2004-2005-2006 The Parliament of the Commonwealth of Australia HOUSE OF REPRESENTATIVES Presented and read a first time International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 (Treasury) A Bill for an Act to amend the law relating to taxation, and for related purposes [Page Break] 1 Short title ........................................................................................... 1 2 Commencement ................................................................................. 1 3 Schedule(s) ........................................................................................ 1 Schedule 1--Mutual assistance in collection of tax debts 3 Income Tax Assessment Act 1997 3 Taxation Administration Act 1953 3 Taxation (Interest on Overpayments and Early Payments) Act 1983 8 Schedule 2--Exchange of information 10 International Tax Agreements Act 1953 10 Taxation Administration Act 1953 11 Schedule 3--The New Zealand protocol 12 International Tax Agreements Act 1953 12 i International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] 1 taxation, and for related purposes 2 The Parliament of Australia enacts: 3 1 Short title 4 This Act may be cited as the International Tax Agreements 5 Amendment Act (No. 1) 2006. 6 2 Commencement 7 This Act commences on the day on which it receives the Royal 8 Assent. 9 3 Schedule(s) 10 Each Act that is specified in a Schedule to this Act is amended or 11 repealed as set out in the applicable items in the Schedule 12 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 1 [Page Break] 1 according to its terms. 2 2 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] 1 Schedule 1--Mutual assistance in collection 2 of tax debts 3 4 Income Tax Assessment Act 1997 5 1 Subsection 995-1(1) 6 Insert: 7 foreign revenue claim has the meaning given by section 263-10 in 8 Schedule 1 to the Taxation Administration Act 1953. 9 Taxation Administration Act 1953 10 2 Subsection 8AAB(5) (after table item 17J) 11 Insert: 12 17K 263-30 in Taxation Administration Act 1953 Schedule 1 3 Section 8AAZA (definition of credit) 13 Repeal the definition, substitute: 14 credit includes: 15 (a) an amount that the Commissioner must pay to a taxpayer 16 under a taxation law (other than the Product Grants and 17 Benefits Administration Act 2000), whether or not described 18 as a credit; and 19 (b) an amount received by the Commissioner in respect of a 20 taxpayer as a result of the Commissioner having made a 21 claim that is similar in nature to a foreign revenue claim (as 22 defined in section 263-10 in Schedule 1). 23 4 Subsection 250-10(2) in Schedule 1 (after table item 135) 24 Insert: 25 137 amount to be recovered 263-30 in Taxation Administration Act 1953 from a debtor under a Schedule 1 registered foreign revenue claim International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 3 [Page Break] 5 At the end of section 255-40 in Schedule 1 1 Add: 2 (3) For the purposes of giving effect to a provision of an international 3 agreement of a kind referred to in Subdivision 263-A (about 4 foreign revenue claims), if a document needs to be served on a 5 person and the Commissioner, after making reasonable inquiries, is 6 satisfied that: 7 (a) the person is absent from Australia and does not have an 8 agent in Australia on whom the document can be served; and 9 (b) the person has an address in a foreign country, a constituent 10 part of a foreign country or a foreign territory; 11 the Commissioner may serve the document on the person at the 12 address mentioned in paragraph (b). 13 6 Paragraph 255-45(1)(a) in Schedule 1 14 After "subsection (2)", insert "or (3)". 15 7 At the end of section 255-45 in Schedule 1 16 Add: 17 (3) A certificate may state: 18 (a) that a *foreign revenue claim for an amount specified in the 19 certificate has been made by the competent authority under 20 the relevant international agreement; or 21 (b) that the relevant requirements of the relevant international 22 agreement have been complied with in relation to the foreign 23 revenue claim; or 24 (c) that the claim was registered under Division 263 on the date 25 specified in the certificate; or 26 (d) that, as at the date of the certificate, the Commissioner has or 27 has not received advice from the competent authority under 28 the relevant international agreement about the reduction or 29 discharge of an amount to be recovered under the claim; or 30 (e) that the particulars of any reduction or discharge of an 31 amount to be recovered under the claim are as specified in 32 the certificate. 33 8 After Division 260 in Schedule 1 34 Insert: 35 4 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] Division 263--Mutual assistance in collection of foreign tax 1 debts 2 Table of Subdivisions 3 263-A Foreign revenue claims 4 Subdivision 263-A--Foreign revenue claims 5 Guide to Subdivision 263-A 6 263-5 What this Subdivision is about 7 This Subdivision can be activated if there is in force an agreement 8 between Australia and a foreign country or territory that contains 9 an article relating to assistance in collection of foreign tax debts. 10 The Commissioner can collect from an entity an amount in respect 11 of a tax debt that the person owes to such a country or territory or 12 take action to conserve assets of the entity. 13 The Commissioner is required to remit amounts collected to the 14 foreign country or territory concerned. 15 Table of sections 16 Operative provisions 17 263-10 Meaning of foreign revenue claim 18 263-15 Requirements for foreign revenue claims 19 263-20 Foreign Revenue Claims Register 20 263-25 Registering claims 21 263-30 When amount is due and payable 22 263-35 Amending the Register 23 263-40 Payment to competent authority 24 Operative provisions 25 263-10 Meaning of foreign revenue claim 26 A foreign revenue claim is a claim made to the Commissioner: 27 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 5 [Page Break] (a) in accordance with an agreement (the international 1 agreement) between Australia and: 2 (i) a foreign country or a constituent part of a foreign 3 country; or 4 (ii) an overseas territory; 5 (the overseas entity); and 6 (b) for one or both of these purposes: 7 (i) the recovery by the Commissioner of an amount from 8 an entity (the debtor) in respect of taxes imposed 9 otherwise than by an *Australian law (including any 10 associated amounts); 11 (ii) the conserving of assets for the purposes of a recovery 12 of that kind. 13 263-15 Requirements for foreign revenue claims 14 A *foreign revenue claim must: 15 (a) be made by or on behalf of an entity that is, under the 16 relevant international agreement, the competent authority; 17 and 18 (b) be consistent with the provisions of that agreement; and 19 (c) be made in the *approved form; and 20 (d) specify the amount owed by the debtor in Australian currency 21 (calculated as at the day the claim is made); and 22 (e) be accompanied by a declaration by the competent authority 23 stating that the claim fulfils the requirements of that 24 agreement. 25 263-20 Foreign Revenue Claims Register 26 (1) The Commissioner must keep a register called the Foreign 27 Revenue Claims Register (the Register). 28 (2) The regulations may make provision in relation to the form in 29 which the Register may be kept. 30 (3) The register is not a legislative instrument. 31 6 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] 263-25 Registering claims 1 If the Commissioner is satisfied that a *foreign revenue claim has 2 been made in accordance with section 263-15, the Commissioner 3 must register the claim by entering particulars of it in the Register 4 within 90 days after receiving the claim. 5 263-30 When amount is due and payable 6 (1) When particulars of a *foreign revenue claim are entered in the 7 Register, the amount owed by the debtor becomes a pecuniary 8 liability to the Commonwealth by the debtor. 9 Note 1: The amount to be recovered from the debtor will be a primary tax debt 10 for the purposes of Part IIB and the Commissioner may allocate the 11 debt to a running balance account under that Part. 12 Note 2: For provisions about collection and recovery of the debt, see 13 Part 4-15. 14 (2) That amount becomes due and payable 30 days after notice of the 15 particulars of the *foreign revenue claim is given to the debtor or 16 on a later day specified in the notice. 17 (3) If that amount remains unpaid after it is due and payable, the 18 debtor is liable to pay *general interest charge on the unpaid 19 amount for each day in the period that: 20 (a) started at the beginning of the day by which the amount was 21 due to be paid; and 22 (b) finishes at the end of the last day at the end of which either of 23 the following remains unpaid: 24 (i) the amount; 25 (ii) general interest charge on any of the amount. 26 263-35 Amending the Register 27 (1) The Commissioner may, with the agreement of the relevant 28 competent authority, amend the Register to correct an error. 29 (2) The Commissioner may, with the agreement of the relevant 30 competent authority: 31 (a) remove from the Register the particulars of a *foreign 32 revenue claim; or 33 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 7 [Page Break] (b) reduce an amount to be recovered from a debtor under the 1 claim. 2 (3) A debtor may, after receiving a copy of the particulars of a *foreign 3 revenue claim entered in the Register, apply to the Commissioner 4 in the *approved form to have those particulars removed from the 5 Register. 6 (4) The Commissioner may, after considering the application, remove 7 those particulars from the Register. 8 (5) If the Commissioner removes particulars of a *foreign revenue 9 claim relating to the recovery of an amount from the Register 10 under paragraph (2)(a) or subsection (4), the debtor is taken never 11 to have been liable to pay an amount (including any *general 12 interest charge) as a result of the foreign revenue claim. 13 (6) If the Commissioner reduces the amount to be recovered from a 14 debtor under a *foreign revenue claim under paragraph (2)(b), the 15 amount of the reduction is taken never to have been payable by the 16 debtor. 17 263-40 Payment to competent authority 18 (1) The Commissioner must, if the Commissioner recovers all or part 19 of an amount to be recovered from a debtor under a registered 20 *foreign revenue claim, pay that amount to the competent authority 21 concerned or to another entity on behalf of that competent 22 authority. 23 (2) The Commissioner may also pay to the competent authority all or 24 part of an amount that the Commissioner has received and that is 25 attributable to *general interest charge in relation to the claim. 26 Taxation (Interest on Overpayments and Early Payments) Act 27 1983 28 9 Subsection 3(1) (after paragraph (c) of the definition of 29 decision to which this Act applies) 30 Insert: 31 8 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] (caa) a decision under Subdivision 263-A (about foreign revenue 1 claims) in Schedule 1 to the Taxation Administration Act 2 1953; or 3 10 Section 3C (after table item 90 of the definition of relevant 4 tax) 5 Insert: 6 92 An amount payable to the Commissioner under Subdivision 263-A (about foreign revenue claims) in Schedule 1 to the Taxation Administration Act 1953 11 Application 7 The amendments made by this Schedule apply to claims for assistance 8 in collection of foreign tax debts made after the day on which this Act 9 receives the Royal Assent. 10 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 9 [Page Break] 1 Schedule 2--Exchange of information 2 3 International Tax Agreements Act 1953 4 1 After section 22 5 Insert: 6 23 Gathering and exchanging information 7 (1) The Commissioner or an officer authorised by the Commissioner 8 may use the information gathering provisions for the purpose of 9 gathering information to be exchanged in accordance with the 10 Commissioner's obligations under an international agreement. 11 (2) Making a record of, and exchanging, information in accordance 12 with the Commissioner's obligations under an international 13 agreement is not a breach of a provision of a taxation law that 14 prohibits the Commissioner or an officer from making a record of, 15 or disclosing, information. 16 Example: An example of such a provision is section 3C of the Taxation 17 Administration Act 1953. 18 (3) Subsections (1) and (2) have effect whether or not the information 19 relates to Australian tax. 20 (4) In this section: 21 information gathering provision means a provision of a taxation 22 law that allows the Commissioner: 23 (a) to access land, premises, documents, information, goods or 24 other property; or 25 (b) to require or direct a person to provide information; or 26 (c) to require or direct a person to appear before the 27 Commissioner or an officer and give evidence or produce 28 documents. 29 international agreement means: 30 (a) an agreement given the force of law under this Act; or 31 (b) some other agreement that allows for the exchange of 32 information on tax matters between Australia and: 33 10 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] (i) a foreign country or a constituent part of a foreign 1 country; or 2 (ii) an overseas territory. 3 taxation law has the same meaning as in the Income Tax 4 Assessment Act 1997. 5 Taxation Administration Act 1953 6 2 At the end of subsection 3C(2) 7 Add: 8 Note: It is not a breach of subsection (2) to record or disclose information in 9 accordance with an obligation Australia has under an agreement with 10 another country. See section 23 of the International Tax Agreements 11 Act 1953. 12 3 Paragraphs 3C(2A)(b) and (c) 13 Repeal the paragraphs, substitute: 14 (b) in the performance of the person's duties as an officer. 15 4 Paragraph 355-5(4)(a) in Schedule 1 16 Repeal the paragraph, substitute: 17 (a) the making of the record or the disclosure is for the purposes 18 of an *indirect tax law; or 19 5 Subsection 355-5(4) in Schedule 1 (note) 20 Omit "Note", substitute "Note 1". 21 6 At the end of subsection 355-5(4) in Schedule 1 22 Add: 23 Note 2: It is not a breach of subsection (2) to record or disclose information in 24 accordance with an obligation Australia has under an agreement with 25 another country. See section 23 of the International Tax Agreements 26 Act 1953. 27 7 Application 28 The amendments made by this Schedule apply to requests for the 29 exchange of information made after the day on which this Act receives 30 the Royal Assent. 31 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 11 [Page Break] 1 Schedule 3--The New Zealand protocol 2 3 International Tax Agreements Act 1953 4 1 Subsection 3(1) (at the end of the definition of the New 5 Zealand agreement) 6 Add ", as amended by the New Zealand protocol". 7 2 Subsection 3(1) 8 Insert: 9 the New Zealand protocol means the Protocol amending the 10 Agreement between the Government of Australia and the 11 Government of New Zealand for the avoidance of double taxation 12 and the prevention of fiscal evasion with respect to taxes on 13 income. A copy of the protocol is set out in Schedule 4A. 14 3 After section 6B 15 Insert: 16 6C New Zealand protocol 17 Subject to this Act, on and after the date of entry into force of a 18 provision of the New Zealand protocol, the provision has the force 19 of law according to its tenor. 20 4 After Schedule 4 21 Insert: 22 12 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] Schedule 4A--The New Zealand protocol 1 Note: See section 6C 2 3 4 5 6 PROTOCOL 7 AMENDING THE AGREEMENT BETWEEN 8 THE GOVERNMENT OF AUSTRALIA 9 AND 10 THE GOVERNMENT OF NEW ZEALAND 11 FOR THE AVOIDANCE OF DOUBLE TAXATION 12 AND 13 THE PREVENTION OF FISCAL EVASION WITH RESPECT TO 14 TAXES ON INCOME 15 Melbourne, 15 November 2005 16 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 13 [Page Break] 1 PROTOCOL AMENDING THE AGREEMENT BETWEEN THE 2 GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF NEW 3 ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE 4 PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON 5 INCOME. 6 7 The Government of Australia and the Government of New Zealand, 8 9 10 Desiring to amend the Agreement between the Government of New Zealand 11 and the Government of Australia for the avoidance of double taxation and the 12 prevention of fiscal evasion with respect to taxes on income signed at 13 Melbourne on the 27th day of January 1995 (in this Protocol referred to as "the 14 Agreement"), 15 16 17 Have agreed as follows: 18 ARTICLE 1 19 Article 2 of the Agreement is amended by inserting: 20 "3. Notwithstanding paragraphs 1 and 2, the taxes to which Articles 26 and 21 27 shall apply are: 22 a) in the case of New Zealand, taxes of every kind and description 23 imposed under its tax laws; and 24 b) in the case of Australia, taxes of every kind and description 25 imposed under the federal tax laws administered by the 26 Commissioner of Taxation." 27 ARTICLE 2 28 Article 26 of the Agreement is omitted and the following Article is substituted: 29 "Article 26 30 14 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] EXCHANGE OF INFORMATION 1 1. The competent authorities of the Contracting States shall exchange such 2 information as is forseeably relevant for carrying out the provisions of this 3 Agreement or to the administration or enforcement of the domestic law 4 concerning taxes referred to in Article 2, insofar as the taxation thereunder is 5 not contrary to the Agreement. The exchange of information is not restricted by 6 Article 1. 7 2. Any information received under paragraph 1 by a Contracting State 8 shall be treated as secret in the same manner as information obtained under the 9 domestic law of that State and shall be disclosed only to persons or authorities 10 (including courts and administrative bodies) concerned with the assessment or 11 collection of, the enforcement or prosecution in respect of, the determination of 12 appeals in relation to, the taxes referred to in paragraph 1, or the oversight of the 13 above. Such persons or authorities shall use the information only for such 14 purposes. They may disclose the information in public court proceedings or in 15 judicial decisions. 16 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as 17 to impose on a Contracting State the obligation: 18 a) to carry out administrative measures at variance with the law 19 and administrative practice of that or of the other Contracting 20 State; 21 b) to supply information which is not obtainable by the competent 22 authority under the law or in the normal course of the 23 administration of that or of the other Contracting State; 24 c) to supply information which would disclose any trade, business, 25 industrial, commercial or professional secret or trade process, or 26 information, the disclosure of which would be contrary to 27 public policy (ordre public). 28 4. If information is requested by a Contracting State in accordance with 29 this Article, the other Contracting State shall use its information gathering 30 measures to obtain the requested information, even though that other State may 31 not need such information for its own tax purposes. The obligation contained in 32 the preceding sentence is subject to the limitations of paragraph 3 but in no case 33 shall such limitations be construed to permit a Contracting State to decline to 34 supply information solely because it has no domestic interest in such 35 information. 36 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 15 [Page Break] 5. In no case shall the provisions of paragraph 3 be construed to permit a 1 Contracting State to decline to supply information solely because the 2 information is held by a bank, other financial institution, nominee or person 3 acting in an agency or a fiduciary capacity or because it relates to ownership 4 interests in a person." 5 ARTICLE 3 6 Article 27, Article 28 and Article 29 of the Agreement are renumbered as 7 Article 28, Article 29 and Article 30 respectively. 8 ARTICLE 4 9 The Agreement is amended by inserting: 10 "Article 27 11 ASSISTANCE IN COLLECTION OF TAXES 12 1. The Contracting States shall lend assistance to each other in the 13 collection of revenue claims. This assistance is not restricted by Article 1. The 14 competent authorities of the Contracting States may by mutual agreement settle 15 the mode of application of this Article. 16 2. The term "revenue claim" as used in this Article means an amount 17 owed in respect of taxes referred to in Article 2, insofar as the taxation 18 thereunder is not contrary to this Agreement or any other instrument to which 19 the Contracting States are parties, as well as interest, administrative penalties 20 and costs of collection or conservancy related to such amount. 21 3. When a revenue claim of a Contracting State is enforceable under the 22 law of that State and is owed by a person who, at that time, cannot, under the 23 law of that State, prevent its collection, that revenue claim shall, at the request 24 of the competent authority of that State, be accepted for purposes of collection 25 by the competent authority of the other Contracting State. That revenue claim 26 shall be collected by that other State in accordance with the provisions of its law 27 applicable to the enforcement and collection of its own taxes as if the revenue 28 claim were a revenue claim of that other State. 29 16 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] 4. When a revenue claim of a Contracting State is a claim in respect of 1 which that State may, under its law, take measures of conservancy with a view 2 to ensure its collection, that revenue claim shall, at the request of the competent 3 authority of that State, be accepted for purposes of taking measures of 4 conservancy by the competent authority of the other Contracting State. That 5 other State shall take measures of conservancy in respect of that revenue claim 6 in accordance with the provisions of its law as if the revenue claim were a 7 revenue claim of that other State even if, at the time when such measures are 8 applied, the revenue claim is not enforceable in the first-mentioned State or is 9 owed by a person who has a right to prevent its collection. 10 5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim 11 accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in 12 that State, be subject to the time limits or accorded any priority applicable to a 13 revenue claim under the law of that State by reason of its nature as such. In 14 addition, a revenue claim accepted by a Contracting State for the purposes of 15 paragraph 3 or 4 shall not, in that State, have any priority applicable to that 16 revenue claim under the law of the other Contracting State. 17 6. Proceedings with respect to the existence, validity or the amount of a 18 revenue claim of a Contracting State shall not be brought before the courts or 19 administrative bodies of the other Contracting State. 20 7. Where, at any time after a request has been made by a Contracting State 21 under paragraph 3 or 4 and before the other Contracting State has collected and 22 remitted the relevant revenue claim to the first-mentioned State, the relevant 23 revenue claim ceases to be 24 a) in the case of a request under paragraph 3, a revenue claim of 25 the first-mentioned State that is enforceable under the law of 26 that State and is owed by a person who, at that time, cannot, 27 under the law of that State, prevent its collection, or 28 b) in the case of a request under paragraph 4, a revenue claim of 29 the first-mentioned State in respect of which that State may, 30 under its law, take measures of conservancy with a view to 31 ensure its collection 32 the competent authority of the first-mentioned State shall promptly notify the 33 competent authority of the other State of that fact and, at the option of the other 34 State, the first-mentioned State shall either suspend or withdraw its request. 35 8. In no case shall the provisions of this Article be construed so as to 36 impose on a Contracting State the obligation: 37 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 17 [Page Break] a) to carry out administrative measures at variance with the law 1 and administrative practice of that or of the other Contracting 2 State; 3 b) to carry out measures which would be contrary to public policy 4 (ordre public); 5 c) to provide assistance if the other Contracting State has not 6 pursued all reasonable measures of collection or conservancy, 7 as the case may be, available under its law or administrative 8 practice; 9 d) to provide assistance in those cases where the administrative 10 burden for that State is clearly disproportionate to the benefit to 11 be derived by the other Contracting State; 12 e) to provide assistance if that State considers that the taxes with 13 respect to which assistance is requested are imposed contrary to 14 generally accepted taxation principles." 15 16 ARTICLE 5 17 With reference to Articles 10, 11 and 12, if in any future Agreement with any 18 other State, New Zealand should limit its taxation at source of dividends, 19 interest or royalties to a rate lower than the one provided for in any of those 20 Articles, the Government of New Zealand shall without undue delay inform the 21 Government of Australia and shall enter into negotiations with the Government 22 of Australia with a view to providing the same treatment. 23 24 ARTICLE 6 25 1. The Government of New Zealand and the Government of Australia 26 shall notify each other in writing through the diplomatic channel of the 27 completion of their domestic requirements for the entry into force of this 28 Protocol. 29 18 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 [Page Break] 2. The Protocol, which shall form an integral part of the Agreement, shall 1 enter into force on the date of the last notification, and thereupon the Protocol 2 shall have effect. 3 3. Notwithstanding paragraph 2, Article 4 shall have effect from the date 4 agreed in a subsequent exchange of notes through the diplomatic channel. 5 6 In WITNESS WHEREOF the undersigned, being duly authorised thereto by 7 their respective Governments, have signed this Protocol. 8 9 DONE at Melbourne in duplicate this fifteenth day of November two thousand 10 and five in the English language. 11 12 13 FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF AUSTRALIA: NEW ZEALAND: Peter Costello Kate Lackey [Signatures omitted] 14 International Tax Agreements Amendment Bill (No. 1) 2006 No. , 2006 19