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 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;
(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;
(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;
(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 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.
(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.
(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 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 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 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, 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.
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—
(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.
(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 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.
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 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 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 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.
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 |
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.
(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
“(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.”.
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:
“(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:
“(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 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
(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
(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 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.”.
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), 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 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.”.
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.
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
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 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;
(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
(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;
(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
(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.
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 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 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
(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 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 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.
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
(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 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.
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.
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.
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.
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 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. 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
(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.
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.
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
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
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.”
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).
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.
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, 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.
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]
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;
(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 “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.
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;
(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;
(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
(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.
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 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 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 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 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.
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
(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 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;
(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 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 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 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;
(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 |
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.”.
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.
(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
(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.
(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 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
(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.
(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:
“(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.
(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:
“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 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;
(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.
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
(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;
(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 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:
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 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,
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:
(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.
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
(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 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;
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 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.
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.
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.
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:
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.
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 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.
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
(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
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.
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.
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:
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
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 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.
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
(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 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.
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, 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.
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.
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
(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.
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.
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.
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.
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 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.
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
(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:
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.
For Australia | For Japan |
Hon. Stephen Smith Minister for Foreign Affairs [Signatures omitted] | Hon. Masahiko Koumura Minister for Foreign Affairs |
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;
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.
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.
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 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 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 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.
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 |
(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
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]
(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
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”).
(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.
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.
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 |
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.
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;
(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 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 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 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, 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 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.
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.
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.
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.
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 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;
(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;
(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.
(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 |
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 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 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
(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.
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 |
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);
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;
(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 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;
(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 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.
(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 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 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.
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 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 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
(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
(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 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.
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 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.
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.
(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.
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.
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 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
(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 |
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.’
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.
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
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.
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 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
(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;
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.
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 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;
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.
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
(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 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:
(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.
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.
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 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.
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 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.
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.
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.
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 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 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
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 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 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 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 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.
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):
(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 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.
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.
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 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 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 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.
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;
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.
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 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;
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.
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:
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:
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.
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 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 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 ;
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]
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.
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]
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;
(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.
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
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);
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 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.
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.
(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.
(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.
(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 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 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 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 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 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 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.
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 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 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.
(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 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.
(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.
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 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—
(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;
(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 |
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).’.
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.’.
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
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:
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;
(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.
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.
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;
(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.
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 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.
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.
(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 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 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.
(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
(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.
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.
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.
(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.
(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 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.
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 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.
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
(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.
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
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 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;
(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.
(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.
(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.
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.
(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 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 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 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 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.
(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
(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.
(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.
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
(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.
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
(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 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 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 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 |
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 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;
(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 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;
(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.
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.
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.
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 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 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.
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, 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 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.
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.
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.
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.
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 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 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.
(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.
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 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 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;
(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 |
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,
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.”.
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.”.
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.
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:
“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 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 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 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 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.
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
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.”.
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 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.”.
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 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 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:
(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 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
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.
(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 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.
(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;
(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 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 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.
(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.
(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 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 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.
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 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
(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.
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.
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.
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 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 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 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 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;
(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
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).
(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;
(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 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.
(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 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.
(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 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
(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.
(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 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 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;
(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.
(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.
(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.
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.
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 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, 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.
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 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;
(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
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 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 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 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;
(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.
(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.
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.
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.
(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 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 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 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.
‑.(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.
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 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;
(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.
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 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.
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.
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 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.
(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;
(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.
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 |
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);
(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;
(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 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.
(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 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.
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.
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
(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 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 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.
(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
(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.
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.
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.
(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.
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 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;
(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—
(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.
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).
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 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 |
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;
(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 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.
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.
(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.
(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.
(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.
(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.
(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 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 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.
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 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;
(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.
(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.
(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 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.
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.
(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;
(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 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.
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.
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 |
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 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
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.
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.
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 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
(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
(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 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
(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
(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 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;
(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 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 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.
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.
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
(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 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.
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 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.
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.
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, 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:
(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.
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 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.
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 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 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 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.
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
(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 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.
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 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 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:
(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.
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.
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.
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]
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 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 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 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.
(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
(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;
(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 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.
(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 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;
(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.
(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.
(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 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
(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
(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.
(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.
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 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 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.
(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.
(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.
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 |
