws of that State and is owed by a person who, at that time, cannot, under the
laws of that State, prevent its collection, that revenue claim shall, at the request
of the competent authority of that State, be accepted for purposes of collection
by the competent authority of the other Contracting State. That revenue claim
shall be collected by that other State in accordance with the provisions of its
laws applicable to the enforcement and collection of its own taxes as if the
revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of
which that State may, under its law, take measures of conservancy with a view
to ensure its collection, that revenue claim shall, at the request of the competent
authority of that State, be accepted for purposes of taking measures of
conservancy by the competent authority of the other Contracting State. That
other State shall take measures of conservancy in respect of that revenue claim
in accordance with the provisions of its laws as if the revenue claim were a
revenue claim of that other State even if, at the time when such measures are
applied, the revenue claim is not enforceable in the first-mentioned State or is
owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim
accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in
that State, be subject to the time limits or accorded any priority applicable to a
revenue claim under the laws of that State by reason of its nature as such. In
Schedule 11 2006 French convention
408 International Tax Agreements Act 1953
addition, a revenue claim accepted by a Contracting State for the purposes of
paragraphs 3 or 4 shall not, in that State, have any priority applicable to that
revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a
revenue claim of a Contracting State shall not be brought before the courts or
administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State
under paragraph 3 or 4 and before the other Contracting State has collected and
remitted the relevant revenue claim to the first-mentioned State, the relevant
revenue claim ceases to be:
a) in the case of a request under paragraph 3, a revenue claim of the
first-mentioned State that is enforceable under the laws of that
State and is owed by a person who, at that time, cannot, under the
laws of that State, prevent its collection, or
b) in the case of a request under paragraph 4, a revenue claim of the
first-mentioned State in respect of which that State may, under its
laws, take measures of conservancy with a view to ensure its
collection
the competent authority of the first-mentioned State shall promptly notify the
competent authority of the other State of that fact and, at the option of the other
State, the first-mentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to
impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
2006 French convention Schedule 11
International Tax Agreements Act 1953 409
b) to carry out measures which would be contrary to public policy
(ordre public);
c) to provide assistance if the other Contracting State has not pursued
all reasonable measures of collection or conservancy, as the case
may be, available under its laws or administrative practice;
d) to provide assistance in those cases where the administrative
burden for that State is clearly disproportionate to the benefit to be
derived by the other Contracting State;
e) to provide assistance if that State considers that the taxes with
respect to which assistance is requested are imposed contrary to
generally accepted taxation principles.
Article 27
DIPLOMATIC AND CONSULAR PRIVILEGES
1. Nothing in this Convention shall affect diplomatic or consular
privileges under the general rules of international law or under the provisions of
special international agreements.
2. This Convention shall not apply to international organisations, to
organs or officials thereof or to persons who are members of a diplomatic or
consular mission of a third State and who, being present in a Contracting State,
are not treated in either Contracting State as residents in respect of taxes on
income.
Schedule 11 2006 French convention
410 International Tax Agreements Act 1953
Article 28
MISCELLANEOUS
Notwithstanding the provisions of subparagraph b) of paragraph 1 of
Article 2 of this Convention, for the purposes of the assessment in respect of the
capital tax (“l’impôt de solidarité sur la fortune”) of an individual who is
resident of France and is a citizen of Australia without being a national of
France, property situated outside France which that individual owns on
1 January in each of the five calendar years following that in which the
individual became a resident of France shall not be included in the basis of
assessment of the tax pertaining to each of those five years. If that person ceases
to be a resident of France for a period of at least three years, and then becomes a
resident of France again, property situated outside France which that person
owns on 1st January in each of the five calendar years following that in which
the person became a resident of France again shall not be included in the basis
of assessment of the tax pertaining to each of those five years.
Article 29
PARTNERSHIPS
1. In the case of a partnership or similar entity which has its place of
effective management in Australia and which is treated in Australia as fiscally
transparent:
2006 French convention Schedule 11
International Tax Agreements Act 1953 411
a) a partner who is a resident of Australia and whose share of the
income, profits or gains of the partnership is taxed in Australia in
all respects as though such amounts had been derived by the partner
directly, shall be entitled to the benefits of this Convention with
respect to their share of such amounts arising in France as though
the partner had derived such amounts directly;
b) a partner who is a resident of France :
(i) shall be entitled to the benefits of this Convention with
respect to their share of such income, profits or gains of the
partnership arising in Australia as though the partner had
derived such amounts directly; and
(ii) shall be taxable in respect of their share of such income,
profits or gains of the partnership arising in France as though
the partner had derived such amounts directly but any such
amounts which are taxed in Australia shall be treated for the
purpose of paragraph 2 of Article 23 of this Convention as
arising from sources in Australia.
2. In the case of a partnership which has its place of effective management
in a State other than a Contracting State and which is treated in that third State
as fiscally transparent, a partner who is a resident of a Contracting State and
whose share of the income, profits or gains of the partnership is taxed in that
Contracting State in all respects as though those amounts had been derived
directly by the partner, shall be entitled to the benefits of this Convention with
respect to their share of such amounts arising in the other Contracting State as
though the partner had derived such amounts directly, subject to the following
conditions:
Schedule 11 2006 French convention
412 International Tax Agreements Act 1953
a) the absence of contrary provisions in a taxation convention
between a Contracting State and the third State; and
b) the partner’s share of the income, profits or gains of the partnership
is taxed in the same manner, including the nature or source of those
amounts and the time when those amounts are taxed, as would
have been the case if the amounts had been derived directly; and
c) it is possible to exchange information concerning the partnership or
partners under the terms of a taxation convention between the
Contracting State in which the income, profits or gains arise and
the third State.
3. For the purposes of paragraphs 1 and 2 of this Article, income, profits
or gains shall be deemed to arise in a Contracting State in particular where they
are attributable to a permanent establishment which the partnership or entity has
in that State.
4. Where, under any provision of this Convention, a partnership or other
group of persons which is a resident of France in accordance with paragraph 5
of Article 4, is entitled to relief from tax in Australia on any income, profits or
gains, that provision shall not be construed as restricting the right of Australia to
tax any member of the partnership or other group who is a resident of Australia
on their share of such amounts; but any such amounts shall be treated for the
purposes of paragraph 1 of Article 23 of this Convention as arising from sources
in France.
2006 French convention Schedule 11
International Tax Agreements Act 1953 413
Article 30
ENTRY INTO FORCE
1. The Contracting States shall notify each other in writing through the
diplomatic channel of the completion of their domestic requirements for the
entry into force of this Convention. This Convention shall enter into force on
the first day of the second month following the date of receipt of the last
notification, and thereupon the Convention shall have effect:
a) in the case of Australia:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after
1 January in the calendar year next following the date on
which the Convention enters into force;
(ii) in respect of other Australian tax, in relation to income,
profits or gains of any year of income beginning on or after
1 July in the calendar year next following the date on which
the Convention enters into force;
b) in the case of France:
(i) in respect of taxes on income withheld at source, for
amounts taxable after the calendar year in which the
Convention enters into force;
(ii) in respect of taxes on income which are not withheld at
source, for income relating, as the case may be, to any
Schedule 11 2006 French convention
414 International Tax Agreements Act 1953
calendar year or accounting period beginning after the
calendar year in which the Convention enters into force;
(iii) in respect of the other taxes, for taxation the taxable event of
which will occur after the calendar year in which the
Convention enters into force.
c) for purposes of Article 25, from the date of entry into force of this
Convention ;
d) notwithstanding the provisions of subparagraphs a) and b), Article
26 shall have effect from the date agreed in an exchange of notes
through the diplomatic channel.
2. The Agreement between the Government of Australia and the
Government of the French Republic for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income signed in
Canberra on 13 April 1976 (as amended by the Protocol signed in Paris on
19 June 1989) and the Agreement between the Government of the
Commonwealth of Australia and the Government of the French Republic for the
avoidance of double taxation of income derived from international air transport
signed in Canberra on 27 March 1969 shall be terminated and shall cease to
have effect from the dates on which this Convention becomes effective in
accordance with paragraph 1 of this Article.
3. Notwithstanding the entry into force of this Convention, an individual
who is entitled to the benefits of Article 19 of the Agreement between the
Government of Australia and the Government of the French Republic for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income signed in Canberra on 13 April 1976 (as amended by the
Protocol signed in Paris on 19 June 1989) at the time of the entry into force of
2006 French convention Schedule 11
International Tax Agreements Act 1953 415
this Convention shall continue to be entitled to such benefits until such time as
the individual would have ceased to be entitled to such benefits if the
Agreement had remained in force.
Article 31
TERMINATION
This Convention shall continue in effect indefinitely, but either Contracting
State may terminate the Convention by giving written notice of termination,
through the diplomatic channel, to the other State at least 6 months before the
end of any calendar year beginning after the expiration of 5 years from the date
of its entry into force and, in that event, the Convention shall cease to be
effective:
a) in the case of Australia:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after
1 January in the calendar year next following that in which
the notice of termination is given;
(ii) in respect of other Australian tax, in relation to income,
profits or gains of any year of income beginning on or after
1 July in the calendar year next following that in which the
notice of termination is given ;
Schedule 11 2006 French convention
416 International Tax Agreements Act 1953
b) in the case of France:
(i) in respect of taxes on income withheld at source, for
amounts taxable after the calendar year in which the notice
of termination is given ;
(ii) in respect of taxes on income which are not withheld at
source, for income relating, as the case may be, to any
calendar year or accounting period beginning after the
calendar year in which the notice of termination is given ;
(iii) in respect of the other taxes, for taxation the taxable event
of which will occur after the calendar year in which the
notice of termination is given.
In witness whereof the undersigned, duly authorised thereto, have signed this
Convention.
Done in duplicate at Paris this twentieth day of June two thousand and six in the
English and French languages, both texts being equally authentic.
FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE FRENCH REPUBLIC:
ALEXANDER DOWNER
PHILIPPE DOUSTE-BLAZY
[Signatures omitted]
2006 French convention Schedule 11
International Tax Agreements Act 1953 417
PROTOCOL
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
THE FRENCH REPUBLIC
Have agreed at the signing of the Convention between the two Governments for
the avoidance of double taxation with respect to taxes on income and the
prevention of fiscal evasion upon the following provisions, which shall form an
integral part of the said Convention (in this Protocol referred to as “the
Convention”):
1. The competent authorities of the Contracting States may settle, jointly
or separately, the mode of application of the Convention.
2. With reference to paragraph 5 of Article 4 (Residence),
where a resident of a third State is a member of such partnership or group that is
not subject to corporation tax in France, the Australian income tax liability in
respect of the member’s share of the income, profits or gains of the partnership
or group shall be determined in accordance with Australian domestic law,
including the provisions of any taxation convention between Australia and that
third State, it being understood that such partnership or group shall be treated as
fiscally transparent for the purposes of entitlement to Australian tax benefits
under that convention.
Schedule 11 2006 French convention
418 International Tax Agreements Act 1953
3. With reference to Article 12 (Royalties),
the term “royalties” does not include payments for the use of spectrum licenses.
The provisions of Article 7 of the Convention shall apply to such payments.
4. With reference to Article 18 (Government service),
business activities carried on by a statutory body of a Contracting State include
activities of that body which are not primarily supported by public funds of that
State or of one or more political subdivisions or local authorities thereof.
In witness whereof the undersigned, duly authorised thereto, have signed this
Convention.
Done in duplicate at Paris this twentieth day of June two thousand and six in
the English and French languages, both texts being equally authentic.
FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE FRENCH REPUBLIC:
ALEXANDER DOWNER
PHILIPPE DOUSTE-BLAZY
[Signatures omitted]
Agreement between the Government of Australia and the Government of the Hellenic
Republic for the Avoidance of Double Taxation of Income derived from International
Air Transport Schedule 12
International Tax Agreements Act 1953 419
Schedule 12—Agreement between the
Government of Australia and the
Government of the Hellenic Republic
for the Avoidance of Double Taxation
of Income derived from International
Air Transport
Section 3
The Government of Australia and the Government of the Hellenic Republic
desiring to conclude an Agreement for the avoidance of double taxation of
income derived from international air transport,
HAVE AGREED as follows:
ARTICLE 1
(1) The existing taxes to which this Agreement applies are—
(a) the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company,
(hereinafter referred to as “Australian tax”);
(b) the Greek income tax including the income tax on legal entities as well
as the contribution for Agricultural Insurance Organisation, (hereinafter
referred to as “Greek tax”).
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed after the date of signature of this Agreement in
addition to, or in place of, the existing taxes.
ARTICLE 2
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” includes all Territories of or under the authority of
Australia except the Territory of Papua New Guinea;
(b) the term “Greece” means the territory of the Hellenic Republic;
(c) the terms “Contracting State” and “other Contracting State” mean
Australia or Greece, as the context requires;
Schedule 12 Agreement between the Government of Australia and the Government of
the Hellenic Republic for the Avoidance of Double Taxation of Income derived from
International Air Transport
420 International Tax Agreements Act 1953
(d) the term “Australian enterprise” means an enterprise that has its place of
effective management in Australia;
(e) the term “Greek enterprise” means an enterprise that has its place of
effective management in Greece;
(f) the term “enterprise of a Contracting State” means an Australian
enterprise or a Greek enterprise, as the context requires;
(g) the term “tax” means Australian tax or Greek tax, as the context
requires;
(h) the term “operation of aircraft in international traffic” means the
operation of aircraft in the carriage of persons, livestock, goods or mail
between—
(i) Australia and Greece;
(ii) Australia and any other country;
(iii) Greece and any other country;
(iv) countries other than Australia or Greece; and
(v) places within a country other than Australia or Greece,
and, in relation to an enterprise engaged in the operation of aircraft for
such carriage, includes the sale of tickets for such carriage and the
provision of services in connection with the loading or unloading of
aircraft engaged in such carriage, either for the enterprise itself or for
any other enterprise engaged in the operation of aircraft for such
carriage.
(2) In the application of the provisions of this Agreement by one of the
Contracting States, any term used but not defined herein shall, unless the
context otherwise requires, have the meaning which it has under the laws in
force in that Contracting State relating to the taxes to which this Agreement
applies.
ARTICLE 3
(1) Profits derived by an enterprise of a Contracting State from the
operation of aircraft in international traffic or arising from the carriage by air of
persons, livestock, goods or mail between places in that Contracting State, shall
be exempt from tax in the other Contracting State.
(2) The exemption provided in paragraph (1) of this Article shall also apply
to a share of the profits from the operation of aircraft in international traffic
derived by an enterprise of a Contracting State through participation in a pooled
service, in a joint air transport operation or in an international operating agency.
Agreement between the Government of Australia and the Government of the Hellenic
Republic for the Avoidance of Double Taxation of Income derived from International
Air Transport Schedule 12
International Tax Agreements Act 1953 421
ARTICLE 4
This Agreement shall enter into force on the fourteenth day after the date on
which each Contracting State shall have received from the other Contracting
State written notification that it has complied with all statutory and
constitutional requirements for the entry into force of the Agreement, and the
provisions of the Agreement shall have effect—
(a) as regards Australian tax, in respect of income derived from the first
day of March 1972 and thereafter;
(b) as regards Greek tax, in respect of income derived from the first day of
April 1972 and thereafter.
ARTICLE 5
This Agreement shall continue in effect indefinitely but either Contracting
State may, on or before the thirtieth day of June in any calendar year after the
year 1978, give notice of termination to the other Contracting State and in that
event this Agreement shall cease to be effective—
(a) as regards Australian tax, in respect of income derived from the first
day of March in the calendar year next following that in which the
notice of termination is given and thereafter; and
(b) as regards Greek tax, in respect of income derived from the first day of
April in the calendar year next following the year in which notice of
termination is given and thereafter.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed this Agreement.
DONE in duplicate at Canberra the fifth day of May, One thousand nine
hundred and seventy--seven in the English and Greek languages, both texts
being equally authoritative.
PHILLIP LYNCH C. TRICOUPIS
FOR THE GOVERNMENT OF
AUSTRALIA
FOR THE GOVERNMENT OF THE
HELLENIC REPUBLIC
Schedule 13 Agreement between Australia and the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
422 International Tax Agreements Act 1953
Schedule 13—Agreement between Australia
and the Kingdom of Belgium for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income Section 3
The Government of Australia and the Government of the Kingdom of
Belgium,
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
HAVE AGREED as follows:
CHAPTER I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are—
(a) in Australia:
the Commonwealth income tax, including the additional tax upon
the undistributed amount of the distributable income of a private
company;
(b) in Belgium:
the individual income tax (impôt des personnes physiques—
personenbelasting);
the corporate income tax (impôt des sociétés—
vennootschapsbelasting);
Agreement between Australia and the Kingdom of Belgium for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 13
International Tax Agreements Act 1953 423
the income tax on legal entities (impôt des personnes morales—
rechtspersonenbelasting);
the income tax on non--residents (impôt des non--résidents—
belasting der nietverblijfhouders);
including the prepayments, the surcharges on these taxes and
prepayments, and the communal supplement to the individual income
tax.
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by one of the Contracting States after the date of
signature of this Agreement in addition to, or in place of, the existing taxes. At
the end of each calendar year, the competent authority of each Contracting State
shall notify the competent authority of the other Contracting State of any
substantial changes which have been made in the laws of his State relating to
the taxes to which this Agreement applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
seabed and subsoil of the continental shelf;
(b) the term “Belgium” means the Kingdom of Belgium and, when used in
a geographical sense, means the territory of the Kingdom of Belgium
and includes any territory outside the national sovereignty of Belgium
which in accordance with international law has been or may hereafter
Schedule 13 Agreement between Australia and the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
424 International Tax Agreements Act 1953
be designated, under the laws of Belgium concerning the continental
shelf, as an area within which the rights of Belgium with respect to the
seabed and the subsoil and their natural resources may be exercised;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State” mean Australia or Belgium, as the context requires;
(d) the term “person” means an individual, a company and any other body
of persons;
(e) the term “company” means any body corporate or any entity which is
assimilated to a body corporate for tax purposes in the Contracting State
of which it is a resident;
(f) the term “tax” means Australian tax or Belgian tax, as the context
requires;
(g) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(h) the term “Belgian tax” means tax imposed by Belgium, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Belgium, the Minister of Finance or his authorized
representative;
(j) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” means an enterprise carried on by a
resident of Australia or an enterprise carried on by a resident of
Belgium, as the context requires;
(k) words in the singular include the plural and words in the plural include
the singular.
(2) In this Agreement, the terms “Australian tax” and “Belgian tax” do not
include any charge imposed as a penalty under the law of either Contracting
State relating to the taxes to which this Agreement applies by virtue of Article
2.
(3) In the application of this Agreement by a Contracting State, any term
not otherwise defined shall, unless the context otherwise requires, have the
meaning which it has under the laws of that Contracting State relating to the
taxes to which this Agreement applies.
Agreement between Australia and the Kingdom of Belgium for the Avoidance of
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ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
Contracting States—
(a) in the case of Australia, subject to paragraph (2), if the person is a
resident of Australia for the purposes of Australian tax; and
(b) in the case of Belgium, if the person is a resident of Belgium for the
purposes of Belgian tax.
(2) In relation to income from sources in Belgium, a person who is subject
to Australian tax on income which is from sources in Australia shall not be
treated as a resident of Australia unless the income from sources in Belgium is
subject to Australian tax or, if that income is exempt from Australian tax, it is so
exempt solely because it is subject to Belgian tax.
(3) Where by reason of the provisions of paragraph (1) an individual is a
resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States, or if he does not
have an habitual abode in either of them, he shall be deemed to be a
resident solely of the Contracting State with which his personal and
economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1) a person other than
an individual is a resident of both Contracting States, then it shall be deemed to
be a resident solely of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent
establishment” means a fixed place of business in which the business of the
enterprise is wholly or partly carried on.
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(2) The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising, scientific research or the supply of
information.
(4) An enterprise shall be deemed to have a permanent establishment in one
of the Contracting States and to carry on business through that permanent
establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or the exploitation of, natural resources, or in activities connected with
such exploration or exploitation.
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(5) A person acting in one of the Contracting States on behalf of an
enterprise of the other Contracting State—other than an agent of an independent
status to whom paragraph (6) applies—shall be deemed to be a permanent
establishment of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise, provided that this
provision shall apply only in relation to the goods or merchandise so
manufactured or processed.
(6) An enterprise of one of the Contracting States shall not be deemed to
have a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be
applied in determining for the purposes of this Agreement whether there is a
permanent establishment outside both Contracting States, and whether an
enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or the exploitation of any natural
resource, may be taxed in the Contracting State in which the real property,
mines, quarries, or natural resources are situated.
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(2) Income from a lease of land and income from any other direct interest
in or over land, whether or not improved, shall be regarded as income from real
property situated in the Contracting State in which the land is situated.
(3) Ships, boats or aircraft shall not be regarded as real property.
(4) The provisions of paragraph (1) shall also apply to the income from real
property of an enterprise and to the income from real property used for the
performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions, expenses of the enterprise, being expenses
which are incurred for the purposes of the permanent establishment (including
executive and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(5) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, nothing in this Article shall affect the application
of any law of that State relating to the determination of the tax liability of a
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person, provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with the principles
of this Article.
(6) For the purposes of this Article, except as provided in the Articles
referred to in this paragraph, the profits of an enterprise do not include items of
income dealt with in Articles 6, 8, 10, 11, 12, 14, 16 and 17 and in paragraph (1)
of Article 13.
(7) Notwithstanding the provisions of this Article, profits of an enterprise
of one of the Contracting States from carrying on a business of any form of
insurance, other than life insurance, may be taxed in the other Contracting State
according to the law of that State, provided that if the law in force at the date of
signature of this Agreement is varied (otherwise than in minor respects so as not
to affect its general character) the Contracting Governments shall consult with
each other with a view to agreeing to any amendment of this paragraph that may
be appropriate.
(8) The amount of the profits attributable to a permanent establishment
situated in Belgium of an enterprise carried on by a company that is a resident
of Australia may be taxed in Belgium at the rate fixed by the law of Belgium,
provided that such rate shall not exceed the highest rate applicable to profits of
a company which is a resident of Belgium.
(9) If Australia imposes on profits attributable to a permanent
establishment situated in Australia of an enterprise carried on by a company that
is a resident of Belgium any tax which is in addition to the tax which would be
chargeable on those profits if they were the profits of an enterprise carried on by
a company that is a resident of Australia, the Contracting Governments shall
consult with each other with a view to agreeing to such amendments to
paragraph (8) of this Article as may be appropriate.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of
one of the Contracting States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be
taxed in the other Contracting State where they are profits from operations of
ships or aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a resident
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of a Contracting State through participation in a pool service, in a joint transport
operating organization or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage of
passengers, livestock, mail, goods or merchandise shipped in a Contracting
State for discharge at another place in that State shall be treated as profits from
operations of ships or aircraft confined solely to the places in that State.
(5) The amount which shall be charged to tax in one of the Contracting
States as profits from operations of ships or aircraft in respect of which a
resident of the other Contracting State may be taxed in the first--mentioned
State under paragraph (2) or (3) shall not exceed 5 per cent of the amount paid
or payable (net of rebates) in respect of carriage in such operations.
(6) Paragraph (5) shall not apply to profits derived from the operation of
ships or aircraft by a resident of one of the Contracting States whose principal
place of business is in the other Contracting State, nor shall it apply to profits
derived from the operation of ships or aircraft by a resident of a Contracting
State if those profits are derived otherwise than from the carriage of passengers,
livestock, mail, goods or merchandise.
ARTICLE 9
Associated Enterprise
(1) Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an enterprise,
nothing in this Article shall affect the application of any law of that State
relating to the determination of the tax liability of a person, provided that that
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law shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of this Article.
(3) Where profits on which an enterprise of one of the Contracting States
has been charged to tax in that State are also included, by virtue of
paragraph (1) or (2), in the profits of an enterprise of the other Contracting State
and taxed accordingly, and the profits so included are profits which might have
been expected to have accrued to the enterprise of the other State if the
conditions operative between the enterprises had been those which might have
been expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make such
adjustment as it considers appropriate to the amount of tax charged on those
profits in the first--mentioned State. In determining any adjustment, due regard
shall be had to the other provisions of this Agreement, and for this purpose the
competent authorities of the Contracting States shall if necessary consult each
other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends. This paragraph shall not affect the
taxation of the company in respect of the profits out of which the dividends are
paid.
(3) The term “dividends” in this Article means income from shares and
other income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident. In
the case of Belgium, the term includes income, even when paid in the form of
interest, which is taxable under the head of income from capital invested by the
members of a company which is a resident of Belgium for the purposes of its
tax and is not a company with share capital.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business through a permanent establishment situated in the
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other Contracting State, being the State of which the company paying the
dividends is a resident, and the holding in respect of which the dividends are
paid is effectively connected with that permanent establishment. In such a case,
the provisions of Article 7 shall apply.
(5) Dividends paid by a company which is a resident of Belgium, being
dividends to which a person who is not a resident of Australia is beneficially
entitled, shall be exempt from tax in Australia except insofar as the holding in
respect of which the dividends are paid is effectively connected with a
permanent establishment situated in Australia. Provided that this paragraph
shall not apply in relation to dividends paid by any company which is a resident
of Belgium for the purposes of Belgian tax and which is also a resident of
Australia for the purposes of Australian tax.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the interest.
(3) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in the debtor’s profits, and interest
from any other form of indebtedness as well as all other income assimilated to
interest by the taxation law of the Contracting State in which the income arises.
The term does not include income which is paid in the form of interest but
which is, in accordance with paragraph (3) of Article 10, to be treated as
dividends.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, carries on business through a permanent establishment situated in the
other Contracting State, being the State in which the interest arises, and the
indebtedness giving rise to the interest is effectively connected with that
permanent establishment. In such a case, the provisions of Article 7 shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a political sub--division of that State or a local
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authority of that State or a person who is a resident of that State for the purposes
of its tax. Where, however—
(a) the person paying the interest is a resident of one of the Contracting
States and has in the other State or outside both States a permanent
establishment in connection with which the indebtedness on which the
interest is paid was incurred and the interest is borne by the permanent
establishment, then the interest shall be deemed to arise in the State
where the permanent establishment is situated;
(b) the person paying the interest is not a resident of either of the
Contracting States but has in one of the States a permanent
establishment in connection with which the indebtedness on which the
interest is paid was incurred and the interest is borne by the permanent
establishment, then the interest shall be deemed to arise in the State
where the permanent establishment is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest or between both of them and some
other person, the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid may be taxed in the Contracting State in which the interest arises
according to the law of that State.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such royalties may be taxed in the Contracting State in which they
arise, and according to the law of that State, but the tax so charged shall not
exceed 10 per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments, whether periodical
or not, and however described or computed, to the extent to which they are paid
as consideration for the use of, or the right to use, any copyright, patent, design
or model, plan, secret formula or process, trade--mark, or other like property or
right, or industrial, commercial or scientific equipment, or for the supply of
scientific, technical, industrial or commercial knowledge or information, or for
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the supply of any assistance of an ancillary or subsidiary nature furnished as a
means of enabling the application or enjoyment of such knowledge or
information or any other property or right to which this Article applies, and
includes any payments to the extent to which they are paid as consideration for
the use of, or the right to use, motion picture films, films or video tapes for use
in connection with television or tapes for use in connection with radio
broadcasting.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, carries on business through a permanent establishment situated in the
other Contracting State, being the State in which the royalties arise, and the
asset giving rise to the royalties is effectively connected with that permanent
establishment. In such a case, the provisions of Article 7 shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a political sub--division of that State or a local
authority of that State or a person who is a resident of that State for the purposes
of its tax. Where, however—
(a) the person paying the royalties is a resident of one of the Contracting
States and has in the other State or outside both States a permanent
establishment in connection with which the liability to pay the royalties
was incurred and the royalties are borne by the permanent
establishment, then the royalties shall be deemed to arise in the State
where the permanent establishment is situated;
(b) the person paying the royalties is not a resident of either of the
Contracting States but has in one of the States a permanent
establishment in connection with which the liability to pay the royalties
was incurred and the royalties are borne by the permanent
establishment, then the royalties shall be deemed to arise in the State
where the permanent establishment is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties or between both of them and some
other person, the amount of the royalties paid, having regard to what they are
paid for, exceeds the amount which might have been expected to have been
agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid may be taxed in the Contracting State in which the royalties arise
according to the law of that State.
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ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the
Contracting State in which that property is situated.
(2) For the purposes of this Article—
(a) the term “real property” shall include—
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
(iii) shares or comparable interests in a company, the assets of
which consist wholly or principally of direct interests in or over
land in one of the Contracting States or of rights to exploit, or to
explore for, natural resources in one of the Contracting States;
(b) real property shall be deemed to be situated—
(i) where it consists of direct interests in or over land—in the
Contracting State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the Contracting States
or of rights to exploit, or to explore for, natural resources in one
of the Contracting States—in the Contracting State in which the
assets or the principal assets of the company are situated.
(3) Subject to the provisions of paragraph (1), income from the alienation
of capital assets of an enterprise of a Contracting State shall be taxable only in
that Contracting State, but, where those assets form part of the business
property of a permanent establishment situated in the other Contracting State,
such income may be taxed in that other State.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
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may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
(2) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages
and other similar remuneration derived by an individual who is a resident of one
of the Contracting States in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting State. If
the employment is so exercised, the remuneration derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by an individual who is a resident of one of the Contracting States in respect of
an employment exercised in the other Contracting State shall be taxable only in
the first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or in the
taxable period, as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that Contracting State.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State. In relation to remuneration of a director of a company derived from
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the company in respect of the discharge of day--to--day functions of a
managerial or technical nature, the provisions of Article 15 shall apply as if the
remuneration were remuneration of an employee in respect of an employment
and as if references to “employer” were references to the company.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television artistes,
and musicians and athletes) from their personal activities as such may be taxed
in the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as
such accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
ARTICLE 18
Pensions and Annuities
(1) Pensions, other than pensions to which Article 19 applies, and annuities
paid to a resident of one of the Contracting States shall be taxable only in that
State.
(2) The term “annuity” means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
ARTICLE 19
Government Service
(1) Remuneration, other than a pension, paid to an individual in respect of
services rendered in the discharge of governmental functions to one of the
Contracting States or to a political sub--division of one of the Contracting States
or to a local authority of one of the Contracting States shall be taxable only in
that State. Such remuneration shall, however, be taxable only in the other
Contracting State if the services are rendered in that State and the recipient is a
resident of that State who—
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
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(2) Any pension paid to an individual in respect of services rendered in the
discharge of governmental functions to one of the Contracting States or to a
political sub--division of one of the Contracting States or to a local authority of
one of the Contracting States shall be taxable only in that State. Such pension
shall, however, be taxable only in the other Contracting State if the recipient is a
citizen or national of that State and a resident of that State.
(3) The provisions of Articles 15, 16 and 18 shall apply to remuneration,
including pensions, paid in respect of services rendered in connection with any
business carried on by one of the Contracting States or by a political
sub--division of one of the Contracting States or by a local authority of one of
the Contracting States.
ARTICLE 20
Professors and Teachers
(1) Salaries, wages and other similar remuneration which a professor or
teacher who is a resident of one of the Contracting States and who visits the
other Contracting State for a period not exceeding two years for the purpose of
teaching or carrying out advanced study or research at a university, college,
school or other recognized educational institution, receives for those activities
shall be taxable only in the first--mentioned State.
(2) This Article shall not apply to remuneration which a professor or
teacher receives for conducting research, if the research is undertaken primarily
for the private benefit of a specific person or persons.
ARTICLE 21
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in the other State solely for the purpose of
his education, receives payments from sources outside the other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in the other State.
ARTICLE 22
Income of Dual Resident
Where a person, who by reason of the provisions of paragraph (1) of Article
4 is a resident of both Contracting States but by reason of the provisions of
paragraph (3) or (4) of that Article is deemed for the purposes of this
Agreement between Australia and the Kingdom of Belgium for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 13
International Tax Agreements Act 1953 439
Agreement to be a resident solely of one of the Contracting States, derives
income from sources in that Contracting State or from sources outside both
Contracting States, that income shall be taxable only in that Contracting State.
ARTICLE 23
Source of Income
(1) Income derived by a resident of Belgium which, under any one or more
of Articles 6 to 8 and 10 to 17 may be taxed in Australia, shall for the purposes
of the income tax law of Australia be deemed to be income from sources in
Australia.
(2) Income derived by a resident of Australia which, under any one or more
of Articles 6 to 8 and 10 to 17 may be taxed in Belgium, shall for the purposes
of paragraph (1) of Article 24 and of the income tax law of Australia be deemed
to be income from sources in Belgium.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 24
(1) In the case of Australia, double taxation shall be avoided as follows:
(a) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of
tax paid in a country outside Australia (which shall not affect the
general principal hereof), Belgian tax paid, whether directly or by
deduction, in respect of income derived by a person who is a resident of
Australia from sources in Belgium (not including, in the case of a
dividend, tax paid in respect of the profits out of which the dividend is
paid) shall be allowed as a credit against Australian tax payable in
respect of that income.
(b) In the event that Australia should cease to allow a company which is a
resident of Australia a rebate in its assessment at the average rate of tax
payable by the company in respect of dividends derived from sources in
Belgium and included in the taxable income of the company, the
Contracting Governments will enter into negotiations in order to
establish new provisions concerning the credit to be allowed by
Australia against its tax on the dividends.
Schedule 13 Agreement between Australia and the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
440 International Tax Agreements Act 1953
(2) In the case of Belgium, double taxation shall be avoided as follows:
(a) Where a resident of Belgium derives income which may be taxed in
Australia in accordance with this Agreement and which is not subject to
the provisions of subparagraph (b) or (c) below, Belgium shall exempt
such income from tax but may, in calculating the amount of tax on the
remaining income of that resident, apply the rate of tax which would
have been applicable if such income had not been exempted.
(b) In the case of—
(i) dividends taxable in accordance with paragraph (2) of Article
10, and not exempt from Belgian tax according to
subparagraph (c) below;
(ii) interest taxable in accordance with paragraph (2) or (6) of
Article 11; and
(iii) royalties taxable in accordance with paragraph (2) or (6) of
Article 12, there shall be allowed as a credit against Belgian tax
relating to such income the fixed proportion in respect of
foreign tax for which provision is made under Belgian law,
under the conditions and at the rate fixed by such law, provided
that this rate shall not be less than the rate of tax which may be
levied in Australia in accordance with paragraph (2) of Article
10, paragraph (2) of Article 11 or paragraph (2) of Article 12.
(c) Where a company which is a resident of Belgium owns shares in a
company with share capital which is a resident of Australia and which
is subject to Australian tax on its profits, the dividends which are paid
to it by the latter company and which may be taxed in Australia in
accordance with paragraph (2) of Article 10 shall be exempt from the
corporate income tax in Belgium to the extent that exemption would
have been accorded if the two companies had been residents of
Belgium.
(d) Where, in accordance with Belgian law, losses of an enterprise carried
on by a resident of Belgium which are attributable to a permanent
establishment situated in Australia have been effectively deducted from
the profits of that enterprise for its taxation in Belgium, the exemption
provided in subparagraph (a) of this paragraph shall not apply in
Belgium to the profits of other taxable periods attributable to that
establishment to the extent that those profits have also been freed from
tax in Australia by reason of a deduction for the said losses.
Agreement between Australia and the Kingdom of Belgium for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 13
International Tax Agreements Act 1953 441
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 25
Mutual Agreement Procedure
(1) Where a resident of a Contracting State considers that the actions of the
competent authority of one or both of the Contracting States result or will result
for him in taxation not in accordance with this Agreement, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which he
is a resident. The case must be presented within three years from the first
notification of the action giving rise to taxation not in accordance with this
Agreement.
(2) The competent authority shall endeavour, if the taxpayer’s claim
appears to it to be justified and if it is not itself able to arrive at an appropriate
solution, to resolve the case with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Agreement.
(3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the application of
this Agreement.
(4) The competent authorities of the Contracting States may communicate
with each other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 26
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation thereunder is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
Schedule 13 Agreement between Australia and the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
442 International Tax Agreements Act 1953
relation to, the taxes to which this Agreement applies and shall be used by that
competent authority only for such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 27
Miscellaneous
(1) With respect to a company which is a resident of Belgium for the
purposes of Belgian tax, the provisions of this Agreement shall not limit the
taxation of that company in accordance with the Belgian law in the event of the
repurchase by the company of its own shares or in the event of the distribution
of its assets.
(2) Nothing in this Agreement shall affect the fiscal privileges of
diplomatic or consular officials under the general rules of international law or
under the provisions of special international Agreements.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 28
Entry Into Force
This Agreement shall come into force on the fifteenth day after the date on
which the Government of Australia and the Government of the Kingdom of
Belgium exchange notes through the diplomatic channel notifying each other
that the last of such things has been done as is necessary to give this Agreement
the force of law in Australia and in Belgium respectively, and thereupon this
Agreement shall have effect—
Agreement between Australia and the Kingdom of Belgium for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 13
International Tax Agreements Act 1953 443
(a) in Australia—
(i) with respect to withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year immediately following that in
which the Agreement enters into force;
(ii) with respect to other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the Agreement enters into
force;
(b) in Belgium—
(i) with respect to all tax due at source, on income credited or
payable on or after 1 January in the calendar year immediately
following that in which the Agreement enters into force;
(ii) with respect to all tax other than tax due at source, on income of
any accounting period beginning on or after 1 January in the
calendar year immediately following that in which the
Agreement enters into force.
ARTICLE 29
Termination
This Agreement shall continue in effect indefinitely, but the Government of
Australia or the Government of the Kingdom of Belgium may, on or before
30 June in any calendar year beginning after the expiration of 5 years from the
date of its entry into force, give to the other Government through the diplomatic
channel written notice of termination and, in that event, this Agreement shall
cease to be effective—
(a) in Australia—
(i) with respect to withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year immediately following that in
which the notice of termination is given;
(ii) with respect to other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the notice of termination is
given;
Schedule 13 Agreement between Australia and the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income
444 International Tax Agreements Act 1953
(b) in Belgium—
(i) with respect to all tax due at source, on income credited or
payable on or after 1 January in the calendar year immediately
following that in which the notice of termination is given;
(ii) with respect to all tax other than tax due at source, on income of
any accounting period beginning on or after 1 January in the
calendar year immediately following that in which the notice of
termination is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate at Canberra this thirteenth day of October, One thousand
nine hundred and seventy--seven in the English, French and Dutch languages,
the three texts being equally authentic.
PHILLIP R. LYNCH GEORGES BARTHELEMY
FOR THE GOVERNMENT FOR THE GOVERNMENT OF THE
OF AUSTRALIA KINGDOM OF BELGIUM
Protocol amending the Agreement between Australia and the Kingdom of Belgium for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income signed at Canberra on 13 October 1977 Schedule 13A
International Tax Agreements Act 1953 445
Schedule 13A—Protocol amending the
Agreement between Australia and the
Kingdom of Belgium for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income signed at
Canberra on 13 October 1977 Section 3
Australia and the Kingdom of Belgium,
Desiring to amend the Agreement between Australia and the Kingdom of
Belgium for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income signed at Canberra on 13 October 1977
(in this Protocol referred to as ‘the Agreement’),
Have agreed as follows:
ARTICLE I
Article 7 of the Agreement shall be amended by deleting paragraphs (8) and
(9).
ARTICLE II
Article 9 of the Agreement shall be amended by:
(a) deleting from paragraph (2) “of this Article” and substituting “of
paragraph (1),” and
(b) adding at the end thereof the following paragraph:
‘(4) Notwithstanding the provision of this Article, an enterprise of
one of the Contracting States may be taxed by that State as if
this Article had not come into effect but, so far as it is
practicable to do so, in accordance with the principles of
paragraph (1).’.
Schedule 13A Protocol amending the Agreement between Australia and the Kingdom
of Belgium for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income signed at Canberra on 13 October 1977
446 International Tax Agreements Act 1953
ARTICLE III
Article 10 of the Agreement shall be amended by adding at the end thereof
the following paragraph:
‘(6) Nothing in this Agreement shall be construed as preventing one
of the Contracting States from imposing on the profits of a
company which is a resident of the other Contracting State tax
in addition to or at a higher rate than the tax which would be
imposed on the profits of a company which is a resident of the
first--mentioned State. However, if the provisions of the law in
force in either Contracting State which relate to such additional
tax or such higher rate are varied (otherwise than in minor
respects so as not to affect its general character) the Contracting
States shall consult with each other with a view to agreeing to
such amendments to this Article as may be appropriate.’.
ARTICLE IV
Article 12 of the Agreement shall be amended by omitting paragraph (3) and
substituting the following paragraph:
‘(3) The term ‘royalties’ in this Article means payments (including
credits), whether periodical or not, and however described or
computed, to the extent to which they are made as consideration
for the use of, or the right to use, any copyright, patent, design
or model, plan, secret formula or process, trade--mark or other
like property or right, or industrial, commercial or scientific
equipment, or for the supply of scientific, technical, industrial
or commercial knowledge or information, or for the supply of
any assistance of an ancillary or subsidiary nature furnished as a
means of enabling the application or enjoyment of such
knowledge or information or any other property or right to
which this Article applies, and includes any payments
(including credits) to the extent to which they are made as
consideration for the use of, or the right to use, motion picture
films, films or video tapes for use in connection with television
or tapes for use in connection with radio broadcasting, or for
total or partial forbearance in respect of the use or supply of a
property or right referred to in this paragraph.’.
Protocol amending the Agreement between Australia and the Kingdom of Belgium for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income signed at Canberra on 13 October 1977 Schedule 13A
International Tax Agreements Act 1953 447
ARTICLE V
This Protocol, which shall form an integral part of the Agreement, shall enter
into force on the fifteenth day after the date on which the Contracting States
exchange notes through the diplomatic channel notifying each other that the last
of such things has been done as is necessary to give this Protocol the force of
law in Australia and in Belgium respectively, and thereupon this Protocol shall
have effect:
(a) in Australia, in relation to income of any year of income beginning on
or after 1 July in the calendar year immediately following that in which
the Protocol enters into force;
(b) in Belgium, on income of any accounting period beginning on or after
1 January in the calendar year immediately following that in which the
Protocol enters into force.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Protocol.
DONE in duplicate at Canberra this twentieth day of March One thousand
nine hundred and eighty--four in the English, French and Dutch languages, the
three texts being equally authentic.
PAUL KEATING A. DOMUS
FOR AUSTRALIA FOR THE KINGDOM OF BELGIUM
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
448 International Tax Agreements Act 1953
Schedule 14—Agreement between the
Government of Australia and the
Government of the Republic of the
Philippines for the Avoidance of
Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes
on Income
The Government of Australia and the Government of the Republic of the
Philippines,
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
Chapter I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
(1) This Agreement shall apply to persons who are residents of one or both
of the Contracting States.
(2) However, nothing in this Agreement shall prevent the Philippines from
taxing its own citizens, who are not residents of the Philippines, in accordance
with Philippine law.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are—
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in the Philippines:
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 449
the income taxes imposed by the Government of the Republic of the
Philippines.
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Agreement in addition to, or in place of, the existing taxes. At the end of
each calendar year, the competent authority of each Contracting State shall
notify the competent authority of the other Contracting State of any substantial
changes which have been made in the laws of his State relating to the taxes to
which this Agreement applies.
Chapter II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force a law of Australia or of a State or part of Australia or of a
Territory aforesaid dealing with the exploitation of any of the
natural resources of the sea--bed and subsoil of the continental
shelf;
(b) the term “Philippines” means the Republic of the Philippines and when
used in a geographical sense means the national territory comprising the
Republic of the Philippines;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State” mean Australia or the Philippines, as the context
requires;
(d) the term “person” means an individual, an estate, a trust, a company and
any other body of persons;
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
450 International Tax Agreements Act 1953
(e) the term “company” means any body corporate or any entity which is
treated as a company or a body corporate for tax purposes;
(f) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean an enterprise carried on by a
resident of Australia or an enterprise carried on by a resident of the
Philippines, as the context requires;
(g) the term “tax” means Australian tax or Philippines tax, as the context
requires;
(h) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term “Philippine tax” means tax imposed by the Philippines, being
tax to which this Agreement applies by virtue of Article 2;
(j) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and, in the
case of the Philippines, the Minister of Finance or his authorized
representative;
(k) the term “international traffic”, in relation to the operation of ships, or
aircraft by a resident of one of the Contracting States, means operations
of ships or aircraft other than operations of ships or aircraft confined
solely to places in the other Contracting State.
(2) In this Agreement, the terms “Australian tax” and “Philippine tax” do
not include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Agreement applies by virtue of Article
2.
(3) For the purposes of this Agreement, the carriage of passengers,
livestock, mail, goods or merchandise shipped in one of the Contracting States
for discharge at another place in that State shall be treated as operations of ships
or aircraft confined solely to places in that State.
(4) In the application of this Agreement by a Contracting State, any term
not defined in this Agreement shall, unless the context otherwise requires, have
the meaning which it has under the laws of that Contracting State relating to the
taxes to which this Agreement applies.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 451
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
Contracting States—
(a) in the case of Australia, subject to paragraph (2), if the person is a
resident of Australia for the purposes of Australian tax;
(b) in the case of the Philippines—
(i) if the person is a company or an entity which is incorporated,
created or organized in the Philippines or under its laws and is
treated as a body corporate for the purposes of Philippine tax;
(ii) if the person, not being a company or an entity treated as a
company or body corporate for the purposes of Philippine tax,
is a resident of the Philippines for the purposes of Philippine
tax.
(2) In relation to income from sources in the Philippines, a person who is
subject to Australian tax on income which is from sources in Australia shall not
be treated as a resident of Australia unless the income from sources in the
Philippines is subject to Australian tax or, if that income is exempt from
Australian tax, it is so exempt solely because it is subject to Philippine tax.
(3) Where by reason of the preceding provisions of this Article an
individual is a resident of both Contracting States, then his status shall be
determined in accordance with the following rules—
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
with which his personal and economic relations are the closer.
(4) For the purposes of the last preceding paragraph, an individual’s
citizenship of a Contracting State shall be a factor in determining the degree of
his personal and economic relations with that Contracting State.
(5) Where by reason of the provisions of paragraph (1), a person other than
an individual is a resident of both Contracting States, then it shall be deemed to
be a resident solely of the Contracting State in which it is incorporated, created
or organized.
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
452 International Tax Agreements Act 1953
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent
establishment” means a fixed place of business through which the business of
an enterprise is wholly or partly carried on.
(2) The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oil or gas well, quarry or other place of extraction of natural
resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project, or
supervisory activities in connection therewith where such site, project
or activity continues for more than six months;
(i) premises used as a sales outlet;
(j) a warehouse, in relation to a person providing storage facilities for
others;
(k) a place in one of the Contracting States through which an enterprise of
the other Contracting State furnishes services, including consultancy
services, for a period or periods aggregating more than six months in
any taxable year or year of income, as the case may be, in relation to a
particular project, or to any project connected therewith.
(3) Notwithstanding the preceding provisions of this Article, an enterprise
shall not be deemed to have a permanent establishment merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 453
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one
of the Contracting States and to carry on business through that permanent
establishment if substantial equipment is being used in that State for more than
six months by, for or under contract with the enterprise.
(5) A person acting in one of the Contracting States on behalf of an
enterprise of the other Contracting State—other than an agent of an independent
status to whom paragraph (6) applies—shall be deemed to be a permanent
establishment of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) he has no such authority, but habitually maintains on behalf of the
enterprise in the first--mentioned State a stock of goods or merchandise
from which on behalf of the enterprise he regularly delivers goods or
merchandise for use or consumption in that State; or
(c) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise.
(6) An enterprise of one of the Contracting States shall not be deemed to
have a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
However, when the activities of such an agent are devoted wholly or almost
wholly on behalf of the enterprise, he shall not be considered to be an agent of
independent status within the meaning of this paragraph if it is shown that the
transactions between the agent and the enterprise were not made under
arms--length conditions. In such a case, the provisions of paragraph (5) shall
apply.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
454 International Tax Agreements Act 1953
Chapter III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property may be taxed in the Contracting State in
which the real property is situated.
(2) The term “real property” shall have the meaning which it has under the
laws in force in the Contracting State in which the property in question is
situated. The term shall in any case include rights to royalties and other
payments in respect of the operation of mines, oil or gas wells, or quarries or in
respect of the exploitation of any natural resource and those rights shall be
regarded as situated where the mines, oil or gas wells, quarries or natural
resources are situated. Ships or aircraft shall not be regarded as real property.
(3) Income from a lease of land and income from any other direct interest
in or over land, whether or not improved, shall be regarded as income from real
property situated where the land to which the lease or other direct interest
relates is situated.
(4) The provisions of paragraphs (1) and (3) shall also apply to income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to—
(a) that permanent establishment; or
(b) sales within that other Contracting State of goods or merchandise of the
same or a similar kind as those sold, or other business activities of the
same or a similar kind as those carried on through that permanent
establishment if the sale or the business activities had been made or
carried on in that way with a view to avoiding taxation in that other
State.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 455
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions expenses of the enterprise, being expenses which
are incurred for the purposes of the permanent establishment (including
executive and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(5) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, nothing in this Article shall affect the application
of any law of that State relating to the determination of the tax liability of a
person provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with the principles
of this Article.
(6) For the purposes of this Article, the profits of an enterprise do not
include income from the operation of aircraft in international traffic and, except
as provided in the Articles referred to in this paragraph, do not include items of
income dealt with in Articles 6, 8, 10, 11, 12, 13, 14, 16 and 17.
(7) The profits of an enterprise of one of the Contracting States from the
carrying on in the other Contracting State of a business of any form of insurance
other than life insurance may be taxed in the other Contracting State in
accordance with the law of that other State relating specifically to the taxation
of any person who carries on such business, and Article 24 shall apply for the
elimination of double taxation as if the profits so taxed were attributable to a
permanent establishment of the enterprise in the State imposing the tax.
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
456 International Tax Agreements Act 1953
ARTICLE 8
Shipping
(1) The tax payable in a Contracting State by a resident of the other
Contracting State in respect of profits from the operation of ships in
international traffic shall not exceed the lesser of—
(a) one and one--half per cent of the gross revenues derived from sources in
that State; and
(b) the lowest rate of Philippine tax that may be imposed on profits of the
same kind derived under similar circumstances by a resident of a third
State.
(2) Paragraph (1) shall apply in relation to the share of the profits from the
operation of ships derived by a resident of one of the Contracting States through
participation in a pool service, in a joint transport operating organization or in
an international operating agency.
ARTICLE 9
Associated Enterprises
(1) Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an enterprise,
nothing in this Article shall affect the application of any law of that State
relating to the determination of the tax liability of a person, provided that that
law shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of this Article.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 457
(3) Where profits on which an enterprise of one of the Contracting States
has been charged to tax in that State are also included, by virtue of
paragraph (1) or (2), in the profits of an enterprise of the other Contracting State
and taxed accordingly, and the profits so included are profits which might have
been expected to have accrued to that enterprise of the other State if the
conditions operative between the enterprises had been those which might have
been expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Agreement in relation to the nature of the
income, and for this purpose the competent authorities of the Contracting States
shall, if necessary, consult each other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall—
(a) in the case of dividends derived by a company, not exceed 15 per cent
of the gross amount of the dividends where relief, either by way of
rebate or credit as described in paragraph (2) of Article 24 or relief by
way of credit as described in the second sentence of paragraph (4) of
Article 24, is given to the beneficial owner of the dividends; and
(b) in any other case, not exceed 25 per cent of the gross amount of the
dividends.
Nothing in this paragraph shall affect the taxation of a company in respect of
profits out of which dividends are paid.
(3) The term “dividends” in this Article means income from shares and
other income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business in the other Contracting State of which the company
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
458 International Tax Agreements Act 1953
paying the dividends is a resident through a permanent establishment situated
therein or performs in that other State independent personal services from a
fixed base situated therein, and the holding in respect of which the dividends are
paid is effectively connected with that permanent establishment or fixed base.
In such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.
(5) Dividends paid by a company which is a resident of one of the
Contracting States, being dividends to which a person who is not a resident of
the other Contracting State is beneficially entitled, shall be exempt from tax in
that other State except insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or fixed base
situated in that other State. Provided that this paragraph shall not apply in
relation to dividends paid by a company which is a resident of Australia for the
purposes of Australian tax and which is also a resident of the Philippines for the
purposes of Philippine tax.
(6) The Philippines may impose in accordance with its domestic law, apart
from the corporate income tax, a tax on remittances of profits by a branch to its
Head Office provided that the tax so imposed shall not exceed 15 per cent of the
amount remitted.
(7) Australia may impose an income tax (in this paragraph called a “branch
profits tax”) on the reduced taxable income of a company that is a resident of
the Philippines in addition to the income tax (in this paragraph called “the
general income tax”) payable by the company in respect of its taxable income;
provided that any branch profits tax so imposed in respect of a year of income
shall not exceed 15 per cent of the amount by which the reduced taxable income
of that year of income exceeds the general income tax payable in respect of the
reduced taxable income of that year of income.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises,
and according to the law of that State, but the tax so charged shall not exceed 15
per cent of the gross amount of the interest.
(3) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures and interest from any other form of
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 459
indebtedness (whether or not secured by mortgage and whether or not carrying
a right to participate in profits) as well as all other income assimilated to interest
by the taxation law of the Contracting State in which the income arises.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, carries on business in the other Contracting State in which the interest
arises through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the indebtedness giving rise to the interest is effectively connected with that
permanent establishment or fixed base. In such a case, the provisions of Article
7 or Article 14, as the case may be, shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer
is that State itself or a political subdivision of that State or a local authority of
that State or a person who is a resident of that State for the purposes of its tax.
Where, however, the person paying the interest, whether he is a resident of one
of the Contracting States or not, has in a Contracting State or outside both
Contracting States a permanent establishment or fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and the
interest is borne by the permanent establishment or fixed base, then the interest
shall be deemed to arise where the permanent establishment or fixed base is
situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest, or between both of them and some
other person, the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
(7) Interest derived by the Government of a Contracting State, or by any
other body exercising governmental functions in, or in a part of, a Contracting
State, or by a bank performing central banking functions in a Contracting State,
shall be exempt from tax in the other Contracting State.
(8) The Philippine tax on interest arising in the Philippines in respect of
public issues of bonds, debentures or similar obligations and paid by a company
which is a resident of the Philippines to a resident of Australia shall not exceed
10 per cent of the gross amount of the interest.
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
460 International Tax Agreements Act 1953
(9) The principles set forth in paragraphs (1) to (7) inclusive of Article 5
shall be applied in determining for the purposes of this Article whether there is
a permanent establishment outside both Contracting States, and whether an
enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such royalties may also be taxed in the Contracting State in which they
arise, and according to the law of that State. However, the tax so charged shall
not exceed—
(a) 15 per cent of the gross amount of the royalties where the royalties are
paid by an enterprise registered with the Philippine Board of
Investments and engaged in preferred areas of activities; and
(b) in all other cases, 25 per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for—
(a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark, or other like property or
right;
(b) the use of, or the right to use, any industrial, commercial or scientific
equipment;
(c) the supply of scientific, technical, industrial or commercial knowledge
or information;
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in paragraph (a), any such
equipment as is mentioned in paragraph (b) or any such knowledge or
information as is mentioned in paragraph (c);
(e) the use of, or the right to use—
(i) motion picture films;
(ii) films or video tapes for use in connection with television; or
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 461
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use of a property or right
referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, carries on business in the other Contracting State in which the royalties
arise through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the asset giving rise to the royalties is effectively connected with that permanent
establishment or fixed base. In such a case, the provisions of Article 7 or Article
14, as the case may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself or a political sub--division of that State or a local
authority of that State or a person who is a resident of that State for purposes of
its tax. Where, however, the person paying the royalties, whether he is a
resident of one of the Contracting States or not, has in the other Contracting
State or outside both Contracting States a permanent establishment or fixed base
in connection with which the liability to pay the royalties was incurred, and the
royalties are borne by the permanent establishment or fixed base, then the
royalties shall be deemed to arise where the permanent establishment or fixed
base is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties or between both of them and some
other person, the amount of the royalties paid, having regard to what they are
paid for, exceeds the amount which might have been expected to have been
agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
(7) The principles set forth in paragraphs (1) to (7) inclusive of Article 5
shall be applied in determining for the purposes of this Article whether there is
a permanent establishment outside both Contracting States, and whether an
enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
462 International Tax Agreements Act 1953
ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the
Contracting State in which that property is situated.
(2) For the purposes of this Article—
(a) the term “real property” shall have the meaning which it has under the
laws in force in the Contracting State in which the property in question
is situated and shall include—
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
(iii) shares or comparable interests in a company, the assets of
which consist wholly or principally of direct interests in or over
land in one of the Contracting States or of rights to exploit, or to
explore for, natural resources in one of the Contracting States;
(b) real property shall be deemed to be situated—
(i) where it consists of direct interests in or over land—in the
Contracting State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the Contracting States
or of rights to exploit, or to explore for, natural resources in one
of the Contracting States in the Contracting State in which the
assets or the principal assets of the company are situated.
(3) Subject to the provisions of paragraph (1), income from the alienation
of capital assets of an enterprise of one of the Contracting States or available to
a resident of one of the Contracting States for the purpose of performing
professional services or other independent activities shall be taxable only in that
Contracting State, but, where those assets form part of the business property of
a permanent establishment or fixed base situated in the other Contracting State,
such income may be taxed in that other State.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 463
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State. However, if
such an individual—
(a) has a fixed base regularly available to him in the other Contracting State
for the purpose of performing his activities; or
(b) in a year of income or taxable year, as the case may be, stays in the
other Contracting State for a period or periods aggregating 183 days for
the purpose of performing his activities; or
(c) derives, in a year of income or taxable year, as the case may be, from
residents of the other Contracting State gross remuneration in that State
exceeding ten thousand Australian dollars or its equivalent in Philippine
pesos from performing his activities,
so much of the income derived by him as is attributable to activities so
performed may be taxed in the other State.
(2) The Treasurer of Australia and the Minister of Finance of the
Philippines may agree in letters exchanged for the purpose to variations in the
amount specified in subparagraph (c) of paragraph (1) and any variations so
agreed shall have effect according to the tenor of the letters.
(3) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities, as well as in the exercise of independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages
and other similar remuneration derived by an individual who is a resident of one
of the Contracting States in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as is derived from that
exercise may be taxed in that other State.
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
464 International Tax Agreements Act 1953
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by an individual who is a resident of one of the Contracting States in respect of
an employment exercised in the other Contracting State shall be taxable only in
the first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or taxable
year, as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that Contracting State.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State. In relation to remuneration of a director of a company derived from
the company in respect of the discharge of day--to--day functions of a
managerial or technical nature, the provisions of Article 15 shall apply as if the
remuneration were remuneration of an employee in respect of an employment
and as if references to “employer” were references to the company.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television artistes
and musicians and athletes) from their personal activities as such may be taxed
in the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as
such accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 465
(3) Notwithstanding the provisions of paragraph (1) and Articles 14 and 15,
income derived from activities performed in a Contracting State by entertainers
shall be exempt from tax in that Contracting State if the visit to that State is
substantially supported or sponsored by the other Contracting State and the
entertainer is certified as qualifying under this provision by the competent
authority of that other State.
ARTICLE 18
Pensions and Annuities
(1) Pensions (including government pensions) and annuities paid to a
resident of one of the Contracting States shall be taxable only in that State.
However, pensions paid by a Philippine enterprise under a pension plan not
registered under Philippine law may be taxed in the Philippines.
(2) The term “annuity” means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
ARTICLE 19
Government Service
(1) Remuneration (other than a pension) paid by a Contracting State or a
political subdivision of that State or a local authority of that State to any
individual in respect of services rendered in the discharge of governmental
functions shall be taxable only in that State. However, such remuneration shall
be taxable only in the other Contracting State if the services are rendered in that
State and the recipient is a resident of that State who—
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) The provisions of paragraph (1) shall not apply to remuneration in
respect of services rendered in connection with any trade or business carried on
by one of the Contracting States or a political sub--division of one of the States
or a local authority of one of the States. In such a case the provisions of Articles
15 and 16 shall apply.
ARTICLE 20
Professors and Teachers
(1) Remuneration which a professor or teacher who is a resident of one of
the Contracting States and who visits the other Contracting State for a period
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
466 International Tax Agreements Act 1953
not exceeding two years for the purpose of teaching or carrying out advanced
study or research at a university, college, school or other educational institution
receives for those activities shall be taxable only in the first--mentioned State.
(2) This Article shall not apply to remuneration which a professor or
teacher receives for conducting research if the research is undertaken primarily
for the private benefit of a specific person or persons.
(3) For the purposes of paragraph (1), the term “remuneration” shall
include remittances from sources outside the other State sent to enable the
professor or teacher to carry out the purposes referred to in paragraph (1).
ARTICLE 21
Students and Trainees
Where a student or trainee, who is a resident of one of the Contracting States
or who was a resident of that State immediately before visiting the other
Contracting State and who is temporarily present in the other State solely for the
purpose of his education or training, receives remittances from sources outside
the other State for the purpose of his maintenance or education, those payments
shall be exempt from tax in the other State.
ARTICLE 22
Income of Dual Resident
Where a person who by reason of the provisions of paragraph (1) of Article
4 is a resident of both Contracting States but by reason of the provisions of
paragraph (3) or (5) of that Article is deemed for the purposes of this
Agreement to be a resident solely of one of the Contracting States derives
income from sources in that Contracting State or from sources outside both
Contracting States, that income shall be taxable only in that Contracting State.
ARTICLE 23
Source of Income
Income derived by a resident of one of the Contracting States which, under
any one or more of Articles 6 to 8 and 10 to 17 may be taxed in the other
Contracting State, shall, for the purposes of Article 24 and of the income tax
law of that other State, be deemed to be income from sources in that other State.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 467
Chapter IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 24
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle
hereof), Philippine tax paid, whether directly or by deduction, in respect of
income derived by a person who is a resident of Australia from sources in the
Philippines (excluding, in the case of dividends, tax paid in respect of the profits
out of which the dividends are paid except to the extent that the provisions of
paragraph (2) may permit that tax to be included) shall be allowed as a credit
against Australian tax payable in respect of that income.
(2) A company which is a resident of Australia is, in accordance with the
provisions of the taxation law of Australia in force at the date of signature of
this Agreement, entitled to a rebate in its assessment at the average rate of tax
payable by the company in respect of dividends that are included in its taxable
income and are received from a company that is a resident of the Philippines.
However, should the law so in force be amended so that the rebate in relation to
the dividends ceases to be allowable under that law, credit shall be allowed to
the first--mentioned company under paragraph (1) for the Philippine tax paid on
the profits out of which the dividends are paid, but only if that company
beneficially owns at least 10 per cent of the paid--up share capital of the
second--mentioned company.
(3) For the purposes of paragraph (1) and of the income tax law of
Australia—
(a) a resident of Australia deriving income from sources in the Philippines,
consisting of royalties to which sub--paragraph (a) of paragraph (2) of
Article 12 applies, shall be deemed to have paid, in addition to any
Philippine tax actually paid, Philippine tax in an amount equal to 5% of
the gross amount of the royalties; and
(b) the amount of the said royalties shall be deemed to be the amount that
would have been the amount of the royalties if no Philippine tax had
been paid, increased by 5%.
(4) In accordance with the provisions and subject to the limitations of the
law of the Philippines (as it may be amended from time to time without
changing the general principle hereof), the Philippines shall allow to a resident
of the Philippines as a credit against the Philippine tax the appropriate amount
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
468 International Tax Agreements Act 1953
of taxes paid or accrued to Australia. In the case of a Philippine corporation
owning more than 50 per cent of the voting stock of an Australian corporation
from which it receives dividends in any taxable year, the Philippines shall also
allow credit for the appropriate amount of taxes paid or accrued to Australia by
an Australian corporation paying such dividends with respect to the profits out
of which such dividends are paid. Such appropriate amount shall be based upon
the amount of tax paid or accrued to Australia, but the credit shall not exceed
the limitations (for the purpose of limiting the credit to the Philippine tax on
income from sources within Australia, and on income from sources outside the
Philippines) provided by Philippine law for the taxable year.
Chapter V
SPECIAL PROVISIONS
ARTICLE 25
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the
actions of the competent authority of one or both of the Contracting States result
or will result for him in taxation not in accordance with this Agreement, he
may, notwithstanding the remedies provided by the national laws of those
States, present his case to the competent authority of the Contracting State of
which he is a resident. The case must be presented in writing within two years
from the first notification of the action.
(2) The competent authority shall endeavour, if the taxpayer’s claim
appears to it to be justified and if it is not itself able to arrive at an appropriate
solution, to resolve the case with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Agreement.
(3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the application of
this Agreement.
(4) The competent authorities of the Contracting States may communicate
with each other directly for the purpose of giving effect to the provisions of this
Agreement.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 469
ARTICLE 26
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation thereunder is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes to which this Agreement applies and shall be used only for
such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 27
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officals under the general rules of international law or under the
provisions of special agreements.
ARTICLE 28
Miscellaneous
If, under any Agreement or Convention concluded by the Philippines, a
resident of any other country is exempt from—
(a) the Philippine income tax on gross billings relating to the operation of
aircraft in international traffic; or
Schedule 14 Agreement between the Government of Australia and the Government of
the Republic of the Philippines for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income
470 International Tax Agreements Act 1953
(b) the Philippine business tax on gross receipts relating to the operation of
ships or aircraft in international traffic,
the Philippines will grant a corresponding exemption to residents of Australia
and Australia will grant a corresponding exemption to residents of the
Philippines.
Chapter VI
FINAL PROVISIONS
ARTICLE 29
Entry into Force
(1) This Agreement shall be ratified and the instruments of ratification shall
be exchanged at Canberra, Australia as soon as possible.
(2) The Agreement shall enter into force upon the date of exchange of the
instruments of ratification and its provisions shall have effect:
(a) in Australia—
(i) with respect to withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year in which the exchange of
instruments of ratification takes place;
(ii) with respect to other Australian tax, in relation to income of any
year of income beginning on or after 1 July in that calendar
year;
(b) in the Philippines—
(i) in respect of tax withheld at the source on amounts paid to
non--residents on or after the first day of January in the calendar
year in which the exchange of instruments of ratification takes
place; and
(ii) in respect of other taxes for taxable years beginning on or after
the first day of January in that calendar year.
Agreement between the Government of Australia and the Government of the Republic
of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income Schedule 14
International Tax Agreements Act 1953 471
ARTICLE 30
Termination
This Agreement shall continue in effect indefinitely but either Contracting
State may, on or before June 30 in any calendar year after the fifth year
following the exchange of the instruments of ratification, give to the other
Contracting State, through the diplomatic channel, written notice of termination
and in such event the Agreement shall cease to have effect:
(a) in Australia—
(i) with respect to withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year next following that in which the
written notice of termination takes place;
(ii) with respect to other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the next
following calendar year;
(b) in the Philippines—
(i) in respect of tax withheld at the source on amounts paid to
non--residents on or after the first day of January in the calendar
year next following that in which the written notice of
termination takes place; and
(ii) in respect of other taxes for taxable years beginning on or after
the first day of January in the next following calendar year.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate at Manila this 11th day of May One thousand nine
hundred and seventy nine in the English language.
R.V. GARLAND CESAR VIRATA
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF THE REPUBLIC OF
THE PHILIPPINES
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
472 International Tax Agreements Act 1953
Schedule 15—Agreement between Australia
and Switzerland for the Avoidance of
Double Taxation with respect to Taxes
on Income Section 3
The Government of Australia and the Swiss Federal Council,
Desiring to conclude an Agreement for the avoidance of double taxation
with respect to taxes on income,
Have agreed as follows:
Chapter I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are—
(a) in Australia:
The Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company
and also income tax upon the reduced taxable income of a non--resident
company;
(b) in Switzerland:
The Federal, cantonal and communal taxes on income (total income,
earned income, income from capital, industrial and commercial profits
and other items of income).
(2) This Agreement shall also apply to any indentical or substantially
similar taxes which are imposed after the date of signature of this Agreement in
addition to, or in place of, the existing taxes. At the end of each calendar year,
the competent authority of each Contracting State shall notify the competent
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 473
authority of the other Contracting State of any substantial changes which have
been made in the laws of his State relating to the taxes to which this Agreement
applies.
(3) In this Agreement, the term “Australian tax” means tax imposed by
Australia, being tax to which this Agreement applies; the term “Swiss tax”
means tax imposed in Switzerland, being tax to which this Agreement applies;
and the term “tax” means Australian tax or Swiss tax, as the context requires;
but the terms “Australian tax” and “Swiss tax” do not include any penalty or
interest imposed under the law in force in either Contracting State relating to the
taxes to which this Agreement applies.
(4) This Agreement shall not apply to Federal anticipatory tax withheld in
Switzerland at the source on prizes in a lottery.
Chapter II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term “Switzerland” means the Swiss Confederation;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State” mean Australia or Switzerland, as the context
requires;
(d) the term “person” includes an individual, a company and any other
body of persons;
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
474 International Tax Agreements Act 1953
(e) the term “company” includes any body or association corporate or
unincorporate which is treated as a company or body corporate for tax
purposes;
(f) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean an enterprise carried on by a
resident of Australia or an enterprise carried on by a resident of
Switzerland, as the context requires;
(g) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Switzerland, the Director of the Federal Tax Administration or
his authorized representative.
(2) In the application of this Agreement by one of the Contracting States,
any term not otherwise defined shall, unless the context otherwise requires,
have the meaning which it has under the laws of that Contracting State relating
to the taxes to which this Agreement applies.
ARTICLE 4
Residence
(1) (a) For the purposes of this Agreement, a person is a resident of
Australia if the person is a resident of Australia for purposes of
Australian tax. However, in relation to income from sources in
Switzerland, a person who is subject to Australian tax on income
which is from sources in Australia shall not be treated as a resident
of Australia unless the income from sources in Switzerland is
subject to Australian tax or, if that income is exempt from
Australian tax, it is so exempt solely because it is subject to Swiss
tax.
(b) For the purposes of this Agreement, a person is a resident of
Switzerland if the person is subject to unlimited tax liability in
Switzerland.
(2) Where by reason of the preceding provisions of this Article an
individual is a resident of both Contracting States, then his status shall be
determined in accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
with which his personal and economic relations are the closer.
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 475
(3) Where by reason of the provisions of paragraph (1), a person other than
an individual is a resident of both Contracting States, then it shall be deemed to
be a resident solely of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent
establishment” means a fixed place of business through which the business of
an enterprise is wholly or partly carried on.
(2) The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
476 International Tax Agreements Act 1953
(4) An enterprise shall be deemed to have a permanent establishment in one
of the Contracting States and to carry on business through that permanent
establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or the exploitation of, natural resources, or in activities connected with
such exploration or exploitation.
(5) A person acting in one of the Contracting States on behalf of an
enterprise of the other Contracting State—other than an agent of an independent
status to whom paragraph (6) applies—shall be deemed to be a permanent
establishment of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise, provided that this
provision shall apply only in relation to the goods or merchandise so
manufactured or processed.
(6) An enterprise of one of the Contracting States shall not be deemed to
have a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be
applied in determining for the purposes of this Agreement whether an
enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 477
Chapter III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property may be taxed in the Contracting State in
which the real property is situated.
(2) The term “real property” shall have the meaning which it has under the
laws in force in the Contacting State in which the property in question is
situated. The term shall in any case include rights to royalties and other
payments in respect of the operation of mines or quarries or of the exploitation
of any natural resource, which rights shall be regarded as situated where the
mines, quarries or natural resource are situated. Ships, boats or aircraft shall not
be regarded as real property.
(3) The provisions of paragraph (1) shall apply to income derived from the
direct use, letting, or use in any other form of real property.
(4) Income from a lease of land and income from any other direct interest
in or over land, whether or not improved, shall be regarded as income from real
property situated where the land is situated.
(5) The provisions of paragraphs (1), (3) and (4) shall also apply to the
income from real property of an enterprise and to income from real property
used for the performance of independent personal services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contacting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
478 International Tax Agreements Act 1953
(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions expenses of the enterprise, being expenses which
are incurred for the purposes of the permanent establishment (including
executive and general adminstrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(5) Where profits include items of income which are dealt with separately
in other Articles of this Agreement, then the provisions of those Articles shall
not be affected by the provisions of this Article.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of
one of the Contracting States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be
taxed in the other Contracting State where they are profits from operations of
ships or aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a resident
of one of the Contracting States through participation in a pool service, in a
joint transport operating organization or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in
one of the Contracting States for discharge at another place in that State shall be
treated as profits from operations of ships or aircraft confined solely to places in
that State.
(5) The amount which shall be charged to tax in one of the Contracting
States as profits from the operation of ships or aircraft in respect of which a
resident of the other Contracting State may be taxed in the first--mentioned
State under paragraph (2) or (3) shall not exceed 5 per cent of the amount paid
or payable (net of rebates) in respect of carriage in such operations.
(6) Paragraph (5) shall not apply to profits derived from the operation of
ships or aircraft by a resident of one of the Contracting States whose principal
place of business is in the other Contracting State, nor shall it apply to profits
derived from the operation of ships or aircraft by a resident of one of the
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 479
Contracting States if those profits are derived otherwise than from the carriage
of passengers, livestock, mails, goods or merchandise. In such cases, the
provisions of Article 7 shall apply.
ARTICLE 9
Associated Enterprises
Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
(3) The term “dividends” in this Article means income from shares and
other income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business in the other Contracting State, being the State of
which the company paying the dividends is a resident, through a permanent
establishment situated therein or performs in that other State independent
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
480 International Tax Agreements Act 1953
personal services from a fixed base situated therein and the holding in respect of
which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In any such case, the provisions of Article 7 or
Article 14, as the case may be, shall apply.
(5) Dividends paid by a company which is a resident of one of the
Contracting States, being dividends to which a person who is not a resident of
the other Contracting State is beneficially entitled, shall be exempt from tax in
that other State except insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment situated in that
other State. Provided that this paragraph shall not apply in relation to dividends
paid by any company which is a resident of Australia for the purposes of
Australian tax and which is also a resident of Switzerland for the purposes of
Swiss tax.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the interest.
(3) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to interest by
the taxation law of the Contracting State in which the income arises.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, carries on business in the other Contracting State, being the State in
which the interest arises, through a permanent establishment situated therein or
performs in that other State independent personal services from a fixed base
situated therein and the indebtedness giving rise to the interest is effectively
connected with the permanent establishment or fixed base. In any such case, the
provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Interest shall be deemed to arise in one of the Contracting States when
the payer is that Contracting State itself or a political sub--division of that State
or a local authority of that State or a person who is a resident of that State for
the purposes of its tax. Where, however, the person paying the interest, whether
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 481
he is a resident of one of the Contracting States or not, has in one of the
Contracting States a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base, then such
interest shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest, or between both of them and some
other person, the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States being royalties to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such royalties may be taxed in the Contracting State in which they
arise, and according to the law of that State, but the tax so charged shall not
exceed 10 per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments (including credits),
whether periodical or not and however described or computed, to the extent to
which they are consideration for the use of, or the right to use, any copyright,
patent, design or model, plan, secret formula or process, trademark, or other like
property or right, or industrial, commercial or scientific equipment, or for the
supply of scientific, technical, industrial or commercial knowledge or
information, or any assistance of an ancillary and subsidiary nature furnished as
a means of enabling the application or enjoyment of such knowledge or
information or any other property or right to which this Article applies, or for
the use of, or the right to use, motion picture films, films or video tapes for use
in connection with television or tapes for use in connection with radio
broadcasting, or for total or partial forbearance in respect of the use of a
property or right referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
482 International Tax Agreements Act 1953
States, carries on business in the other Contracting State, being the State in
which the royalties arise, through a permanent establishment situated therein or
performs in that other State independent personal services from a fixed base
situated therein and the asset giving rise to the royalties is effectively connected
with that permanent establishment or fixed base. In any such case, the
provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Royalties shall be deemed to arise in one of the Contracting States
when the payer is that Contracting State itself or a political sub--division of that
State or a local authority of that State or a person who is a resident of that State
for the purposes of its tax. Where, however, the person paying the royalties,
whether he is a resident of one of the Contracting States or not, has in one of the
Contracting States a permanent establishment or a fixed base in connection with
which the obligation to pay the royalties was incurred, and such royalties are
borne by such permanent establishment or fixed base, then such royalties shall
be deemed to arise in the State in which the permanent establishment or fixed
base is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties or between both of them and some
other person, the amount of the royalties paid, having regard to what they are
paid for, exceeds the amount which might have been expected to have been
agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
ARTICLE 13
Alienation of Property
(1) Income or gains from the alienation of real property or of a direct
interest in or over land or of a right to exploit, or to explore for, a natural
resource may be taxed in the Contracting State in which the real property, the
land or the natural resource is situated.
(2) For the purposes of this Article, shares or comparable interests in a
company, the assets of which consist wholly or principally of real property or of
direct interests in or over land in one of the Contracting States or of rights to
exploit, or to explore for, natural resources in one of the Contracting States,
shall be deemed to be real property situated in the Contracting State in which
the land or the natural resources are situated or in which the exploration may
take place.
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 483
(3) Subject to the provisions of paragraphs (1) and (2), income from the
alienation of capital assets of an enterprise of one of the Contracting States shall
be taxable only in that Contracting State, but, where those assets form part of
the business property of a permanent establishment situated in the other
Contracting State, such income may be taxed in that other State.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
(2) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of articles 16, 18 and 19 salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by an individual who is a resident of one of the Contracting States in respect of
an employment exercised in the other Contracting State shall be taxable only in
the first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or the fiscal
year as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
484 International Tax Agreements Act 1953
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that Contracting State.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television artistes
and musicians and athletes) from their personal activities as such may be taxed
in the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as
such accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
(3) The provisions of paragraph (2) shall not apply if it is established that
neither the entertainer nor persons related to the entertainer participate directly
or indirectly in the profits of the person referred to in that paragraph.
ARTICLE 18
Pensions and Annuities
(1) Pensions (including government pensions) and annuities paid to a
resident of one of the Contracting States shall be taxable only in that State.
(2) The term annuity means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 485
(3) Notwithstanding anything in this Agreement—
(a) the pensions and other payments referred to in paragraphs (a) and (b) of
sub--section 23AD (3) of the Australian Income Tax Assessment Act
1936, as amended, where they are paid by Australia, shall be exempt
from Swiss tax as long as they are exempt from Australian tax;
(b) the pensions and other payments received from Switzerland under the
legislation concerning Military Insurance shall be exempt from
Australian tax as long as they are exempt from Swiss tax.
ARTICLE 19
Government Service
(1) Remuneration (other than a pension or annuity) paid by one of the
Contracting States or a political sub--division of that State or a local authority of
that State to any individual in respect of services rendered in the discharge of
governmental functions shall be taxable only in that State. However, such
remuneration shall be taxable only in the other Contracting State if the services
are rendered in that other State and the recipient is a resident of that other State
who—
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) The provisions of paragraph (1) shall not apply to remuneration in
respect of services rendered in connection with any trade or business carried on
by one of the Contracting States or a political sub--division of one of the States
or a local authority of one of the States. In such a case the provisions of Articles
15 and 16 shall apply.
ARTICLE 20
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in the other State solely for the purpose of
his education, receives payments from sources outside the other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in the other State.
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
486 International Tax Agreements Act 1953
ARTICLE 21
Income of Dual Resident
Where a person, who by reason of the provisions of paragraph (1) of Article
4 is a resident of both Contracting States but by reason of the provisions of
paragraph (2) or (3) of that Article is deemed for the purposes of this
Agreement to be a resident solely of one of the Contracting States, derives
income from sources in that Contracting State or from sources outside both
Contracting States, that income shall be taxable only in that Contracting State.
Chapter IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 22
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle
hereof), Swiss tax paid, whether directly or by deduction, in respect of income
derived by a resident of Australia from sources in Switzerland (not including, in
the case of a dividend, tax paid in respect of the profits out of which the
dividend is paid) shall be allowed as a credit against Australian tax payable in
respect of that income.
(2) Where a resident of Switzerland derives income dealt with in this
Agreement and which, in accordance with the provisions of this Agreement,
may be taxed in Australia, Switzerland shall, subject to the provisions of
paragraph (3), exempt such income from Swiss tax but may, in calculating tax
on the remaining income of that person, apply the rate of tax which would have
been applicable if the exempted income had not been so exempted. Provided,
however, that the exemption shall apply to gains from the alienation of property
referred to in paragraph (2) of Article 13 only if taxation of such gains by
Australia is demonstrated.
(3) Where a resident of Switzerland derives dividends, interest or royalties
which, in accordance with the provisions of Articles 10, 11 and 12, may be
taxed in Australia, Switzerland shall allow, upon request, relief to that person.
The relief may consist of:
(a) a deduction from the Swiss tax on the income of that person of an
amount equal to the tax levied in Australia in accordance with the
provisions of Articles 10, 11 and 12; such deduction shall not, however,
exceed that part of the Swiss tax, as computed before the deduction is
given, which is attributable to the income which may be taxed in
Australia, or
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 487
(b) a lump sum reduction of the Swiss tax determined by standardised
formulae which have regard to the general principles of the relief
referred to in sub--paragraph (a), or
(c) a partial exemption of such dividends, interest or royalties from Swiss
tax, in any case consisting at least of the deduction of the tax levied in
Australia from the gross amount of the dividends, interest or royalties.
Switzerland shall determine the applicable relief and regulate the procedure in
accordance with the Swiss provisions relating to the carrying out of
international conventions of the Swiss Confederation for the avoidance of
double taxation.
(4) A company which is a resident of Switzerland and which derives
dividends from a company which is a resident of Australia shall be entitled, for
the purposes of Swiss tax with respect to such dividends, to the same relief
which would be granted if the company paying the dividends were a resident of
Switzerland.
Chapter V
SPECIAL PROVISIONS
ARTICLE 23
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the
actions of tax authorities in one or both of the Contracting States result or will
result for him in taxation not in accordance with this Agreement, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which he
is a resident.
(2) The competent authority shall endeavour, if the taxpayer’s claim
appears to it to be justified and if it is not itself able to arrive at an appropriate
solution, to resolve the case with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Agreement.
(3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the application of
this Agreement.
(4) The competent authorities of the Contracting States may communicate
with each other directly for the purpose of giving effect to the provisions of this
Agreement.
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
488 International Tax Agreements Act 1953
ARTICLE 24
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information (being information which is at their disposal under their respective
taxation laws in the normal course of administration) as is necessary for
carrying out the provisions of this Agreement in relation to the taxes which are
the subject of this Agreement. Any information so exchanged shall be treated as
secret and shall not be disclosed to any persons other than those concerned with
the assessment and collection of the taxes which are the subject of this
Agreement. No information as aforesaid shall be exchanged which would
disclose any trade, business, industrial or professional secret or trade process.
(2) In no case shall the provisions of this Article be construed as imposing
upon either of the Contracting States the obligation to carry out administrative
measures at variance with the regulations and practice of either Contracting
State or which would be contrary to its sovereignty, security or public policy or
to supply particulars which are not procurable under its own legislation or that
of the State making application.
ARTICLE 25
Source of Income
Income derived by a resident of one of the Contracting States which, under
any one or more of Articles 6 to 8 and 10 to 17 may be taxed in the other
Contracting State, shall for the purposes of Article 22, and of the income tax
law of that other State, be deemed to be income from sources in that other State.
ARTICLE 26
Diplomatic and Consular Officials
(1) Nothing in this Agreement shall affect the fiscal privileges of
diplomatic or consular officials under the general rules of international law or
under the provisions of special agreements.
(2) For the purposes of this Agreement, an individual who is a member of a
diplomatic mission, consular post or permanent mission of one of the
Contracting States which is situated in the other Contracting State or in a third
State shall be deemed to be a resident of the sending Contracting State if—
(a) in accordance with international law he is not liable to tax in the
receiving Contracting State in respect of income from sources outside
that Contracting State, and
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 489
(b) he is liable in the sending Contracting State to the same obligations in
relation to tax on his total income as are residents of that Contracting
State.
(3) This Agreement shall not apply to international organisations, to organs
or officials thereof or to persons who are members of a diplomatic mission,
consular post or permanent mission of a third State, being present in one of the
Contracting States and not treated in either Contracting State as residents in
respect of taxes on income.
Chapter VI
FINAL PROVISIONS
ARTICLE 27
Entry into Force
This Agreement shall come into force on the date on which the Government
of Australia and the Swiss Federal Council exchange notes through the
diplomatic channel notifying each other that the last of such things has been
done as is necessary to give this Agreement the force of law in Australia and in
Switzerland, as the case may be, and thereupon this Agreement shall have
effect—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 January
1979;
(ii) in respect of other Australian tax for any year of income
beginning on or after 1 July 1979;
(b) in Switzerland—
for any taxable year beginning on or after 1 January 1979.
ARTICLE 28
Termination
This Agreement shall continue in effect indefinitely, but the Government of
Australia or the Swiss Federal Council may on or before 30 June in any
calendar year give to the other through the diplomatic channel written notice of
termination and, in that event this Agreement shall cease to be effective—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 January
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
490 International Tax Agreements Act 1953
in the calendar year next following that in which the notice of
termination is given;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July in the calendar year next following
that in which the notice of termination is given;
(b) in Switzerland—
for any taxable year beginning on or after 1 January in the calendar year
next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate at Canberra this 28th day of February One thousand nine
hundred and eighty in the English and German languages, both texts being
equally authoritative.
JOHN HOWARD HENRI ROSSI
FOR THE GOVERNMENT OF
AUSTRALIA
FOR THE SWISS FEDERAL
COUNCIL
PROTOCOL
The Government of Australia and
the Swiss Federal Council
Have agreed at the signing of the Agreement between the two States for the
avoidance of double taxation with respect to taxes on income upon the
following provisions which shall form an integral part of the said Agreement.
(1) With reference to Article 2,
the provisions of the Australian law relating specifically to the income
tax upon the reduced taxable income of a non--resident company in
existence at the date of signature of this Agreement are to be applied in
ascertaining the income subject to that tax or, if those provisions are
amended so as to make more favourable to the company the
ascertainment of that income, those provisions as so amended are to be
so applied.
(2) With reference to Article 7,
(a) insofar as it has been customary in one of the Contracting States to
determine the profits to be attributed to a permanent establishment on
the basis of an apportionment of the total profits of the enterprise to its
various parts, nothing in paragraph (2) of Article 7 shall preclude that
Contracting State from determining the profits to be taxed by such an
Agreement between Australia and Switzerland for the Avoidance of Double Taxation
with respect to Taxes on Income Schedule 15
International Tax Agreements Act 1953 491
apportionment as may be customary; the method of apportionment
adopted shall, however, be such that the result shall be in accordance
with the principles contained in that Article;
(b) for the purposes of (a) and of paragraphs (1) to (4) of Article 7, the
profits to be attributed to the permanent establishment shall be
determined by the same method year by year unless there is good and
sufficient reason to the contrary;
(c) Article 7 of the Agreement shall not apply to profits of an enterprise
from carrying on a business of any form of insurance, other than life
insurance.
(3) With reference to Articles 7 and 9,
where the information available to the competent authority of one of the
Contracting States is inadequate to determine the profits of an enterprise
on which tax may be imposed in that State in accordance with Article 7
or Article 9 of the Agreement, nothing in those Articles shall affect the
application of any law of that State relating to the determination of the
tax liability of an enterprise in special circumstances, provided that that
law shall be applied, so far as the information available to the
competent authority permits, in accordance with the principles of those
Articles.
(4) With reference to Articles 10, 11 and 12, if, in an Agreement for the
avoidance of double taxation that is subsequently made between
Australia and a third State being a State that at the date of signature of
this Protocol is a member of the Organisation for Economic
Co--operation and Development, Australia shall agree to limit the rate
of its taxation—
(a) on dividends paid by a company which is a resident of Australia for the
purposes of Australian tax to which a company that is a resident of the
third State is entitled, to a rate less than that provided in paragraph (2)
of Article 10; or
(b) on interest arising in Australia to which a resident of the third State is
entitled, to a rate less than that provided in paragraph (2) of Article 11;
or
(c) on royalties arising in Australia to which a resident of the third State is
entitled, to a rate less than that provided in paragraph (2) of Article 12,
the Government of Australia shall immediately inform the Swiss
Federal Council in writing through the diplomatic channel and shall
enter into negotiations with the Swiss Federal Council to review the
Schedule 15 Agreement between Australia and Switzerland for the Avoidance of
Double Taxation with respect to Taxes on Income
492 International Tax Agreements Act 1953
provisions specified in (a), (b) and (c) above in order to provide the
same treatment for Switzerland as that provided for the third State.
DONE in duplicate at Canberra this twenty--eighth day of February, One
thousand nine hundred and eighty, in the English and German languages, both
texts being equally authoritative.
JOHN HOWARD HENRI ROSSI
FOR THE GOVERNMENT OF FOR THE SWISS FEDERAL
AUSTRALIA COUNCIL
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
International Tax Agreements Act 1953 493
Schedule 16—Agreement between the
Government of Australia and the
Government of Malaysia for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income Section 3
The Government of Australia and the Government of Malaysia,
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
1. The existing taxes to which this Agreement shall apply are—
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in Malaysia:
income tax and excess profit tax; supplementary income taxes, that is,
tin profits tax, development tax and timber profits tax; and petroleum
income tax.
2. This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Agreement in addition to, or in place of, the existing taxes. The
competent authority of each Contracting State shall notify the competent
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
494 International Tax Agreements Act 1953
authority of the other Contracting State of any significant changes which have
been made in the laws of its Contracting State relating to the taxes to which this
Agreement applies.
ARTICLE 3
General Definitions
1. In this Agreement, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and
includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia, or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term “Malaysia” means the Federation of Malaysia and includes any
area adjacent to the territorial waters of Malaysia which, in accordance
with international law, has been or may hereafter be designated under
the laws of Malaysia concerning the continental shelf as an area within
the rights of Malaysia with respect to the sea--bed and subsoil and their
natural resources may be exercised;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State” mean Australia or Malaysia, as the context requires;
(d) the term “person” includes an individual, a company and such
unincorporated bodies of persons as are treated as persons under the
taxation laws of the respective Contracting States;
(e) the term “company” means any body corporate or any entity which is
treated as a company for tax purposes;
(f) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean respectively an enterprise carried
on by a resident of one of the Contracting States and an enterprise
carried on by a resident of the other Contracting State;
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
International Tax Agreements Act 1953 495
(g) the term “tax” means Australian tax or Malaysian tax, as the context
requires;
(h) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term “Malaysian tax” means tax imposed by Malaysia, being tax to
which this Agreement applies by virtue of Article 2;
(j) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Malaysia, the Minister of Finance or his authorized
representative.
2. In this Agreement, the terms “Australian tax” and “Malaysian tax” do not
include any penalty or interest imposed under the taxation laws of either
Contracting State.
3. In the application of this Agreement by a Contracting State, any term not
otherwise defined shall, unless the context otherwise requires, have the meaning
which it has under the taxation laws of that Contracting State.
ARTICLE 4
Residence
1. For the purposes of this Agreement, a person is a resident of one of the
Contracting States—
(a) in the case of Australia, if the person is a resident of Australia for the
purposes of Australian tax; and
(b) in the case of Malaysia, if the person is resident in Malaysia for the
purposes of Malaysian tax.
2. Where by reason of the preceding provisions an individual is a resident of
both Contracting States, then his status shall be determined in accordance with
the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States, or if he does not
have an habitual abode in either of them, he shall be deemed to be a
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
496 International Tax Agreements Act 1953
resident solely of the Contracting State with which his personal and
economic relations are the closer.
3. In determining for the purposes of paragraph 2 the Contracting State with
which an individual’s personal and economic relations are the closer, the
matters to which regard may be had shall include the citizenship of the
individual.
4. Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be
a resident solely of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
Permanent Establishment
1. For the purposes of this Agreement, the term “permanent establishment”
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2. The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oil or gas well, quarry or any other place of extraction of natural
resources including timber or other forest produce;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than six months.
3. An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
International Tax Agreements Act 1953 497
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
4. An enterprise of one of the Contracting States shall be deemed to have a
permanent establishment in the other Contracting State and to carry on business
through that permanent establishment if—
(a) it carries on supervisory activities in that other State for more than six
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that other State; or
(b) substantial equipment is in that other State being used or installed by,
for or under contract with, the enterprise.
5. A person acting in one of the Contracting States on behalf of an enterprise
of the other Contracting State (other than an agent of an independent status to
whom paragraph 6 applies) shall be deemed to be a permanent establishment of
that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that first--mentioned State, an
authority to conclude contracts on behalf of the enterprise, unless his
activities are limited to the purchase of goods or merchandise for the
enterprise; or
(b) there is maintained in that first--mentioned State a stock of goods or
merchandise belonging to the enterprise from which he habitually fills
orders on behalf of the enterprise; or
(c) in so acting, he manufactures or processes in that first--mentioned State
for the enterprise goods or merchandise belonging to the enterprise.
6. An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
7. The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
498 International Tax Agreements Act 1953
ARTICLE 6
Income from Land
1. Income from land may be taxed in the Contracting State in which the land
is situated.
2. In this Article, the word “land” shall have the meaning which it has under
the law of the Contracting State in which the land in question is situated; it shall
include any estate or direct interest in land whether improved or not. A right to
receive variable or fixed payments as consideration for the working of, or the
right to work, mineral deposits, oil or gas wells, quarries or other places of
extraction or exploitation of natural resources or for the exploitation of, or the
right to exploit or to fell any standing trees, plants or forest produce shall be
deemed to be an estate or direct interest in land situated in the Contracting State
in which the mineral deposits, oil or gas wells, quarries, natural resources, or
standing trees, plants or forest produce are situated.
3. The provisions of paragraph 1 shall apply to income derived from the
direct use, letting or use in any other form of land.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from
land of an enterprise and to income from land used for the performance of
professional services.
ARTICLE 7
Business Income or Profits
1. The income or profits of an enterprise of one of the Contracting States shall
be taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the income or profits of the
enterprise may be taxed in the other State, but only so much of them as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of one of the
Contracting States carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the income or profits which it
might be expected to make if it were a distinct and separate enterprise engaged
in the same or similar activities under the same or similar conditions and
dealing at arm’s length with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
International Tax Agreements Act 1953 499
3. In the determination of the income or profits of a permanent establishment,
there shall be allowed as deductions expenses of the enterprise, being expenses
(including executive and general administrative expenses) which are reasonably
connected with the permanent establishment and which would be deductable if
the permanent establishment were an independent entity that incurred those
expenses, whether incurred in the Contracting State in which the permanent
establishment is situated or elsewhere.
4. No income or profits shall be attributed to a permanent establishment by
reason of the mere purchase by that permanent establishment of goods or
merchandise for the enterprise.
5. If the information available to the competent authority of a Contracting
State is inadequate to determine the income or profits to be attributed to the
permanent establishment of an enterprise, nothing in this Article shall effect the
application of any law of that State relating to the determination of the tax
liability of a person by the exercise of a discretion or the making of an estimate
by the competent authority, provided that that law shall be applied, so far as the
information available to the competent authority permits, in accordance with the
principles of this Article.
6. Where income or profits include any item of income or profits which is
dealt with separately in another Article of this Agreement, the provisions of that
other Article, (except where otherwise provided in that Article) shall not be
affected by the provisions of this Article.
7. Nothing in this Article shall affect the operation of any taxation law:
(a) in the case of Australia,
relating to insurance with non--residents; and
(b) in the case of Malaysia,
relating to income or profits from an insurance business:
provided that if the relevant law in force in either Contracting State at the date
of signature of this Agreement is varied (otherwise than in minor respects so as
not to affect its general character), the Contracting States shall consult with each
other with a view to agreeing to any amendment of this paragraph that may be
appropriate.
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
500 International Tax Agreements Act 1953
ARTICLE 8
Shipping and Air Transport
1. Income or profits from the operation of ships or aircraft derived by a
resident of one of the Contracting States shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, such income or profits may
be taxed in the other Contracting State where they are income or profits from
operations of ships or aircraft confined solely to places in that other State.
3. The provisions of paragraphs 1 and 2 shall apply in relation to the share of
the income or profits from the operation of ships or aircraft derived by a
resident of one of the Contracting States through participation in a pool service,
in a joint transport operating organization or in an international operating
agency.
4. For the purposes of this Article, income or profits derived from the carriage
by ships or aircraft of passengers, livestock, mail, goods or merchandise
shipped in a Contracting State for discharge at another place in that State shall
be treated as income or profits from operations of ships or aircraft confined
solely to places in that State.
5. Nothing in this Article shall affect the application of the law of a
Contracting State relating to the determination of tax liability by the exercise of
a discretion or the making of an estimate by the competent authority in
determining the tax liability of a resident of the other Contracting State in
respect of operations of ships or aircraft confined solely to places in the
first--mentioned State.
ARTICLE 9
Associated Enterprises
1. Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing at arm’s length,
then any income or profits which, but for those conditions, might have been
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the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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International Tax Agreements Act 1953 501
expected to accrue to one of the enterprises, but, by reason of those conditions,
have not so accrued, may be included in the income or profits of that enterprise
and taxed accordingly.
2. If the information available to the competent authority of a Contracting
State is inadequate to determine the income or profits to be attributed to an
enterprise, nothing in this Article shall affect the application of any law of that
State relating to the determination of the tax liability of a person by the exercise
of a discretion or the making of an estimate by the competent authority,
provided that that law shall be applied, so far as the information available to the
competent authority permits, in accordance with the principles of this Article.
ARTICLE 10
Dividends
1. Dividends paid by a company which is a resident of one of the Contracting
States, being dividends to which a resident of the other Contracting State is
beneficially entitled, may be taxed in that other State.
2. Dividends paid by a company which is a resident of Australia for the
purposes of Australian tax, being dividends to which a resident of Malaysia is
beneficially entitled, may be taxed in Australia according to the law of
Australia, but the tax so charged shall not exceed 15 per cent of the gross
amount of the dividends.
3. Subject to paragraph 4, dividends paid by a company which is resident in
Malaysia for the purposes of Malaysian tax, being dividends to which a resident
of Australia is beneficially entitled, shall be exempt from any tax in Malaysia
which is chargeable on dividends in addition to the tax chargeable in respect of
the income or profits of the company:
Provided that nothing in this paragraph shall affect the provisions of the
Malaysian law under which the tax in respect of a dividend paid by a company
resident in Malaysia from which Malaysian tax has been, or has been deemed to
be, deducted may be adjusted by reference to the rate of tax appropriate to the
Malaysian year of assessment immediately following that in which the dividend
was paid.
4. If after the date of signature of this Agreement the existing system of
taxation in Malaysia applicable to the income and distributions of companies is
altered by the introduction of a tax on the income or profits of a company (for
which no credit or only partial credit is given to its shareholders) and of a
further tax on dividends pay by the company, the Malaysian tax on dividends,
being dividends paid by a company which is resident in Malaysia for the
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purposes of Malaysian tax, and to which a resident of Australia is beneficially
entitled, shall not exceed 15 per cent of the gross amount of the dividends.
5. Dividends paid by a company which is a resident of one of the Contracting
States, being dividends to which a person who is not a resident of the other
Contracting State is beneficially entitled, shall be exempt from tax in that other
State:
Provided that this paragraph shall not apply in relation to dividends paid by
a company which is both a resident of Australia for the purposes of Australian
tax and resident in Malaysia for the purposes of Malaysian tax.
6. The provisions of paragraphs 1 to 5 shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, has in the other Contracting State, in which the company paying the
dividends is resident, a permanent establishment which the holding by virtue of
which the dividends are paid is effectively connected. In such a case, the
provisions of Article 7 shall apply.
7. Dividends paid by a company which is a resident of Malaysia shall include
dividends paid by a company which is a resident of Singapore which for the
purpose of those dividends has declared itself to be a resident of Malaysia, but
shall not include dividends paid by a company which is a resident of Malaysia
which for the purpose of those dividends has declared itself to be a resident of
Singapore.
8. The term “dividends” in this Article includes any item which, under the
laws of the Contracting State of which the company paying the dividend is a
resident, is treated as a dividend of a company.
9. Nothing in this Agreement shall be construed as preventing a Contracting
State from imposing on the income of a company which is a resident of the
other Contracting State, tax in addition to the tax which would be chargeable on
the chargeable income or taxable income, as the case may be, of a company
which is a resident of the first--mentioned State:
Provided that any additional tax so imposed by the first--mentioned State
shall not exceed 15 per cent of the amount by which the chargeable income or
taxable income for the year of assessment or year of income exceeds the tax
which would have been payable on that income if the company had been a
resident of the first--mentioned State.
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
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ARTICLE 11
Interest
1. Interest arising in one of the Contracting States, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
2. Such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest to which a resident
of Australia is beneficially entitled shall be exempt from Malaysian tax if the
loan or other indebtedness in respect of which the interest is paid is an approved
loan or a long--term loan as defined in section 2 (1) of the Income Tax Act,
1967 of Malaysia (as amended).
4. The provisions of paragraphs 1, 2 and 3 shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, has in the other Contracting State in which the interest arises a
permanent establishment with which the debt--claim in respect of which the
interest is paid is effectively connected. In such a case the provisions of Article
7 shall apply.
5. Interest shall be deemed to arise in a Contracting State when the payer is
that Contracting State itself or a political sub--division, a local authority or
statutory body thereof or a resident of that State for the purposes of its tax.
Where, however, the person paying the interest, whether he is a resident of one
of the Contracting States or not, has in a Contracting State a permanent
establishment in connection with which the indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment, then such interest shall be deemed to arise in the Contracting
State in which the permanent establishment is situated.
6. Where the payer is related to the person beneficially entitled to the interest
and the amount of the interest paid, having regard to the debt--claim for which it
is paid, exceeds the amount which might be expected to have been agreed upon
by the payer and the person so entitled if they had not been related, the
provisions of this Article shall apply only to the last--mentioned amount. In that
case, the excess part of the payments shall remain taxable according to the law
of each Contracting State, due regard being had to the other provisions of this
Agreement. For the purposes of this paragraph, a person is related to another
person if either person participates directly or indirectly in the management,
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
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control or capital of the other, or if any third person or persons participate
directly or indirectly in the management, control or capital of both.
7. The term “interest” in this Article means interest from Government
securities, or from bonds or debentures, whether or not secured by mortgage
and whether or not carrying a right to participate in profits, and from
debt--claims of every kind as well as other income assimilated to interest from
money lent by the taxation law of the Contracting State in which the income
arises.
ARTICLE 12
Royalties
1. Royalties arising in one of the Contracting States, being royalties to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
2. Such royalties may be taxed in the Contracting State in which they arise,
and according to the laws of that State but the tax so charged shall not exceed
15 per cent of the gross amount of the royalties.
3. Notwithstanding the provisions of paragraph 2, approved industrial
royalties derived from Malaysia by a resident of Australia who is the beneficial
owner thereof shall be exempt from Malaysian tax.
4. The provisions of paragraphs 1, 2 and 3 shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, has in the other Contracting State from which the royalties are derived a
permanent establishment with which the right, property, knowledge,
information or assistance giving rise to the royalties is effectively connected. In
such a case the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is
that Contracting State itself or a political sub--division, a local authority or
statutory body thereof or a resident of that State for the purposes of its tax.
Where, however, the person paying the royalties, whether he is a resident of one
of the Contracting States or not, has in a Contracting State a permanent
establishment in connection with which the liability to pay the royalties was
incurred, and such royalties are borne by such permanent establishment, then
such royalties shall be deemed to arise in the Contracting State in which the
permanent establishment is situated.
6. Where the payer is related to the person beneficially entitled to the
royalties and the amount of the royalties paid or credited, having regard to the
use, to the right to use, or to the knowledge, information or assistance, for
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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which they are paid or credited, exceeds the amount which might be expected to
have been agreed upon by the payer and the person so entitled if they had not
been related, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the royalties paid or
credited shall remain taxable according to the law of each Contracting State,
due regard being had to the other provisions of this Agreement. For the
purposes of this paragraph, a person is related to another person if either person
participates directly or indirectly in the management, control or capital of the
other, or if any third person or persons participate directly or indirectly in the
management, control or capital of both.
7. The term “royalties” in this Article means payments or credits of any kind
to the extent to which they are made as consideration for—
(a) the use of, or the right to use, any—
(i) copyright, patent, design or model, plan, secret formula or
process, trade mark or other like property or right;
(ii) industrial, commercial or scientific equipment; or
(iii) motion picture film or tape for radio or television broadcasting;
(b) the supply of scientific, technical, industrial or commercial knowledge
or information;
(c) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such right or property as is described in paragraph (a) (i), any such
equipment as is described in paragraph (a) (ii), or any such knowledge
or information as is described in paragraph (b); or
(d) total or partial forbearance in respect of the use of a property or right
referred to in this paragraph.
8. The term “approved industrial royalties” in this Article means royalties as
defined in paragraph 7 which are approved and certified by the competent
authority of Malaysia as payable for the purpose of promoting industrial
development in Malaysia and which are payable by an enterprise which is
wholly or mainly engaged in activities falling within one of the following
classes—
(a) manufacturing, assembling or processing;
(b) construction, civil engineering or ship--building; or
(c) electricity, hydraulic power, gas or water supply.
Schedule 16 Agreement between the Government of Australia and the Government of
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with respect to Taxes on Income
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9. Royalties derived by a resident of Australia, being royalties that, as film
rentals, are subject to the cinematograph film--hire duty in Malaysia, shall not
be liable to Malaysian tax.
ARTICLE 13
Alienation of Land
Income or profits from the alienation of land as defined in Article 6 may be
taxed in the Contracting State in which that land is situated.
ARTICLE 14
Personal Services
1. Subject to Articles 15, 18, 19 and 20, remuneration (other than a pension)
derived by an individual who is a resident of one of the Contracting States in
respect of personal (including professional) services may be taxed only in that
Contracting State unless the services are performed in the other Contracting
State. If the services are so performed, such remuneration as is derived in
respect thereof may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration (other than a
pension) derived by an individual who is a resident of one of the Contracting
States in respect of personal (including professional) services performed in the
other Contracting State shall be taxable only in the first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the basis year or year of income,
as the case may be, of that other State;
(b) the remuneration is paid by, or on behalf of, a person who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment which that person has in that other State.
3. Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that Contracting State.
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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ARTICLE 15
Directors’ fees
Notwithstanding the provisions of Article 14, directors’ fees and similar
payments derived by a resident of one of the Contracting States in his capacity
as a member of the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
ARTICLE 16
Entertainers
1. Notwithstanding the provisions of Article 14, income derived by
entertainers (such as theatrical, motion picture, radio or television artistes and
musicians and athletes) from their personal activities as such may be taxed in
the Contracting State in which these activities are exercised.
2. Where income in respect of the personal activities of an entertainer as such
accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting
State in which the activities of the entertainer are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to remuneration or
profits derived from activities exercised in a Contracting State that are directly
connected with a visit to that Contracting State that is arranged by and is
directly or indirectly supported wholly or substantially from the public funds of
the other Contracting State or a political sub--division, a local authority or
statutory body thereof.
ARTICLE 17
Pensions and Annuities
1. Any pension (other than a pension of the kind referred to in Article 18) or
other similar payment or any annuity paid to a resident of one of the
Contracting States shall be taxable only in that Contracting State.
2. The term “annuity” means a stated sum payable periodically at stated
times, during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
3. Any alimony or other maintenance payment arising in a Contracting State
and paid to a resident of the other Contracting State, shall be taxable only in the
first--mentioned State.
Schedule 16 Agreement between the Government of Australia and the Government of
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with respect to Taxes on Income
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ARTICLE 18
Government Service
1. Remuneration (other than a pension or annuity) paid by a Contracting State
or a political sub--division or a local authority thereof to any individual in
respect of services rendered in the discharge of governmental functions shall be
taxable only in that State. However, such remuneration shall be taxable only in
the other Contracting State if the services are rendered in that other State and
the recipient is a resident of that other State who:
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
2. Any pension paid by, or out of funds created by, a Contracting State or a
political sub--division or a local authority thereof to any individual in respect of
services rendered to that State or sub--division or local authority thereof shall be
taxable in that State.
3. The provisions of paragraphs 1 and 2 shall not apply to remuneration or
pensions in respect of services rendered in connection with any trade or
business carried on by one of the Contracting States or a political sub--division
or a local authority thereof. In such a case, the provisions of Articles 14, 15 and
17 shall apply.
ARTICLE 19
Professors and Teachers
1. An individual who, at the invitation of a university, college, school or other
similar recognised educational institution in a Contracting State, visits that
Contracting State for a period not exceeding two years solely for the purpose of
teaching or conducting research or both at such educational institution and who
is, or was immediately before that visit, a resident of the other Contracting State
shall be exempt from tax in the first--mentioned Contracting State on any
remuneration for such teaching or research in respect of which he is, or upon the
application of this Article will be, subject to tax in the other Contracting State.
2. This Article shall not apply to remuneration which a professor or teacher
receives for conducting research if the research is undertaken primarily for the
private benefit of a specific person or persons.
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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ARTICLE 20
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in the other State solely for the purpose of
his education or training, receives payments from sources outside the other
State for the purpose of his maintenance, education or training, those payments
shall be exempt from tax in the other State.
ARTICLE 21
Income of Dual Resident
Where a person, who by reason of the provisions of paragraph 1 of Article
4 is a resident of both Contracting States but by reason of the provisions of
paragraph 2 or 4 of that Article is deemed for the purposes of this Agreement to
be a resident solely of one of the Contracting States, derives income from
sources in that Contracting State or from sources outside both Contracting
States, that income shall be taxable only in that Contracting State.
ARTICLE 22
Sources of Income
Income derived by a resident of one of the Contracting States which, under
any one or more of Articles 6 to 8, 10 to 16 and 18 may be taxed in the other
Contracting State, shall for the purpose of Article 23, and of the income tax law
of that other State, be deemed to be income from sources in that other State.
ARTICLE 23
Methods of Elimination of Double Taxation
1. The laws in force in each of the Contracting States shall continue to govern
the taxation of income in that Contracting State except where provision to the
contrary is made in this Agreement. Where income is subject to tax in both
Contracting States, relief from double taxation shall be given in accordance
with the following paragraphs.
2. In the case of Malaysia, subject to the provisions of the law of Malaysia
regarding the allowance as a credit against Malaysian tax of tax payable in any
country other than Malaysia, the amount of Australian tax payable under the
law of Australia and in accordance with the provisions of this Agreement, by a
resident of Malaysia in respect of income from sources within Australia shall be
allowed as a credit against Malaysian tax payable in respect of such income, but
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
510 International Tax Agreements Act 1953
in an amount not exceeding the proportion of Malaysian tax which such income
bears to the entire income chargeable to Malaysian tax.
3. (a) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of
tax paid in a country outside Australia (which shall not affect the
general principle hereof), Malaysian tax paid, whether directly or by
deduction, in respect of income derived by a person who is a resident of
Australia from sources in Malaysia shall be allowed as a credit against
Australian tax payable on the income on which the Malaysian tax was
paid. However, where the income consists of a dividend paid by a
company which is a resident of Malaysia, the credit shall, subject to
sub--paragraph (b), only take into account such tax in respect thereof as
is additional to any tax payable by the company on the profits out of
which the dividend is paid and is ultimately borne by the recipient
without reference to any tax so payable.
(b) A company which is a resident of Australia is, in accordance with the
provisions of the taxation law of Australia in force at the date of
signature of this Agreement, entitled to a rebate in its assessment at the
average rate of tax payable by the company in respect of dividends that
are included in its taxable income and are received from a company
which is a resident of Malaysia. However, should the law so in force be
amended so that the rebate in relation to the dividends ceases to be
allowable under that law, credit shall be allowed under
sub--paragraph (a) to the first--mentioned company for the Malaysian
tax paid on the profits out of which the dividends are paid, as well as for
the Malaysian tax paid on the dividends for which credit is to be
allowed under sub--paragraph (a), but only if that company beneficially
owns at least 10 per cent of the paid--up share capital of the
second--mentioned company.
4. Where the income or profits on which an enterprise of one of the
Contracting States has been charged to tax in that Contracting State are also
included in the income or profits of an enterprise of the other Contracting State
as being income or profits which, because of the conditions operative between
the two enterprises, might have been expected to accrue to the enterprise of that
other Contracting State if the enterprises had been independent enterprises
dealing at arm’s length, the income or profits so included shall be treated for the
purposes of this Article as income or profits of the enterprise of the
first--mentioned Contracting State from a source in the other Contracting State
and credit shall be given in accordance with this Article in respect of the extra
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International Tax Agreements Act 1953 511
tax chargeable in that other Contracting State as a result of the inclusion of such
income or profits.
5. For the purposes of paragraph 6, the term “Malaysian tax forgone”
means—
(a) an amount which, under the laws of Malaysia and in accordance with
this Agreement, would have been payable as Malaysian tax on income
had that income not been exempted either wholly or partly from
Malaysian tax in accordance with—
(i) Schedule 7A of the Income Tax Act 1967 of Malaysia or
sections 21, 22, 26 or 30Q of the Investment Incentives Act
1968 of Malaysia, so far as they were in force on, and have not
been modified since, the date of signature of this Agreement or
have been modified only in minor respects so as not to affect
their general character; or
(ii) any other provisions which may subsequently be agreed in an
Exchange of Letters between the Governments of the
Contracting States to be of a substantially similar character;
(b) in the case of interest derived by a resident of Australia which is exempt
from Malaysian tax in accordance with paragraph 3 of Article 11, the
amount which, under the law of Malaysia and in accordance with this
Agreement, would have been payable as Malaysian tax if the interest
were interest to which paragraph 3 of Article 11 did not apply, and if
the tax referred to in paragraph 2 of Article 11 were not to exceed 10
per cent of the gross amount of the interest; and
(c) in the case of royalties derived by a resident of Australia, being
approved industrial royalties which are exempt from Malaysian tax in
accordance with paragraph 3 of Article 12, the amount which, under the
law of Malaysia and in accordance with this Agreement, would have
been payable as Malaysian tax if the royalties were royalties to which
paragraph 3 of Article 12 did not apply and if the tax referred to in
paragraph 2 of Article 12 were not to exceed 10 per cent of the gross
amount of the royalties.
6. (a) For the purposes of sub--paragraph (a) or (b) of paragraph 3, Malaysian
tax forgone which answers the description in sub--paragraph (a) of
paragraph 5 shall be deemed to be Malaysian tax paid.
(b) For the purposes of sub--paragraph (a) of paragraph 3, Malaysian tax
forgone which answers the description in sub--paragraph (b) or (c) of
paragraph 5 shall be deemed to be Malaysian tax paid.
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(c) For the purposes of the income tax law of Australia—
(i) In the event that the rebate in relation to dividends, referred to
in sub--paragraph (b) of paragraph 3, ceases to be allowable in
Australia, the amount of the income referred to in
sub--paragraph (a) of paragraph 5 shall be deemed to be
increased by the amount that is deemed in accordance with
sub--paragraph (a) of this paragraph to be Malaysian tax paid;
and
(ii) the amount of interest or royalties referred to in
sub--paragraphs (b) and (c) of paragraph 5 shall be deemed to
be increased by the amount that is deemed in accordance with
sub--paragraph (b) of this paragraph to be Malaysian tax paid.
7. (a) Paragraphs 5 and 6 shall not apply in relation to income derived in any
year of income after the year of income that ends on 30 June 1984 or
any later date that may be agreed by the Governments of the
Contracting States, after the consultations referred to in
sub--paragraph (b), in Letters exchanged for this purpose.
(b) The Governments of the Contracting States shall consult each other in
order to determine whether the period of application of paragraphs 5
and 6 shall be extended. For this purpose notice of intention to consult
may be given not less than six months before the expiration of that
period.
8. If in an Agreement for the avoidance of double taxation that is
subsequently made between Australia and a third State Australia should agree—
(a) in relation to dividends that are derived by a company which is a
resident of Australia from a company which is a resident of the third
State, to give credit for tax paid on the profits out of which the
dividends are paid on the basis of a test of beneficial ownership by the
first--mentioned company of less than 10 per cent of the paid--up share
capital of the second--mentioned company; or
(b) to give relief from Australian tax of the kind that is provided for in
relation to Malaysia in paragraphs 5 and 6, on a basis that, other than in
minor respects, is more favourable in relation to the third State than that
so provided for,
the Government of Australia shall immediately inform the Government of
Malaysia and shall enter into negotiations with the Government of Malaysia
with a view to providing treatment in relation to Malaysia comparable with that
provided in relation to that third State.
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
International Tax Agreements Act 1953 513
9. Where royalties derived by a resident of Australia are, as film rentals,
subject to the cinematograph film--hire duty in Malaysia, that duty shall, for the
purposes of sub--paragraph (a) of paragraph 3, be deemed to be Malaysian tax.
ARTICLE 24
Mutual Agreement Procedure
1. Where a resident of one of the Contracting States considers that the actions
of the competent authority of one or both of the Contracting States result or will
result for him in taxation not in accordance with this Agreement, he may,
notwithstanding the remedies provided by the taxation laws of those States,
present his case to the competent authority of the Contracting State of which he
is a resident. The case must be presented within two years from the first
notification of the action.
2. The competent authority shall endeavour, if the taxpayer’s claim appears to
it to be justified and if it is not itself able to arrive at an appropriate solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Agreement. If the claim is made within six years of the end of the year
of assessment or year of tax, as the case may be, the solution so reached shall be
implemented notwithstanding any time limits in the taxation laws of the
Contracting States.
3. The competent authorities of the Contracting States shall jointly endeavour
to resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of this Agreement.
4. The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 25
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or for the
prevention of fraud or for the administration of statutory provisions against
legal avoidance in relation to the taxes to which this Agreement applies. Any
information so exchanged shall be treated as secret and shall be disclosed only
to persons or authorities (including courts and administrative bodies) concerned
with the assessment, collection, enforcement or prosecution in respect of, or the
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514 International Tax Agreements Act 1953
determination of appeals in relation to, those taxes to which this Agreement
applies.
2. In no case shall the provisions of paragraph 1 be construed so as to impose
on a Contracting State the obligation—
(a) to carry out any administrative measures at variance with the laws or
the administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information the disclosure of which would be contrary to public policy.
ARTICLE 26
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
ARTICLE 27
Limitation of Relief
Where this Agreement provides (with or without other conditions) that
income from sources in a Contracting State shall be relieved wholly or partly
from tax in that State, and under the laws in force in the other Contracting State
the said income is subject to tax by reference to the amount thereof which is
remitted to or received in that other State and not by reference to the full
amount thereof, then the relief to be allowed under this Agreement in the
first--mentioned State shall apply only to so much of the income as is remitted
to or received in that other State;
Provided that where—
(a) in accordance with the foregoing provisions of this Article, relief has
not been allowed in the first instance in the first--mentioned State in
respect of an amount of income; and
(b) that amount of income has subsequently been remitted to or received in
the other State and is thereby subject to tax in that other State,
the competent authority of the first--mentioned State shall, subject to any laws
thereof for the time being in force limiting the time and setting out the method
Agreement between the Government of Australia and the Government of Malaysia for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 16
International Tax Agreements Act 1953 515
for the making of a refund of tax, allow relief in respect of that amount of
income in accordance with the appropriate provisions of this Agreement.
ARTICLE 28
Entry into Force
This Agreement shall come into force on the date on which the
Government of Australia and the Government of Malaysia exchange notes
through the diplomatic channel notifying each other that the last of such things
has been done as is necessary to give this Agreement the force of law in
Australia and in Malaysia, as the case may be, and thereupon this Agreement
shall have effect—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 July
1979;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July 1979;
(b) in Malaysia—
in respect of Malaysian tax, for the year of assessment beginning on
1January 1980, and subsequent years of assessment.
ARTICLE 29
Termination
This Agreement shall continue in effect indefinitely, but the Government
of Australia or the Government of Malaysia may on or before 30 June in any
calendar year after the year 1982 give to the other Government through the
diplomatic channel written notice of termination and, in that event this
Agreement shall cease to be effective—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 July in
the calendar year next following that in which the notice of
termination is given;
Schedule 16 Agreement between the Government of Australia and the Government of
Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
516 International Tax Agreements Act 1953
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July in the calendar year next following
that in which the notice of termination is given;
(b) in Malaysia—
in respect of Malaysian tax, for the year of assessment beginning on
1 January in the second calendar year next following that in which the
notice of termination is given, and subsequent years of assessment.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate in the English and the Bahasa Malaysia language, both
texts being equally authentic, at Canberra this twentieth day of August One
thousand nine hundred and eighty.
JOHN HOWARD AWANG BIN HASSAN
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF MALAYSIA
Malaysian protocol Schedule 16A
International Tax Agreements Act 1953 517
Schedule 16A—Malaysian protocol Note: See section 3
PROTOCOL AMENDING THE AGREEMENT BETWEEN THE
GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
MALAYSIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT TO
TAXES ON INCOME
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
MALAYSIA,
DESIRING to amend the Agreement between the Government of Australia and
the Government of Malaysia for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income signed at Canberra
on 20 August 1980 (in this Protocol referred to as “the Agreement”),
HAVE AGREED as follows:
Article 1
Article 3 of the Agreement is amended by:
(a) deleting subparagraphs (a) and (b) of paragraph 1 and substituting the
following:
“(a) the term “Australia”, when used in a geographical sense,
excludes all external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
(vi) the Coral Sea Islands Territory,
Schedule 16A Malaysian protocol
518 International Tax Agreements Act 1953
and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in this subparagraph) in
respect of which there is for the time being in force, consistently
with international law, a law of Australia dealing with the
exploitation of any of the natural resources of the seabed and
subsoil of the continental shelf;
(b) the term “Malaysia” means the territories of the Federation of
Malaysia, the territorial waters of Malaysia and the sea--bed and
subsoil of the territorial waters, and includes any area extending
beyond the limits of the territorial waters of Malaysia, and the
sea--bed and subsoil of any such area, which has been or may
hereafter be designated under the laws of Malaysia and in
accordance with international law as an area over which
Malaysia has sovereign rights for the purposes of exploring and
exploiting the natural resources, whether living or non--living;”;
and
(b) deleting the full stop at the end of paragraph 3 and adding “from time to
time in force.”.
Article 2
Article 5 of the Agreement is amended by:
(a) deleting “or” immediately following subparagraph (a) of paragraph 4;
(b) deleting the full stop at the end of subparagraph (b) of paragraph 4 and
substituting “; or”; and
(c) adding after subparagraph (b) of paragraph 4 the following subparagraph:
“(c) it furnishes services, including consultancy services, in that other
State through employees or other personnel engaged by the
enterprise for such purpose, but only where those activities
continue (for the same or a connected project) within the other
State for a period or periods aggregating more than three months
within any twelve--month period.”.
Malaysian protocol Schedule 16A
International Tax Agreements Act 1953 519
Article 3
Article 6 of the Agreement is amended by deleting paragraph 2 and substituting
the following:
“2. In this Article, the word “land” shall have the meaning which it
has under the law of the Contracting State in which the land in question
is situated; it shall include any estate or direct interest in land whether
improved or not. A right to receive variable or fixed payments either as
consideration for the exploitation of or the right to explore for or exploit,
or in respect of the exploitation of, mineral deposits, oil or gas wells,
quarries or other places of extraction or exploitation of natural resources
or for the exploitation of, or the right to exploit or to fell any standing
trees, plants or forest produce shall be deemed to be an estate or direct
interest in land situated in the Contracting State in which the mineral
deposits, oil or gas wells, quarries, natural resources, or standing trees,
plants or forest produce, as the case may be, are situated or where the
exploration may take place.”.
Article 4
Article 7 of the Agreement is amended by adding after paragraph 7 the
following paragraph:
“8. Where:
(a) a resident of one of the Contracting States is beneficially
entitled, whether directly or indirectly through one or more
trusts, to a share of the business profits of an enterprise
carried on in the other Contracting State by the trustee of a
trust estate other than a trust estate which is treated as a
company for tax purposes; and
(b) in relation to that enterprise, that trustee has, in accordance
with the principles of Article 5, a permanent establishment
in that other State,
the enterprise carried on by the trustee shall be deemed to be a business
carried on in that other State by that resident through a permanent
establishment situated therein and the resident’s share of business profits
shall be attributed to that permanent establishment.”.
Schedule 16A Malaysian protocol
520 International Tax Agreements Act 1953
Article 5
Article 11 of the Agreement is amended by:
(a) deleting the words “or a long--term loan” in paragraph 3; and
(b) adding after paragraph 7 the following paragraph:
“8. Notwithstanding the provisions of paragraph 2, interest derived
from the investment of official reserve assets by the Government of a
Contracting State or by a bank performing central banking functions in a
Contracting State shall be exempt from tax in the other Contracting
State.”.
Article 6
Article 13 of the Agreement is deleted and substituted with the following:
“Article 13
Alienation of Property
1. Income, profits or gains derived by a resident of one of the
Contracting States from the alienation of land as defined in Article 6 and,
as provided in that Article, situated in the other Contracting State may be
taxed in that other State.
2. Income, profits or gains from the alienation of property, other than
land as defined in Article 6, that forms part of the business property of a
permanent establishment which an enterprise of one of the Contracting
States has in the other Contracting State, including income, profits or
gains from the alienation of such a permanent establishment (alone or
with the whole enterprise), may be taxed in that other State.
3. Income, profits or gains from the alienation of ships or aircraft
operated in international traffic, or of property other than land as defined
in Article 6 pertaining to the operation of those ships or aircraft, shall be
taxable only in the Contracting State of which the enterprise which
operated those ships or aircraft is a resident.
Malaysian protocol Schedule 16A
International Tax Agreements Act 1953 521
4. Income, profits or gains derived by a resident of a Contracting
State from the alienation of any shares or other interests in a company, or
of an interest of any kind in a partnership, trust or other entity, where the
value of the assets of such entity, whether they are held directly or
indirectly (including through one or more interposed entities, such as, for
example, through a chain of companies), is principally attributable to
land as defined in Article 6 and, as referred to in that Article, situated in
the other Contracting State, may be taxed in that other State.
5. Nothing in this Agreement affects the application of a law of a
Contracting State relating to the taxation of profits or gains of a capital
nature derived from the alienation of property other than that to which
any of paragraphs 1, 2, 3 and 4 apply.”.
Article 7
Article 20 of the Agreement is amended by:
(a) deleting “Students” in the heading and substituting “Students and
Trainees”; and
(b) inserting “or a trainee” after “student”.
Article 8
Article 22 of the Agreement is amended by:
(a) deleting “Sources of Income” in the heading and substituting “Sources of
Income and Gains”; and
(b) inserting “or gains” after “Income” in the first line.
Article 9
Article 23 of the Agreement is deleted and substituted with the following:
Schedule 16A Malaysian protocol
522 International Tax Agreements Act 1953
“Article 23
Methods of Elimination of Double Taxation
1. The laws in force in each of the Contracting States shall continue to
govern the taxation of income in that Contracting State except where
provision to the contrary is made in this Agreement. Where income is
subject to tax in both Contracting States, relief from double taxation shall
be given in accordance with the following paragraphs.
2. In the case of Malaysia, subject to the law of Malaysia regarding the
allowance as a credit against Malaysian tax of tax payable in any country
other than Malaysia, the amount of Australian tax payable under the law of
Australia and in accordance with the provisions of this Agreement, by a
resident of Malaysia in respect of income from sources within Australia
shall be allowed as a credit against Malaysian tax payable in respect of that
income. Where such income is a dividend paid by a company which is a
resident of Australia to a company which is a resident of Malaysia and
which owns not less than 10 per cent of the voting shares of the company
paying the dividend, the credit shall take into account Australian tax
payable by that company in respect of its income out of which the dividend
is paid. The credit shall not, however, exceed that part of the Malaysian
tax, as computed before the credit is given which is appropriate to such
item of income.
3. (a) Subject to the provisions of the law of Australia from time
to time in force which relate to the allowance of a credit
against Australian tax of tax paid in a country outside
Australia (which shall not affect the general principle
hereof), Malaysian tax paid under the law of Malaysia and
in accordance with this Agreement, whether directly or by
deduction, in respect of income derived by a person who is a
resident of Australia from sources in Malaysia shall be
allowed as a credit against Australian tax payable in respect
of that income.
(b) Where a company which is a resident of Malaysia and is not
a resident of Australia for the purposes of Australian tax
pays a dividend to a company which is a resident of
Australia and which controls directly or indirectly not less
than 10 per cent of the voting power of the first--mentioned
company, the credit referred to in subparagraph (a) shall
Malaysian protocol Schedule 16A
International Tax Agreements Act 1953 523
include the Malaysian tax paid by that first--mentioned
company in respect of that portion of its profits out of which
the dividend is paid.
4. Where the income or profits on which an enterprise of one of the
Contracting States has been charged to tax in that Contracting State are also
included in the income or profits of an enterprise of the other Contracting State
as being income or profits which, because of the conditions operative between
the two enterprises, might have been expected to accrue to the enterprise of that
other Contracting State if the enterprises had been independent enterprises
dealing at arm’s length, the income or profits so included shall be treated for the
purposes of this Article as income or profits of the enterprise of the
first--mentioned Contracting State from a source in the other Contracting State
and credit shall be given in accordance with this Article in respect of the extra
tax chargeable in that other Contracting State as a result of the inclusion of such
income or profits.
5. For the purposes of paragraph 6, the term “Malaysian tax forgone”
means—
(a) an amount which, under the laws of Malaysia and in accordance
with this Agreement, would have been payable as Malaysian tax on
income had that income not been exempted either wholly or partly
from Malaysian tax in accordance with—
(i) Schedule 7A of the Income Tax Act 1967 of Malaysia or
sections 22, 23, 29, 35 and 37 of the Promotion of
Investments Act 1986 of Malaysia and section 45 of that Act
to the extent that it relates to sections 21, 22, 26, or 30Q of the
Investment Incentives Act 1968, so far as the sections were in
force on, and have not been modified since, the date of
signature of the Protocol first amending the Agreement or
have been modified only in minor respects so as not to affect
their general character; or
(ii) any other provisions which may subsequently be agreed in an
Exchange of Letters between the Governments of the
Contracting States to be of a substantially similar character;
(b) in the case of interest derived by a resident of Australia which is
exempt from Malaysian tax in accordance with paragraph 3 of
Schedule 16A Malaysian protocol
524 International Tax Agreements Act 1953
Article 11, the amount which, under the law of Malaysia and in
accordance with this Agreement, would have been payable as
Malaysian tax if the interest were interest to which paragraph 3 of
Article 11 did not apply, and if the tax referred to in paragraph 2 of
Article 11 were not to exceed 10 per cent of the gross amount of the
interest; and
(c) in the case of royalties derived by a resident of Australia, being
approved industrial royalties which are exempt from Malaysian tax
in accordance with paragraph 3 of Article 12, the amount which,
under the law of Malaysia and in accordance with this Agreement,
would have been payable as Malaysian tax if the royalties were
royalties to which paragraph 3 of Article 12 did not apply and if the
tax referred to in paragraph 2 of Article 12 were not to exceed 10
per cent of the gross amount of the royalties.
6. (a) For the purposes of subparagraph (a) or (b) of paragraph 3,
Malaysian tax forgone which answers the description in
subparagraph (a) of paragraph 5 shall be deemed to be Malaysian
tax paid.
(b) For the purposes of subparagraph (a) of paragraph 3, Malaysian tax
forgone which answers the description in subparagraph (b) or (c) of
paragraph 5 shall be deemed to be Malaysian tax paid.
7. Paragraphs 5 and 6 shall apply only in relation to income derived in any
of the 5 years of income beginning with the year of income that commenced on
1 July 1987 and in any later year of income that may be agreed in an Exchange
of Letters for this purpose by the Governments of the Contracting States, or
their authorised representatives.
8. If in an Agreement for the avoidance of double taxation that is
subsequently made between Australia and a third State, Australia should
agree—
(a) in relation to dividends that are derived by a company which is
a resident of Australia from a company which is a resident of
the third State, to give credit for tax paid on the profits out of
which the dividends are paid on the basis of a test of beneficial
ownership by the first--mentioned company of less than 10 per
Malaysian protocol Schedule 16A
International Tax Agreements Act 1953 525
cent of the paid--up share capital of the second--mentioned
company; or
(b) to give relief from Australian tax of the kind that is provided
for in relation to Malaysia in paragraphs 5 and 6, on a basis
that, other than in minor respects, is more favourable in relation
to the third State than that so provided for,
the Government of Australia shall immediately inform the Government of
Malaysia and shall enter into negotiations with the Government of Malaysia
with a view to providing treatment in relation to Malaysia comparable with that
provided in relation to that third State.
9. Where royalties derived by a resident of Australia are, as film rentals,
subject to the cinematograph film--hire duty in Malaysia, that duty shall, for the
purposes of subparagraph (a) of paragraph 3, be deemed to be Malaysian tax.
10. Where gains derived by a resident of Australia are subject to real
property gains tax in Malaysia, that tax shall, for the purposes of subparagraph
3(a), be deemed to be Malaysian tax.”.
Article 10
Entry into force
1. This Protocol, which shall form an integral part of the Agreement, shall
enter into force on the last of the dates on which the Contracting States
exchange notes through the diplomatic channel notifying each other that the last
of such things has been done as is necessary to give this Protocol the force of
law in Australia and in Malaysia respectively, and thereupon this Protocol shall,
subject to paragraph 2, have effect:
(a) in Australia:
(i) subject to subparagraph 1(a)(ii), for the purposes of Article 9 of
the Protocol in respect of tax on income of any year of income
beginning on or after 1 July 1987;
(ii) to the extent that Article 9 of the Protocol has application in
respect of Malaysian tax forgone in accordance with section 35
or 37 of the Promotion of Investments Act 1986 of Malaysia, in
Schedule 16A Malaysian protocol
526 International Tax Agreements Act 1953
respect of tax on income of any year of income beginning on or
after 1 July 1985;
(iii) in the case of subparagraph (c) of Article 2 of the Protocol, in
respect of tax on income of any year of income beginning on or
after 1 July 1993; and
(iv) in any other case, in relation to income of any year of income
beginning on or after 1 July in the calendar year next following
that in which this Protocol enters into force;
(b) in Malaysia:
(i) for the purposes of Article 9 of the Protocol in respect of
Malaysian tax for any year of assessment beginning on or after
1 January 1988;
(ii) in the case of subparagraph (c) of Article 2 of the Protocol in
respect of tax for any year of assessment beginning on or after
1 January 1994; and
(iii) in any other case, in respect of Malaysian tax for any year of
assessment beginning on or after 1 January in the second
calendar year following the calendar year in which this Protocol
enters into force.
2. Where any provision of the Agreement that is affected by this Protocol
would have afforded any greater relief from tax than is afforded by the
amendments made by this Protocol, that provision shall continue to have effect:
(a) in Australia, for any year of income; and
(b) in Malaysia, for any year of assessment,
beginning, in either case, before the entry into force of this Protocol.
IN WITNESS WHEREOF the undersigned, being duly authorised, have signed
this Protocol.
Malaysian protocol Schedule 16A
International Tax Agreements Act 1953 527
DONE in duplicate in English and Bahasa Malaysia, both texts being equally
authentic, at Sydney this second day of August, One thousand nine hundred and
ninety--nine.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
AUSTRALIA: MALAYSIA:
MARK VAILE DATO' SERI RAFIDAH AZIZ
[Signatures omitted]
Schedule 16B second Malaysian protocol
528 International Tax Agreements Act 1953
Schedule 16B—second Malaysian protocol Note: See section 3.
SECOND PROTOCOL AMENDING THE AGREEMENT BETWEEN
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
MALAYSIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT TO
TAXES ON INCOME AS AMENDED BY THE FIRST PROTOCOL OF
2 AUGUST 1999
The Government of Australia and the Government of Malaysia,
Desiring to amend the Agreement between the Government of Australia
and the Government of Malaysia for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income done at Canberra
on 20 August 1980 (as amended by the first Protocol to that Agreement, done at
Sydney on 2 August 1999), (in this Protocol referred to as “the Agreement, as
amended”),
Have agreed as follows:
ARTICLE 1
Article 9 of the Agreement, as amended, is amended by adding after
paragraph 2 the following paragraph:
“(3) Where profits on which an enterprise of one of the
Contracting States has been charged to tax in that State are also included,
by virtue of the provisions of paragraph 1 or 2, in the profits of an
enterprise of the other Contracting State and charged to tax in that other
State, and the profits so included are profits which might reasonably have
been expected to have accrued to that enterprise of the other State if the
conditions operative between the enterprises had been those which might
reasonably have been expected to have operated between independent
enterprises dealing wholly independently with one another, then the
firstmentioned State shall make an appropriate adjustment to the amount
of tax charged on those profits in the firstmentioned State. In determining
such an adjustment, due regard shall be had to the other provisions of this
Agreement and for this purpose the competent authorities of the
Contracting States shall if necessary consult each other.”.
second Malaysian protocol Schedule 16B
International Tax Agreements Act 1953 529
ARTICLE 2
Article 10 of the Agreement, as amended, is deleted and substituted with
the following:
“ARTICLE 10
Dividends
1. Dividends paid by a company which is a resident of one of
the Contracting States for the purposes of its tax, being dividends to
which a resident of the other Contracting State is beneficially entitled,
may be taxed in that other State.
2. However, those dividends may also be taxed in the
Contracting State of which the company paying the dividends is a
resident, and according to the law of that State, but:
(a) in Australia:
(i) no tax shall be charged on dividends to the extent to
which those dividends have been “franked” in
accordance with Australia's law relating to tax, if the
person beneficially entitled to those dividends is a
company (other than a partnership) which holds
directly at least 10 per cent of the voting power in the
company paying the dividends; and
(ii) tax charged shall not exceed 15 per cent of the gross
amount of the dividends to the extent to which those
dividends are not within subparagraph (a)(i); and
(b) in Malaysia:
no tax shall be charged on dividends paid by a company
which is resident in Malaysia for the purposes of Malaysian
tax being dividends to which a resident of Australia is
beneficially entitled, in addition to the tax chargeable in
respect of the income or profits of the company paying the
dividends.
3. For the purposes of paragraph 2, if the relevant law in either
Contracting State at the date of signature of this Protocol is varied
Schedule 16B second Malaysian protocol
530 International Tax Agreements Act 1953
otherwise than in minor respects so as not to affect its general character,
the Contracting States shall consult each other with a view to agreeing to
any amendment of that paragraph that may be appropriate.
4. The term “dividends” as used in this Article means income
from shares, as well as other amounts which are subjected to the same
taxation treatment as income from shares by the law of the State of which
the company making the distribution is a resident for the purposes of its
tax.
5. The provisions of paragraphs 1 and 2 shall not apply if the
person beneficially entitled to the dividends, being a resident of one of
the Contracting States, carries on business in the other Contracting State
of which the company paying the dividends is a resident, through a
permanent establishment situated in that other State, and the holding in
respect of which the dividends are paid is effectively connected with that
permanent establishment. In that case the provisions of Article 7 shall
apply.
6. Where a company which is a resident of one of the
Contracting States derives profits or income from the other Contracting
State, that other State may not impose any tax on the dividends paid by
the company—being dividends to which a person who is not a resident of
the other Contracting State is beneficially entitled—except insofar as the
holding in respect of which, such dividends are paid is effectively
connected with a permanent establishment situated in that other State,
even if the dividends paid consist wholly or partly of profits or income
arising in such other State. This paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the
purposes of Australian tax and which is also a resident of Malaysia for
the purposes of Malaysian tax.
7. Dividends paid by a company which is a resident of
Malaysia shall include dividends paid by a company which is a resident
of Singapore which for the purpose of those dividends has declared itself
to be a resident of Malaysia, but shall not include dividends paid by a
company which is a resident of Malaysia which for the purpose of those
dividends has declared itself to be a resident of Singapore.”.
second Malaysian protocol Schedule 16B
International Tax Agreements Act 1953 531
ARTICLE 3
Article 12 of the Agreement, as amended, is amended by:
(a) deleting paragraphs 3, 8 and 9 and renumbering the
paragraphs 1 to 6;
(b) deleting “paragraphs 1, 2 and 3” and substituting
“paragraphs 1 and 2” in renumbered paragraph 3; and
(c) deleting “or” at the end of subparagraph (c) of renumbered
paragraph 6, renumbering existing subparagraph “(d)” as
“(f)” and inserting the following subparagraphs:
“(d) the use in connection with television, radio or other
broadcasting, or the right to use in connection with such
broadcasting, visual images or sounds, or both, transmitted
by:
(i) satellite; or
(ii) cable, optic fibre or similar technology;
(e) the use of, or the right to use, some or all of the part of the
radiofrequency spectrum specified in a relevant licence; or”.
ARTICLE 4
Article 21 of the Agreement, as amended, is deleted and substituted with
the following:
“ARTICLE 21
Other Income
1. Items of income of a resident of one of the Contracting
States, wherever arising, not dealt with in the foregoing Articles of this
Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income,
other than income from land as defined in paragraph 2 of Article 6,
derived by a resident of one of the Contracting States where that income
is effectively connected with a permanent establishment situated in the
Schedule 16B second Malaysian protocol
532 International Tax Agreements Act 1953
other Contracting State. In that case the provisions of Article 7 shall
apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, items
of income of a resident of one of the Contracting States not dealt with in
the foregoing articles of this Agreement from sources in the other
Contracting State may also be taxed in the other Contracting State.”.
ARTICLE 5
Article 23 of the Agreement, as amended, is amended by:
(a) deleting paragraphs 4 to 7 and substituting the following:
“4. For the purposes of paragraph 5, the term “Malaysian tax
forgone” means an amount which, under the laws of Malaysia and in
accordance with this Agreement, would have been payable as Malaysian
tax on income had that income not been exempted either wholly or partly
from Malaysian tax in accordance with Schedules 7A and 7B of the
Income Tax Act 1967 of Malaysia or sections 22, 23, 29, 29A, 29B, 29C,
29D, 29E, 29F, 29G, 29H, 31E, 35, 37 and 41B of the Promotion of
Investments Act 1986 of Malaysia and section 45 of that Act to the extent
that it relates to sections 21, 22, 26, or 30Q of the Investment Incentives
Act 1968, so far as the sections were in force on, and have not been
modified since, the date of signature of the Protocol second amending the
Agreement or have been modified only in minor respects so as not to
affect their general character.
5. Notwithstanding the operation of paragraph 4, Malaysian tax
forgone shall not be deemed to have been paid in respect of income
derived from:
(a) banking, insurance, consulting, accounting, auditing or
similar services; or
(b) the operation of ships or aircraft, other than ships or aircraft
operated principally from places in Malaysia and used solely
in carrying on a business in Malaysia; or
(c) any scheme entered into by an Australian resident with the
purpose of using Malaysia as a conduit for income or as a
location of property in order to evade or avoid Australian tax
second Malaysian protocol Schedule 16B
International Tax Agreements Act 1953 533
through the exploitation of the Australian foreign tax credit
provisions or to confer a benefit on a person who is neither a
resident of Australia, nor of Malaysia.
6. For the purposes of subparagraph (a) or (b) of paragraph 3,
Malaysian tax forgone which answers the description in paragraph 4 and
is not of a type referred to in paragraph 5 shall be deemed to be
Malaysian tax paid.
7. Paragraphs 4, 5 and 6 shall not apply in relation to income
derived in any year of income after the year of income that ends on
30 June 2003.”;
(b) deleting the words “5 and 6” and substituting “4 and 6” in
subparagraph (b) of paragraph 8; and
(c) deleting paragraph 9 and renumbering paragraph 10 as 9.
ARTICLE 6
Article 24 of the Agreement, as amended, is amended by adding after
paragraph 4 the following paragraph:
“5. For the purposes of paragraph 3 of Article XXII
(Consultation) of the General Agreement on Trade in Services, the
Contracting States agree that, notwithstanding that paragraph, any dispute
between them as to whether a measure falls within the scope of this
Agreement may be brought before the Council for Trade in Services, as
provided by that paragraph, only with the consent of both Contracting
States. Any doubt as to the interpretation of this paragraph shall be
resolved under paragraph 3 of this Article or, failing agreement under that
procedure, pursuant to any other procedure agreed to by both Contracting
States.”.
ARTICLE 7
Article 27 of the Agreement, as amended, is amended by numbering the
existing paragraph as 1 and adding after that paragraph, the following:
“2. Persons entitled to a particular tax treatment under:
Schedule 16B second Malaysian protocol
534 International Tax Agreements Act 1953
(a) a law of one of the Contracting States which has been
identified in an Exchangeof Letters between the Contracting
States; or
(b) any law substantially similar to such an identified law which
is subsequently enacted by the relevant Contracting State,
shall not be entitled to any benefit of this Agreement.
3. In the event of either Contracting State becoming aware of a
substantially similar law of the type referred to in subparagraph (b) of
paragraph 2, the Contracting States shall consult each other with a view
to identifying such law in an Exchange of Letters.”.
ARTICLE 8
This Protocol, which shall form an integral part of the Agreement, as
amended, shall enter into force on the last of the dates on which the Contracting
States exchange notes through the diplomatic channel notifying each other that
the last of such things has been done as is necessary to give this Protocol the
force of law in Australia and in Malaysia respectively, and thereupon this
Protocol shall, have effect:
(a) in Australia:
(i) for the purposes of paragraph (a) of Article 5 of the
Protocol, in respect of tax on income of any year of
income beginning on or after 1 July 1992; and
(ii) in any other case, in relation to income of any year of
income beginning on or after 1 July in the calendar
year next following that in which this Protocol enters
into force;
(b) in Malaysia:
(i) for the purposes of paragraph (a) of Article 5 of the
Protocol, in respect of Malaysian tax for any year of
assessment beginning on or after 1 January 1993; and
(ii) in any other case, in respect of Malaysian tax for any
year of assessment beginning on or after 1 January in
second Malaysian protocol Schedule 16B
International Tax Agreements Act 1953 535
the calendar year next following that in which this
Protocol enters into force.
IN WITNESS WHEREOF the undersigned, being duly authorised, have
signed this Protocol.
DONE in duplicate in English and Bahasa Malaysia, both texts being
equally authentic, at Genting Highlands, this 28th day of July, Two thousand
and two.
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA: OF MALAYSIA:
Mark Vaile Dato’ Seri Rafidah Aziz
[Signatures omitted]
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
536 International Tax Agreements Act 1953
Schedule 17—Agreement between the
Government of Australia and the
Government of Sweden for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income Section 3
The Government of Australia and the Government of Sweden,
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are:
(a) in Australia:
the Australian income tax including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in Sweden:
(i) the State income tax, including sailors’ tax and coupon tax;
(ii) the tax on undistributed profits of companies and the tax on
distribution in connection with reduction of share capital or the
winding--up of a company;
(iii) the tax on public entertainers; and
(iv) the communal income tax.
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the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Agreement in addition to, or in place of, the existing taxes. The
competent authority of each Contracting State shall notify the competent
authority of the other Contracting State of any substantial changes which have
been made in the laws of his State relating to the taxes to which this Agreement
applies.
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires:
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term “Sweden” means the Kingdom of Sweden and includes any
area outside the territorial sea of Sweden within which under the laws
of Sweden and in accordance with international law the rights of
Sweden with respect to the exploration and exploitation of the natural
resources on the sea--bed or in its subsoil may be exercised;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State “mean Australia or Sweden, as the context requires;
(d) the term “person” means an individual, a company and any other body
of persons;
(e) the term “company” means any body corporate or any entity which is
assimilated to a body corporate for tax purposes;
(f) the terms “enterprise of one of the Contracting States” and enterprise
“of the other Contracting State “mean an enterprise carried on by a
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Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
538 International Tax Agreements Act 1953
resident of Australia or an enterprise carried on by a resident of
Sweden, as the context requires;
(g) the term “tax” means Australian tax or Swedish tax, as the context
requires;
(h) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term “Swedish tax” means tax imposed by Sweden, being tax to
which this Agreement applies by virtue of Article 2;
(j) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Sweden, the Minister of the Budget or his authorized
representative.
(2) In this Agreement, the terms “Australian tax” and “Swedish tax” do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Agreement applies by virtue of Article
2.
(3) In the application of this Agreement by a Contracting State, any term not
defined in this Agreement shall, unless the context otherwise requires, have the
meaning which it has under the laws of that State relating to the taxes to which
this Agreement applies.
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
Contracting States:
(a) in the case of Australia, subject to paragraph (2), if the person is a
resident of Australia for the purposes of Australian tax; and
(b) in the case of Sweden, if the person is subject to unlimited tax liability
in Sweden.
(2) In relation to income from sources in Sweden, a person who is subject to
Australian tax on income which is from sources in Australia shall not be treated
as a resident of Australia unless the income from sources in Sweden is subject
to Australian tax or, if that income is exempt from Australian tax, it is so
exempt solely because it is subject to Swedish tax.
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the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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(3) Where by reason of the preceding provisions of this Article an individual is
a resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
with which his personal and economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1), a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be
a resident solely of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent establishment”
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
(2) The term “permanent establishment” shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, quarry or any other place of extraction of
natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of:
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
540 International Tax Agreements Act 1953
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one of
the Contracting States and to carry on business through that permanent
establishment if:
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or exploitation of, natural resources, or in activities connected with such
exploration or exploitation.
(5) A person acting in one of the Contracting States on behalf of an enterprise
of the other Contracting State—other than an agent of an independent status to
whom paragraph (6) applies—shall be deemed to be a permanent establishment
of that enterprise in the first--mentioned State if:
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise.
(6) An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
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the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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International Tax Agreements Act 1953 541
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be applied in
determining for the purposes of paragraph (6) of Article 11 and paragraph (5) of
Article 12 of this Agreement whether there is a permanent establishment outside
both Contracting States, and whether an enterprise, not being an enterprise of
one of the Contracting States, has a permanent establishment in one of the
Contracting States.
ARTICLE 6
Income from Real Property
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or of the exploitation of any natural
resource, may be taxed in the Contracting State in which the real property,
mines, quarries, or natural resources are situated.
(2) Income from a lease of land and income from any other direct interest in or
over land, whether or not improved, shall be regarded as income from real
property situated where the land to which the lease or other direct interest
relates is situated.
(3) The provisions of paragraphs (1) and (2) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
Schedule 17 Agreement between the Government of Australia and the Government of
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542 International Tax Agreements Act 1953
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprises, being expenses which are
incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
(5) If the information available to the taxation authority of a Contracting State
is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, nothing in this Article shall affect the application
of any law of that State relating to the determination of the tax liability of a
person provided that that law shall be applied, so far as the information
available to the taxation authority permits, in accordance with the principles of
this Article.
(6) Where profits include items of income which are dealt with separately in
other Articles of this Agreement, then the provisions of those Articles shall not
be affected by the provisions of this Article.
(7) Nothing in this Article shall affect the operation of any law of a
Contracting State relating to taxation of profits from insurance with
non--residents provided that if the relevant law in force in either State at the
date of signature of this Agreement is varied (otherwise than in minor respects
so as not to affect its general character) the Contracting States shall consult with
each other with a view to agreeing to any amendment of this paragraph that may
be appropriate.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States shall be taxable only in that State.
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the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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International Tax Agreements Act 1953 543
(2) Notwithstanding the provisions of paragraph (1), such profits may be taxed
in the other Contracting State where they are profits from operations of ships or
aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the share
of the profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States through participation in a pool service, in a joint
transport operating organisation or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise shipped in a
Contracting State for discharge at another place in that State shall be treated as
profits from operations of ships or aircraft confined solely to places in that
State.
ARTICLE 9
Associated Enterprises
(1) Where:
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) If the information available to the taxation authority of a Contracting State
is inadequate to determine the profits to be attributed to an enterprise, nothing in
this Article shall affect the application of any law of that State relating to the
determination of the tax liability of a person, provided that that law shall be
applied, so far as the information available to the taxation authority permits, in
accordance with the principles of this Article.
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
544 International Tax Agreements Act 1953
(3) Where profits on which an enterprise of one of the Contracting States has
been charged to tax in that State are also included, by virtue of paragraph (1) or
(2), in the profits of an enterprise of the other Contracting State and taxed
accordingly, and the profits so included are profits which might have been
expected to have accrued to that enterprise of the other State if the conditions
operative between the enterprises had been those which might have been
expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Agreement, and for this purpose the
competent authorities of the Contracting States shall if necessary consult each
other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the Contracting
States for the purposes of its tax, being dividends to which a resident of the
other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
(3) The term “dividends” in this Article means income from shares and other
income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business in the other Contracting State of which the company
paying the dividends is a resident, through a permanent establishment situated
therein, or performs in that other State independent personal services from a
fixed base situated therein, and the holding in respect of which the dividends are
paid is effectively connected with such permanent establishment or fixed base.
In such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.
(5) Dividends paid by a company which is a resident of one of the Contracting
States, being dividends to which a person who is not a resident of the other
Agreement between the Government of Australia and the Government of Sweden for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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International Tax Agreements Act 1953 545
Contracting State is beneficially entitled, shall be exempt from tax in that other
State except insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or fixed base situated in
that other State; provided that this paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of Sweden for the purposes of
Swedish tax.
(6) Subject to the provisions of this Agreement, a Contracting State may
impose on the income of a company which is a resident of the other Contracting
State, tax in addition to the tax which would be chargeable on the taxable
income of a company which is a resident of the first--mentioned State, provided
that any additional tax so imposed by the first--mentioned State shall not exceed
15 per cent of the amount by which the taxable income of the year of income
exceeds the tax which would have been payable on that taxable income if the
company had been a resident of the first--mentioned State.
(7) In this Article a reference to a company which is a resident of one of the
Contracting States for the purposes of its tax is, in the case of Sweden, a
reference to a company which is subject to unlimited tax liability in Sweden.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraph (2), interest derived by the
Government of a Contracting State, or by any other body exercising
governmental functions in, or in a part of, a Contracting State, or by the central
bank of a Contracting State, or, in the case of Sweden, the National Debt Office,
shall be exempt from tax in the other Contracting State.
(4) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to income
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546 International Tax Agreements Act 1953
from money lent by the taxation law of the Contracting State in which the
income arises.
(5) The provisions of paragraph (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, carries on business in the other Contracting State, in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the indebtedness in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of Article 7 or Article 14, as the case may be, shall apply.
(6) Interest shall be deemed to arise in a Contracting State when the payer is
that State itself or a political sub--division or local authority of that State or a
person who is a resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or not, has in a
Contracting State or outside both Contracting States a permanent establishment
or fixed base in connection with which the indebtedness on which the interest is
paid was incurred, and such interest is borne by such permanent establishment
or fixed base, then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated. In this paragraph, a
reference to a person who is a resident of a Contracting State is, in relation to a
company, a reference to a company which, in the case of Australia, is a resident
of Australia for the purposes of its tax, or, in the case of Sweden, is subject to
unlimited tax liability in Sweden.
(7) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
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International Tax Agreements Act 1953 547
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such royalties may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark, or other like property or
right;
(b) the use of, or the right to use, any industrial, commercial or scientific
equipment;
(c) the supply of scientific, technical, industrial or commercial knowledge
or information;
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in paragraph (a), any such
equipment as is mentioned in paragraph (b) or any such knowledge or
information as is mentioned in paragraph (c);
(e) the use of, or the right to use:
(i) motion picture films;
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use of a property or right
referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, carries on business in the other Contracting State, in which the royalties
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the right or property in respect of which the royalties are paid or credited is
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548 International Tax Agreements Act 1953
effectively connected with such permanent establishment or fixed base. In such
a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer is
that State itself or a political sub--division or local authority of that State or a
person who is a resident of that State. Where, however, the person paying the
royalties, whether he is a resident of a Contracting State or not, has in a
Contracting State or outside both Contracting States a permanent establishment
or fixed base in connection with which the liability to pay the royalties was
incurred, and the royalties are borne by the permanent establishment or fixed
base, then the royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated. In this paragraph, a reference
to a person who is a resident of a Contracting State is, in relation to a company,
a reference to a company which, in the case of Australia, is a resident of
Australia for the purposes of its tax, or, in the case of Sweden is subject to
unlimited tax liability in Sweden.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person the amount of the royalties paid or credited, having regard to what they
are paid or credited for, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid or credited shall remain taxable according to the law of each
Contracting State, but subject to the other provisions of this Agreement.
ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the
Contracting State in which that property is situated.
(2) For the purposes of this Article:
(a) the term “real property” shall include:
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
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(iii) shares or comparable interests in a company, the assets of
which consist wholly or principally of direct interests in or over
land in one of the Contracting States or of rights to exploit, or to
explore for, natural resources in one of the Contracting States;
(b) real property shall be deemed to be situated:
(i) where it consists of direct interests in or over land—in the
Contracting State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the Contracting States
or of rights to exploit, or to explore for, natural resources in one
of the Contracting States—in the Contracting State in which the
assets or the principal assets of the company are situated.
(3) Subject to the provisions of paragraph (1), income from the alienation of
capital assets of an enterprise of one of the Contracting States or available to a
resident of one of the Contracting States for the purpose of performing
professional services or other independent activities shall be taxable only in that
State, but, where those assets form part of the business property of a permanent
establishment or fixed base situated in the other Contracting State, such income
may be taxed in that other State.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
(2) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
550 International Tax Agreements Act 1953
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by
an individual who is a resident of one of the Contracting States in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first--mentioned State if:
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income of that other
State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State; and
(d) the remuneration is, or upon application of this Article will be, subject
to tax in the first--mentioned State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic may be taxed in the Contracting State in which the place of
effective management of the enterprise is situated. Where a resident of Sweden
derives remuneration in respect of employment exercised aboard an aircraft
operated in international traffic by the air transport consortium Scandinavian
Airlines System (SAS), such remuneration shall be taxable only in Sweden.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
Agreement between the Government of Australia and the Government of Sweden for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 17
International Tax Agreements Act 1953 551
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by
entertainers (such as theatrical, motion picture, radio or television artistes and
musicians and athletes) from their personal activities as such may be taxed in
the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as such
accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
(3) Where the services of an entertainer referred to in paragraph (1) are
provided in a Contracting State by an enterprise of the other Contracting State,
the profits derived from providing those services by such an enterprise may,
notwithstanding anything contained in this Agreement, be taxed in the
first--mentioned State.
ARTICLE 18
Pensions and Annuities
(1) Subject to the provisions of paragraph (3), any pension or annuity paid to a
resident of one of the Contracting States shall be taxable only in that State.
(2) The term “annuity” means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
(3) Pensions paid by one of the Contracting States or a political sub--division
or local authority of that State to any individual in respect of services rendered
to that State, political sub--division or local authority, as the case may be, and
pensions paid under the social security scheme of one of the Contracting States
may be taxed in that State. The provisions of this paragraph shall apply only to
individuals who are citizens of the Contracting State from which the payments
are made.
(4) Any alimony or other maintenance payment arising in one of the
Contracting States and paid to a resident of the other Contracting State, shall be
taxable only in the first--mentioned State.
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
552 International Tax Agreements Act 1953
ARTICLE 19
Government Service
(1) Remuneration (other than a pension or annuity) paid by one of the
Contracting States or a political sub--division or local authority of that State to
any individual in respect of services rendered in the discharge of governmental
functions shall be taxable only in that State. However, such remuneration shall
be taxable only in the other Contracting State if the services are rendered in that
other State and the recipient is a resident of that other State who:
(a) is a citizen of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) The provisions of paragraph (1) shall not apply to remuneration in respect
of services rendered in connection with any trade or business carried on by one
of the Contracting States or a political sub--division or local authority of that
State. In such a case, the provisions of Article 15 or Article 16 as the case may
be, shall apply.
ARTICLE 20
Professors and Teachers
(1) A professor or teacher who visits a Contracting State for a period not
exceeding two years for the purpose of teaching or carrying out advanced study
or research at a university, college, school or other educational institution in that
State and who immediately before that visit was a resident of the other
Contracting State shall be exempt from tax in the first--mentioned State on any
remuneration for such teaching, advanced study or research in respect of which
he is, or upon the application of this Article will be, subject to tax in the other
State.
(2) This Article shall not apply to remuneration which a professor or teacher
receives for conducting research if the research is undertaken primarily for the
private benefit of a specific person or persons.
ARTICLE 21
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State solely for the purpose of
Agreement between the Government of Australia and the Government of Sweden for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 17
International Tax Agreements Act 1953 553
his education, receives payments from sources outside that other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in that other State.
ARTICLE 22
Income Not Expressly Mentioned
(1) Items of income, not expressly mentioned in the foregoing Articles,
derived from sources in one of the Contracting States by a resident of the other
Contracting State may be taxed in the first--mentioned State.
(2) Subject to the provisions of paragraph (3), income derived by a person who
is a resident of one of the Contracting States from sources in that Contracting
State or from sources outside both Contracting States shall be taxable only in
the Contracting State of which that person is a resident.
(3) The provisions of paragraph (2) shall not apply to income derived by a
resident of one of the Contracting States where that income is effectively
connected with a permanent establishment or fixed base situated in the other
Contracting State. In such a case, the provisions of Article 7 or Article 14, as
the case may be, shall apply.
ARTICLE 23
Source of Income
(1) Income derived by a resident of Sweden which, under any one or more of
Articles 6 to 8, Articles 10 to 18 and Article 22 may be taxed in Australia, shall
for the purposes of the income tax law of Australia be deemed to be income
from sources in Australia.
(2) Income derived by a resident of Australia which, under any one or more of
Articles 6 to 8, Articles 10 to 18 and Article 22 may be taxed in Sweden, shall
for the purposes of paragraph (1) of Article 24 and of the income tax law of
Australia be deemed to be income from sources in Sweden.
ARTICLE 24
Methods of Elimination of Double Taxation
(1) Subject to the provisions of the law of Australia from time to time in force
which relate to the allowance of a credit against Australian tax of tax paid in a
country outside Australia (which shall not affect the general principle hereof),
Swedish tax paid under the law of Sweden and in accordance with this
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
554 International Tax Agreements Act 1953
Agreement, whether directly or by deduction, in respect of income derived by a
person who is a resident of Australia from sources in Sweden (not including, in
the case of a dividend, tax paid in respect of the profits out of which the
dividend is paid) shall be allowed as a credit against Australian tax payable in
respect of that income.
(2) A company which is a resident of Australia is, in accordance with the
provisions of the taxation law of Australia in force at the date of signature of
this Agreement, entitled to a rebate in its assessment at the average rate of tax
payable by the company in respect of dividends that are included in its taxable
income and are received from a company which is a resident of Sweden.
However, should the law so in force be amended so that the rebate in relation to
the dividends ceases to be allowable under that law, credit shall be allowed
under paragraph (1) to the first--mentioned company for the Swedish tax paid
on the profits out of which the dividends are paid, as well as for the Swedish tax
paid on the dividends for which credit is to be allowed under paragraph (1), but
only if that company beneficially owns at least 10 per cent of the paid--up share
capital of the second--mentioned company.
(3) Subject to the provisions of paragraphs (4) and (5) of this Article, where a
resident of Sweden derives income which, in accordance with the provisions of
this Agreement may be taxed in Australia, Sweden shall allow as a deduction
from the tax on the income of that person, an amount equal to the income tax
paid in Australia. The deduction shall not, however, exceed that part of the
income tax, as computed before the deduction is given, which is appropriate to
the income which may be taxed in Australia.
(4) Where a resident of Sweden derives income which, in accordance with the
provisions of this Agreement, shall be taxable only in Australia, Sweden may
include this income in the tax case but shall allow as a deduction from the
income tax that part of the income tax which is appropriate to the income
derived from Australia.
(5) Notwithstanding the provisions of paragraph (1) of Article 10, dividends
paid by a company which is a resident of Australia and to which a company
which is a resident of Sweden is beneficially entitled shall be exempt from
Swedish tax to the extent that the dividends would have been exempt under
Swedish law if both companies had been Swedish companies. This exemption
shall not be granted unless the principal part of the profits or income of the
company paying the dividends arises, directly or indirectly, from business
activities other than the management of securities and other similar movable
property and such activities are carried on within Australia by the company
Agreement between the Government of Australia and the Government of Sweden for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 17
International Tax Agreements Act 1953 555
paying the dividends or by a company in which it owns at least 25 per cent of
the paid--up share capital.
ARTICLE 25
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the actions
of the taxation authority of one or both of the Contracting States result or will
result for him in taxation not in accordance with this Agreement, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which he
is a resident. The case must be presented within three years from the first
notification of the action.
(2) The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at an appropriate solution, to resolve
the case with the competent authority of the other Contracting State, with a
view to the avoidance of taxation not in accordance with this Agreement. The
solution so reached shall be implemented notwithstanding any time limits in the
national laws of the Contracting States.
(3) The competent authorities of the Contracting States shall jointly endeavour
to resolve any difficulties or doubts arising as to the application of this
Agreement.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 26
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation thereunder is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
Schedule 17 Agreement between the Government of Australia and the Government of
Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income
556 International Tax Agreements Act 1953
relation to, the taxes to which this Agreement applies and shall be used only for
such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 27
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
ARTICLE 28
Entry into Force
This Agreement shall come into force on the date on which the
Government of Australia and the Government of Sweden exchange notes at
Stockholm through the diplomatic channel notifying each other that the last of
such things has been done as is necessary to give this Agreement the force of
law in Australia and in Sweden, as the case may be, and thereupon this
Agreement shall have effect:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year immediately following that in
which the Agreement enters into force;
Agreement between the Government of Australia and the Government of Sweden for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income Schedule 17
International Tax Agreements Act 1953 557
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the Agreement enters into
force;
(b) In Sweden, in respect of income derived on or after 1 January in the
calendar year immediately following that in which the Agreement
enters into force.
ARTICLE 29
Termination
This Agreement shall continue in effect indefinitely, but the Government
of Australia or the Government of Sweden may, on or before 30 June in any
calendar year beginning after the expiration of 5 years from the date of its entry
into force, give to the other Government through the diplomatic channel written
notice of termination and, in that event, this Agreement shall cease to be
effective:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year next following that in which the
notice of termination is given;
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
next following that in which the notice of termination is given;
(b) in Sweden, in respect of income derived on or after 1 January in the
calendar year next following that in which the notice of termination is
given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate at Canberra this fourteenth day of January One
thousand nine hundred and eighty--one in the English language.
JOHN HOWARD L. HEDSTROM
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF SWEDEN
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
558 International Tax Agreements Act 1953
Schedule 18—Agreement between the
Government of Australia and the
Government of the Kingdom of
Denmark for the Avoidance of Double
Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on
Income Section 3
The Government of Australia and the Government of the Kingdom of
Denmark,
Desiring to conclude an Agreement for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are—
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in Denmark:
the income taxes to the State and to the municipalities
(indkomstskatterne til staten og til kommunerne).
Agreement between the Government of Australia and the Government of the Kingdom
of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 559
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Agreement in addition to, or in place of, the existing taxes. The
competent authority of each Contracting State shall notify the competent
authority of the other Contracting State of any substantial changes which have
been made in the laws of his State relating to the taxes to which this Agreement
applies.
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term “Denmark” means the Kingdom of Denmark including any
area outside the territorial sea of Denmark which in accordance with
international law has been or may hereafter be designated under Danish
laws as an area within which Denmark may exercise sovereign rights
with respect to the exploration and exploitation of the natural resources
of the sea--bed or its subsoil; the term does not comprise the Faroe
Islands and Greenland;
(c) the terms “Contracting State, one of the Contracting States” and “other
Contracting State” mean Australia or Denmark, as the context requires;
(d) the term “person” includes an individual, a company and any other
body of persons;
(e) the term “company” means any body corporate or any entity which is
treated as a body corporate or company for tax purposes;
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
560 International Tax Agreements Act 1953
(f) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean an enterprise carried on by a
resident of Australia or an enterprise carried on by a resident of
Denmark, as the context requires;
(g) the term “tax” means Australian tax or Danish tax, as the context
requires;
(h) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term “Danish tax” means tax imposed by Denmark, being tax to
which this Agreement applies by virtue of Article 2;
(j) the term “competent authority” means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Denmark, the Minister for Inland Revenue, Customs and Excise
or his authorized representative.
(2) In this Agreement, the terms “Australian tax” and “Danish tax” do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Agreement applies by virtue of Article
2.
(3) In the application of this Agreement by a Contracting State, any term
not defined in this Agreement shall, unless the context otherwise requires, have
the meaning which it has under the laws of that State relating to the taxes to
which this Agreement applies.
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
Contracting States—
(a) in the case of Australia, subject to the provisions of paragraph (2), if the
person is a resident of Australia for the purposes of Australian tax; and
(b) in the case of Denmark, if the person is liable to tax therein by reason of
his domicile, residence, place of incorporation or any other criterion of
a similar nature but not if he is liable to tax in Denmark in respect only
of income from sources therein.
(2) In relation to income from sources in Denmark, a person who is subject
to Australian tax on income which is from sources in Australia shall not be
treated as a resident of Australia unless the income from sources in Denmark is
Agreement between the Government of Australia and the Government of the Kingdom
of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 561
subject to Australian tax or, if that income is exempt from Australian tax, it is so
exempt solely because it is subject to Danish tax.
(3) Where by reason of the provisions of paragraph (1) an individual is a
resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States, or if he does not
have an habitual abode in either of them, he shall be deemed to be a
resident solely of the Contracting State with which his personal and
economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1), a person other than
an individual is a resident of both Contracting States, then it shall be deemed to
be a resident solely of the Contracting State in which it is created.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent
establishment” means a fixed place of business through which the business of
an enterprise is wholly or partly carried on.
(2) The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
lasts for more than twelve months.
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
562 International Tax Agreements Act 1953
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one
of the Contracting States and to carry on business through that permanent
establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or exploitation of, natural resources, or in activities connected with such
exploration or exploitation.
(5) A person acting in one of the Contracting States on behalf of an
enterprise of the other Contracting State—other than an agent of an independent
status to whom paragraph (6) applies—shall be deemed to be a permanent
establishment of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise.
(6) An enterprise of one of the Contracting States shall not be deemed to
have a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
Agreement between the Government of Australia and the Government of the Kingdom
of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 563
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise) shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be
applied in determining for the purposes of paragraph (5) of Article 11 and
paragraph (5) of Article 12 of this Agreement whether there is a permanent
establishment outside both Contracting States, and whether an enterprise, not
being an enterprise of one of the Contracting States, has a permanent
establishment in one of the Contracting States.
ARTICLE 6
Income from Real Property
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or of the exploitation of any natural
resource, may be taxed in the Contracting State in which the real property,
mines, quarries, or natural resources are situated.
(2) Income from a lease of land and income from any other direct interest
in or over land, whether or not improved, shall be regarded as income from real
property situated where the land to which the lease or other direct interest
relates is situated.
(3) The provisions of paragraphs (1) and (2) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to that
permanent establishment.
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
564 International Tax Agreements Act 1953
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions expenses of the enterprise, being expenses which
are incurred for the purposes of the permanent establishment (including
executive and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) Insofar as it has been customary in a Contracting State to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts, nothing
in paragraph (2) shall preclude that Contracting State from determining the
profits to be taxed by such an apportionment as may be customary; the method
of apportionment adopted shall, however, be such that the result shall be in
accordance with the principles contained in this Article.
(5) No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
(6) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, nothing in this Article shall affect the application
of any law of that State relating to the determination of the tax liability of a
person provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with the principles
of this Article.
(7) Where profits include items of income which are dealt with separately
in other Articles of this Agreement, then the provisions of those Articles shall
not be affected by the provisions of this Article.
(8) Nothing in this Article shall affect the operation of any law of a
Contracting State relating to taxation of profits from insurance with
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of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 565
non--residents provided that if the relevant law in force in either State at the
date of signature of this Agreement is varied (otherwise than in minor respects
so as not to affect its general character) the Contracting States shall consult with
each other with a view to agreeing to any amendment of this paragraph that may
be appropriate.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of
one of the Contracting States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be
taxed in the other Contracting State where they are profits from operations of
ships or aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a resident
of one of the Contracting States through participation in a pool service, in a
joint transport operating organization or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in
a Contracting State for discharge at another place in that State shall be treated as
profits from operations of ships or aircraft confined solely to places in that
State.
(5) With respect to profits derived by the Danish, Norwegian and Swedish
air transport consortium, known as the Scandinavian Airlines System (SAS), the
provisions of paragraphs (1) and (2) shall only apply to such part of the profits
as corresponds to the shareholding in the consortium held by Det Danske
Luftfartsselskab (DDL), the Danish partner of Scandinavian Airlines System
(SAS).
ARTICLE 9
Associated Enterprises
(1) Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
566 International Tax Agreements Act 1953
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an enterprise,
nothing in this Article shall affect the application of any law of that State
relating to the determination of the tax liability of a person, provided that that
law shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of this Article.
(3) Where profits on which an enterprise of one of the Contracting States
has been charged to tax in that State are also included, by virtue of
paragraph (1) or (2), in the profits of an enterprise of the other Contracting State
and taxed accordingly, and the profits so included are profits which might have
been expected to have accrued to that enterprise of the other State if the
conditions operative between the enterprises had been those which might have
been expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Agreement and for this purpose the
competent authorities of the Contracting States shall if necessary consult each
other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
Agreement between the Government of Australia and the Government of the Kingdom
of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 567
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
(3) The term “dividends” in this Article means income from shares and
other income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident for
the purposes of its tax.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business in the other Contracting State of which the company
paying the dividends is a resident, through a permanent establishment situated
therein, or performs in that other State independent personal services from a
fixed base situated therein, and the holding in respect of which the dividends are
paid is effectively connected with such permanent establishment or fixed base.
In such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.
(5) Dividends paid by a company which is a resident of one of the
Contracting States, being dividends to which a person who is not a resident of
the other Contracting State is beneficially entitled, shall be exempt from tax in
that other State except insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or fixed base
situated in that other State. Provided that this paragraph shall not apply in
relation to dividends paid by any company which is a resident of Australia for
the purposes of Australian tax and which is also a resident of Denmark for the
purposes of Danish tax.
(6) Subject to the provisions of this Agreement, a Contracting State may
impose on the income of a company which is a resident of the other Contracting
State, tax in addition to the tax which would be chargeable on the taxable
income of a company which is a resident of the first--mentioned State, provided
that any additional tax so imposed by the first--mentioned State shall not exceed
15 per cent of the amount by which the taxable income of the year of income
exceeds the tax which would have been payable on that taxable income if the
company had been a resident of the first--mentioned State.
(7) Where an individual who is a resident of Australia receives from a
company which is a resident of Denmark a dividend to which he is beneficially
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
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568 International Tax Agreements Act 1953
entitled and which, if received by a resident of Denmark, would entitle the
resident to the Danish tax credit (skattegodtgørelse)—
(a) the individual shall be entitled to the credit subject to the deduction of
tax that would apply if that credit were a dividend;
(b) the amount of the credit shall be treated for purposes of Australian tax
as assessable income from sources in Denmark.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the interest.
(3) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to income
from money lent by the taxation law of the Contracting State in which the
income arises.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, carries on business in the other Contracting State, in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the indebtedness in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of Article 7 or Article 14, as the case may be, shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer
is that State itself or a political sub--division or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State or outside both Contracting
States a permanent establishment or fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or fixed base, then such interest shall be
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of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 569
deemed to arise in that State in which the permanent establishment or fixed base
is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the interest, or between both of them and some
other person, the amount of the interest paid, having regard to the indebtedness
for which it is paid, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to
which a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State.
(2) Such royalties may be taxed in the Contracting State in which they
arise, and according to the law of that State, but the tax so charged shall not
exceed 10 per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for—
(a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark, or other like property or
right;
(b) the use of, or the right to use, any industrial, commercial or scientific
equipment;
(c) the supply of scientific, technical, industrial or commercial knowledge
or information;
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in paragraph (a), any such
equipment as is mentioned in paragraph (b) or any such knowledge or
information as is mentioned in paragraph (c);
(e) the use of, or the right to use—
(i) motion picture films;
Schedule 18 Agreement between the Government of Australia and the Government of
the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
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570 International Tax Agreements Act 1953
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use of a property or right
referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, carries on business in the other Contracting State, in which the royalties
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the right or property in respect of which the royalties are paid or credited is
effectively connected with such permanent establishment or fixed base. In such
a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer
is that State itself or a political sub--division or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State or outside both Contracting
States a permanent establishment or fixed base in connection with which the
liability to pay the royalties was incurred, and the royalties are borne by the
permanent establishment or fixed base, then the royalties shall be deemed to
arise in the State in which the permanent establishment or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties or between both of them and some
other person the amount of the royalties paid or credited, having regard to what
they are paid or credited for, exceeds the amount which might have been
expected to have been agreed upon by the payer and the person so entitled in the
absence of such relationship, the provisions of this Article shall apply only to
the last--mentioned amount. In that case, the excess part of the amount of the
royalties paid or credited shall remain taxable according to the law of each
Contracting State, but subject to the other provisions of this Agreement.
ARTICLE 13
Alienation of Property
(1) Income from alienation of real property may be taxed in the Contracting
State in which that property is situated.
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of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 571
(2) For the purposes of this Article—
(a) the term “real property” shall include—
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
(iii) shares or comparable interests in a company, the assets of
which consist wholly or principally of direct interests in or over
land in one of the Contracting States or of rights to exploit, or to
explore for, natural resources in one of the Contracting States;
(b) real property shall be deemed to be situated—
(i) where it consists of direct interests in or over land—in the
Contracting State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the Contracting States
or of rights to exploit, or to explore for, natural resources in one
of the Contracting States—in the Contracting State in which the
assets or the principal assets of the company are situated.
(3) Subject to the provisions of paragraph (1), income from the alienation
of capital assets of an enterprise of one of the Contracting States or available to
a resident of one of the Contracting States for the purpose of performing
professional services or other independent activities shall be taxable only in that
State, but, where those assets form part of the business property of a permanent
establishment or fixed base situated in the other Contracting State, such income
may be taxed in that other State.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
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the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
572 International Tax Agreements Act 1953
(2) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived
by an individual who is a resident of one of the Contracting States in respect of
an employment exercised in the other Contracting State shall be taxable only in
the first--mentioned State if—
(a) the recipient is present in that other State for a period of periods not
exceeding in the aggregate 183 days in the year of income of that other
State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State; and
(d) the remuneration is, or upon the application of this Article will be,
subject to tax in the first--mentioned State.
(3) Notwithstanding the preceding provisions of this Article, remuneration
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic may be taxed in the Contracting State in which the place of
effective management of the enterprise is situated. Where a resident of Denmark
derives remuneration in respect of an employment exercised aboard an aircraft
operated in international traffic by the Scandinavian Airlines System (SAS)
consortium, such remuneration shall be taxable only in Denmark.
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of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
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ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived
by entertainers (such as theatrical, motion picture, radio or television artistes
and musicians and athletes) from their personal activities as such may be taxed
in the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as
such accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
ARTICLE 18
Pensions and Annuities
(1) Subject to the provisions of paragraph (3), any pension or annuity paid
to a resident of one of the Contracting States shall be taxable only in that State.
(2) The term “annuity” means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
(3) Pensions paid by one of the Contracting States or a political
sub--division or local authority of that State to any individual in respect of
services rendered to that State, political sub--division or local authority, as the
case may be, and pensions paid under the social security scheme of one of the
Contracting States may be taxed in that State. The provisions of this paragraph
shall apply only to individuals who are citizens of the Contracting State from
which the payments are made.
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the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
574 International Tax Agreements Act 1953
ARTICLE 19
Government Service
(1) Remuneration (other than a pension or annuity) paid by one of the
Contracting States or a political sub--division or local authority of that State to
any individual in respect of services rendered in the discharge of governmental
functions shall be taxable only in that State. However, such remuneration shall
be taxable only in the other Contracting State if the services are rendered in that
other State and the recipient is a resident of that other State who:
(a) is a citizen of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) The provisions of paragraph (1) shall not apply to remuneration in
respect of services rendered in connection with any trade or business carried on
by one of the Contracting States or a political sub--division or local authority of
that State. In such a case, the provisions of Article 15 or Article 16, as the case
may be, shall apply.
ARTICLE 20
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State solely for the purpose of
his education, receives payments from sources outside that other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in that other State.
ARTICLE 21
Income Not Expressly Mentioned
(1) Items of income of a resident of one of the Contracting States which are
not expressly mentioned in the foregoing Articles of this Agreement shall be
taxable only in that Contracting State.
(2) However, if such income is derived by a resident of one of the
Contracting States from sources in the other Contracting State, such income
may also be taxed in the Contracting State in which it arises.
(3) The provisions of paragraph (1) shall not apply to income derived by a
resident of one of the Contracting States where that income is effectively
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of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 575
connected with a permanent establishment or fixed base situated in the other
Contracting State. In such a case, the provisions of Article 7 or Article 14, as
the case may be, shall apply.
ARTICLE 22
Source of Income
(1) Income derived by a resident of Denmark which, under any one or more
of Articles 6 to 8 and Articles 10 to 18 and Article 21 may be taxed in Australia,
shall for the purposes of the income tax law of Australia be deemed to be
income from sources in Australia.
(2) Income derived by a resident of Australia which, under any one or more
of Articles 6 to 8 and Articles 10 to 18 and Article 21 may be taxed in
Denmark, shall for the purposes of paragraph (1) of Article 23 and of the
income tax law of Australia be deemed to be income from sources in Denmark.
ARTICLE 23
Methods of Elimination of Double Taxation
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle
hereof), Danish tax paid under the law of Denmark and in accordance with this
Agreement, whether directly or by deduction, in respect of income derived by a
person who is a resident of Australia from sources in Denmark (not including in
the case of a dividend, tax paid in respect of the profits out of which the
dividend is paid) shall be allowed as a credit against Australian tax payable in
respect of that income.
(2) Double taxation shall be avoided as follows in Denmark:
(a) Subject to the provisions of sub--paragraph (c), where a resident of
Denmark derives income which, in accordance with the provisions of
this Agreement may be taxed in Australia, Denmark shall allow as a
deduction from the tax on the income of that resident, an amount equal
to the income tax paid in Australia;
(b) Such deduction shall not, however, exceed that part of the income tax,
as computed before the deduction is given, which is attributable to the
income which may be taxed in Australia;
(c) Where a resident of Denmark derives income which, in accordance with
the provisions of this Agreement, shall be taxable only in Australia,
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the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
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576 International Tax Agreements Act 1953
Denmark may include this income in the tax base, but shall allow as a
deduction from the income tax that part of the income tax which is
attributable to the income derived from Australia.
(3) In the event that one of the Contracting States should cease to allow a
company which is a resident of that State relief from its tax in respect of
dividends paid to it by a company which is a resident of the other Contracting
State, being relief available under the taxation law of the first--mentioned State
as in force at the date of signature of this Agreement, that State will
immediately advise the other State of the change and enter into negotiations
with it to establish new provisions concerning the relief to be allowed in the
first--mentioned State under this Article in respect of that State’s tax on the
dividends.
ARTICLE 24
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the
actions of the competent authority of one or both of the Contracting States result
or will result for him in taxation not in accordance with this Agreement, he
may, notwithstanding the remedies provided by the national laws of those
States, present his case to the competent authority of the Contracting State of
which he is a resident. The case must be presented within three years from the
first notification of the action giving rise to taxation not in accordance with this
Agreement.
(2) The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at an appropriate solution, to resolve
the case with the competent authority of the other Contracting State, with a
view to the avoidance of taxation not in accordance with this Agreement. The
solution so reached shall be implemented notwithstanding any time limits in the
national laws of the Contracting States.
(3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the application of
this Agreement.
(4) The competent authorities of the Contracting States may communicate
with each other directly for the purpose of giving effect to the provisions of this
Agreement.
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of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
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ARTICLE 25
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation thereunder is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes to which this Agreement applies. It shall be used only for
such purposes and may be disclosed in public court proceedings or in judicial
decisions.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special international agreements.
ARTICLE 27
Entry into Force
This Agreement shall enter into force on the date on which the Government
of Australia and the Government of Denmark exchange notes through the
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the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
578 International Tax Agreements Act 1953
diplomatic channel notifying each other that the last of such things has been
done as is necessary to give this Agreement the force of law in Australia and in
Denmark, as the case may be, and thereupon this Agreement shall have effect—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year immediately following that in
which the Agreement enters into force;
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the Agreement enters into
force;
(b) in Denmark—
in relation to income derived on or after 1 January in the
calendar year immediately following that in which the
Agreement enters into force.
ARTICLE 28
Termination
This Agreement shall continue in effect indefinitely, but the Government of
Australia or the Government of Denmark may, on or before 30 June in any
calendar year beginning after the expiration of 5 years from the date of its entry
into force, give to the other Government through the diplomatic channel written
notice of termination and, in that event, this Agreement shall cease to be
effective—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after
1 January in the calendar year immediately following that in
which the notice of termination is given;
Agreement between the Government of Australia and the Government of the Kingdom
of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 18
International Tax Agreements Act 1953 579
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the notice of termination is
given;
(b) in Denmark—
in relation to income derived on or after 1 January in the
calendar year immediately following that in which the notice of
termination is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement.
DONE in duplicate at Canberra this first day of April One thousand nine
hundred and eighty--one in the English language.
JOHN HOWARD MOGENS WARBERG
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF THE KINGDOM OF DENMARK
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
580 International Tax Agreements Act 1953
Schedule 20—Agreement between the
Government of Australia and the
Government of Ireland for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income and
Capital Gains Section 3
The Government of Australia and the Government of Ireland,
Desiring to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and capital gains,
Have agreed as follows:
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are—
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in Ireland:
(i) the income tax;
(ii) the corporation tax; and
(iii) the capital gains tax.
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 581
of this Agreement in addition to, or in place of, the existing taxes. As soon as
possible after the end of each calendar year, the competent authority of each
Contracting State shall notify the competent authority of the other Contracting
State of any substantial changes which have been made in the laws of the State
relating to the taxes to which this Agreement applies.
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires—
(a) the term “Australia” means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or
of a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term “Ireland” includes any area outside the territorial waters of
Ireland which in accordance with international law has been or may
hereafter be designated, under the laws of Ireland concerning the
Continental Shelf, as an area within which the rights of Ireland with
respect to the sea--bed and subsoil and their natural resources may be
exercised;
(c) the terms “Contracting State, one of the Contracting States” and “the
other Contracting State” mean Australia or Ireland, as the context
requires;
(d) the term “person” includes an individual, a company and any other
body of persons;
(e) the term “company” means any body corporate or any entity which is
assimilated to a body corporate for tax purposes;
(f) the terms “enterprise of one of the Contracting States” and “enterprise
of the other Contracting State” mean an enterprise carried on by a
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
582 International Tax Agreements Act 1953
resident of Australia or an enterprise carried on by a resident of Ireland,
as the context requires;
(g) the term “tax” means Australian tax or Irish tax, as the context requires;
(h) the term “Australian tax” means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term “Irish tax” means tax imposed by Ireland, being tax to which
this Agreement applies by virtue of Article 2;
(j) the term “competent authority” means:
(i) in the case of Australia, the Commissioner of Taxation or his
authorised representative;
(ii) in the case of Ireland, the Revenue Commissioners or their
authorised representative.
(2) In this Agreement, the terms “Australian tax” and “Irish tax” do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Agreement applies by virtue of Article
2.
(3) In the application of this Agreement by a Contracting State, any term not
defined in this Agreement shall, unless the context otherwise requires, have the
meaning which it has under the laws of that State relating to the taxes to which
this Agreement applies.
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
Contracting States—
(a) in the case of Australia, subject to the provisions of paragraph (2) of
this Article, if the person is a resident of Australia for the purposes of
Australian tax; and
(b) in the case of Ireland, if the person is liable to tax therein by reason of
his domicile, residence, place of management or any other criterion of a
similar nature but not if he is liable to tax in Ireland in respect only of
income for sources therein.
(2) In relation to income from sources in Ireland a person who is subject to
Australian tax on income which is from sources in Australia shall not be treated
as a resident of Australia unless the income from sources in Ireland is subject to
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 583
Australian tax or, if that income is exempt from Australian tax, it is so exempt
solely because it is subject to Irish tax.
(3) Where by reason of the preceding provisions of this Article an individual is
a resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States, or if he does not
have an habitual abode in either of them, he shall be deemed to be a
resident solely of the Contracting State with which his personal and
economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1) of this Article, a person
other than an individual is a resident of both Contracting States, then it shall be
deemed to be a resident solely of the Contracting State in which its place of
effective management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term “permanent establishment”
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
(2) The term “permanent establishment” shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months;
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
584 International Tax Agreements Act 1953
(i) an installation or structure used for the exploration of natural resources.
(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one of
the Contracting States and to carry on business through that permanent
establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State;
(b) substantial equipment is being used in that State by, for or under
contract with the enterprise; or
(c) it carries on activities in that State in connection with the exploration or
exploitation of the sea--bed, subsoil or their natural resources in that
State.
(5) A person acting in one of the Contracting States on behalf of an enterprise
of the other Contracting State—other than an agent of an independent status to
whom paragraph (6) of this Article applies—shall be deemed to be a permanent
establishment of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise, provided that this
provision shall apply only in relation to the goods or merchandise so
manufactured or processed.
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 585
(6) An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) of this Article shall be
applied in determining for the purposes of paragraph (5) of Article 12 and
paragraph (5) of Article 13 whether there is a permanent establishment outside
both Contracting States, and whether an enterprise, not being an enterprise of
one of the Contracting States, has a permanent establishment in one of the
Contracting States.
ARTICLE 6
Limitation of Relief
Where under any provision of this Agreement income is relieved from tax in
one of the Contracting States and, under the law in force in the other
Contracting State—
(a) the income or a part thereof is exempt from tax; or
(b) a person, in respect of the said income, is subject to tax by reference to
the amount thereof which is remitted to or received in that other State,
and not by reference to the full amount thereof, then the relief to be
allowed under this Agreement in the first--mentioned State shall
apply—
(c) where (a) above applies, only to so much of the income as is not exempt
from tax in the other State; or
(d) where (b) above applies, only to so much of the income as is remitted to
or received in the other State.
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
586 International Tax Agreements Act 1953
ARTICLE 7
Income from Real Property
(1) Income from real property may be taxed in the Contracting State in which
the real property is situated.
(2) In this Article, the term “real property”—
(a) in the case of Australia, has the meaning which it has under the laws of
Australia, and shall also include—
(i) a lease of land and any other interest in or over land, whether
improved or not;
(ii) a right to receive variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, oil or
gas wells, quarries or other places of extraction or exploitation
of natural resources; and
(b) in the case of Ireland, means immovable property according to the laws
of Ireland, and shall also include—
(i) property accessory to immovable property;
(ii) rights to which the provisions of the general law respecting
landed property apply;
(iii) usufruct of immovable property; and (iv) a right to
receive variable or fixed payments as consideration for the
working of, or the right to work, mineral deposits, oil or gas
wells, quarries or other places of extraction or exploitation of
natural resources.
Ships, boats and aircraft shall not be regarded as real property.
(3) The provisions of paragraph (1) of this Article shall apply to income
derived from the direct use, letting or use in any other form of real property.
(4) A lease of land, any other interest in or over land and any right referred to
in any of the subparagraphs of paragraph (2) of this Article shall be regarded as
situated where the land, mineral deposits, oil or gas wells, quarries or natural
resources as the case may be, are situated.
(5) The provisions of paragraphs (1), (3) and (4) of this Article shall also apply
to income from real property of an enterprise and to income from real property
used for the performance of professional services.
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 587
ARTICLE 8
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3) of this Article, where an
enterprise of one of the Contracting States carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment the
profits which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or similar
conditions and dealing wholly independently with the enterprise of which it is a
permanent establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
(5) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, nothing in this Article shall affect the application
of any law of that State relating to the determination of the tax liability of a
person provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with the principles
of this Article.
(6) Where profits include items of income which are dealt with separately in
other Articles of this Agreement, then the provisions of those Articles shall not
be affected by the provisions of this Article.
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
588 International Tax Agreements Act 1953
(7) Nothing in this Article shall apply to either Contracting State to prevent the
operation in the Contracting State of any provision of its law relating
specifically to the taxation of any person who carries on a business of any form
of insurance.
ARTICLE 9
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1) of this Article, such
profits may be taxed in the other Contracting State where they are profits from
operations of ships or aircraft confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) of this Article shall apply in
relation to the share of the profits from the operation of ships or aircraft derived
by a resident of one of the Contracting States through participation in a pool
service, in a joint transport operating organization or in an international
operating agency.
(4) For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise shipped in a
Contracting State for discharge at another place in that State shall be treated as
profits from operations of ships or aircraft confined solely to places in that
State.
ARTICLE 10
Associated Enterprises
(1) Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 589
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an enterprise,
nothing in this Article shall affect the application of any law of that State
relating to the determination of the tax liability of a person, provided that that
law shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of this Article.
(3) Notwithstanding the provisions of this Article, an enterprise of one of the
Contracting States may be taxed by that Contracting State as if this Article had
not entered into force and had not had effect but, so far as it is practicable to do
so, in accordance with the principles of this Article.
(4) Where profits on which an enterprise of one of the Contracting States has
been charged to tax in that State are also included, by virtue of paragraphs (1),
(2) or (3) of this Article, in the profits of an enterprise of the other Contracting
State and taxed accordingly, and the profits so included are profits which might
have been expected to have accrued to that enterprise of the other State if the
conditions operative between the enterprises had been those which might have
been expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Agreement and for this purpose the
competent authorities of the Contracting States shall if necessary consult each
other.
(5) The provisions of paragraph (4) of this Article relating to an appropriate
adjustment are not applicable after the expiration of six years from the end of
the year of assessment or financial year, as the case may be, in respect of which
a Contracting State has charged to tax the profits to which the adjustment would
relate.
ARTICLE 11
Dividends
(1) Dividends paid by a company which is a resident of Australia for the
purposes of Australian tax, being dividends to which a resident of Ireland is
beneficially entitled, may be taxed in Ireland. Such dividends may also be taxed
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
590 International Tax Agreements Act 1953
in Australia, according to the law of Australia, but the tax so charged shall not
exceed 15 per cent of the gross amount of the dividends.
(2) (a) Dividends paid by a company which is a resident of Ireland for the
purposes of Irish tax, being dividends to which a resident of Australia is
beneficially entitled, may be taxed in Australia.
(b) Where a resident of Australia is entitled to a tax credit in respect of
adividend under paragraph (3) of this Article, tax may also be charged
in Ireland and according to the laws of Ireland on the aggregate of the
amount or value of that dividend and the amount of that tax credit at a
rate not exceeding 15 per cent.
(c) Except as aforesaid, dividends paid by a company which is a resident
ofIreland for the purposes of Irish tax, being dividends to which a
resident of Australia is beneficially entitled, shall be exempt from any
tax in Ireland which is chargeable on dividends.
(3) A resident of Australia who receives dividends from a company which is a
resident of Ireland shall, subject to the provisions of paragraph (4) of this
Article and provided he is the beneficial owner of the dividends, be entitled to
the tax credit in respect thereof to which an individual resident in Ireland would
have been entitled had he received those dividends, and to the payment of any
excess of that tax credit over his liability to Irish tax. Any such credit shall be
treated for the purposes of Australian tax as assessable income from sources in
Ireland.
(4) The provisions of paragraph (3) of this Article shall not apply where the
beneficial owner of the dividends (being a company) is, or is associated with, a
company which either alone or together with one or more associated companies
controls directly or indirectly 10 per cent or more of the voting power in the
company paying the dividends. For the purposes of this paragraph two
companies shall be deemed to be associated if one controls directly or indirectly
more than 50 per cent of the voting power in the other company, or a third
company controls more than 50 per cent of the voting power in both of them.
(5) The term dividends in this Article means income from shares and includes
any income or distribution assimilated to income from shares under the taxation
law of the Contracting State of which the company paying the dividends or
income or making the distribution is a resident.
(6) Where the company paying a dividend is a resident of one of the
Contracting States and the beneficial owner of the dividend, being a resident of
the other Contracting State, owns 10 per cent or more of the class of shares in
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 591
respect of which the dividend is paid, paragraphs (2) and (3) of this Article shall
not apply to the dividend to the extent that it can have been paid only out of
profits which the company paying the dividend earned or other income which it
received in a period ending 12 months or more before the relevant date. For the
purposes of this paragraph the term relevant date means the date on which the
beneficial owner of the dividend became the owner of 10 per cent or more of
the class of shares in question: provided that this paragraph shall not apply if the
shares were acquired for bona fide commercial reasons and not primarily for the
purpose of securing the benefit of this Article.
(7) The provisions of paragraphs (1), (2) and (3) of this Article shall not apply
if the person beneficially entitled to the dividends, being a resident of one of the
Contracting States, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in respect
of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such a case, the provisions of Article 8 or Article
15, as the case may be, shall apply.
(8) Dividends paid by a company which is a resident of one of the Contracting
States, being dividends to which a person who is not a resident of the other
Contracting State is beneficially entitled, shall be exempt from tax in that other
State except insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or fixed base situated in
that other State: provided that this paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of Ireland for the purposes of Irish
tax.
ARTICLE 12
Interest
(1) Interest arising in one of the Contracting States, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
592 International Tax Agreements Act 1953
-.(3) The term “interest” in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to income
from money lent by the taxation law of the Contracting State in which the
income arises but does not include any income which is treated as a dividend
under Article 11.
(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if
the person beneficially entitled to the interest, being a resident of one of the
Contracting States, carries on business in the other Contracting State, in which
the interest arises, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the indebtedness in respect of which the interest is paid is
effectively connected with such permanent establishment or fixed base. In such
a case, the provisions of Article 8 or Article 15, as the case may be, shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer is
that State itself or a political subdivision or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State or outside both Contracting
States a permanent establishment or fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or fixed base, then such interest shall be
deemed to arise in the State in which the permanent establishment or fixed base
is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
(7) The provisions of this Article shall not apply if the indebtedness in respect
of which the interest is paid was created or assigned mainly for the purpose of
taking advantage of this Article and not for bona fide commercial reasons.
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital Gains Schedule 20
International Tax Agreements Act 1953 593
ARTICLE 13
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such royalties may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
(3) The term “royalties” in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for—
(a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark, or other like property or
right;
(b) the use of, or the right to use, any industrial, commercial or scientific
equipment;
(c) the supply of scientific, technical, industrial or commercial knowledge
or information;
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in subparagraph (a), any such
equipment as is mentioned in subparagraph (b) or any such knowledge
or information as is mentioned in subparagraph (c);
(e) the use of, or the right to use—
(i) motion picture films;
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use of a property or right
referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if
the person beneficially entitled to the royalties, being a resident of one of the
Contracting States, carries on business in the other Contracting State, in which
the royalties arise, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties are
paid or credited is effectively connected with such permanent establishment or
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respect to Taxes on Income and Capital Gains
594 International Tax Agreements Act 1953
fixed base. In such a case, the provisions of Article 8 or Article 15, as the case
may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer is
that State itself or a political subdivision or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State or outside both Contracting
States a permanent establishment or fixed base in connection with which the
liability to pay the royalties was incurred, and the royalties are borne by the
permanent establishment or fixed base, then the royalties shall be deemed to
arise in the State in which the permanent establishment or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person, the amount of the royalties paid or credited, having regard to what they
are paid or credited for, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned ammount. In that case, the excess part of the amount of the
royalties paid or credited shall remain taxable according to the law of each
Contracting State, but subject to the other provisions of this Agreement.
(7) The provisions of this Article shall not apply if the right or property in
respect of which the royalties were paid or credited was created or assigned
mainly for the purpose of taking advantage of this Article and not for bona fide
commercial reasons.
ARTICLE 14
Alienation of Property
(1) Income or gains from the alienation of real property may be taxed in the
Contracting State in which that property is situated.
(2) For the purposes of this Article—
(a) the term “gains” means, in the case of Ireland, chargeable gains as
defined in the taxation law of Ireland;
(b) the term “real property” shall include—
(i) a lease of land or any other interest in or over land;
(ii) rights to exploit, or to explore for, natural resources;
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(iii) shares or comparable interests in a company the assets of which
consist wholly or principally of interests in or over land in one
of the Contracting States or of rights to exploit, or to explore
for, natural resources in one of the Contracting States;
(iv) any partnership interest, or any interest in settled property
deriving its value or the greater part of its value directly or
indirectly from interests in or over land in one of the
Contracting States or rights to exploit, or to explore for, natural
resources in one of the Contracting States; and
(v) any option, consent or embargo affecting the disposition of
interests in or over land in one of the Contracting States or
rights to exploit, or to explore for, natural resources in one of
the Contracting States; and
(c) real property shall be deemed to be situated—
(i) where it consists of interests in or over land—in the Contracting
State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a company
referred to in clause (iii) of subparagraph (b) of this paragraph,
a partnership interest or an interest in settled property referred
to in clause (iv) of the said subparagraph, or an option, consent
or embargo referred to in clause (v) of the said subparagraph—
in the Contracting State in which the land or natural resources
are wholly or principally situated or the exploration may take
place.
(3) Subject to the provisions of paragraph (1) of this Article, income or gains
from the alienation of capital assets of an enterprise of one of the Contracting
States or of capital assets available to a resident of one of the Contracting States
for the purpose of performing professional services or other independent
activities shall be taxable only in that State, but, where those assets form the
whole or part of the business property of a permanent establishment or fixed
base situated in the other Contracting State, such income or gains may be taxed
in that other State.
(4) Income or gains derived by an enterprise of one of the Contracting States
from the alienation of ships or aircraft operated in international traffic while
owned by that enterprise shall be taxable only in that State.
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Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
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ARTICLE 15
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
(2) The term “professional services” includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 16
Dependent Personal Services
(1) Subject to the provisions of Articles 17, 19, 20 and 21, salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1) of this Article,
remuneration derived by an individual who is a resident of one of the
Contracting States in respect of an employment exercised in the other
Contracting State shall be taxable only in the first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or year of
assessment, as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
Agreement between the Government of Australia and the Government of Ireland for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
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international traffic by a resident of one of the Contracting States may be taxed
in that Contracting State.
ARTICLE 17
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
ARTICLE 18
Entertainers
(1) Notwithstanding the provisions of Articles 15 and 16, income derived by
entertainers (such as theatrical, motion picture, radio or television artistes,
musicians and athletes) from their personal activities as such may be taxed in
the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as such
accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 8, 15 and 16, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
ARTICLE 19
Pensions and Annuities
(1) Pensions (including government pensions) and annuities paid to a resident
of one of the Contracting States shall be taxable only in that State.
(2) The term annuity means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
(3) Any alimony or other maintenance payment arising in one of the
Contracting States and paid to a resident of the other Contracting State shall be
taxable only in the first--mentioned State.
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
598 International Tax Agreements Act 1953
ARTICLE 20
Government Service
(1) Remuneration (other than a pension or annuity) paid by one of the
Contracting States or a political subdivision or local authority of that State to
any individual in respect of services rendered in the discharge of governmental
functions shall be taxable only in that State. However, such remuneration shall
be taxable only in the other Contracting State if the services are rendered in that
other State and the recipient is a resident of that other State who:
(a) is a citizen of that State; or
(b) did not become a resident of that State solely for the purpose of
rendering the services.
(2) The provisions of paragraph (1) of this Article shall not apply to
remuneration in respect of services rendered in connection with any trade or
business carried on by one of the Contracting States or a political subdivision or
local authority of that State. In such a case, the provisions of Article 16 or
Article 17, as the case may be, shall apply.
ARTICLE 21
Professors and Teachers
(1) Remuneration which a professor or teacher who is a resident of one of the
Contracting States and who visits the other Contracting State for a period not
exceeding two years for the purpose of teaching or carrying out advanced study
or research at a university, college, school or other educational institution,
receives for those activities shall be taxable only in the first--mentioned State.
(2) This Article shall not apply to remuneration which a professor or teacher
receives for conducting research if the research is undertaken primarily for the
private benefit of a specific person or persons.
ARTICLE 22
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State solely for the purpose of
his education, receives payments from sources outside that other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in that other State.
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ARTICLE 23
Income Not Expressly Mentioned
(1) Items of income of a resident of one of the Contracting States which are
not expressly mentioned in the foregoing Articles of this Agreement shall be
taxable only in that Contracting State.
(2) However, if such income is derived by a resident of one of the Contracting
States from sources in the other Contracting State, such income may also be
taxed in the Contracting State in which it arises.
(3) The provisions of paragraph (1) of this Article shall not apply to income
derived by a resident of one of the Contracting States where that income is
effectively connected with a permanent establishment or fixed base situated in
the other Contracting State. In such a case, the provisions of Article 8 or Article
15, as the case may be, shall apply.
ARTICLE 24
Source of Income
(1) Income or gains derived by a resident of one of the Contracting States
which, under any one or more of Articles 7 to 9, 11 to 19 and Article 23 may be
taxed in the other Contracting State, shall for the purposes of the taxation law of
the other Contracting State be deemed to be income or gains from sources in the
other Contracting State.
(2) Income or gains derived by a resident of one of the Contracting States
which, under any one or more of Articles 7 to 9, 11 to 19 and Article 23 may be
taxed in the other Contracting State, shall for the purposes of Article 25 and of
the taxation law of the first--mentioned Contracting State be deemed to be
income or gains from sources in the other Contracting State.
ARTICLE 25
Methods of Elimination of Double Taxation
(1) (a) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of
tax paid in a country outside Australia (which shall not affect the
general principle hereof), Irish tax paid under the law of Ireland and in
accordance with this Agreement, whether directly or by deduction, in
respect of income derived by a person who is a resident of Australia
from sources in Ireland (not including, in the case of a dividend, tax
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
600 International Tax Agreements Act 1953
paid in respect of the profits out of which the dividend is paid) shall be
allowed as a credit against Australian tax payable in respect of that
income;
(b) in the event that Australia should cease to allow a company which is
aresident of Australia a rebate in its assessment at the average rate of
tax payable by the company in respect of dividends derived from
sources in Ireland and included in the taxable income of the company,
the Governments of the Contracting States will enter into negotiations
in order to establish new provisions concerning the credit to be allowed
by Australia against its tax on the dividends.
(2) Subject to the provisions of the law of Ireland regarding the allowance as a
credit against Irish tax of tax payable in a territory outside Ireland (which shall
not affect the general principle hereof):
(a) Australian tax payable under the law of Australia and in accordance
with this Agreement, whether directly or by deduction, on profits,
income or chargeable gains from sources within Australia (excluding in
the case of a dividend, tax payable in respect of the profits out of which
the dividend is paid) shall be allowed as a credit against any Irish tax
computed by reference to the same profits, income or chargeable gains
by reference to which Australian tax is computed;
(b) in the case of a dividend paid by a company which is a resident of
Australia to a company which is a resident of Ireland and which
controls directly or indirectly 10 per cent or more of the voting power in
the company paying the dividend, the credit shall take into account (in
addition to any Australian tax creditable under the provisions of
subparagraph (a) of this paragraph) the Australian tax payable by the
company in respect of the profits out of which such dividend is paid.
ARTICLE 26
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the actions
of the competent authority of one or both of the Contracting States result or will
result for him in taxation not in accordance with this Agreement, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which he
is a resident. The case must be presented within three years from the first
notification of the action giving rise to taxation not in accordance with this
Agreement.
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(2) The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at an appropriate solution, to resolve
the case with the competent authority of the other Contracting State, with a
view to the avoidance of taxation not in accordance with this Agreement.
Notwithstanding any time limits in the national laws of the Contracting States,
the solution so reached may be implemented within a period of seven years
from the date of presentation of the case by the resident to the relevant
competent authority in accordance with paragraph (1) of this Article.
(3) The competent authorities of the Contracting States shall jointly endeavour
to resolve any difficulties or doubts arising as to the application of this
Agreement.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 27
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation thereunder is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes to which this Agreement applies and shall be used only for
such purposes.
(2) In no case shall the provisions of paragraph (1) of this Article be construed
so as to impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
Schedule 20 Agreement between the Government of Australia and the Government of
Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains
602 International Tax Agreements Act 1953
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 28
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officals under the general rules of international law or under the
provisions of special international agreements.
ARTICLE 29
Entry into Force
This Agreement shall enter into force on the date on which the Government
of Australia and the Government of Ireland exchange notes through the
diplomatic channel notifying each other that the last of such things has been
done as is necessary to give this Agreement the force of law in Australia and in
Ireland, as the case may be, and thereupon this Agreement shall have effect—
(a) in Australia—
(i) with respect to withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 July in
the calendar year immediately following that in which the
Agreement enters into force;
(ii) with respect to other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the Agreement enters into
force;
(b) in Ireland—
(i) with respect to income tax and capital gains tax, for any year of
assessment beginning on or after 6 April in the calendar year
immediately following that in which the Agreement enters into
force;
(ii) with respect to corporation tax, for any financial year beginning
on or after 1 January in the calendar year immediately
following that in which the Agreement enters into force.
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ARTICLE 30
Termination
This Agreement shall continue in effect indefinitely, but the Government of
Australia or the Government of Ireland may, on or before 30 June in any
calendar year beginning after the expiration of five years from the date of its
entry into force, give to the other Government through the diplomatic channel
written notice of termination and, in that event, this Agreement shall cease to be
effective—
(a) in Australia—
(i) with respect to withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 July in
the calendar year immediately following that in which the
notice of termination is given;
(ii) with respect to other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
immediately following that in which the notice of termination is
given;
(b) in Ireland—
(i) with respect to income tax and capital gains tax, for any year of
assessment beginning on or after 6 April in the calendar year
immediately following that in which the notice of termination is
given;
(ii) with respect to corporation tax, for any financial year beginning
on or after 1 January in the calendar year immediately
following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have
signed this Agreement and affixed thereto their seals.
DONE in duplicate at Canberra this thirty--first day of May One thousand
nine hundred and eighty--three in the English language.
J. S. DAWKINS JOSEPH SMALL
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF IRELAND
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Schedule 21—Convention between Australia
and the Republic of Italy for the
Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with
respect to Taxes on Income Section 3
The Government of Australia and the Government of the Republic of Italy,
Desiring to conclude a Convention for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE 1
Personal Scope
This Convention shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) This Convention shall apply only to taxes on income imposed on behalf of
each Contracting State irrespective of the manner in which they are levied.
(2) The existing taxes to which this Convention shall apply are—
(a) in the case of Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in the case of Italy:
(i) the indvidual income tax (l’imposta sul reddito delle persone
fisiche);
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Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 21
International Tax Agreements Act 1953 605
(ii) the corporate income tax (l’imposta sul reddito delle persone
giuridiche);
even if they are collected by withholding taxes at the source.
(3) The Convention shall apply to any identical or substantially similar taxes
which are imposed after the date of signature of this Convention in addition to,
or in place of, the existing taxes. The competent authorities of the Contracting
States shall notify to each other any significant changes which have been made
in their laws relating to the taxes to which this Convention applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Convention, unless the context otherwise requires—
(a) the term ‘Australia’ means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force a law of Australia or of a State or part of Australia or of a
Territory aforesaid dealing with the exploitation of any of the
natural resources of the sea--bed and subsoil of the continental
shelf;
(b) the term ‘Italy’ means the Republic of Italy and includes any area
beyond the territorial waters of Italy which, in accordance with the laws
of Italy concerning the exploration for and exploitation of natural
resources, may be designated as an area within which the rights of Italy
with respect to the sea--bed and subsoil and natural resources may be
exercised;
(c) the terms ‘Contracting State, one of the Contracting States’ and ‘other
Contracting State’ mean Australia or Italy, as the context requires;
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of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income
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(d) the term ‘person’ comprises an individual, a company and any other
body of persons;
(e) the term ‘company’ means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(f) the terms ‘enterprise of one of the Contracting States’ and ‘enterprise of
the other Contracting State’ mean an enterprise carried on by a resident
of Australia or an enterprise carried on by a resident of Italy, as the
context requires;
(g) the term ‘tax’ means Australian tax or Italian tax, as the context
requires;
(h) the term ‘Australian tax’ means tax imposed by Australia, being tax to
which this Convention applies by virtue of Article 2;
(i) the term ‘Italian tax’ means tax imposed by Italy, being tax to which
this Convention applies by virtue of Article 2;
(j) the term ‘competent authority’ means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Italy, the Ministry of Finance.
(2) In this Convention, the terms ‘Australian tax’ and ‘Italian tax’ do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Convention applies by virtue of Article
2.
(3) In the application of this Convention by a Contracting State, any term not
otherwise defined shall, unless the context otherwise requires, have the meaning
which it has under the laws of that Contracting State relating to the taxes to
which this Convention applies.
ARTICLE 4
Residence
(1) For the purposes of this Convention, a person is a resident of one of the
Contracting States—
(a) in the case of Australia, subject to paragraph (2), if the person is a
resident of Australia for the purposes of Australian tax; and
(b) in the case of Italy, if the person is a resident of Italy for the purposes of
Italian tax.
(2) In relation to income from sources in Italy, a person who is subject to
Australian tax on income which is from sources in Australia shall not be treated
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Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
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International Tax Agreements Act 1953 607
as a resident of Australia unless the income from sources in Italy is subject to
Australian tax or, if that income is exempt from Australian tax, it is so exempt
solely because it is subject to Italian tax.
(3) Where by reason of the provisions of paragraph (1) an individual is a
resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States, or if he does not
have an habitual abode in either of them, he shall be deemed to be a
resident solely of the Contracting State with which his personal and
economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1) a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be
a resident solely of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Convention, the term ‘permanent establishment’
means a fixed place of business in which the business of the enterprise is wholly
or partly carried on.
(2) The term ‘permanent establishment’ shall include especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than twelve months.
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of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
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(3) The term ‘permanent establishment’ shall not be deemed to include—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one of
the Contracting States and to carry on business through that permanent
establishment if—
(a) it carries on supervisory activities in that State for more than twelve
months in connection with a building site, or a construction, installation
or assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or the exploitation of, natural resources, or in activities connected with
such exploration or exploitation.
(5) A person acting in one of the Contracting States on behalf of an enterprise
of the other Contracting State—other than an agent of an independent status to
whom paragraph (6) applies—shall be deemed to be a permanent establishment
of that enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless his activities are limited to
the purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise provided that this
provision shall apply only in relation to the goods or merchandise so
manufactured or processed.
(6) An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
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agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself constitute
either company a permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be applied in
determining for the purposes of this Convention whether there is a permanent
establishment outside both Contracting States, and whether an enterprise, not
being an enterprise of one of the Contracting States, has a permanent
establishment in one of the Contracting States.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property may be taxed in the Contracting State in which
such property is situated.
(2) The term ‘real property’ (beni immobili) shall have the meaning which it
has under the laws in force in the Contracting State in which the property in
question is situated. The term shall in any case include rights to royalties and
other payments in respect of the operation of mines or quarries or of the
exploitation of any natural resource and those rights shall be regarded as
situated where the land is situated. Ships, boats or aircraft shall not be regarded
as real property.
(3) The provisions of paragraph (1) shall apply to income derived from the
direct use, letting, or use in any other form of real property.
(4) Income from a lease of land and income from any other direct interest in or
over land, whether or not improved, shall be regarded as income from real
property situated where the land is situated.
(5) The provisions of paragraphs (1), (3) and (4) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of independent personal services.
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ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State, but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
(5) Nothing in this Article shall affect the operation of any law of a
Contracting State relating to taxation of profits from insurance with
non--residents provided that if the relevant law in force in either State at the
date of signature of this Convention is varied (otherwise than in minor respects
so as not to affect its general character) the Contracting States shall consult with
each other with a view to agreeing to any amendment of this paragraph that may
be appropriate.
(6) For the purposes of this Article, the profits of an enterprise do not include
items of income which are dealt with separately in other Articles of this
Convention and the provisions of those Articles shall not be affected by the
provisions of this Article.
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ARTICLE 8
Shipping and Aircraft
(1) Where profits are derived by a resident of one of the Contracting States
from the operation of ships and the place of the effective management of the
shipping enterprise is situated in that State, those profits shall be taxable only in
that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be taxed
in the other Contracting State where they are profits from operations of ships
confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the share
of the profits from the operation of ships derived by a resident of one of the
Contracting States through participation in a pool service, in a joint transport
operating organization or in an international operating agency.
(4) For the purpose of this Article, profits derived from the carriage by ships of
passengers, livestock, mail, goods or merchandise shipped in one of the
Contracting States for discharge at another place in that State shall be treated as
profits from operations of ships confined solely to places in that State.
(5) If the place of effective management of a shipping enterprise is aboard a
ship, then it shall be deemed to be situated in the Contracting State in which the
home harbour of the ship is situated, or, if there is no such home harbour, in the
Contracting State of which the operator of the ship is a resident.
(6) Nothing in this Convention shall affect the operation of the Agreement
between the Governments of the Contracting States for the avoidance of double
taxation of income derived from international air transport signed at Canberra
on 13 April 1972.
ARTICLE 9
Associated Enterprises
Where—
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
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(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the Contracting
States for the purposes of its tax, being dividends to which a resident of the
other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
(3) The term ‘dividends’ in this Article means income from shares and other
income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the Contracting
States, carries on business in the other Contracting State of which the company
paying the dividends is a resident, through a permanent establishment situated
therein or performs in that other State independent personal services from a
fixed base situated therein, and the holding in respect of which the dividends are
paid is effectively connected with such permanent establishment or fixed base.
In such a case the dividends are taxable in that other Contracting State
according to its own law.
(5) Dividends paid by a company which is a resident of one of the Contracting
States, being dividends to which a person who is not a resident of the other
Contracting State is beneficially entitled, shall be exempt from tax in that other
State except insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or fixed base situated in
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that other State. Provided that this paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of Italy for the purposes of Italian
tax.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraph (2), interest derived by the
Government of one of the Contracting States or by a political or administrative
sub--division or a local authority thereof or by any other body exercising public
functions in, or in a part of, a Contracting State, or by a bank performing central
banking functions in a Contracting State, shall be exempt from tax in the other
Contracting State.
(4) The term ‘interest’ in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to income
from money lent by the taxation law of the Contracting State in which the
income arises.
(5) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the Contracting
States, carries on business in the other Contracting State, in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the indebtedness in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the interest is
taxable in that other Contracting State according to its own law.
(6) Interest shall be deemed to arise in one of the Contracting States when the
payer is that State itself or a political or administrative subdivision of that State
or a local authority of that State or a person who is a resident of that State for
the purposes of its tax. Where, however, the person paying the interest, whether
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he is a resident of one of the Contracting States or not, has in one of the
Contracting States or outside both Contracting States a permanent establishment
or fixed base in connection with which the indebtedness on which the interest is
paid was incurred, and such interest is borne by such permanent establishment
or fixed base then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated.
(7) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, due regard being had to the other provisions of this Convention.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such royalties may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
(3) The term ‘royalties’ in this Article means payments, whether periodical or
not, and however described or computed, to the extent to which they are paid as
consideration for the use of, or the right to use, any copyright, patent, design or
model, plan, secret formula or process, trade--mark, or other like property or
right, or industrial, commercial or scientific equipment, or for the supply of
scientific, technical, industrial or commercial knowledge or information, or for
the supply of any assistance of an ancillary and subsidiary nature furnished as a
means of enabling the application or enjoyment of such knowledge or
information or any other property or right to which this Article applies, and
includes any payments to the extent to which they are paid as consideration for
the use of, or the right to use, motion picture films, films or video tapes for use
in connection with television or tapes for use in connection with radio
broadcasting.
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(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the Contracting
States, carries on business in the other Contracting State, in which the royalties
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein, and
the right or property in respect of which the royalties are paid is effectively
connected with such permanent establishment or fixed base. In such a case, the
royalties are taxable in that other Contracting State according to its own law.
(5) Royalties shall be deemed to arise in one of the Contracting States when
the payer is that Contracting State itself or a political or administrative
sub--division of that State or a local authority of that State or a person who is a
resident of that State for purposes of its tax. Where, however, the person paying
the royalties, whether he is a resident of one of the Contracting States or not,
has in one of the Contracting States or outside both Contracting States a
permanent establishment or fixed base in connection with which the liability to
pay the royalties was incurred, and the royalties are borne by the permanent
establishment or fixed base, then the royalties shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person the amount of the royalties paid, having regard to what they are paid for,
exceeds the amount which might have been expected to have been agreed upon
by the payer and the person so entitled in the absence of such relationship, the
provisions of this Article shall apply only to the last--mentioned amount. In that
case, the excess part of the amount of the royalties paid shall remain taxable
according to the law of each Contracting State, due regard being had to the
other provisions of this Convention.
ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the
Contracting State in which that property is situated.
(2) For the purposes of this Article—
(a) the term ‘real property’ shall include —
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
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(iii) shares or comparable interest in a company, the assets of which
consist wholly or principally of direct interests in or over land
in one of the Contracting States or of rights to exploit, or to
explore for, natural resources in one of the Contracting States.
(b) real property shall be deemed to be situated—
(i) where it consists of direct interests in or over land—in the
Contracting State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the Contracting States
or of rights to exploit, or to explore for, natural resources in one
of the Contracting States—in the Contracting State in which the
assets or the principal assets of the company are situated.
(3) Gains from the alienation of shares or corporate rights in a company which
is a resident of Italy for the purposes of Italian tax, derived by an individual
who is a resident of Australia, may be taxed in Italy.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base.
(2) The term ‘professional services’ includes especially services performed in
the exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
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ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20 salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by
an individual who is a resident of one of the Contracting States in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or the fiscal
year as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article remuneration
derived by a resident of one of the Contracting States in respect of an
employment exercised aboard a ship or aircraft in international traffic shall be
taxable only in that Contracting State.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
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ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by
entertainers (such as theatrical, motion picture, radio or television artistes and
musicians and athletes) from their personal activities as such may be taxed in
the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as such
accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
ARTICLE 18
Pensions and Annuities
(1) Pensions (including government pensions) and annuities paid to a resident
of one of the Contracting States shall be taxable only in that State.
(2) The term ‘annuity’ means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
(3) Any alimony or other maintenance payment arising in a Contracting State
and paid to a resident of the other Contracting State, shall be taxable only in the
first--mentioned State.
ARTICLE 19
Government Service
(1) Remuneration (other than a pension or annuity) paid by one of the
Contracting States or by a political or administrative sub--division of that State
or by a local authority of that State to any individual in respect of services
rendered to that State or sub--division or authority shall be taxable only in that
State. However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that State and the recipient is a
resident of that State who:
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
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(2) The provisions of paragraph (1) shall not apply to remuneration in respect
of services rendered in connection with any trade or business carried on by one
of the Contracting States or by a political or administrative sub--division of one
of the States or by a local authority of one of the States. In such a case the
provisions of Articles 15 and 16 shall apply.
ARTICLE 20
Professors and Teachers
A professor or teacher who visits one of the Contracting States for a period
not exceeding two years for the purpose of teaching or carrying out advanced
study or research at a university, college, school or other educational institution
in that State and who immediately before that visit was a resident of the other
Contracting State shall be exempt from tax in the first--mentioned State on any
remuneration for such teaching, advanced study or research in respect of which
he is, or upon the application of this Article will be, subject to tax in the other
State.
ARTICLE 21
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in the other State solely for the purpose of
his education, receives payments from sources outside the other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in the other State.
ARTICLE 22
Income of Dual Resident
Where a person, who by reason of the provisions of paragraph (1) of Article
4 is a resident of both Contracting States but by reason of the provisions of
paragraph (3) or (4) of that Article is deemed for the purposes of this
Convention to be a resident solely of one of the Contracting States, derives
income from sources in that Contracting State or from sources outside both
Contracting States, that income shall be taxable only in that Contracting State.
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ARTICLE 23
Source of Income
Income derived by a resident of one of the Contracting States which, under
any one or more of Articles 6 to 8 and 10 to 17 may be taxed in the other
Contracting State, shall for the purposes of Article 24, and of the income tax
law of that other State, be deemed to be income from sources in that other State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 24
(1) Subject to the provisions of the law of Australia from time to time in force
which relate to the allowance of a credit against Australian tax of tax paid in a
country outside Australia (which shall not affect the general principle hereof),
Italian tax paid, whether directly or by deduction, in respect of income derived
by a person who is a resident of Australia from sources in Italy shall be allowed
as a credit against Australian tax payable in respect of that income.
(2) If a resident of Italy owns items of income which are taxable in Australia,
Italy in determining its income taxes specified in Article 2 of this Convention,
may include in the basis upon which such taxes are imposed the said items of
income, unless specific provisions of this Convention otherwise provide. In
such a case, Italy shall deduct from the taxes so calculated the Australian tax on
income, but in an amount not exceeding that proportion of the aforesaid Italian
tax which such items of income bear to the entire income. On the contrary no
deduction will be granted if the item of income is subjected in Italy to a final
withholding tax by request of the recipient of the said income in accordance
with the Italian law.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 25
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the actions
of one or both of the Contracting States result or will result for him in taxation
not in accordance with this Convention, he may, notwithstanding the remedies
provided by the national laws of those States, present his case to the competent
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authority of the Contracting State of which he is a resident. This case must be
presented within two years from the first notification of the action.
(2) The competent authority shall endeavour, if the taxpayer’s claim appears to
it to be justified and if it is not itself able to arrive at an appropriate solution, to
resolve the case with the competent authority of the other Contracting State,
with a view to the avoidance of taxation not in accordance with this
Convention.
(3) The competent authorities of the Contracting States shall endeavour to
resolve any difficulties or doubts arising as to the application of this
Convention.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Convention.
ARTICLE 26
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Convention or of the
domestic laws of the Contracting States concerning taxes to which this
Convention applies insofar as the taxation thereunder is not contrary to this
Convention, or for the prevention of fiscal evasion in relation to such taxes. The
exchange of information is not restricted by Article 1. Any information received
by a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and shall be
disclosed only to persons or authorities (including courts and administrative
bodies) involved in the assessment or collection of, the enforcement or
prosecution in respect of, or the determination of appeals in relation to, the taxes
to which this Convention applies. Such persons or authorities shall use the
information only for such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on one of the Contracting States the obligation—
(a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
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(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information, the disclosure of which would be contrary to public
policy (ordre public).
ARTICLE 27
Diplomatic and Consular Officials
Nothing in this Convention shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
ARTICLE 28
Refunds
(1) Taxes withheld at the source in one of the Contracting States will be
refunded by request of the taxpayer or of the State of which he is a resident if
the right to collect the said taxes is affected by the provisions of this
Convention.
(2) Claims for refund, that shall be produced within the time limit fixed by the
law of the Contracting State which is obliged to carry out the refund, shall be
accompanied by an official certificate of the Contracting State of which the
taxpayer is a resident certifying the existence of the conditions required for
being entitled to the application of the allowances provided for by this
Convention.
(3) The competent authorities of the Contracting States shall settle the mode of
application of this Article, in accordance with the provisions of Article 25 of
this Convention.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 29
Entry Into Force
(1) This Convention shall be ratified and the instruments of ratification shall
be exchanged at Rome as soon as possible.
(2) The Convention shall enter into force on the date of the exchange of
instruments of ratification and its provisions shall have effect—
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(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 July
1976;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July 1976;
(b) In Italy—
in respect of income assessable for taxable periods beginning on or
after 1 July 1976.
(3) Claims for refund or credits arising in accordance with this Convention in
respect of any tax payable by residents of either of the Contracting States in
respect of income which is subject to tax and to which this Convention applies
in accordance with paragraph (2) of this Article and which was derived before
the entry into force of this Convention, shall be lodged within three years from
the date of entry into force of this Convention or from the date the tax was
charged whichever is later.
ARTICLE 30
Termination
This Convention shall remain in force until terminated by one of the
Contracting States. Either Contracting State may terminate the Convention,
through the diplomatic channel, not earlier than five years after its entry into
force by giving notice of termination at least six months before the end of the
calendar year. In such event, the Convention shall cease to be effective—
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in respect of income derived on or after 1 July in
the calendar year next following that in which the notice of
termination is given;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July in the calendar year next following
that in which the notice of termination is given;
(b) in Italy—
in respect of income assessable for taxable periods beginning on or
after 1 July in the calendar year next following that in which the
notice of termination is given.
Schedule 21 Convention between Australia and the Republic of Italy for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income
624 International Tax Agreements Act 1953
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed the present Convention.
Done in duplicate at Canberra the fourteenth day of December 1982 in the
English and Italian languages, both texts being equally authoritative.
JOHN HOWARD SERGIO ANGELETTI
For the Government For the Government of the
of Australia Republic of Italy
PROTOCOL
The Government of Australia and
The Government of the Republic of Italy,
at the signing of the Convention between the two Governments for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income, have agreed upon the following provisions which shall form
an integral part of the Convention:
It is understood that:
(1) With reference to Articles 7 and 9—
If the information available to the competent authority of one of
the Contracting States is inadequate to determine the profits of an
enterprise on which tax may be imposed in that State in accordance
with Article 7 or Article 9 of the Convention, nothing in those
Articles shall prevent the application of any law of that State
relating to the determination of the tax liability of a person
provided that that law shall be applied, so far as the information
available to the competent authority permits, in accordance with
the principles applicable under Articles 7 and 9.
(2) With reference to paragraph (6) of Article 8—
The Italian taxes to which the Agreement therein referred to shall
apply, with effect from the date of their entry into force, are the
following—
(i) the individual income tax (l’imposta sul reddito delle persone
fisiche);
(ii) the corporate income tax (l’imposta sul reddito delle persone
giuridiche);
(iii) the local income tax (l’imposta locale sui redditi).
Convention between Australia and the Republic of Italy for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Schedule 21
International Tax Agreements Act 1953 625
If, in Australia, a tax (not being Australian tax referred to in Article
1 of the said Agreement) is imposed on profits derived by an
enterprise of Italy from the operation of aircraft in international
traffic, the taxes to which the Agreement shall apply in Italy shall
thereupon cease to include the local income tax (l’imposta locale
sui redditi).
(3) With reference to Article 9—
Notwithstanding the provisions of Article 9, an enterprise of one of
the Contracting States may be taxed by that Contracting State as if
that Article had not come into effect but, so far as it is practicable
to do so, in accordance with the principles applicable under that
Article.
(4) With reference to Article 12—
The term ‘payments’ includes credits or any amount credited and a
reference to royalties paid includes royalties credited. The term
‘royalties’ includes payments or credits for total or partial
forbearance in respect of the use of a property or right referred to
in paragraph (3).
(5) With reference to Article 24—
The tax paid in respect of income by way of dividend in one of the
Contracting States that is to be allowed as a credit against tax
payable in respect of that income in the other Contracting State
shall not include tax paid in respect of the profits out of which the
dividend is paid.
(6) With reference to paragraph (1) of Article 25—
The expression ‘notwithstanding the remedies provided by the
national laws’ means that the mutual agreement procedure is not
alternative to the national contentious proceedings which shall be,
in any case, preventively initiated, when the claim is related to an
assessment of Italian tax not in accordance with this Convention.
(7) With reference to Article 28—
The provisions of paragraph (3) shall not prevent the Contracting
States from carrying out other practices for the allowance of the
taxation reductions provided for in this Convention.
(8) If, in a Convention for the avoidance of double taxation that is
subsequently made between Australia and a third State being a State that at the
Schedule 21 Convention between Australia and the Republic of Italy for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income
626 International Tax Agreements Act 1953
date of signature of this Protocol is a member of the Organisation for Economic
Co--operation and Development, Australia shall agree to limit the rate of its
taxation
(i) on dividends paid by a company which is a resident of
Australia for the purposes of Australian tax to which a
company that is a resident of the third State is entitled, to a
rate less than that provided in paragraph (2) of Article 10; or
(ii) on interest arising in Australia to which a resident of the third
State is entitled, to a rate less than that provided in
paragraph (2) of Article 11; or
(iii) on royalties arising in Australia to which a resident of the
third State is entitled, to a rate less than that provided in
paragraph (2) of Article 12, the Government of Australia shall
immediately inform the Government of the Republic of Italy
in writing through the diplomatic channel and shall enter into
negotiations with the Government of the Republic of Italy to
review the provisions in sub--paragraphs (i), (ii) and (iii)
above in order to provide the same treatment for Italy as that
provided for the third State.
Done in duplicate at Canberra the fourteenth day of December 1982 in the
English and Italian languages, both texts being equally authoritative.
JOHN HOWARD SERGIO ANGELETTI
For the Government
of Australia
For the Government of the
Republic of Italy
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 627
Schedule 22—Convention between the
Government of Australia and the
Government of the Republic of Korea
for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion
with respect to Taxes on Income Section 3
The Government of Australia and the Government of the Republic of Korea
Desiring to conclude a Convention for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE 1
Personal Scope
This Convention shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Convention shall apply are—
(a) in Korea:
(i) the income tax;
(ii) the corporation tax; and
(iii) the inhabitant tax;
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
628 International Tax Agreements Act 1953
(b) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company.
(2) This Convention shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Convention in addition to, or in place of, the existing taxes. At the end of
each calendar year, the competent authority of each Contracting State shall
notify the competent authority of the other Contracting State of any substantial
changes which have been made in the laws of either State relating to the taxes to
which this Convention applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) For the purposes of this Convention, unless the context otherwise
requires—
(a) the term ‘Australia’ means the Commonwealth of Australia and, when
used in a geographical sense, includes—
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or of
a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term ‘Korea’ means the Republic of Korea and, when used in a
geographical sense, it includes any area adjacent to the territorial sea of
the Republic of Korea which, in accordance with international law, has
been or may hereafter be designated under the laws of the Republic of
Korea as an area within which the sovereign rights of the Republic of
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 629
Korea with respect to the sea--bed and subsoil and their natural
resources may be exercised;
(c) the terms ‘a Contracting State’ and ‘the other Contracting State’ mean
Australia or Korea, as the context requires;
(d) the term ‘person’ means an individual, a company and any other body
of persons;
(e) the term ‘company’ means any body corporate or any entity which is
assimilated to a body corporate for tax purposes;
(f) the terms ‘enterprise of a Contracting State’ and ‘enterprise of the other
Contracting State’ mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;
(g) the term ‘tax’ means Australian tax or Korea tax, as the context
requires;
(h) the term ‘Australian tax’ means tax imposed by Australia, being tax to
which this Convention applies by virtue of Article 2;
(i) the term ‘Korean tax’ means tax imposed by Korea, being tax to which
this Convention applies by virtue of Article 2;
(j) the term ‘competent authority’ means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Korea, the Minister of Finance or his authorized representative;
and
(k) the term ‘international traffic’, in relation to the operation of ships or
aircraft by a resident of a Contracting State, means operations of ships
or aircraft other than operations of ships or aircraft which are confined
solely to places in the other Contracting State, and for this purpose the
carriage of passengers, livestock, mail, goods or merchandise shipped in
a Contracting State for discharge at another place in that State shall be
treated as operations confined solely to places in that State.
(2) In this Convention, the terms ‘Australian tax’ and ‘Korean tax’ do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Convention applies by virtue of Article
2.
(3) In the application of this Convention by a Contracting State, any term not
defined in this Convention shall, unless the context otherwise requires, have the
meaning which it has under the laws of that Contracting State relating to the
taxes to which this Convention applies.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
630 International Tax Agreements Act 1953
ARTICLE 4
Residence
(1) For the purposes of this Convention, a person is, subject to paragraph (2), a
resident of a Contracting State—
(a) in the case of Australia, if the person is a resident of Australia for the
purposes of Australian tax; and
(b) in the case of Korea, if the person is a resident of Korea for the
purposes of Korean tax.
(2) A person is not a resident of a Contracting State for the purposes of this
Convention if he is liable to tax in that State in respect only of income from
sources in that State.
(3) Where by reason of the preceding provisions of this Article an individual is
a resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
with which his personal and economic relations are the closer.
For purposes of this paragraph in determining the Contracting State with which
an individual’s personal and economic relations are the closer, regard shall be
given to his citizenship or nationality (if he is a citizen or national of a
Contracting State).
(4) Where by reason of the provisions of paragraphs (1) and (2) a person other
than an individual is a resident of both Contracting States, then it shall be
deemed to be a resident solely of the Contracting State in which its place of
effective management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Convention, the term ‘permanent establishment’
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 631
(2) The term ‘permanent establishment’ includes especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources;
(g) land used for agricultural, pastoral or forestry purposes.
(3) A building site or a construction, installation or assembly project
constitutes a permanent establishment only if it exists for more than six months.
(4) An enterprise shall not be deemed to have a permanent establishment
merely by reason of one or more of the following—
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or of collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(5) An enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent
establishment if:
(a) it carries on supervisory activities in that State for more than six months
in connection with a building site, or a construction, installation or
assembly project which is being undertaken in that State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration for,
or the exploitation of, natural resources, or in activities connected with
such exploration or exploitation.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
632 International Tax Agreements Act 1953
(6) A person acting in a Contracting State on behalf of an enterprise of the
other Contracting State—other than an agent of an independent status to whom
paragraph (7) applies—shall be deemed to be a permanent establishment of that
enterprise in the first--mentioned State if—
(a) he has, and habitually exercises in that State, an authority to conclude
contracts binding the enterprise, unless his activities are limited to the
purchase of goods or merchandise for the enterprise; or
(b) in so acting, he manufactures or processes in that State for the enterprise
goods or merchandise belonging to the enterprise, provided that this
provision shall apply only in relation to the goods or merchandise so
manufactured or processed.
(7) An enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that Contracting State
through a broker, general commission agent or any other agent of an
independent status, where that person is acting in the ordinary course of his
business as such a broker or agent.
(8) The fact that a company which is a resident of a Contracting State controls
or is controlled by a company which is a resident of the other Contracting State,
or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
(9) The principles set forth in paragraphs (1) to (8) inclusive shall also be
applied in determining for the purposes of paragraph (6) of Article 11 and
paragraph (5) of Article 12 of this Convention whether an enterprise of a
Contracting State has a permanent establishment outside both Contracting
States, and whether an enterprise, not being an enterprise of either Contracting
State, has a permanent establishment in a Contracting State.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income derived by a resident of a Contracting State from land (including
any building or other construction) situated in the other Contracting State may
be taxed in the other State.
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 633
(2) The term ‘land’ shall have the meaning which it has under the law of the
Contracting State in which the land in question is situated and it shall include
any lease of such land and any estate or direct interest in or over such land
whether improved or not. A right to receive variable or fixed payments as
consideration for the working of, or the right to work, mineral deposits, oil or
gas wells, quarries or other places of extraction or exploitation of natural
resources shall be deemed to be an estate or direct interest in land situated in the
Contracting State in which the mineral deposits, oil or gas wells, quarries or
natural resources are situated.
(3) The provisions of paragraph (1) shall also apply to the income from land of
an enterprise and to income from land used for the performance of professional
services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other
State but only so much of them as is attributable to that permanent
establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly indepenently with the enterprise of which it is a permanent
establishment.
(3) In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
634 International Tax Agreements Act 1953
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
(5) Where the correct amount of profits attributable to a permanent
establishment is incapable of determination or the ascertaining thereof presents
exceptional difficulties, nothing in this Article shall affect the application of any
law of that State relating to the determination of the tax liability of a person
provided that that law shall be applied, so far as the information available to the
competent authority permits, in accordance with the principles of this Article.
(6) Where profits include items of income which are dealt with separately in
other Articles of this Convention, then the provisions of those Articles shall not
be affected by the provisions of this Article.
ARTICLE 8
Ships and Aircraft
(1) Profits of a resident of a Contracting State from the operation of ships or
aircraft in international traffic shall be taxable only in that State.
(2) The provisions of paragraph (1) shall also apply to profits derived from
participation in a pool, a joint business or an international operating agency.
ARTICLE 9
Associated Enterprises
(1) Where a person subject to the taxing jurisdiction of a Contracting State and
any other person are related and where conditions are operative between such
related persons in their commercial or financial relations which are different
from those which might be expected to operate if such persons were unrelated
persons dealing wholly independently with one another, then any profits which,
but for those conditions, might have been expected to accrue to one of those
persons, but by reason of those conditions, have not so accrued, may be
included in the profits of that person and taxed accordingly.
(2) A person is related to another person for purposes of this Convention if
either person participates directly or indirectly in the management, control, or
capital of the other, or if any third person or persons participates or participate
directly or indirectly in the management, control, or capital of both.
(3) This Article shall apply only where both Contracting States have a tax
interest.
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 635
(4) Notwithstanding the provisions of this Article, an enterprise of a
Contracting State may be taxed by that State as if this Article had not come into
effect but, so far as it is practicable to do so, in accordance with the principles
of this Article.
(5) Where profits on which an enterprise of a Contracting State has been
charged to tax in that State are also included, by virtue of paragraph (1) or (4),
in the profits of an enterprise of the other Contracting State and taxed
accordingly, and the profits so included are profits which might have been
expected to have accrued to that enterprise of the other State if the conditions
operative between the enterprises had been those which might have been
expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Convention in relation to the nature of the
income, and for this purpose the competent authorities of the Contracting States
shall if necessary consult each other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of a Contracting State,
being dividends to which a resident of the other Contracting State is beneficially
entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident, and according to the law of that
State, but the tax so charged shall not exceed 15 per cent of the gross amount of
the dividends.
(3) The term ‘dividends’ in this Article means income from shares and other
income which is subjected to the same taxation treatment as income from shares
by the laws of the Contracting State of which the company making the
distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of a Contracting State,
carries on business in the other Contracting State of which the company paying
the dividends is a resident, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the holding in respect of which the dividends are paid is
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
636 International Tax Agreements Act 1953
effectively connected with such permanent establishment or fixed base. In any
such case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
(5) Dividends paid by a company which is a resident of a Contracting State,
being dividends to which a person who is not a resident of the other Contracting
State is beneficially entitled, shall be exempt from tax in that other State except
insofar as the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment or fixed base situated in that other
State. Provided that this paragraph shall not apply in relation to dividends paid
by any company which by reason of paragraph (1) of Article 4 is a resident of
Australia and which by reason of that paragraph is also a resident of Korea.
(6) Nothing in this Convention shall be construed as preventing a Contracting
State from imposing on the income of a company which is a resident of the
other Contracting State, tax in addition to the taxes referred to in Article 2 in
relation to the first--mentioned Contracting State which are payable by a
company which is a resident of the first--mentioned State, provided that any
such additional tax shall not exceed 15 per cent of the amount by which the
taxable income of the first--mentioned company of a year of income exceeds the
tax payable on that taxable income to the first--mentioned State. Any tax
payable to a Contracting State on the undistributed profits of a company which
is a resident of the other Contracting State shall be calculated as if that company
were not liable to the additional tax referred to in this paragraph and had paid
dividends of such amount that tax equal to the amount of that additional tax
would have been payable on the dividends in accordance with paragraph (2) of
this Article.
ARTICLE 11
Interest
(1) Interest arising in a Contracting State, being interest to which a resident of
the other Contracting State is beneficially entitled, may be taxed in that other
State.
(2) Such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the interest.
(3) Interest derived by the Government of a Contracting State or by any other
body exercising governmental functions in or in a part of a Contracting State, or
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 637
by a bank performing central banking functions in a Contracting State, shall be
exempt from tax in the other Contracting State.
(4) The term ‘interest’ in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to income
from money lent by the taxation law of the Contracting State in which the
income arises.
(5) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of a Contracting State,
carries on business in the other Contracting State, in which the interest arises,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
indebtedness in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of Article 7 or Article 14, as the case may be, shall apply.
(6) Interest shall be deemed to arise in a Contracting State when the payer is
that State itself or a political or administrative subdivision of that State or a
local authority of that State or a person who, by reason of paragraph (1) of
Article 4 is a resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or not, has in a
Contracting State or outside both Contracting States a permanent establishment
or fixed base in connection with which the indebtedness on which the interest is
paid was incurred, and such interest is borne by such permanent establishment
or fixed base, then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated.
(7) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the taxpayer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Convention.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
638 International Tax Agreements Act 1953
ARTICLE 12
Royalties
(1) Royalties arising in a Contracting State, being royalties to which a resident
of the other Contracting State is beneficially entitled, may be taxed in that other
State.
(2) Such royalties may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed 15
per cent of the gross amount of the royalties.
(3) The term ‘royalties’ in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for—
(a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark, or other like property or
right;
(b) the use of, or the right to use, any industrial, commercial or scientific
equipment;
(c) the supply of scientific, technical, industrial or commercial knowledge
or information;
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in paragraph (a), any such
equipment as is mentioned in paragraph (b) or any such knowledge or
information as is mentioned in paragraph (c);
(e) the use of, or the right to use—
(i) motion picture films;
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forberance in respect of the use of a property or right
referred to in this paragraph.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of a Contracting State,
carries on business in the other Contracting State, in which the royalties arise,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
right or property in respect of which the royalties are paid is effectively
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 639
connected with such permanent establishment or fixed base. In such a case, the
provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer is
that State itself or a political or administrative subdivision of that State or a
local authority of that State or a person who, by reason of paragraph (1) of
Article 4, is a resident of that State. Where, however, the person paying the
royalties, whether he is a resident of a Contracting State or not, has in a
Contracting State or outside both Contracting States a permanent establishment
or fixed base in connection with which the liability to pay the royalties was
incurred, and the royalties are borne by the permanent establishment or fixed
base, then the royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person, the amount of the royalties paid, having regard to what they are paid for,
exceeds the amount which might have been expected to have been agreed upon
by the payer and the person so entitled in the absence of such relationship, the
provisions of this Article shall apply only to the last--mentioned amount. In that
case, the excess part of the amount of the royalties paid shall remain taxable
according to the law of each Contracting State, but subject to the other
provisions of this Convention.
ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the
Contracting State in which that property is situated.
(2) For the purposes of this Article—
(a) the term ‘real property’ shall include:
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
(iii) shares or comparable interests in a company, the assets of which
consist wholly or principally of direct interests in or over land in
a Contracting State or of rights to exploit, or to explore for,
natural resources in a Contracting State;
(b) real property shall be deemed to be situated—
(i) where it consists of direct interests in or over land—in the
Contracting State in which the land is situated;
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
640 International Tax Agreements Act 1953
(ii) where it consists of rights to exploit, or to explore for, natural
resources—in the Contracting State in which the natural
resources are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a company,
the assets of which consist wholly or principally of direct
interests in or over land in a Contracting State or of rights to
exploit, or to explore for, natural resources in a Contracting
State—in the Contracting State in which the assets or the
principal assets of the company are situated.
(3) Income derived by an enterprise of a Contracting State from the alienation
of ships or aircraft operated in international traffic while owned by that
enterprise or of personal property pertaining to the operation of those ships or
aircraft shall be taxable only in that State.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of a Contracting State in
respect of professional services or other independent activities of a similar
character shall be taxable only in that State unless he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing his
activities. If he has such a fixed base, the income may be taxed in the other
State but only so much of it as is attributable to activities exercised from that
fixed base.
(2) The term ‘professional services’ includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and
other similar remuneration derived by an individual who is a resident of a
Contracting State in respect of an employment shall be taxable only in that State
unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 641
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by
an individual who is a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first--mentioned State if—
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income of that other
State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of a Contracting State may be taxed in that
Contracting State.
ARTICLE 16
Directors’ Fees
Directors’ fees and other similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other Contracting State.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by a
resident of a Contracting State as an entertainer (such as a theatre, motion
picture, radio or television artiste, or a musician, or an athlete) from his personal
activities as such exercised in the other Contracting State, may be taxed in that
other State.
(2) Where income in respect of personal activities exercised by an entertainer
in his capacity as such accrues not to the entertainer himself but to another
person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the entertainer are
exercised.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
642 International Tax Agreements Act 1953
(3) Notwithstanding the provisions of paragraph (1), income derived by an
entertainer from his personal activities as such in a Contracting State shall be
taxable only in the other Contracting State if his visit to the first--mentioned
State is supported substantially from the public funds of that other State or of
one of its political subdivisions or local authorities.
(4) Notwithstanding the provisions of paragraph (2), where income in respect
of personal activities as such of an entertainer in a Contracting State accrues not
to that entertainer himself but to another person, that income shall be taxable
only in the other Contracting State if that person is supported substantially from
the public funds of that other State or of one of its political subdivisions or local
authorities, or if that person is a non--profit organisation of that other State.
ARTICLE 18
Pensions and Annuities
(1) Subject to the provisions of paragraph (2) of Article 19, any pension or any
annuity paid to a resident of a Contracting State shall be taxable only in that
State.
(2) The term ‘annuity’ means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
ARTICLE 19
Government Service
(1) (a) Remuneration, other than a pension or annuity, paid by a Contracting
State or a political subdivision or local authority of that Contracting
State to an individual in respect of services rendered to that State or
subdivision or authority shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that State and the
individual is a resident of that State who—
(i) is a national or citizen of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.
(2) (a) Any pension paid by, or out of funds created by, a Contracting State or
a political subdivision or local authority of that Contracting State to an
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 643
individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a national or citizen of, that
Contracting State.
(3) The provisions of Articles 15, 16 and 18 shall apply to remuneration and
pensions in respect of services rendered in connection with a business carried
on by a Contracting State or a political subdivision or local authority of that
Contracting State.
(4) The provisions of paragraphs (1) and (2) of this Article shall likewise apply
in respect of remuneration or pensions paid, in the case of Korea, by the Bank
of Korea, the Export--Import Bank of Korea, and the Korea Trade Promotion
Corporation and, in the case of Australia, by the Reserve Bank of Australia.
ARTICLE 20
Professors and Teachers
An individual who is a resident of a Contracting State and who, at the
invitation of any university, college, school or other recognised educational
institution, visits the other Contracting State for a period not exceeding two
years solely for the purpose of teaching or research or both at such educational
institution shall be taxable only in the first--mentioned State on his
remuneration for such teaching or research.
ARTICLE 21
Students and Trainees
Where a student or trainee, who is a resident of a Contracting State or who
was a resident of that Contracting State immediately before visiting the other
Contracting State and who is temporarily present in the other Contracting State
solely for the purpose of his education or training, receives payments from
sources outside the other Contracting State for the purpose of his maintenance
or education, those payments shall be exempt from tax in the other Contracting
State.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
644 International Tax Agreements Act 1953
ARTICLE 22
Income Not Expressly Mentioned
(1) Items of income of a resident of a Contracting State which are not
expressly mentioned in the foregoing Articles of this Convention shall be
taxable only in that Contracting State.
(2) However, if such income is derived by a resident of a Contracting State
from sources in the other Contracting State, such income may also be taxed in
the Contracting State in which it arises.
(3) The provisions of paragraph (1) shall not apply to income derived by a
resident of a Contracting State where that income is effectively connected with
a permanent establishment or fixed base situated in the other Contracting State.
In such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.
ARTICLE 23
Source of Income
Income derived by a resident of a Contracting State which, under any one or
more of Articles 6 to 8 and 10 to 17 may be taxed in the other Contracting State,
shall, for the purposes of Article 24 and of the income tax law of that other
State, be deemed to be income from sources in that other State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 24
(1) Subject to the provisions of the law of Australia from time to time in force
which relate to the allowance of a credit against Australian tax of tax paid in a
country outside Australia (which shall not affect the general principle hereof),
Korean tax paid under the law of Korea and in accordance with this
Convention, whether directly or by deduction, in respect of income derived by a
person who is a resident of Australia from sources in Korea shall be allowed as
a credit against Australian tax payable on the income on which the Korean tax
was paid. However, where the income is a dividend paid by a company which is
a resident of Korea, the credit shall only take into account such tax in respect
thereof as is additional to any tax payable by the company on the profits out of
which the dividend is paid.
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 645
(2) In the case of a resident of Korea, double taxation shall be avoided in
accordance with this paragraph. Subject to the provisions of Korean tax law
regarding the allowance as a credit against Korean tax of tax payable in any
country other than Korea (which shall not affect the general principle hereof)
Australian tax payable (excluding in the case of a dividend tax payable in
respect of the profits out of which the dividends are paid) under the laws of
Australia and in accordance with this Convention, whether directly or by
deduction, in respect of income from sources within Australia shall be allowed
as a credit against Korean tax payable in respect of that income. The credit shall
not, however, exceed that proportion of Korean tax which the income from
sources within Australia bears to the entire income subject to Korean tax.
(3) (a) For the purposes of paragraph (4), the term ‘Korean tax forgone’
means—
(i) in the case of interest derived by a resident of Australia which is
exempted from Korean tax in accordance with the relevant
legislation, the amount which, under the law of Korea and in
accordance with this Convention, would have been payable as
Korean tax if the interest had not been so exempt and if the tax
referred to in paragraph (2) of Article 11 were not to exceed 10
per cent of the gross amount of the interest; and
(ii) in the case of royalties derived by a resident of Australia which
are exempted either wholly or partly from Korean tax in
accordance with the relevant legislation, the amount or, where the
royalties are partly exempt, the additional amount which, under
the law of Korea and in accordance with this Convention, would
have been payable as Korean tax if the royalties had not been so
wholly or partly exempt, and if the tax referred to in
paragraph (2) of Article 12 were not to exceed 10 per cent of the
gross amount of the royalties.
(b) In sub--paragraph (a), the term ‘the relevant legislation’ means those
provisions of the laws of Korea relating to Korean tax which are agreed
in letters exchanged from time to time between the Minister of Finance
of Korea and the Treasurer of Australia for the purposes of this
paragraph.
(4) (a) For the purposes of paragraph (1), an amount of Korean tax forgone
shall be deemed to be an equivalent amount of Korean tax paid;
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
646 International Tax Agreements Act 1953
(b) For the purposes of the income tax law of Australia—
(i) an amount of interest referred to in sub--paragraph (3) (a) (i) shall
be deemed to be increased by the amount of Korean tax forgone
in respect of that interest; and
(ii) an amount of royalties referred to in sub--paragraph (3) (a) (ii)
shall be deemed to be increased by the amount of Korean tax
forgone in respect of those royalties.
(5) Paragraphs (3) and (4) shall not apply in relation to income derived in any
year of income after the year of income that ends on 30 June in the calendar
year fifth following the calendar year in which this Convention is signed or any
later date that may be agreed by the Governments of the Contracting States in
letters exchanged for this purpose.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 25
Mutual Agreement Procedure
(1) Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the
provisions of this Convention, he may, notwithstanding the remedies provided
by the domestic law of those States, present his case to the competent authority
of the Contracting State of which he is a resident. The case must be presented
within three years from the first notification of the action resulting in taxation
not in accordance with the provisions of this Convention.
(2) The competent authority shall endeavour, if the objection appears to it to
be justified and if it is not itself able to arrive at an appropriate solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with the Convention. Any solution reached shall be implemented
notwithstanding any time limits in the domestic laws of the Contracting States.
(3) The competent authorities of the Contracting States shall seek to resolve by
agreement any difficulties or doubts arising as to the application or
interpretation of this Convention. In particular the competent authorities of the
Contracting States shall seek to agree as to with which of the Contracting States
an individual described in sub--paragraph (3) (b) of Article 4 has closer
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 647
personal and economic relations or in which of the Contracting States the place
of effective management of a person other than an individual described in
paragraph (4) of that Article is situated.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Convention.
ARTICLE 26
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for carrying out the provisions of this Convention or
of the domestic laws of the Contracting States concerning the taxes to which
this Convention applies insofar as the taxation thereunder is not contrary to this
Convention. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
relation to the taxes to which this Convention applies and shall be used only for
such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information, the disclosure of which would be contrary to public
policy.
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
648 International Tax Agreements Act 1953
ARTICLE 27
Diplomatic Agents and Consular Officers
Nothing in this Convention shall affect the fiscal privileges of diplomatic
agents or consular officers under the general rules of international law or under
the provisions of special agreements.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 28
Entry Into Force
(1) Each Contracting State shall notify the other by note through the
diplomatic channel of the completion of the procedure required by its law for
the bringing into force of this Convention. This Convention shall enter into
force on the first day of the month second following the month in which the
later of these notifications is given.
(2) This Convention shall have effect:
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 January
in the calendar year in which this Convention is signed; and
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
in which this Convention is signed;
(b) in Korea—
(i) in respect of tax withheld at source on amounts paid or credited
to a non--resident, in relation to income derived on or after
1 January in the calendar year in which this Convention is signed;
and
(ii) in respect of other Korean tax, in relation to income of any year
of income beginning on or after 1 January in the calendar year in
which this Convention is signed.
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 649
ARTICLE 29
Termination
This Convention shall remain in force indefinitely, but the Government of
Australia or the Government of Korea may on or before 30 June in any calendar
year after the expiration of 5 years from the date of its entry into force give to
the other Government through the diplomatic channel written notice of
termination and, in that event, this Convention shall cease to be effective:
(a) in Australia—
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 January
in the calendar year next following that in which the notice of
termination is given; and
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
next following that in which the notice is given;
(b) in Korea—
(i) in respect of tax withheld at source on amounts paid or credited
to a non--resident, in relation to income derived on or after
1 January in the calendar year next following that in which the
notice of termination is given; and
(ii) in respect of other Korean tax, in relation to income of any year
of income beginning on or after 1 January in the calendar year
next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by
their respective Governments, have signed this Convention.
Done in duplicate at Canberra this twelfth day of July of the year one
thousand nine hundred and eighty--two in the English and Korean languages,
both texts being equally authoritative.
For the Government of For the Government of
Australia: the Republic of Korea:
JOHN HOWARD HA JONG YOON
Schedule 22 Convention between the Government of Australia and the Government of
the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income
650 International Tax Agreements Act 1953
PROTOCOL
THE GOVERNMENT OF AUSTRALIA AND
THE GOVERNMENT OF THE REPUBLIC OF KOREA
HAVE AGREED AT THE SIGNING of the Convention between the two
Governments for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income upon the following provisions which
shall form an integral part of the said Convention.
(1) With reference to Article 2,
the Convention shall also apply to the Korean defence tax where
charged by reference to the income tax or the corporation tax.
(2) With reference to Article 7,
the Convention shall not apply to profits of an enterprise from carrying
on a business of any form of insurance, other than life insurance.
(3) With reference to paragraph (6) of Article 10,
the Governments of the Contracting States acknowledge that the
additional tax referred to in that paragraph applicable at the time at which
the Convention is signed is, in the case of Australia, only a tax of 5 per cent
levied on the reduced taxable income of a company which is not a resident
of Australia, in accordance with Section 128T of the Income Tax
Assessment Act 1936.
(4) With reference to paragraph (1) of Article 24,
the Governments of the Contracting States acknowledge that a company
which is a resident of Australia is, in accordance with the provisions of the
taxation law of Australia in force at the date of signature of the
Convention, entitled to a rebate in its assessment at the average rate of tax
payable by the company in respect of dividends that are included in its
taxable income and are received from a company which is a resident of
Korea. In the event that Australia should cease to allow a company which
is a resident of Australia a rebate in its assessment at the average rate of tax
payable by the company in respect of dividends derived from sources in
Korea and included in the taxable income of the company, the
Governments of the Contracting States will enter into negotiations in order
to establish new provisions concerning the credit to be allowed by
Australia against its tax on the dividends.
(5) With reference to paragraph (2) of Article 24,
if subsequently to the signature of the Convention Korea provides relief
from its tax on intercorporate dividends, or in a convention with another
Convention between the Government of Australia and the Government of the Republic
of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income Schedule 22
International Tax Agreements Act 1953 651
country agrees to give credit for the tax of the other country on profits out
of which dividends are paid to a resident of Korea, it shall immediately
notify Australia and enter into negotiations in order to establish new
provisions concerning the credit to be allowed by Korea against its tax on
dividends.
(6) In general,
if in a convention for the avoidance of double taxation that is
subsequently made between Australia and a third State Australia should
agree—
(a) to reduce below 15 per cent the rate of its tax on dividends paid by
a company which is a resident of Australia and to which a resident
of the third State is beneficially entitled; or
(b) to include an Article dealing with non--discrimination,
the Government of Australia shall immediately inform the Government of
Korea and shall enter into negotiations with the Government of Korea with
a view to providing treatment in relation to Korea comparable with that
provided in relation to that third State.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by
their respective Governments, have signed this Protocol.
Done in duplicate at Canberra this twelfth day of July of the year one
thousand nine hundred and eighty--two in the English and Korean languages,
both texts being equally authoritative.
For the Government of For the Government of the
Australia: Republic of Korea:
JOHN HOWARD HA JONG YOON
Schedule 23 2006 Norwegian convention
652 International Tax Agreements Act 1953
Schedule 23—2006 Norwegian convention Note: See section 3.
CONVENTION BETWEEN AUSTRALIA AND THE KINGDOM OF
NORWAY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH
RESPECT TO TAXES ON INCOME AND THE PREVENTION OF
FISCAL EVASION
The Government of Australia and the Government of the Kingdom of
Norway,
Desiring to conclude a Convention for the avoidance of double taxation
with respect to taxes on income and the prevention of fiscal evasion,
Have agreed as follows:
ARTICLE 1
Persons Covered
This Convention shall apply to persons who are residents of one or both
of the Contracting States.
2006 Norwegian convention Schedule 23
International Tax Agreements Act 1953 653
ARTICLE 2
Taxes Covered
1 The existing taxes to which this Convention shall apply are:
(a) in the case of Australia:
(i) the income tax; and
(ii) the resource rent tax in respect of offshore projects
relating to exploration for or exploitation of petroleum
resources,
imposed under the federal law of Australia;
(b) in the case of Norway:
(i) the tax on general income;
(ii) the tax on personal income;
(iii) the special tax on petroleum income;
(iv) the resource rent tax on income from production of
hydro-electric power;
(v) the withholding tax on dividends; and
(vi) the tax on remuneration to non-resident artistes, etc.
2 This Convention shall apply also to any identical or substantially
similar taxes that are imposed under the federal law of Australia or the law of
Norway after the date of signature of this Convention in addition to, or in place
of, the existing taxes. The competent authorities of the Contracting States shall
notify each other of any significant changes that have been made in the law of
their respective States relating to the taxes to which this Convention applies
within a reasonable period of time after those changes.
3 For the purposes of Article 24, the taxes to which this Convention shall
apply are taxes of every kind and description imposed on behalf of the
Contracting States, or their political subdivisions or local authorities.
Schedule 23 2006 Norwegian convention
654 International Tax Agreements Act 1953
4 For the purposes of Articles 26 and 27, the taxes to which this
Convention shall apply are:
(a) in the case of Australia, taxes of every kind and description
imposed under the federal tax laws administered by the
Commissioner of Taxation; and
(b) in the case of Norway, taxes of every kind and description.
ARTICLE 3
General Definitions
1 For the purposes of this Convention, unless the context otherwise
requires:
(a) the term "Australia", when used in a geographical sense,
excludes all external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands;
and
(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of
Australia (including the Territories specified in this
subparagraph) in respect of which there is for the time being in
force, consistently with international law, a law of Australia
dealing with the exploration for or exploitation of any of the
natural resources of the seabed and subsoil of the continental
shelf;
(b) the term "Norway" means the land territory, internal waters, the
territorial sea and the area beyond the territorial sea where the
Kingdom of Norway, according to Norwegian legislation and in
2006 Norwegian convention Schedule 23
International Tax Agreements Act 1953 655
accordance with international law, may exercise rights with
respect to the seabed and subsoil and their natural resources; the
terms do not comprise Svalbard, Jan Mayen and the Norwegian
dependencies ("biland");
(c) the terms "Contracting State", "one of the Contracting States"
and "other Contracting State" shall refer to Australia or
Norway, as the context requires;
(d) the term "Australian tax" means tax imposed by Australia,
being tax to which this Convention applies by virtue of
paragraphs 1 and 2 of Article 2;
(e) the term "Norwegian tax" means tax imposed by Norway or its
political subdivisions or local authorities, being tax to which
this Convention applies by virtue of paragraphs 1 and 2 of
Article 2;
(f) the term "business" includes the performance of professional
services and of other activities of an independent character;
(g) the term "company" means any body corporate or any entity
which is treated as a company or body corporate for tax
purposes;
(h) the term "competent authority" means, in the case of Australia,
the Commissioner of Taxation or an authorised representative
of the Commissioner and, in the case of Norway, the Minister
of Finance or an authorised representative of the Minister;
(i) the term "enterprise" applies to the carrying on of any business;
(j) the terms "enterprise of a Contracting State" and "enterprise of
the other Contracting State" mean respectively an enterprise
carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
(k) the term "international traffic" means any transport by a ship or
aircraft operated by an enterprise of a Contracting State, except
when such transport is solely between places in the other
Contracting State;
(l) the term "national", in relation to a Contracting State, means:
(i) any individual possessing the nationality or citizenship
of that Contracting State; and
Schedule 23 2006 Norwegian convention
656 International Tax Agreements Act 1953
(ii) any company deriving its status as such from the laws
in force in that Contracting State;
(m) the term "person" includes an individual, a company and any
other body of persons;
(n) the term "tax" means Australian tax or Norwegian tax as the
context requires, but does not include any penalty or interest
imposed under the law of either Contracting State relating to its
tax;
(o) the term "recognised stock exchange" means:
(i) the Australian Stock Exchange and any other
Australian stock exchange recognised as such under
Australian law;
(ii) the Oslo Stock Exchange and any other Norwegian
stock exchange recognised as such under Norwegian
law; and
(iii) any other stock exchange agreed upon by the
competent authorities.
2 As regards the application of the Convention at any time by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning that it has at that time under the law of
that State concerning the taxes to which the Convention applies, any meaning
under the applicable tax law of that State prevailing over a meaning given to the
term under other law of that State.
ARTICLE 4
Residence
1 For the purposes of this Convention, the term "resident of a Contracting
State" means:
(a) in the case of Australia, a person who is a resident of Australia
for the purposes of Australian tax; and
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(b) in the case of Norway, a person who is liable to tax therein by
reason of domicile, residence, place of management or any
other criterion of a similar nature.
The Government of a Contracting State or a political subdivision or
local authority of that State is also a resident of that State for
the purposes of the Convention.
2 A person is not a resident of a Contracting State for the purposes of this
Convention if the person is liable to tax in that State in respect only of
income from sources in that State.
3 Where by reason of the preceding provisions of this Article a person,
being an individual, is a resident of both Contracting States, then the person’s
status shall be determined as follows:
(a) the individual shall be deemed to be a resident only of the State
in which a permanent home is available to that individual; but if
a permanent home is available in both States, or in neither of
them, that individual shall be deemed to be a resident only of
the State with which the individual’s personal and economic
relations are closer (centre of vital interests);
(b) if the State in which the centre of vital interests is situated
cannot be determined, the individual shall be deemed to be a
resident only of the State of which that individual is a national;
(c) if the individual is a national of both States or of neither of
them, the competent authorities of the Contracting States shall
endeavour to resolve the question by mutual agreement.
4 Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be
a resident only of the State in which its place of effective management is
situated.
5 Where under this Convention any income, profits or gains are relieved
from tax in a Contracting State and, under the law in force in the other
Contracting State, an individual in respect of that income or those profits or
gains is exempt from tax by virtue of being a temporary resident of the other
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State within the meaning of the applicable tax laws of that other State, then the
relief to be allowed under this Convention in the first-mentioned State shall not
apply to the extent that that income or those profits or gains are exempt from tax
in the other State.
ARTICLE 5
Permanent Establishment
1 For the purposes of this Convention, the term "permanent
establishment" means a fixed place of business through which the business of
the enterprise is wholly or partly carried on.
2 The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place relating to
the exploration for or exploitation of natural resources; and
(g) an agricultural, pastoral or forestry property.
3 Notwithstanding the provisions of paragraphs 1 and 2, an enterprise
shall be deemed to have a permanent establishment in a Contracting State and to
carry on business through that permanent establishment if:
(a) it has a building site or construction or installation project in
that State, or a supervisory or consultancy activity connected
therewith, which lasts more than six months; or
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(b) it furnishes services, including consultancy services, for the
same or a connected project, through its employees or other
personnel engaged for such purposes, within a Contracting
State for a period or periods aggregating more than six months
within any twelve month period; or
(c) it maintains substantial equipment for rental or other purposes
within that other State (excluding equipment let under a
hire-purchase agreement) for more than six months; or
(d) a person acting in a Contracting State on behalf of an enterprise
of the other Contracting State manufactures or processes in the
first-mentioned State for the enterprise goods or merchandise
belonging to the enterprise.
4 (a) The duration of activities under subparagraph 3(a) will be
determined by aggregating the periods during which activities
are carried on in a Contracting State by associated enterprises
provided that the activities of the enterprise in that State are
substantially the same as the activities carried on in that State
by its associate.
(b) The period during which two or more associated enterprises are
carrying on concurrent activities will be counted only once for
the purpose of determining the duration of activities.
(c) Under this Article, an enterprise shall be deemed to be
associated with another enterprise if:
(i) one is controlled directly or indirectly by the other; or
(ii) both are controlled directly or indirectly by the same
third person or persons.
5 Notwithstanding the preceding provisions of this Article, an enterprise
shall not be deemed to have a permanent establishment merely by reason of:
(a) the use of facilities solely for the purpose of storage or display of
goods or merchandise belonging to the enterprise; or
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(b) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of storage or display; or
(c) the maintenance of a stock of goods or merchandise belonging to
the enterprise solely for the purpose of processing by another
enterprise; or
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or for collecting information,
for the enterprise; or
(e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a
preparatory or auxiliary character.
6 Notwithstanding the provisions of paragraphs 1 and 2, where a
person—other than an agent of an independent status to whom paragraph 7
applies—is acting on behalf of an enterprise and has, and habitually exercises,
in a Contracting State an authority to conclude contracts on behalf of the
enterprise, that enterprise shall be deemed to have a permanent establishment in
that State in respect of any activities which that person undertakes for that
enterprise, unless the activities of such person are limited to those mentioned in
paragraph 5 and are, in relation to the enterprise, of a preparatory or auxiliary
character.
7 An enterprise shall not be deemed to have a permanent establishment in
a Contracting State merely because it carries on business in that State through a
person who is a broker, general commission agent or any other agent of an
independent status, provided that such persons are acting in the ordinary course
of the person's business as such a broker or agent.
8 The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
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through a permanent establishment or otherwise), shall not of itself make either
company a permanent establishment of the other.
9 The principles set forth in the preceding paragraphs of this Article shall
be applied in determining for the purposes of this Convention whether there is a
permanent establishment in a State other than one of the Contracting States and
whether an enterprise other than an enterprise of one of the Contracting States
has a permanent establishment in one of the Contracting States.
ARTICLE 6
Income from Real Property
1 Income derived by a resident of a Contracting State from real property
may be taxed in the Contracting State in which the real property is situated.
2 The term "real property":
(a) in the case of Australia, has the meaning which it has under the
laws of Australia, and shall also include:
(i) a lease of land and any other interest in or over land,
whether improved or not, including a right to explore
for mineral, oil or gas deposits or other natural
resources, and a right to mine those deposits or
resources; and
(ii) a right to receive variable or fixed payments either as
consideration for or in respect of the exploitation of, or
the right to explore for or exploit, mineral, oil or gas
deposits, quarries or other places of extraction or
exploitation of natural resources.
(b) in the case of Norway, means immovable property according to
the laws of Norway, and shall also include:
(i) property accessory to immovable property;
(ii) rights to which the provisions of the general law
respecting landed property apply;
Schedule 23 2006 Norwegian convention
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(iii) usufruct of immovable property; and
(iv) a right to receive variable or fixed payments as
consideration for the working of, or the right to work,
mineral deposits, oil or gas wells, quarries or other
places of extraction or exploitation of natural resources.
Ships and aircraft shall not be regarded as real property.
3 Any interest or right referred to in paragraph 2 shall be regarded as
situated where the land, mineral, oil or gas deposits, quarries or natural
resources, as the case may be, are situated or where the exploration may take
place.
4 The provisions of paragraph 1 shall apply to income derived from the
direct use, letting, or use in any other form of real property.
5 The provisions of paragraphs 1, 3, and 4 shall also apply to income
from real property of an enterprise.
ARTICLE 7
Business Profits
1 The profits of an enterprise of a Contracting State shall be taxable only
in that State unless the enterprise carries on business in the other Contracting
State through a permanent establishment situated therein. If the enterprise
carries on business as aforesaid, the profits of the enterprise may be taxed in the
other State but only so much of them as is attributable to that permanent
establishment.
2 Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
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same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
3 In determining the profits of a permanent establishment, there shall be
allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) and which would be
deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
4 Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including determinations in cases where the information available to the
competent authority of that State is inadequate to determine the profits to be
attributed to a permanent establishment, provided that that law shall be applied,
so far as it is practicable to do so, consistently with the principles of this Article.
5 No profits shall be attributed to a permanent establishment by reason of
the mere purchase by that permanent establishment of goods or merchandise for
the enterprise.
6 For the purposes of the preceding paragraphs, the profits to be attributed
to the permanent establishment shall be determined by the same method year by
year unless there is good and sufficient reason to the contrary.
7 Where profits include items of income or gains which are dealt with
separately in other Articles of this Convention, then the provisions of those
Articles shall not be affected by the provisions of this Article.
8 Nothing in this Article shall affect the operation of any law of a
Contracting State relating to tax imposed on profits from insurance with
non-residents provided that if the relevant law in force in either Contracting
State at the date of signature of this Convention is varied (otherwise than in
minor respects so as not to affect its general character) the Contracting States
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shall consult with each other with a view to agreeing to any amendment of this
paragraph that may be appropriate.
9 Where:
(a) a resident of a Contracting State is beneficially entitled,
whether directly or through one or more interposed trust estates,
to a share of the business profits of an enterprise carried on in
the other Contracting State by the trustee of a trust estate other
than a trust estate which is treated as a company for tax
purposes; and
(b) in relation to that enterprise, that trustee would, in accordance
with the principles of Article 5, have a permanent establishment
in that other State,
the enterprise carried on by the trustee shall be deemed to be a business carried
on in the other State by that resident through a permanent establishment situated
in that other State and that share of business profits shall be attributed to that
permanent establishment.
ARTICLE 8
Shipping and Air Transport
1 Profits of an enterprise of a Contracting State derived from the
operation of ships or aircraft in international traffic shall be taxable only in that
State.
2 Notwithstanding the provisions of paragraph 1, profits of an enterprise
of a Contracting State derived from the operation of ships or aircraft may be
taxed in the other Contracting State to the extent that they are profits derived
directly or indirectly from ship or aircraft operations confined solely to places in
that other State.
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3 The provisions of paragraphs 1 and 2 shall also apply to profits derived
from the participation in a pool, a joint business or in an international operating
agency.
4 For the purposes of this Article, profits derived from the carriage by
ships or aircraft of passengers, livestock, mail, goods or merchandise which are
shipped in a Contracting State and are discharged at a place in that State shall be
treated as profits from ship or aircraft operations confined solely to places in
that State.
5 The provisions of paragraphs 1, 2 and 3 shall apply to profits derived by
the joint Norwegian, Danish and Swedish air transport consortium Scandinavian
Airlines System (SAS), but only insofar as profits derived by SAS Norge AS,
the Norwegian partner of the Scandinavian Airlines System (SAS), are in
proportion to its share in that organisation.
ARTICLE 9
Associated Enterprises
1 Where:
(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise
of the other Contracting State; or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
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2 Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including determinations in cases where the information available to the
competent authority of that State is inadequate to determine the profits accruing
to an enterprise, provided that that law shall be applied, so far as it is practicable
to do so, consistently with the principles of this Article.
3 Where profits on which an enterprise of a Contracting State has been
charged to tax in that State are also included, by virtue of the provisions of
paragraph 1 or 2, in the profits of an enterprise of the other Contracting State
and charged to tax in that other State, and the profits so included are profits
which might have been expected to have accrued to that enterprise of the other
State if the conditions operative between the enterprises had been those which
might have been expected to have operated between independent enterprises
dealing wholly independently with one another, then the first-mentioned State
shall make an appropriate adjustment to the amount of tax charged on those
profits in the first-mentioned State, if that State considers the adjustment
justified. In determining such an adjustment, due regard shall be had to the
other provisions of this Convention and for this purpose the competent
authorities of the Contracting States shall if necessary consult each other.
ARTICLE 10
Dividends
1 Dividends paid by a company which is a resident of a Contracting State
for the purposes of its tax, being dividends beneficially owned by a resident of
the other Contracting State, may be taxed in that other State.
2 However, those dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident for the purposes of its tax,
and according to the law of that State, but the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends, if the beneficial
owner of those dividends is a company (other than a
partnership) which holds directly at least 10 per cent of the
voting power in the company paying the dividends; and
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(b) 15 per cent of the gross amount of the dividends in all other
cases,
provided that if the relevant law in either Contracting State at the date of
signature of this Convention is varied otherwise than in minor respects so as not
to affect its general character, the Contracting States shall consult each other
with a view to agreeing to any amendment of this paragraph that may be
appropriate.
3 Notwithstanding the provisions of paragraph 2 of this Article, dividends
shall not be taxed in the Contracting State of which the company paying the
dividends is a resident if the beneficial owner of the dividends is a company that
is a resident of the other Contracting State that has owned shares representing
80 per cent or more of the voting power of the company paying the dividends
for a twelve month period ending on the date the dividend is declared and the
company that is the beneficial owner of the dividends:
(a) has its principal class of shares listed on a recognised stock
exchange specified in subparagraph (i) or (ii) of
subparagraph (o) of paragraph 1 of Article 3 and is regularly
traded on one or more recognised stock exchanges;
(b) is owned directly or indirectly by one or more companies
whose principal class of shares is listed on a recognised stock
exchange specified in subparagraph (i) or (ii) of
subparagraph (o) of paragraph 1 of Article 3 and is regularly
traded on one or more recognised stock exchanges; or
(c) does not meet the requirements of subparagraphs (a) or (b) of
this paragraph but the competent authority of the
first-mentioned Contracting State determines, in accordance
with the law of that State, that the establishment, acquisition or
maintenance of the company that is the beneficial owner of the
dividends and the conduct of its operations did not have as one
of its principal purposes the obtaining of benefits under this
Convention. The competent authority of the first-mentioned
Contracting State shall consult the competent authority of the
other Contracting State before refusing to grant benefits of this
Convention under this subparagraph.
4 The term "dividends" as used in this Article means income from shares
or other rights, not being debt-claims, participating in profits, as well as other
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amounts which are subjected to the same taxation treatment as income from
shares by the law of the State of which the company making the distribution is a
resident for the purposes of its tax.
5 The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial
owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident, through a permanent establishment situated therein, and
the holding in respect of which the dividends are paid is effectively connected
with such permanent establishment. In such case, the provisions of Article 7
shall apply.
6 Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State may not
impose any tax on the dividends paid by the company—being dividends
beneficially owned by a person who is not a resident of the other Contracting
State—except insofar as the holding in respect of which such dividends are paid
is effectively connected with a permanent establishment situated in that other
State, even if the dividends paid consist wholly or partly of profits or income
arising in such other State. This paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of Norway for the purposes of
Norwegian tax.
7 No relief shall be available under this Article if it was the main purpose
or one of the main purposes of any person concerned with the creation or
assignment of shares or other rights in respect of which the dividend is paid to
take advantage of this Article by means of that creation or assignment.
ARTICLE 11
Interest
1 Interest arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.
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2 However, that interest may also be taxed in the Contracting State in
which it arises, and according to the law of that State, but the tax so charged
shall not exceed 10 per cent of the gross amount of the interest.
3 Notwithstanding paragraph 2, interest arising in a Contracting State and
beneficially owned by a resident of the other Contracting State may not be taxed
in the first-mentioned State if:
(a) the interest is derived from the investment of official reserve
assets by the government of a Contracting State, its monetary
institutions or a bank performing central banking functions in
that State; or
(b) the interest is derived by a financial institution which is
unrelated to and dealing wholly independently with the payer.
For the purposes of this Article, the term "financial institution"
means a bank or other enterprise substantially deriving its
profits by raising debt finance in the financial markets or by
taking deposits at interest and using those funds in carrying on
a business of providing finance.
4 Notwithstanding paragraph 3, interest referred to in subparagraph (b) of
that paragraph may be taxed in the State in which it arises at a rate not
exceeding 10 per cent of the gross amount of the interest if the interest is paid as
part of an arrangement involving back-to-back loans or other arrangement that
is economically equivalent and intended to have a similar effect to back-to-back
loans.
5 The term "interest" in this Article includes interest from government
securities or from bonds or debentures, whether or not secured by mortgage,
interest from any other form of indebtedness, as well as income which is
subjected to the same taxation treatment as income from money lent by the law
of the Contracting State in which the income arises.
6 The provisions of paragraphs 1 and 2, subparagraph (b) of paragraph 3
and paragraph 4 of this Article shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein, and the indebtedness in respect of which the
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interest is paid is effectively connected with such permanent establishment. In
such case the provisions of Article 7 shall apply.
7 Interest shall be deemed to arise in a Contracting State when the payer
is a resident of that State for the purposes of its tax. Where, however, the
person paying the interest, whether the person is a resident of a Contracting
State or not, has in a Contracting State or outside both Contracting States a
permanent establishment in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by such permanent
establishment, then such interest shall be deemed to arise in the State in which
the permanent establishment is situated.
8 Where, by reason of a special relationship between the payer and the
beneficial owner of the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the beneficial owner in the absence of that
relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall remain taxable
according to the law of each Contracting State, due regard being had to the
other provisions of this Convention.
9 No relief shall be available under this Article if it was the main purpose
or one of the main purposes of any person concerned with the creation or
assignment of the indebtedness in respect of which the interest is paid to take
advantage of this Article by means of that creation or assignment.
ARTICLE 12
Royalties
1 Royalties arising in a Contracting State and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.
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2 However, those royalties may also be taxed in the Contracting State in
which they arise, and according to the law of that State, but the tax so charged
shall not exceed 5 per cent of the gross amount of the royalties.
3 The term "royalties" in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design or
model, plan, secret formula or process, trademark or other like
property or right; or
(b) the supply of scientific, technical, industrial or commercial
knowledge or information; or
(c) the supply of any assistance that is ancillary and subsidiary to,
and is furnished as a means of enabling the application or
enjoyment of, any such property or right as is mentioned in
subparagraph (a) or any such knowledge or information as is
mentioned in subparagraph (b); or
(d) the use of, or the right to use:
(i) motion picture films; or
(ii) films or audio or video tapes or disks, or any other
means of image or sound reproduction or transmission
for use in connection with television, radio or other
broadcasting; or
(e) the use of, or the right to use, some or all of the part of the
radiofrequency spectrum specified in a spectrum licence; or
(f) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4 The provisions of paragraphs 1 and 2 shall not apply if the beneficial
owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State, in which the royalties arise, through a
permanent establishment situated therein, and the right or property in respect of
which the royalties are paid or credited is effectively connected with such
permanent establishment. In such case the provisions of Article 7 shall apply.
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5 Royalties shall be deemed to arise in a Contracting State when the payer
is a resident of that State for the purposes of its tax. Where, however, the person
paying the royalties, whether the person is a resident of a Contracting State or
not, has in a Contracting State or outside both Contracting States a permanent
establishment in connection with which the liability to pay the royalties was
incurred, and the royalties are borne by the permanent establishment, then such
royalties shall be deemed to arise in the State in which the permanent
establishment is situated.
6 Where, by reason of a special relationship between the payer and the
beneficial owner of the royalties, or between both of them and some other
person, the amount of the royalties paid or credited, having regard to what they
are paid or credited for, exceeds the amount which might have been expected to
have been agreed upon by the payer and the beneficial owner in the absence of
such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the amount of the
payments or credits shall remain taxable according to the law of each
Contracting State, due regard being had to the other provisions of this
Convention.
7 No relief shall be available under this Article if it was the main purpose
or one of the main purposes of any person concerned with the creation or
assignment of rights in respect of which the royalties are paid or credited to take
advantage of this Article by means of that creation or assignment.
ARTICLE 13
Alienation of Property
1 Income, profits or gains derived by a resident of a Contracting State
from the alienation of real property referred to in Article 6 and situated in the
other Contracting State may be taxed in that other State.
2 Income, profits or gains from the alienation of property, other than real
property, that forms part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State,
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including income, profits or gains from the alienation of that permanent
establishment (alone or with the whole enterprise), may be taxed in that other
State.
3 Income, profits or gains of an enterprise of a Contracting State from the
alienation of ships or aircraft operated by that enterprise in international traffic,
or of property (other than real property) pertaining to the operation of those
ships or aircraft, shall be taxable only in that State.
4 Income, profits or gains derived by a resident of a Contracting State
from the alienation of any shares or comparable interests deriving more than 50
per cent of their value directly or indirectly from real property situated in the
other Contracting State, may be taxed in that other State.
5 Gains of a capital nature from the alienation of any property, other than
that referred to in the preceding paragraphs shall be taxable only in the
Contracting State of which the alienator is a resident.
ARTICLE 14
Income from Employment
1 Subject to the provisions of Articles 15, 17 and 18, salaries, wages and
other similar remuneration derived by an individual who is a resident of a
Contracting State in respect of an employment shall be taxable only in that State
unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in that other State.
2 Notwithstanding the provisions of paragraph 1, remuneration derived
by an individual who is a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first-mentioned State if:
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(a) the recipient is present in the other State for a period or periods
not exceeding in the aggregate 183 days in any twelve month
period commencing or ending in the year of income of that
other State; and
(b) the remuneration is paid by, or on behalf of, an employer who
is a resident of the first-mentioned State; and
(c) the remuneration is not borne by a permanent establishment
which the employer has in that other State.
3 Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft operated
in international traffic may be taxed in the Contracting State of which the
enterprise operating the ship or aircraft is a resident. However, where such
remuneration is derived in respect of an employment exercised aboard a ship
registered in the Norwegian International Ships' register (NIS), the
remuneration shall be taxable only in the Contracting State where the recipient
is a resident.
4 Where a resident of a Contracting State derives remuneration in respect
of an employment exercised aboard an aircraft operated in international traffic
by the Scandinavian Airlines System (SAS) consortium, such remuneration
shall be taxable only in that State.
ARTICLE 15
Directors' Fees
Directors' fees and other similar payments derived by a resident of a
Contracting State in that person's capacity as a member of the board of
directors, or similar body, of a company which is a resident of the other
Contracting State may be taxed in that other State.
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ARTICLE 16
Entertainers and Sportspersons
1 Notwithstanding the provisions of Articles 7 and 14, income derived by
a resident of a Contracting State as an entertainer, such as a theatre, motion
picture, radio or television artiste, or a musician, or as a sportsperson, from that
person's personal activities as such exercised in the other Contracting State, may
be taxed in that other State.
2 Where income in respect of personal activities exercised by an
entertainer or a sportsperson in that person's capacity as such accrues not to that
person but to another person, that income may, notwithstanding the provisions
of Articles 7 and 14, be taxed in the Contracting State in which the activities of
the entertainer or sportsperson are exercised.
3 The provisions of paragraphs 1 and 2 shall not apply to income derived
from activities performed in a Contracting State by entertainers or sportspersons
if the visit to that State is wholly or mainly supported by public funds of the
other Contracting State or a political subdivision or local authority of that State.
In such a case, the income is taxable only in the Contracting State of which the
entertainer or sportsperson is a resident.
ARTICLE 17
Pensions and Annuities
1 Subject to the provisions of paragraph 2 of Article 18, pensions and
annuities paid to a resident of a Contracting State shall be taxable only in that
State.
2 The term "annuity" means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under an
Schedule 23 2006 Norwegian convention
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obligation to make the payments in return for adequate and full consideration in
money or money's worth.
3 Any alimony or other maintenance payment arising in a Contracting
State and paid to a resident of the other Contracting State shall be taxable only
in the first-mentioned State.
ARTICLE 18
Government Service
1 Salaries, wages and other similar remuneration, other than a pension or
annuity, paid by a Contracting State or a political subdivision or local authority
of that State to an individual in respect of services rendered to that State or
subdivision or authority shall be taxable only in that State. However, such
salaries, wages and other similar remuneration shall be taxable only in the other
Contracting State if the services are rendered in that other State and the
individual is a resident of that other State who:
(a) is a national of that State; or
(b) did not become a resident of that State solely for the purpose of
rendering the services.
2 Any pension paid by, or out of funds created by, a Contracting State or
a political subdivision or local authority of that State to an individual in the
respect of services rendered to that State or subdivision or authority (including,
in the case of Norway, any national insurance element of such pension) shall be
taxable only in that State. However, such pensions shall be taxable only in the
other Contracting State if the individual is a resident of, and a national of, that
State.
3 The provisions of Articles 14, 15, 16 and 17 shall apply to salaries,
wages and other similar remuneration and to pensions in respect of services
rendered in connection with a business carried on by a Contracting State or a
political subdivision or local authority of that State.
2006 Norwegian convention Schedule 23
International Tax Agreements Act 1953 677
ARTICLE 19
Students
Payments which a student who is or was immediately before visiting a
Contracting State a resident of the other Contracting State and who is
temporarily present in the first-mentioned State solely for the purpose of the
student's education receives for the purpose of the student's maintenance or
education shall not be taxed in that State, provided that such payments arise
from sources outside that State.
ARTICLE 20
Offshore Activities
1 The provisions of this Article shall apply notwithstanding any other
provision of this Convention.
2 A person who is a resident of a Contracting State and carries on
activities offshore in the other Contracting State in connection with the
exploration or exploitation of the seabed or subsoil or their natural resources
situated in that other State shall, subject to paragraph 3 of this Article, be
deemed in relation to those activities to be carrying on business in that other
State through a permanent establishment situated therein.
3 The provisions of paragraph 2 shall not apply where the activities are
carried on in a Contracting State for a period or periods not exceeding 30 days
in the aggregate in any twelve month period commencing or ending in the year
of income of that State. However, for the purposes of this paragraph:
(a) activities carried on by an enterprise associated with another enterprise
shall be regarded as carried on by the enterprise with which it is
Schedule 23 2006 Norwegian convention
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associated if the activities in question are substantially the same as
those carried on by the last-mentioned enterprise;
(b) the period during which two or more associated enterprises are carrying
on concurrent activities will be counted only once for the purpose of
determining the duration of activities; and
(c) an enterprise shall be deemed to be associated with another enterprise
if:
(i) one is controlled directly or indirectly by the other; or
(ii) both are controlled directly or indirectly by the same third person or
persons.
4 Salaries, wages and other similar remuneration derived by a resident of
a Contracting State in respect of an employment connected with the exploration
or exploitation of the seabed or subsoil or their natural resources situated in the
other Contracting State may, to the extent that the employment is exercised
offshore in that other State, be taxed in that other State. However, such
remuneration shall be taxable only in the first-mentioned State if the
employment is exercised offshore for an employer who is not a resident of the
other State and provided that the employment is carried on for a period or
periods not exceeding in the aggregate 30 days in any twelve month period
commencing or ending in the year of income of that other State.
ARTICLE 21
Other Income
1 Items of income of a resident of a Contracting State, wherever arising,
not dealt with in the foregoing Articles of this Convention shall be taxable only
in that State.
2 The provisions of paragraph 1 shall not apply to income, other than
income from real property as defined in paragraph 2 of Article 6, derived by a
resident of a Contracting State who carries on business in the other Contracting
State through a permanent establishment situated therein and the right or
property in respect of which the income is paid is effectively connected with
2006 Norwegian convention Schedule 23
International Tax Agreements Act 1953 679
such permanent establishment. In such case the provisions of Article 7 shall
apply.
3 Notwithstanding the provisions of paragraphs 1 and 2, items of income
of a resident of a Contracting State not dealt with in the foregoing Articles of
this Convention from sources in the other Contracting State may also be taxed
in that other State.
ARTICLE 22
Source of Income
1 Income, profits or gains derived by a resident of a Contracting State
which, under any one or more of Articles 6 to 8, 10 to 16, 18 and 20, may be
taxed in the other Contracting State shall for the purposes of the law of that
other State relating to its tax be deemed to arise from sources in that other State.
2 Income, profits or gains derived by a resident of a Contracting State
which, under any one or more of Articles 6 to 8, 10 to 16, 18 and 20, may be
taxed in the other Contracting State shall for the purposes of Article 23 and of
the law of the first-mentioned State relating to its tax be deemed to arise from
sources in the other State.
ARTICLE 23
Methods of Elimination of Double Taxation
1 Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax paid
in a country outside Australia (which shall not affect the general principle of
this Article), Norwegian tax paid under the law of Norway and in accordance
with this Convention, whether directly or by deduction, in respect of income
Schedule 23 2006 Norwegian convention
680 International Tax Agreements Act 1953
derived by a person who is a resident of Australia from sources in Norway shall
be allowed as a credit against Australian tax payable in respect of that income.
2 Subject to the provisions of the laws of Norway regarding the
allowance as a credit against Norwegian tax of tax payable in a territory outside
Norway (which shall not affect the general principle hereof):
(a) where a resident of Norway derives income which, in
accordance with the provisions of this Convention, may be
taxed in Australia, Norway shall allow as a deduction from the
tax on the income of that resident, an amount equal to the
income tax paid in Australia on that income. Such deduction
shall not, however, exceed that part of the income tax, as
computed before the deduction is given, which is attributable to
the income which may be taxed in Australia.
(b) where in accordance with any provision of the Convention
income derived by a resident of Norway is exempt from tax in
Norway, Norway may nevertheless include such income in the
tax base, but shall allow as a deduction from the Norwegian tax
on income that part of the Norwegian income tax which is
attributable to the income derived from Australia.
ARTICLE 24
Non-discrimination
1 Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith,
which is other or more burdensome than the taxation and connected
requirements to which nationals of that other State in the same circumstances, in
particular with respect to residence, are or may be subjected.
2 The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other State than the taxation levied on enterprises of that other
State carrying on the same activities in similar circumstances.
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3 Except where the provisions of paragraph 1 of Article 9, paragraph 8 of
Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the
other Contracting State shall for the purpose of determining the taxable profits
of such enterprise, be deductible under the same conditions as if they had been
paid to a resident of the first-mentioned State.
4 Enterprises of a Contracting State, the capital of which is wholly or
partly owned or controlled, directly or indirectly, by one or more residents of
the other Contracting State, shall not be subjected in the first-mentioned State to
any taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other
similar enterprises of the first-mentioned State in similar circumstances are or
may be subjected.
5 Nothing contained in this Article shall be construed as obliging a
Contracting State to grant to individuals who are residents of the other
Contracting State any of the personal allowances, reliefs and reductions for tax
purposes which are granted to its own resident individuals.
6 This Article shall not apply to any provision of the law of a Contracting
State which:
(a) is designed to prevent the avoidance or evasion of taxes; or
(b) does not permit the deferral of tax arising on the transfer of an
asset where the subsequent transfer of the asset by the
transferee would be beyond the taxing jurisdiction of the
Contracting State under its laws; or
(c) provides for consolidation of group entities for treatment as a
single entity for tax purposes provided that a company, being a
resident of that State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more
residents of the other Contracting State, may access such
consolidation treatment on the same terms and conditions as
other companies that are residents of the first-mentioned State;
or
Schedule 23 2006 Norwegian convention
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(d) does not allow tax rebates or credits in relation to dividends
paid by a company that is a resident of that State for purposes
of its tax; or
(e) provides deductions to eligible taxpayers for expenditure on
research and development; or
(f) is otherwise agreed to be unaffected by this Article in an
Exchange of Notes between the Contracting States.
7 In this Article, provisions of the law of a Contracting State which are
designed to prevent avoidance or evasion of taxes include:
(a) measures designed to address thin capitalisation, dividend
stripping and transfer pricing;
(b) controlled foreign company, transferor trusts and foreign
investment fund rules; and
(c) measures designed to ensure that taxes can be effectively
collected and recovered, including conservancy measures.
ARTICLE 25
Mutual Agreement Procedure
1 Where a person considers that the actions of one or both of the
Contracting States result or will result for the person in taxation not in
accordance with this Convention, the person may, irrespective of the remedies
provided by the domestic law of those States concerning taxes to which this
Convention applies, present a case to the competent authority of the Contracting
State of which the person is a resident or, if the case comes under paragraph 1
of Article 24, to that of the Contracting State of which the person is a national.
The case must be presented within 3 years from the first notification of the
action resulting in taxation not in accordance with this Convention.
2 The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve
the case by mutual agreement with the competent authority of the other
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International Tax Agreements Act 1953 683
Contracting State, with a view to the avoidance of taxation which is not in
accordance with this Convention. The solution so reached shall be
implemented notwithstanding any time limits in the domestic law of the
Contracting States.
3 The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of this Convention. They may also consult together
for the elimination of double taxation in cases not provided for in this
Convention.
4 The competent authorities of the Contracting States may communicate
with each other directly for the purpose of reaching an agreement in the sense of
the preceding paragraphs.
5 For the purposes of paragraph 3 of Article XXII (Consultation) of the
General Agreement on Trade in Services, the Contracting States agree that,
notwithstanding that paragraph, any dispute between them as to whether a
measure falls within the scope of this Convention may be brought before the
Council for Trade in Services, as provided by that paragraph, only with the
consent of both Contracting States. Any doubt as to the interpretation of this
paragraph shall be resolved under paragraph 3 of this Article or, failing
agreement under that procedure, pursuant to any other procedure agreed to by
both Contracting States.
ARTICLE 26
Exchange of Information
1 The competent authorities of the Contracting States shall exchange such
information as is forseeably relevant for carrying out the provisions of this
Convention or to the administration or enforcement of the domestic laws
concerning taxes referred to in Article 2, insofar as the taxation thereunder is
not contrary to the Convention. The exchange of information is not restricted by
Article 1.
Schedule 23 2006 Norwegian convention
684 International Tax Agreements Act 1953
2 Any information received under paragraph 1 by a Contracting State
shall be treated as secret in the same manner as information obtained under the
domestic laws of that State and shall be disclosed only to persons or authorities
(including courts and administrative bodies) concerned with the assessment or
collection of, the enforcement or prosecution in respect of, the determination of
appeals in relation to the taxes referred to in paragraph 1, or the oversight of the
above. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
3 In no case shall the provisions of paragraphs 1 and 2 be construed so as
to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws
and administrative practice of that or of the other Contracting
State; or
(b) to supply information which is not obtainable by the competent
authority under the laws or in the normal course of the
administration of that or of the other Contracting State; or
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process,
or information, the disclosure of which would be contrary to
public policy (ordre public).
4 If information is requested by a Contracting State in accordance with
this Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other State may
not need such information for its own tax purposes. The obligation contained in
the preceding sentence is subject to the limitations of paragraph 3 but in no case
shall such limitations be construed to permit a Contracting State to decline to
supply information solely because it has no domestic interest in such
information.
5 In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the
information is held by a bank, other financial institution, nominee or person
2006 Norwegian convention Schedule 23
International Tax Agreements Act 1953 685
acting in an agency or a fiduciary capacity or because it relates to ownership
interests in a person.
ARTICLE 27
Assistance in the Collection of Taxes
1 The Contracting States shall lend assistance to each other in the
collection of revenue claims. This assistance is not restricted by Article 1. The
competent authorities of the Contracting States may by mutual agreement settle
the mode of application of this Article.
2 The term "revenue claim" as used in this Article means an amount owed
in respect of taxes referred to in Article 2, insofar as the taxation thereunder is
not contrary to this Convention or any other instrument to which the
Contracting States are parties, as well as interest, administrative penalties and
costs of collection or conservancy related to such amount.
3 When a revenue claim of a Contracting State is enforceable under the
laws of that State and is owed by a person who, at that time, cannot, under the
laws of that State, prevent its collection, that revenue claim shall, at the request
of the competent authority of that State, be accepted for purposes of collection
by the competent authority of the other Contracting State. That revenue claim
shall be collected by that other State in accordance with the provisions of its
laws applicable to the enforcement and collection of its own taxes as if the
revenue claim were a revenue claim of that other State.
4 When a revenue claim of a Contracting State is a claim in respect of
which that State may, under its law, take measures of conservancy with a view
to ensure its collection, that revenue claim shall, at the request of the competent
authority of that State, be accepted for purposes of taking measures of
conservancy by the competent authority of the other Contracting State. That
other State shall take measures of conservancy in respect of that revenue claim
Schedule 23 2006 Norwegian convention
686 International Tax Agreements Act 1953
in accordance with the provisions of its laws as if the revenue claim were a
revenue claim of that other State even if, at the time when such measures are
applied, the revenue claim is not enforceable in the first-mentioned State or is
owed by a person who has a right to prevent its collection.
5 Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim
accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in
that State, be subject to the time limits or accorded any priority applicable to a
revenue claim under the laws of that State by reason of its nature as such. In
addition, a revenue claim accepted by a Contracting State for the purposes of
paragraph 3 or 4 shall not, in that State, have any priority applicable to that
revenue claim under the laws of the other Contracting State.
6 Proceedings with respect to the existence, validity or the amount of a
revenue claim of a Contracting State shall not be brought before the courts or
administrative bodies of the other Contracting State.
7 Where, at any time after a request has been made by a Contracting State
under paragraph 3 or 4 and before the other Contracting State has collected and
remitted the relevant revenue claim to the first-mentioned State, the relevant
revenue claim ceases to be:
(a) in the case of a request under paragraph 3, a revenue claim of
the first-mentioned State that is enforceable under the laws of
that State and is owed by a person who, at that time, cannot,
under the laws of that State, prevent its collection; or
(b) in the case of a request under paragraph 4, a revenue claim of
the first-mentioned State in respect of which that State may,
under its laws, take measures of conservancy with a view to
ensure its collection,
the competent authority of the first-mentioned State shall promptly notify the
competent authority of the other State of that fact and, at the option of the other
State, the first-mentioned State shall either suspend or withdraw its request.
8 In no case shall the provisions of this Article be construed so as to
impose on a Contracting State the obligation:
2006 Norwegian convention Schedule 23
International Tax Agreements Act 1953 687
(a) to carry out administrative measures at variance with the laws
and administrative practice of that or of the other Contracting
State; or
(b) to carry out measures which would be contrary to public policy
(ordre public); or
(c) to provide assistance if the other Contracting State has not
pursued all reasonable measures of collection or conservancy,
as the case may be, available under its laws or administrative
practice; or
(d) to provide assistance in those cases where the administrative
burden for that State is clearly disproportionate to the benefit to
be derived by the other Contracting State; or
(e) to provide assistance if that State considers that the taxes with
respect to which assistance is requested are imposed contrary to
generally accepted taxation principles.
ARTICLE 28
Members of Diplomatic Missions and Consular Posts
1 Nothing in this Convention shall affect the fiscal privileges of members
of diplomatic missions or consular posts under the general rules of international
law or under the provisions of special international agreements.
2 Insofar as, due to fiscal privileges granted to members of diplomatic
missions and consular posts under the general rules of international law or
under the provisions of special international agreements, income is not subject
to tax in the receiving State, the right to tax shall be reserved to the sending
State.
Schedule 23 2006 Norwegian convention
688 International Tax Agreements Act 1953
ARTICLE 29
Entry into Force
1 The Contracting States shall notify each other in writing through the
diplomatic channel of the completion of their domestic requirements for the
entry into force of this Convention.
2 This Convention shall enter into force on the date of the last
notification, and thereupon the Convention shall have effect:
(a) in the case of Australia:
(i) in respect of withholding tax on income that is derived
by a non-resident, in relation to income derived on or
after 1 January in the calendar year next following the
date on which the Convention enters into force;
(ii) in respect of other Australian tax, in relation to income,
profits or gains of any year of income beginning on or
after 1 July in the calendar year next following the date
on which the Convention enters into force;
(b) in the case of Norway, in respect of taxes on income relating to
the calendar year (including accounting periods beginning in
any such year) next following that in which the Convention
enters into force and subsequent years;
(c) for purposes of Article 26, from the date of entry into force of
this Convention; and
(d) for purposes of Article 27, from a date to be agreed in an
exchange of notes through the diplomatic channel.
3 The Convention between Australia and the Kingdom of Norway for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and on capital signed at Canberra on 6 May 1982, shall be
terminated and shall cease to have effect from the dates on which this
Convention becomes effective in accordance with paragraph 2 of this Article.
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International Tax Agreements Act 1953 689
ARTICLE 30
Termination
This Convention shall continue in effect indefinitely, but either
Contracting State may terminate the Convention by giving written notice of
termination, through the diplomatic channel, to the other State at least six
months before the end of any calendar year beginning after the expiration of
five years from the date of its entry into force and, in that event, the Convention
shall cease to be effective:
(a) in the case of Australia:
(i) in respect of withholding tax on income that is derived
by a non-resident, in relation to income derived on or
after 1 January in the calendar year next following that
in which the notice of termination is given;
(ii) in respect of other Australian tax, in relation to income,
profits or gains of any year of income beginning on or
after 1 July in the calendar year next following that in
which the notice of termination is given;
(b) in the case of Norway:
in respect of taxes on income relating to the calendar
year (including accounting periods beginning in such
year) next following that in which the notice is given
and subsequent years.
IN WITNESS WHEREOF the undersigned, being duly authorised, have signed
this Convention.
DONE at Canberra on this eighth day of August two thousand and six, in
duplicate in the English language.
Schedule 23 2006 Norwegian convention
690 International Tax Agreements Act 1953
FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
NORWAY:
Hon. Peter Dutton
Minister for Revenue and Assistant
Treasurer
H.E. Lars Albert Wensell
Ambassador
[Signatures omitted]
Agreement between Australia and Malta for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 24
International Tax Agreements Act 1953 691
Schedule 24—Agreement between Australia
and Malta for the Avoidance of Double
Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on
Income Section 3
Australia and Malta,
Desiring to conclude an Agreement for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
CHAPTER I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of
the Contracting States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are:
(a) in Australia:
the Australian income tax, including the additional tax upon the
undistributed amount of the distributable income of a private company;
(b) in Malta:
the income tax, including prepayments of tax whether made by
deduction at source or otherwise.
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by either Contracting State after the date of signature
of this Agreement in addition to, or in place of, the existing taxes. As soon as
possible after the end of each calendar year, the competent authority of each
Contracting State shall notify the competent authority of the other Contracting
Schedule 24 Agreement between Australia and Malta for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
692 International Tax Agreements Act 1953
State of any substantial changes which have been made in the laws of his State
relating to the taxes to which this Agreement applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires:
(a) the term ‘Australia’ means the Commonwealth of Australia and, when
used in a geographical sense, includes:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the
said Territories in respect of which there is for the time being in
force, consistently with international law, a law of Australia or of
a State or part of Australia or of a Territory aforesaid dealing
with the exploitation of any of the natural resources of the
sea--bed and subsoil of the continental shelf;
(b) the term ‘Malta’ means the Republic of Malta and, when used in a
geographical sense, means the Island of Malta, the Island of Gozo and
the other islands of the Maltese archipelago, including the territorial
waters thereof, and any area outside the territorial sea of Malta which,
in accordance with international law, has been or may hereafter be
designated, under the law of Malta concerning the continental shelf, as
an area within which the rights of Malta with respect to the sea--bed and
subsoil and their natural resources may be exercised;
(c) the terms ‘Contracting State, one of the Contracting States’ and ‘other
Contracting State’ mean Australia or Malta, as the context requires;
(d) the term ‘person’ includes an individual, a company and any other body
of persons;
(e) the term ‘company’ means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(f) the terms ‘enterprise of one of the Contracting States’ and ‘enterprise of
the other Contracting State’ mean an enterprise carried on by a resident
Agreement between Australia and Malta for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 24
International Tax Agreements Act 1953 693
of Australia or an enterprise carried on by a resident of Malta, as the
context requires;
(g) the term ‘international traffic’ means any transport by a ship or aircraft
except where the ship or aircraft is operated solely between places
within a Contracting State;
(h) the term ‘tax’ means Australian tax or Malta tax, as the context
requires;
(i) the term ‘Australian tax’ means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(j) the term ‘Malta tax’ means tax imposed by Malta, being tax to which
this Agreement applies by virtue of Article 2;
(k) the term ‘competent authority’ means, in the case of Australia, the
Commissioner of Taxation or his authorized representative, and in the
case of Malta, the Minister responsible for finance or his authorized
representative.
(2) In this Agreement, the terms ‘Australian tax’ and ‘Malta tax’ do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes to which this Agreement applies by virtue of Article
2.
(3) In the application of this Agreement by a Contracting State, any term not
defined in this Agreement shall, unless the context otherwise requires, have the
meaning which it has under the laws of that State relating to the taxes to which
this Agreement applies.
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
Contracting States:
(a) in the case of Australia, subject to the provisions of paragraph (2), if the
person is a resident of Australia for the purposes of Australian tax; and
(b) in the case of Malta, if the person is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a
similar nature. A person is not a resident of Malta if he is liable to tax in
Malta in respect only of income from sources therein.
(2) In relation to income from sources in Malta, a person who is subject to
Australian tax on income which is from sources in Australia shall not be treated
as a resident of Australia unless the income from sources in Malta is subject to
Schedule 24 Agreement between Australia and Malta for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
694 International Tax Agreements Act 1953
Australian tax or, if that income is exempt from Australian tax, it is so exempt
solely because it is subject to Malta tax.
(3) Where by reason of the preceding provisions of this Article an individual is
a resident of both Contracting States, then his status shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting States,
or if he does not have a permanent home available to him in either of
them, he shall be deemed to be a resident solely of the Contracting State
with which his personal and economic relations are the closer.
(4) In determining for the purposes of paragraph (3) the Contracting State with
which an individual’s personal and economic relations are the closer, the
matters to which regard may be had shall include the citizenship of the
individual.
(5) Where by reason of the provisions of paragraph (1), a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be
a resident solely of the Contracting State in which its place of effective
management is situated.
ARTICLE 5
Permanent Establishment
(1) For the purposes of this Agreement, the term ‘permanent establishment’,
in—relation to an enterprise, means a fixed place of business through which the
business of the enterprise is wholly or partly carried on.
(2) The term ‘permanent establishment’ shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project which
exists for more than 183 days in any twelve--month period.
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(3) An enterprise shall not be deemed to have a permanent establishment
merely by reason of:
(a) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one of
the Contracting States and to carry on business through that permanent
establishment if:
(a) it carries on supervisory activities in that State for more than 183 days
in any twelve--month period in connection with a building site, or a
construction, installation or assembly project which is being undertaken
in that State;
(b) there is being used in that State by, for or under contract with the
enterprise substantial equipment including, but not limited to, an
installation, drilling rig or ship used for, or in activities connected with,
the exploration for or exploitation of natural resources; or
(c) it carries on supervisory activities in that State in connection with the
use of equipment referred to in sub--paragraph (b).
(5) A person acting in one of the Contracting States on behalf of an enterprise
of the other Contracting State—other than an agent of an independent status to
whom paragraph (6) applies—shall be deemed to be a permanent establishment
of that enterprise in the first--mentioned State:
(a) in respect of his activities in that behalf, if he has, and habitually
exercises in that State, an authority to conclude contracts on behalf of
the enterprise, unless his activities are limited to those mentioned in
paragraph (3) and are such that, if exercised through a fixed place of
business, would not make that fixed place of business a permanent
establishment under the provisions of that paragraph; or
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(b) if, in so acting, he manufactures or processes in that State for the
enterprise goods or merchandise belonging to the enterprise.
(6) An enterprise of one of the Contracting States shall not be deemed to have
a permanent establishment in the other Contracting State merely because it
carries on business in that other State through a broker, general commission
agent or any other agent of an independent status, where that person is acting in
the ordinary course of his business as such a broker or agent.
(7) The fact that a company which is a resident of one of the Contracting
States controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself make either
company a permanent establishment of the other.
(8) The principles set forth in the preceding paragraphs of this Article shall be
applied in determining for the purposes of this Agreement whether there is a
permanent establishment outside both Contracting States, and whether an
enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property may be taxed in the Contracting State in which
the real property is situated.
(2) In this Article, the term ‘real property’:
(a) in the case of Australia, has the meaning which it has under the laws of
Australia, and shall also include:
(i) a lease of land and any other interest in or over land, whether
improved or not; and
(ii) a right to receive variable or fixed payments as consideration for
the working of, or the right to work or to explore for, mineral
deposits, oil or gas wells, quarries or other places of extraction or
exploitation of natural resources; and
(b) in the case of Malta, means immovable property according to the laws
of Malta, and shall also include:
(i) property accessory to immovable property;
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(ii) rights to which the provisions of the general law respecting
landed property apply;
(iii) usufruct of immovable property; and
(iv) rights to variable or fixed payments in respect of the operation of
mines or quarries or of the exploitation of or exploration for any
natural resources.
Ships, boats and aircraft shall not be regarded as real property.
(3) A lease of land, any other interest in or over land and any right referred to
in any of the sub--paragraphs of paragraph (2) shall be regarded as situated
where the land, mineral deposits, oil or gas wells, quarries or natural resources,
as the case may be, are situated or the exploration may take place.
(4) The provisions of paragraph (1) shall apply to income derived from the
direct use, letting or use in any other form of real property.
(5) The provisions of paragraphs (1), (3) and (4) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
Business Profits
(1) The profits of an enterprise of one of the Contracting States shall be
taxable only in that State unless the enterprise carries on business in the other
Contracting State through a permanent establishment situated therein. If the
enterprise carries on business as aforesaid, the profits of the enterprise may be
taxed in the other State but only so much of them as is attributable to that
permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of
the Contracting States carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment or with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) and which would be
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deductible if the permanent establishment were an independent entity which
paid those expenses, whether incurred in the Contracting State in which the
permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
(5) Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including the determination of such liability by the exercise of a discretion or
the making of an estimate by the competent authority of that State in cases in
which, from the information available to the competent authority of that State, it
is not possible or not practicable to ascertain the profits to be attributed to a
permanent establishment, provided that that law shall be applied, so far as the
information available to the competent authority permits, consistently with the
principles of this Article.
(6) For the purposes of the preceding paragraphs of this Article, the profits to
be attributed to the permanent establishment shall be determined by the same
method year by year unless there is good and sufficient reason to the contrary.
(7) Where profits include items of income which are dealt with separately in
other Articles of this Agreement, then the provisions of those Articles shall not
be affected by the provisions of this Article.
(8) Nothing in this Article shall affect the operation of any law of a
Contracting State relating to taxation of profits from insurance with
non--residents provided that if the relevant law in force in either Contracting
State at the date of signature of this Agreement is varied (otherwise than in
minor respects so as not to affect its general character) the Contracting States
shall consult with each other with a view to agreeing to any amendment of this
paragraph that may be appropriate.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be taxed
in the other Contracting State where they are profits from operations of ships or
aircraft confined solely to places in that other State.
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(3) The provisions of paragraphs (1) and (2) shall apply in relation to the share
of the profits from the operation of ships or aircraft derived by a resident of one
of the Contracting States through participation in a pool service, in a joint
transport operating organization or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise shipped in a
Contracting State for discharge at another place in that State shall be treated as
profits from operations of ships or aircraft confined solely to places in that
State.
(5) Notwithstanding the provisions of this Article, profits from the operation of
ships in international traffic derived by a company which is a resident of Malta
may be taxed in Australia unless the company proves that such profits are not
relieved from Malta tax under the provisions of the Merchant Shipping Act,
1973, or under any identical or similar provision. The foregoing sentence,
however, shall not apply if the company proves that not more than 25 per cent
of its capital is owned, directly or indirectly, by persons who are not residents of
Malta.
ARTICLE 9
Associated Enterprises
(1) Where:
(a) an enterprise of one of the Contracting States participates directly or
indirectly in the management, control or capital of an enterprise of the
other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States and
an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
(2) Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including the determination of such liability by the exercise of a discretion or
the making of an estimate by the competent authority of that State in cases in
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which, from the information available to the competent authority of that State, it
is not possible or not practicable to determine the income to be attributed to an
enterprise, provided that that law shall be applied, so far as the information
available to the competent authority permits, consistently with the principles of
this Article.
(3) Where profits on which an enterprise of one of the Contracting States has
been charged to tax in that State are also included, by virtue of paragraph (1) or
(2), in the profits of an enterprise of the other Contracting State and taxed
accordingly, and the profits so included are profits which might have been
expected to have accrued to that enterprise of the other State if the conditions
operative between the enterprises had been those which might have been
expected to have operated between independent enterprises dealing wholly
independently with one another, then the first--mentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits in the
first--mentioned State. In determining such an adjustment, due regard shall be
had to the other provisions of this Agreement in relation to the nature of the
income and for this purpose the competent authorities of the Contracting States
shall if necessary consult each other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the Contracting
States for the purposes of its tax, being dividends to which a resident of the
other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but:
(a) in the case of tax charged by Australia:
that tax shall not exceed 15 per cent of the gross amount of the
dividends;
(b) in the case of tax charged by Malta:
(i) such tax on the gross amount of the dividends shall not exceed that
chargeable on the profits out of which the dividends are paid;
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(ii) where such dividends are paid out of profits of a company which
are subject to tax at a reduced rate of tax under special provisions
designed to promote investments necessary for the economic
development of Malta, the rate of Malta tax on the dividends shall
not exceed such reduced rate.
The provisions of this paragraph shall not affect the taxation of the company on
the profits out of which the dividends are paid.
(3) The term ‘dividends’ in this Article means income from shares and other
income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident for
the purposes of its tax.
(4) The provisions of paragraph (2) shall not apply if the person beneficially
entitled to the dividends, being a resident of one of the Contracting States,
carries on business in the other Contracting State of which the company paying
the dividends is a resident, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In any
such case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
(5) Dividends paid by a company which is a resident of one of the Contracting
States, being dividends to which a person who is not a resident of the other
Contracting State is beneficially entitled, shall be exempt from tax in that other
State except insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or fixed base situated in
that other State. Provided that this paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of Malta for the purposes of Malta
tax.
ARTICLE 11
Interest
(1) Interest arising in one of the Contracting States, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
(2) Such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but the tax so charged shall not exceed 15 per
cent of the gross amount of the interest.
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(3) The term ‘interest’ in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from any
other form of indebtedness as well as all other income assimilated to income
from money lent by the taxation law of the Contracting State in which the
income arises.
(4) The provisions of paragraph (2) shall not apply if the person beneficially
entitled to the interest, being a resident of one of the Contracting States, carries
on business in the other Contracting State, in which the interest arises, through a
permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the
indebtedness in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of Article 7 or Article 14, as the case may be, shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer is
that State itself or a political subdivision or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the interest, whether he is a resident of one of the
Contracting States or not, has in one of the Contracting States or outside both
Contracting States a permanent establishment or fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base, then such
interest shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest, or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
ARTICLE 12
Royalties
(1) Royalties arising in one of the Contracting States, being royalties to which
a resident of the other Contracting State is beneficially entitled, may be taxed in
that other State.
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(2) Such royalties may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
(3) The term ‘royalties’ in this Article means payments or credits, whether
periodical or not, and however described or computed, to the extent to which
they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark or other like property or
right;
(b) the use of, or the right to use, any industrial, commercial or scientific
equipment;
(c) the supply of scientific, technical, industrial or commercial knowledge
or information;
(d) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in sub--paragraph (a), any such
equipment as is mentioned in sub--paragraph (b) or any such knowledge
or information as is mentioned in sub--paragraph (c);
(e) the use of, or the right to use:
(i) motion picture films;
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
(4) The provisions of paragraph (2) shall not apply if the person beneficially
entitled to the royalties, being a resident of one of the Contracting States, carries
on business in the other Contracting State, in which the royalties arise, through
a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the
property or right in respect of which the royalties are paid or credited is
effectively connected with such permanent establishment or fixed base. In such
a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer is
that State itself or a political subdivision or local authority of that State or a
person who is a resident of that State for the purposes of its tax. Where,
however, the person paying the royalties, whether he is a resident of one of the
Contracting States or not, has in one of the Contracting States or outside both
Contracting States a permanent establishment or fixed base in connection with
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which the liability to pay the royalties was incurred, and the royalties are borne
by the permanent establishment or fixed base, then the royalties shall be deemed
to arise in the State in which the permanent establishment or fixed base is
situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties, or between both of them and some other
person, the amount of the royalties paid or credited, having regard to what they
are paid or credited for, exceeds the amount which might have been expected to
have been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last--mentioned amount. In that case, the excess part of the amount of the
royalties paid or credited shall remain taxable according to the law of each
Contracting State, but subject to the other provisions of this Agreement.
ARTICLE 13
Alienation of Property
(1) Income or gains from the alienation of real property may be taxed in the
Contracting State in which the real property is situated.
(2) Income or gains from the alienation of shares or comparable interests in a
company, the assets of which consist wholly or principally of real property, may
be taxed in the Contracting State in which the assets or the principal assets of
the company are situated.
(3) For the purposes of this Article:
(a) the term ‘real property’ has the same meaning that it has in Article 6;
and
(b) any lease, interest or right referred to in any sub--paragraph of
paragraph (2) of that Article shall be regarded as situated where the
land, mineral deposits, oil or gas wells, quarries or natural resources, as
the case may be, are situated or the exploration may take place.
ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of one of the
Contracting States in respect of professional services or other independent
activities of a similar character shall be taxable only in that State. However, if
such an individual:
(a) has a fixed base regularly available to him in the other Contracting State
for the purpose of performing his activities; or
Agreement between Australia and Malta for the Avoidance of Double Taxation and the
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(b) in a year of income or in the year immediately preceding a year of
assessment, as the case may be, stays in the other Contracting State for
a period or periods aggregating more than 183 days for the purpose of
performing his activities; or
(c) derives, in a year of income or in the year immediately preceding a year
of assessment, as the case may be, from residents of the other
Contracting State gross remuneration exceeding twelve thousand five
hundred Australian dollars or its equivalent in Malta pounds from
performing his activities in that State,
so much of the income derived by him as is attributable to activities so
performed may be taxed in the other State.
(2) The Treasurer of Australia and the Minister responsible for finance in
Malta may agree in letters exchanged for the purpose to variations in the
amount specified in subparagraph (c) of paragraph (1) and any variations so
agreed shall have effect according to the tenor of the letters.
(3) The term ‘professional services’ includes services performed in the
exercise of independent scientific, literary, artistic, educational or teaching
activities, as well as in the exercise of independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and
other similar remuneration derived by an individual who is a resident of one of
the Contracting States in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived from that exercise
may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by
an individual who is a resident of one of the Contracting States in respect of an
employment exercised in the other Contracting State shall be taxable only in the
first--mentioned State if:
(a) the recipient is present in that other State for a period or periods not
exceeding in the aggregate 183 days in the year of income or in the year
immediately preceding the year of assessment, as the case may be, of
that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
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(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State; and
(d) the remuneration is, or upon the application of this Article will be,
subject to tax in the first--mentioned State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be taxed
in that State.
ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors, or
other comparable body however described, of a company which is a resident of
the other Contracting State may be taxed in that other State.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by
entertainers (such as theatrical, motion picture, radio or television artistes and
musicians and athletes) from their personal activities as such may be taxed in
the Contracting State in which these activities are exercised.
(2) Where income in respect of the personal activities of an entertainer as such
accrues not to that entertainer but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer are exercised.
ARTICLE 18
Pensions and Annuities
(1) Pensions (including government pensions) and annuities paid to a resident
of one of the Contracting States shall be taxable only in that State.
(2) The term ‘annuity’ means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration in
money or money’s worth.
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(3) Notwithstanding anything in this Agreement, any pension or allowance that
is paid by one of the Contracting States in respect of wounds, disabilities or
death caused by war, or in respect of war service, and is exempt from tax under
the law of that State, to a resident of the other Contracting State shall be exempt
from tax in that other State.
ARTICLE 19
Government Service
(1) Remuneration, other than a pension or annuity, paid by one of the
Contracting States or a political sub--division or local authority of that State to
any individual in respect of services rendered in the discharge of governmental
functions shall be taxable only in that State. However, such remuneration shall
be taxable only in the other Contracting State if the services are rendered in that
other State and the recipient is a resident of that other State who:
(a) is a citizen of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) The provisions of paragraph (1) shall not apply to remuneration in respect
of services rendered in connection with any trade or business carried on by one
of the Contracting States or a political sub--division or local authority of that
State. In such a case, the provisions of Article 15 or Article 16, as the case may
be, shall apply.
(3) Where remuneration is paid under a development assistance programme of
a Contracting State, out of funds exclusively supplied by that State, to a
specialist or volunteer seconded to the other Contracting State with the consent
of that other State, such remuneration shall be deemed to have been paid by the
first--mentioned State and shall be taxable only in that State.
ARTICLE 20
Students
Where a student, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State solely for the purpose of
his education at a university, college, school or other similar educational
institution, receives payments from sources outside that other State for the
purpose of his maintenance or education, those payments shall be exempt from
tax in that other State.
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ARTICLE 21
Income Not Expressly Mentioned
(1) Items of income of a resident of one of the Contracting States which are
not expressly mentioned in the foregoing Articles of this Agreement shall be
taxable only in that State.
(2) However, any such income derived by a resident of one of the Contracting
States, from sources in the other Contracting State, may also be taxed in that
other State.
(3) The provisions of paragraph (1) shall not apply to income derived by a
resident of one of the Contracting States where that income is effectively
connected with a permanent establishment or fixed base situated in the other
Contracting State. In such a case, the provisions of Article 7 or Article 14, as
the case may be, shall apply.
ARTICLE 22
Sources of Income
Income derived by a resident of one of the Contracting States which, under
any one or more of Articles 6 to 8, Articles 10 to 19 and Article 21, may be
taxed in the other Contracting State shall, for the purposes of Article 23 and of
the income tax law of that other State, be deemed to be income from sources in
that other State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 23
(1) Subject to the provisions of the law of Australia from time to time in force
which relate to the allowance of a credit against Australian tax of tax paid in a
country outside Australia (which shall not affect the general principle hereof),
Malta tax paid under the law of Malta and in accordance with this Agreement,
whether directly or by deduction, in respect of income derived by a person who
is a resident of Australia from sources in Malta (not including, in the case of a
dividend, tax paid in respect of the profits out of which the dividend is paid)
shall be allowed as a credit against Australian tax payable in respect of that
income.
(2) A company which is a resident of Australia is, in accordance with the
provisions of the taxation law of Australia in force at the date of signature of
this Agreement, entitled to a rebate in its assessment at the average rate of tax
Agreement between Australia and Malta for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 24
International Tax Agreements Act 1953 709
payable by the company in respect of dividends that are included in its taxable
income and are received from a company which is a resident of Malta.
However, should the law so in force be amended so that the rebate in relation to
the dividends ceases to be allowable under that law, Australia shall immediately
advise Malta of the change and enter into negotiations with Malta in order to
establish new provisions concerning the credit to be allowed by Australia
against its tax on the dividends.
(3) For the purposes of paragraph (1) and of the income tax law of Australia:
(a) a resident of Australia deriving income from sources in Malta
consisting of dividends to which sub--paragraph (2) (b) (ii) of Article 10
applies, interest to which Article 11 applies or royalties to which Article
12 applies, being income in respect of which Malta tax has been wholly
relieved or reduced for a limited period of time under the provisions of
the Aids to Industries Ordinance 1959, so far as they were in force on,
and have not been modified since, the date of signature of this
Agreement, or have been modified only in minor respects so as not to
affect their general character, or under any other provisions which may
subsequently be agreed by the Contracting States in letters exchanged
for the purpose through the diplomatic channel to be of a substantially
similar character, shall be deemed to have paid Malta tax in an amount,
or the Malta tax paid shall be deemed to have been increased by an
amount, equal to the amount by which the Malta tax that otherwise
would have been payable (which tax, in the case of dividends, shall not
exceed 15 per cent and, in the case of royalties or interest, 10 per cent of
the gross amount thereof) is reduced by the exemption or reduction
granted; and
(b) the amount of the said dividends, interest or royalties shall be deemed to
be the amount that would have been the amount of the dividends,
interest or royalties if no Malta tax had been paid, increased by the
amount by which the tax that otherwise would have been payable is
reduced by the said exemption or reduction.
(4) Paragraph (3) shall not apply in relation to income derived in any year of
income after the year of income that ends on 30 June 1989 or on any later date
that may be agreed by the Contracting States in letters exchanged for this
purpose.
(5) (a) Subject to the provisions of the law of Malta from time to time in force
which relate to the allowance of a credit against Malta tax of tax paid in
a country outside Malta (which shall not affect the general principle
hereof), Australian tax paid under the law of Australia and in
Schedule 24 Agreement between Australia and Malta for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
710 International Tax Agreements Act 1953
accordance with this Agreement, whether directly or by deduction, in
respect of income derived by a person who is a resident of Malta from
sources in Australia (not including, in the case of a dividend, tax paid in
respect of the profits out of which the dividend is paid) shall be allowed
as a credit against Malta tax payable in respect of that income.
(b) Where a company which is a resident of Australia pays a dividend to a
company which is a resident of Malta and which controls directly or
indirectly at least 10 per cent of the voting power in the first--mentioned
company, the credit shall take into account (in addition to any
Australian tax for which credit may be allowed under
sub--paragraph (a)) the Australian tax payable by that first--mentioned
company in respect of the profits out of which such dividend is paid.
(6) Where under this Agreement income is to be relieved from tax in one of
the Contracting States and, under the law in force in the other Contracting State,
a person, in respect of the said income, is subject to tax by reference to the
amount thereof which is remitted to or received in that other State and not by
reference to the full amount thereof, then the relief to be allowed under this
Agreement in the first--mentioned State shall apply only to so much of the
income as is remitted to or received in the other State.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 24
Mutual Agreement Procedure
(1) Where a resident of one of the Contracting States considers that the actions
of the competent authority of one or both of the Contracting States result or will
result for him in taxation not in accordance with this Agreement, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which he
is a resident. The case must be presented within three years from the first
notification of the action giving rise to taxation not in accordance with this
Agreement.
(2) The competent authority shall endeavour, if the claim appears to it to be
justified and if it is not itself able to arrive at an appropriate solution, to resolve
the case with the competent authority of the other Contracting State, with a
view to the avoidance of taxation not in accordance with this Agreement. Any
solution so reached shall be implemented notwithstanding any time limits in the
national laws of the Contracting States.
Agreement between Australia and Malta for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 24
International Tax Agreements Act 1953 711
(3) The competent authorities of the Contracting States shall jointly endeavour
to resolve any difficulties or doubts arising as to the interpretation or application
of this Agreement.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 25
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies insofar as the taxation thereunder is not contrary to this
Agreement. The exchange of information is not restricted by Article 1. Any
information received by the competent authority of a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic
laws of that State and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes to which this Agreement applies and shall be used only for
such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and Consular Officials
(1) Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special international agreements.
Schedule 24 Agreement between Australia and Malta for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
712 International Tax Agreements Act 1953
(2) Notwithstanding Article 4, an individual who is a member of a diplomatic
mission, consular post or permanent mission of one of the Contracting States
which is situated in the other Contracting State or in a third State shall be
deemed for the purposes of this Agreement to be a resident of the sending State
if he is liable in the sending State to the same obligations in relation to tax on
his total income as are residents of that sending State.
(3) This Agreement shall not apply to International Organizations, to organs or
officials thereof or to persons who are members of a diplomatic mission,
consular post or permanent mission of a third State, being present in a
Contracting State and who are not liable in either Contracting State to the same
obligations in relation to tax on their total income as are residents thereof.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 27
Entry into Force
This Agreement shall enter into force on the date on which the Contracting
States exchange notes through the diplomatic channel notifying each other that
the last of such things has been done as is necessary to give this Agreement the
force of law in Australia and in Malta, as the case may be, and thereupon this
Agreement shall have effect:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 January
in the calendar year next following that in which the Agreement
enters into force;
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
next following that in which the Agreement enters into force;
(b) in Malta:
in relation to taxes which are levied for the year of assessment
beginning on 1 January in the second calendar year following that
in which the Agreement enters into force and for any subsequent
year of assessment.
Agreement between Australia and Malta for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income Schedule 24
International Tax Agreements Act 1953 713
ARTICLE 28
Termination
This Agreement shall continue in effect indefinitely, but either of the
Contracting States may, on or before 30 June in any calendar year beginning
after the expiration of 5 years from the date of its entry into force, give to the
other Contracting State through the diplomatic channel written notice of
termination and, in that event, this Agreement shall cease to be effective:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
non--resident, in relation to income derived on or after 1 January
in the calendar year next following that in which the notice of
termination is given;
(ii) in respect of other Australian tax, in relation to income of any
year of income beginning on or after 1 July in the calendar year
next following that in which the notice of termination is given;
(b) in Malta:
in relation to taxes which are levied for the year of assessment
beginning on 1 January in the second calendar year following that
in which the notice of termination is given and for subsequent
years of assessment.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have
signed this Agreement.
DONE in duplicate at Malta this ninth day of May One thousand nine
hundred and eighty--four in the English language.
N. ROSS--SMITH ALEX SCEBERRAS TRIGONA
FOR AUSTRALIA FOR MALTA
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