WARNING:
This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 21 August 1996.
CONTENTS
Taxation Laws Amendment (International Tax Agreements)
Bill 1996
Date Introduced: 27 June 1996
House: House of Representatives
Portfolio: Treasury
Commencement: Royal Assent
To provide legislative force for the double taxation agreement
entered into between the Australian Commerce and Industry Office
and the Taipei Economic and Cultural Office.
Australia is a party to approximately 35 bilateral agreements
and conventions which are commonly known as double taxation
agreements which aim to minimise the double taxation of income and
other receipts. Double taxation can arise where there is a
connection in more than one country with the income or other
receipt and the taxpayer. the main methods used to limit double
taxation are to reserve the right to tax certain income for the
country of which the taxpayer is a resident and to allow either
country to tax other income at its source with the country of
residence allowing a credit for any tax paid in the other
country.
In relation to the main categories of income and other receipts,
the general rules are:
- business profits: if the profits arise from the operation of a
permanent establishment, they may be taxed by the country in which
the permanent establishment is established to the extent that the
profits are attributable to the permanent establishment;
- income from real property: may be taxed by the country in which
the property is situated; and
- dividends, interest and royalties: such income may be taxed in
the country where the taxpayer resides and in the country from
which they are sourced up to the maximum rate specified in the
agreement (generally 10% - 15%).
As well, recent agreements contain 'sweeper clauses' that
determine the taxation liability for classes on income and capital
gains that are not specifically dealt with elsewhere in the
agreement.
While known as double taxation agreements, they also contain
provisions to prevent evasion of tax between the two countries.
The agreements are generally between governments, this is not
the case with the Taiwan agreement as Australia does not recognise
Taiwan as an independent country. For this reason the agreement,
which was signed in Canberra on 29 may 1996, is expressed to be
between The Australian Commerce and Industry Office and the Taipei
Economic and Cultural office.
The agreement reflects the current range of double taxation
agreements as outlined above. The most important aspects of the
Billprovide for:
- taxation rates in relation to dividends, interest and royalties
will be within the general 10% to 15% rates noted above; and
- the agreement contains general 'sweeper' provisions in relation
to capital gains (Article 13) and other income (Article 21).
Chris Field Ph. 06 277 2439
16 August 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library,
1996.
This page was prepared by the Parliamentary Library,
Commonwealth of Australia
Last updated: 20 August 1996
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