INCOME TAX LAWS AMENDMENT (ROYALTIES) ACT 1976
An Act relating to the Taxation of Royalties.
BE IT ENACTED by the Queen, and the Senate and House of Representatives of the Commonwealth of Australia, as follows: —
Short title.
1. This Act may be cited as the Income Tax Laws Amendment (Royalties) Act 1976.
Commencement.
2. This Act shall come into operation on the day on which it receives the Royal Assent.
PART II—AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT
References to Income Tax Assessment Act.
3. The Income Tax Assessment Act 1936 is in this Part referred to as the Principal Act.
Interpretation.
4. Section 6 of the Principal Act is amended by omitting from sub-section (1) the definition of “royalty” and substituting the following definition:—
“‘royalty’ or ‘royalties’ includes any payment, whether periodical or not, and however described or computed, to the extent to which it is paid 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); or
(e) the use of, or the right to use—
(i) motion picture films;
(ii) films or video tapes for use in connexion with television; or
(iii) tapes for use in connexion with radio broadcasting;”.
Source of royalty income derived by a non-resident.
5. Section 6c of the Principal Act is amended by inserting in sub-section (2), after the word “of”, the words “paragraph (r) of section 23 and”.
Certain items of assessable income.
6. Section 26 of the Principal Act is amended by omitting paragraph (f) and substituting the following paragraph:—
“(f) any amount received as or by way of royalty other than an amount that—
(i) but for the definition of ‘royalty’ in sub-section (1) of section 6 would not be such an amount; and
(ii) is not ‘income’ within the ordinary meaning of that expression;”.
PART III—AMENDMENTS OF THE INCOME TAX (INTERNATIONAL AGREEMENTS) ACT
Interpretation.
7. Section 3 of the Income Tax (International Agreements) Act 1953 is amended—
(a) by omitting from sub-section (1) the definition of “the Assessment Act” and substituting the following definition:—
“‘the Assessment Act’ means the Income Tax Assessment Act 1936;”; and
(b) by adding at the end thereof the following sub-sections:—
“(8) Where, by virtue of a provision of an agreement, the expression ‘royalties’ as used in, or in a particular provision of, that agreement has the meaning that that expression has under the law of Australia relating to income tax, that expression has, for the purposes of that agreement or of that particular provision, as the case may be, the meaning that that expression has by virtue of sub-section (1) of section 6 of the Assessment Act.
“(9) Where, by virtue of a provision of an agreement, expressions used in, or in a particular provision of, that agreement and not otherwise defined for the purposes of that agreement or of that particular provision have the meanings that those expressions have under the law of Australia relating to income tax, sub-section (8) does not affect the interpretation of that agreement or of that particular provision, as the case may be, in relation to the meaning of expressions other than the expression ‘royalties’.”.
Application of amendments.
8. The amendments made by this Act apply, and shall be deemed to have applied, to income derived on or after 1 July 1968 other than income in respect of which an assessment was made before 5 July 1976.
Amendments not to affect interpretation of previous law.
9. It is hereby declared that the amendments made by this Act are enacted for the avoidance of doubt and, in particular, shall not be taken as implying that the definition of the expression “royalty” in sub-section 6(1) of the Income Tax Assessment Act 1936 as in force at any time during the period that commenced on 1 July 1968 and ended immediately before the commencement of this Act did not apply for the purposes of the application of the Income Tax Assessment Act 1936, or of the Income Tax (International Agreements) Act 1953, as amended and in force at any time during that period—
(a) in relation to payments made to residents of countries other than the United Kingdom; or
(b) in relation to the expression “royalties” as used in a provision of an agreement with respect to taxes on income entered into between Australia and a country other than the United Kingdom where that expression is not given by that agreement a different meaning in that provision.
