Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004-2005-2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
INTERNATIONAL TAX AGREEMENTS AMENDMENT BILL (No. 1) 2006
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Treasurer, the Hon Peter Costello MP)
Table of contents
Glossary ....................................................................................... 1
General outline and financial impact ....................................................... 3
Chapter 1 Mutual assistance in collection of tax debts................... 5
Chapter 2 Exchange of information .............................................. 17
Chapter 3 The Protocol with New Zealand ................................... 23
Index ..................................................................................... 35
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
ATO Australian Taxation Office
A$ in Australian dollars
Commissioner Commissioner of Taxation
ITAA 1936 Income Tax Assessment Act 1936
ITAA 1997 Income Tax Assessment Act 1997
NZ Tax Commissioner The New Zealand Commissioner for Inland
Revenue
OECD Organisation for Economic Co-operation
and Development
OECD Model OECD Model Tax Convention on Income
and on Capital
TAA 1953 Taxation Administration Act 1953
the Agreement 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 Assessment Acts Income Tax Assessment Act 1936
(ITAA 1936) and the Income Tax
Assessment Act 1997 (ITAA 1997)
the Protocol 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 Register Foreign Revenue Claims Register
1
General outline and financial impact
Mutual assistance in collection of tax debts
Schedule 1 to this Bill amends the Taxation Administration Act 1953 and
the Income Tax Assessment Act 1997 to provide a framework to allow the
Commissioner of Taxation to collect a taxation debt on behalf of a foreign
taxation authority or to take conservancy measures to ensure the
collection of that debt.
Date of effect: These amendments will apply to requests made under
Assistance in Collection provisions in an international agreement from the
day following Royal Assent, provided that the relevant provision in the
international agreement has entered into effect.
Proposal announced: The new treaty obligations were announced at the
signature of the New Zealand Protocol and in the Treasurer's Press
Release No. 098 of 15 November 2005.
Financial impact: The Assistance in collection Article will have a
positive impact on revenue collection by the Australian Taxation Office
and will improve international tax compliance.
Compliance cost impact: This measure is not expected to impact
significantly on compliance costs.
Exchange of information
Schedule 2 to this Bill amends the International Tax Agreements Act 1953
to provide the necessary framework to give effect to Australia's current
and future treaty obligations to exchange information on tax matters with
other revenue authorities.
Date of effect: These amendments will apply to requests for the exchange
of information made from the day following Royal Assent, provided that
the relevant international agreement under which the request has been
made has entered into force.
Proposal announced: The new treaty obligations were announced at the
signature of the New Zealand Protocol and in the Treasurer's Press
Release No. 098 of 15 November 2005.
3
International Tax Agreements Amendment Bill (No. 1) 2006
Financial impact: Nil.
Compliance cost impact: This measure is not expected to impact
significantly on compliance costs.
The Protocol with New Zealand
Schedule 3 to this Bill amends the International Tax Agreements Act 1953
to give the force of law in Australia to a protocol amending the
Agreement of 27 January 1995 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.
Date of effect: The provisions of the Protocol amending the Agreement
between the Government of Australia and the Government of
New Zealand for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income (the Protocol) will have
effect from the date of entry into force of the Protocol. However, Article
4 of the Protocol, which inserts a new Article 27 dealing with assistance
in collection of taxes, will have effect only from the date agreed in a
subsequent exchange of notes through the diplomatic channel.
Proposal announced: Signature of the Protocol was announced in the
Treasurer's Press Release No. 098 of 15 November 2005.
Financial impact: The Protocol does not cover the allocation of taxing
rights. It deals with issues that are administrative in nature. Hence, there
will be no financial implications. However, the Assistance in collection
Article will have a positive impact on revenue collection by the Australian
Taxation Office and will improve international tax compliance.
Compliance cost impact: No significant additional compliance costs are
expected to result from entry into force of the Protocol.
4
Chapter 1
Mutual assistance in collection of tax
debts
Outline of chapter
1.1 Schedule 1 to this Bill amends the Taxation Administration
Act 1953 (TAA 1953) and the Income Tax Assessment Act 1997
(ITAA 1997) to enable the Commissioner of Taxation (Commissioner) to
collect a taxation debt on behalf of a foreign taxation authority or to take
conservancy measures to ensure the collection of that debt.
Context of amendments
1.2 There are a number of tax paying entities who are resident in
Australia, or who hold assets in Australia, that have unpaid tax debts in a
foreign state or territory. These tax paying entities will be referred to as
foreign country debtors for the remainder of this chapter.
1.3 Under the current taxation law, the Commissioner has very
limited authority to collect a tax debt from a foreign country debtor on
behalf of the country in which that tax debt arose.
1.4 Consistent with Article 27 of the OECD Model Tax Convention
on Income and on Capital (OECD Model), recent treaty actions by
Australia (including the New Zealand Protocol) allow for mutual
assistance in the collection of tax debts. The amendments to the
TAA 1953 and the ITAA 1997 are designed to ensure that the
Commissioner can meet Australia's current and future treaty obligations
to provide such assistance.
1.5 The reciprocal nature of the international agreements will also
allow foreign taxation authorities to:
· take conservancy measures in relation to unpaid Australian
tax debts against taxpaying entities not resident in, or who
hold no assets in Australia; and
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International Tax Agreements Amendment Bill (No. 1) 2006
· collect unpaid Australian tax debts from taxpaying entities
not resident in, or who hold no assets in Australia,
if the foreign country has agreed to assist Australia in collecting
Australian tax debts.
Summary of new law
Collecting tax debts or taking conservancy measures on behalf of a
foreign country
1.6 These amendments provide that a foreign state or territory,
under a relevant international agreement, may formally request the
Commissioner to collect an amount (in Australian dollars), and/or take
conservancy measures to ensure the collection of that amount, on behalf
of that foreign state or territory, from a foreign country debtor.
1.7 The Commissioner will then register that amount, resulting in
that amount becoming a tax-related liability under Australian tax law and
activating the general debt recovery rules within the tax laws.
1.8 The amount to be recovered will become due and payable after
the particulars of the claim are given to the foreign country debtor. If the
foreign country debtor does not pay within the specified period, general
interest charge will accrue on the debt.
1.9 The Commissioner may in certain situations remove the foreign
country debtor from the Register, or reduce the foreign country debtor's
debt on the register, if the Commissioner is satisfied that the foreign
country debtor should not be on the Register, or that the stated debt
exceeds the foreign country debtor's actual debt.
1.10 Once the Commissioner has recovered all or part of the amount
from the foreign country debtor, the Commissioner will pay that amount
to the foreign state or territory, thus discharging or reducing the foreign
country debtor's unpaid tax debt.
Requesting assistance in the collection of an Australian tax debt
1.11 Any amounts received by the Commissioner pursuant to an
Assistance in collection request that the Commissioner has made to a
foreign taxation authority may be treated by the Commissioner as a credit
on the relevant taxpayer's running balance account in Australia.
6
Mutual assistance in the collection of debts
1.12 The credit will offset the debt on the relevant taxpayer's running
balance account, reducing the taxpayer's outstanding liability by the
amount of the credit.
Comparison of key features of new law and current law
New law Current law
The Commissioner will be able to Australian authorities, including the
collect tax debts from foreign Commissioner, cannot collect tax
country debtors, or take action to debts owed to foreign countries.
conserve assets, on behalf of the
foreign country, if there is an
Assistance in collection agreement
between Australia and the foreign
country.
The Commissioner will be able to No equivalent.
credit against the relevant taxpayer's
running balance account amounts
that the Commissioner receives
pursuant to an Assistance in
collection request.
Detailed explanation of new law
Background
1.13 Currently it can be very difficult for the Commissioner to collect
unpaid tax debts from:
· taxpaying entities who accrue tax debts in Australia but
depart Australia without paying; or
· resident taxpaying entities who do not have sufficient assets
in Australia to meet their tax debts, but who have offshore
assets; or
· taxpaying entities who have never been resident in Australia
but have accrued a tax debt in Australia (eg, a tax debt that
arose from a capital gain made from the disposal of real
property in Australia).
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International Tax Agreements Amendment Bill (No. 1) 2006
1.14 Even under those provisions that do allow the Commissioner to
collect the unpaid tax debts, there are very limited provisions that allow
the Commissioner to seek the assistance of a foreign country to collect the
tax debt.
1.15 This problem is not confined to Australia. New Zealand
taxation authorities, for example, are similarly limited in collecting unpaid
tax debts raised in New Zealand if the taxpayer no longer resides in New
Zealand nor has any assets in New Zealand.
1.16 In an effort to overcome this shortcoming, Article 27 of the
OECD Model was developed in order to allow treaty partners to adopt an
article in their international agreements that would provide support in the
collection of revenue claims.
Policy objective
1.17 This measure will allow the Commissioner to collect foreign tax
debts in Australia and remit those amounts to the foreign state or territory
in which those debts arose.
1.18 In certain circumstances, this measure will also allow the
Commissioner to take conservancy action, to the extent available under
Australian law, in relation to those debts. Conservancy is concerned with
preventing a taxpaying entity from dissipating their assets when they have
a tax-related liability.
1.19 Finally this measure will treat Australian tax debts collected by a
foreign taxation authority that have been remitted to Australia as tax debts
collected in Australia.
8
Mutual assistance in the collection of debts
When a foreign country makes a request to Australia to collect taxes or
take measures of conservancy on its behalf
Receiving a request
1.20 Before the Commissioner can collect a foreign debt or take
conservancy measures, the Commissioner must first receive from an
overseas entity (either a foreign country, a constituent part of a foreign
country or an overseas territory) a formal foreign revenue claim.
1.21 Although there are no specific powers, under Australian laws,
available to the Commissioner to preserve the assets of an entity for the
purpose of that entity being able to meet a tax debt, the Commissioner can
apply for a common law remedy such as a Mareva injunction. As Mareva
injunctions are a common law remedy, the Commissioner would need to
convince a court of law that a Mareva injunction is appropriate and
necessary on a case by case basis.
1.22 A `foreign revenue claim' must:
· be made by, or on behalf of a competent authority under that
international agreement (eg, for New Zealand, the
Commissioner of Inland Revenue or an authorised
representative of the Commissioner of Inland Revenue);
· be in accordance with an international agreement (eg, the
`New Zealand Agreement' in Schedule 4 of the International
Tax Agreement Act 1953);
· be made in the approved form;
· specify the amount owed by the foreign country debtor, in
Australian dollars (A$), calculated on the day that the claim
was made; and
· be accompanied by a declaration by the foreign competent
authority that states that the claim is in accordance with the
international agreement that the foreign revenue claim is
made under.
[Schedule 1, item 8; section 263-15 in Schedule 1 to the TAA 1953; item 1,
subsection 995-1(1) in the ITAA 1997]
9
International Tax Agreements Amendment Bill (No. 1) 2006
Example 1.1
Karen is a taxpayer who is resident in Australia, but has an outstanding
tax-related debt in New Zealand. Karen's tax debt is NZ$100,000.
The New Zealand Commissioner for Inland Revenue (NZ Tax
Commissioner) wants to recover Karen's debt by making a request to
the Australian Commissioner to recover that debt.
The NZ Tax Commissioner would have to convert the New Zealand
debt into an A$ amount, in accordance with the exchange rate on the
day that the request is made to Australia.
Between the time that the request was made and when the amount (in
A$) is remitted to the NZ Tax Commissioner, the exchange rate may
have changed. However, notwithstanding any appreciation or
depreciation of the exchange rate, the amount requested in the foreign
revenue claim (in A$) is the amount that the Commissioner is required
to recover.
The NZ Tax Commissioner may refund any excess amounts to Karen
if after conversion there is a windfall.
1.23 The foreign revenue claim can be for the conservancy of an
amount, the collection of an amount or both the conservancy and
collection of an amount.
1.24 Currently under Australian law, conservancy remedies will
generally only be granted when they are ancillary to a claim for principal
relief, such as debt recovery proceedings. Accordingly, it is expected that
most claims for conservancy will be of two types:
· a claim for conservancy accompanied by a claim for
recovery of an amount that is currently enforceable in a
requesting country; and
· a claim for conservancy accompanied by a claim for
recovery of an amount that is not currently, but will become
enforceable in the requesting country.
Registration of the request
1.25 If the Commissioner is satisfied that the foreign revenue claim
includes all things that are required under this Bill to make it a legitimate
foreign revenue claim, the Commissioner must register the claim on a
Foreign Revenue Claims Register (the Register) within 90 days of
receiving the claim. [Schedule 1, item 8; sections 263-20 and 263-25 in Schedule 1
to the TAA 1953]
10
Mutual assistance in the collection of debts
1.26 Both foreign revenue claims for conservancy and for collection
are to be registered on the Register. However, if a foreign country
debtor's debt has already been registered for conservancy purposes, a later
foreign revenue claim for the collection and recovery of that debt will not
double the foreign country debtor's liability. The Register, in this
situation, will only record one debt owned by the foreign country debtor.
1.27 The Register will only record liabilities. Any payments or
credits the Commissioner receives in relation to a debt that is registered
on the Register will not reduce the amount of the debt on the Register.
Credits will instead be reflected on the foreign country debtor's running
balance account.
1.28 The Register is not a legislative instrument within the meaning
of section 5 of the Legislative Instruments Act 2003 because it is not of a
legislative nature. This is stated in the law to assist readers. [Schedule 1,
item 8; section 263-20 in Schedule 1 to the TAA 1953]
Consequences of registration
1.29 When the Commissioner registers a foreign revenue claim on the
Register, the foreign country debtor's debt becomes a pecuniary liability
to the Commonwealth. As the liability arises directly under a taxation law
(the TAA 1953), the debt is a tax-related liability under section 255-1 of
Schedule 1 to the TAA 1953. [Schedule 1, items 4 and 8; subsections 250-10(2)
and 263-30(1) in Schedule 1 to the TAA 1953]
1.30 This has the effect that the Commissioner's general recovery
rules are triggered and the Commissioner can use any of his recovery
powers to collect the liability.
1.31 If the foreign revenue claim is for conservancy only, the
Commissioner can take steps to reduce the risk that assets will be
dissipated or removed from Australia before the debt becomes due and
payable. However, the Commissioner will only be able to take those
conservancy measures that are available under Australian laws (eg, to
seek a Mareva injunction). Australia presently has no special
conservancy rules for tax debts.
1.32 As the foreign country debtor's debt is an amount due to the
Commonwealth directly under a taxation law, the debt is also a primary
tax debt under Part II B of the TAA 1953. This means that the
Commissioner can allocate that debt to a running balance account.
11
International Tax Agreements Amendment Bill (No. 1) 2006
Notification of the foreign country debtor
1.33 The Commissioner notifies the foreign country debtor of the
particulars of liability if the foreign revenue claim is for the collection of
an amount. [Schedule 1, item 8; subsection 263-30(2) in Schedule 1 to the TAA 1953]
1.34 After the Commissioner enters the particulars of a foreign
revenue claim on the Register, the Commissioner can serve the particulars
of the claim on the foreign country debtor. If the Commissioner has
accepted the claim for the purposes of collection (ie, not conservancy), the
Commissioner would normally serve these particulars promptly.
1.35 The Commissioner may also notify the foreign country debtor of
foreign revenue claims for conservancy only. The fact that a notice has to
be served for the debt to become due and payable will not detract from the
Commissioner's ability to apply for a Mareva injunction.
1.36 However if the Commissioner has accepted the foreign revenue
claim for conservancy purposes but the debt is not yet enforceable in the
requesting country, the Commissioner is not required to serve notice to
the foreign country debtor. Indeed, the standard Assistance in collection
Article will not permit Australia to collect a debt that is not enforceable in
the requesting foreign state or territory.
1.37 The normal rules of giving (or serving) notice of liability by the
Australian Taxation Office will apply. If the foreign country debtor is
absent from Australia and does not have an agent in Australia, the
Commissioner can serve the notice of liability to an address in a foreign
state or territory. [Schedule 1, item 5; section 255-40 in Schedule 1 to the TAA 1953]
1.38 The amount of the foreign revenue claim becomes due and
payable 30 days after the particulars of the claim have been received by
the foreign country debtor or on a later date as specified in the notice.
[Schedule 1, item 8; subsection 263-30(2) in Schedule 1 to the TAA 1953]
1.39 If the taxpayer fails to pay the amount after it becomes due and
payable, `general interest charge' will apply on any unpaid amounts.
[Schedule 1, items 2 and 8; subsection 263-30(3) in Schedule 1 to the TAA 1953 and
subsection 8AAB(5) in the TAA 1953]
1.40 Although the amount does not become due and payable until a
period after notice of the particulars have been received by the foreign
country debtor, the debt becomes a pecuniary liability to the
Commonwealth when the claim is registered. The Commissioner can, for
example, invoke the recovery powers about collection from third parties
under Subdivision 260-A in Schedule 1 to the TAA 1953, unless the
12
Mutual assistance in the collection of debts
relevant international agreement provides that the claim cannot be
collected.
Amending the Register
1.41 If after registration, the Commissioner concludes that a foreign
revenue claim that is on the Register should not be on the Register, the
Commissioner can remove that foreign country debtor from the Register
provided that the Commissioner first obtains the agreement of the foreign
competent authority. [Schedule 1, item 8; paragraph 263-35(2)(a) in Schedule 1 to
the TAA 1953]
Example 1.2
Vivian has assets in Australia and an unpaid tax debt in New Zealand.
The NZ Tax Commissioner makes a foreign revenue claim, requesting
the Commissioner take steps to recover an amount of A$50,000 from
Vivian. The foreign revenue claim is in the correct form and is a valid
claim.
The declaration attached to the foreign revenue claim, also in the
correct form, identifies Vivian as the taxpayer who has the outstanding
tax debt in New Zealand.
As both the request and the declaration are in the correct form, the
Commissioner registers the particulars of the NZ Tax Commissioner's
claim against Vivian on the Register.
However, after some investigation, it is later discovered that the named
tax debt in New Zealand is the result of identity theft.
In a situation like this, after informing the foreign competent authority
and obtaining their agreement, the Commissioner will be allowed to
remove Vivian's particulars from the Register. Vivian will be taken to
have never been liable to pay that amount.
1.42 If after registration the Commissioner receives advice from the
requesting foreign competent authority that the amount to be recovered
from the foreign country debtor should be reduced, the Commissioner can
amend the Register to reflect the reduction. [Schedule 1, item 8;
paragraph 263-35(2)(b) in Schedule 1 to the TAA 1953]
1.43 If there is a minor administrative error in relation to the register
(eg, name spelt incorrectly), the Commissioner may correct that error so
long as the Commissioner first obtains the agreement of the foreign
competent authority. [Schedule 1, item 8; subsection 263-35(1) in Schedule 1 to the
TAA 1953]
13
International Tax Agreements Amendment Bill (No. 1) 2006
1.44 The foreign country debtor, after receiving the details of a
foreign revenue claim, can apply to the Commissioner to have their details
removed from the Register. If the Commissioner is satisfied with the
foreign country debtor's explanation, the Commissioner may remove the
foreign country debtor from the Register, without obtaining the agreement
of the foreign competent authority. [Schedule 1, item 8; subsections 263-35(3)
and (4) in Schedule 1 to the TAA 1953]
1.45 If the Commissioner decides to remove the details of a foreign
country debtor from the Register as a result of an application by the
foreign country debtor or because the foreign country debtor should never
have been registered, it will be as if the foreign country debtor was never
required to pay that amount, including any amounts of general interest
charge that may have accrued, in relation to a foreign revenue claim.
[Schedule 1, item 8; subsections 263-35(4) and (5) in Schedule 1 to the TAA 1953]
1.46 If the Commissioner receives advice from the foreign competent
authority that the amount to be recovered from the foreign country
debtor's debt should be reduced, it will be as if the foreign country debtor
was never required to have paid that extra amount. [Schedule 1, item 8;
paragraph 263-35(2)(b) and subsection 263-35(6) in Schedule 1 to the TAA 1953]
1.47 If all or a portion of a foreign revenue claim is paid by a foreign
country debtor and the Commissioner subsequently either removes that
foreign country debtor from the Register or reduces an amount included
on the Register, such amount as was overpaid by the foreign country
debtor will be subject to interest on any overpayments. [Schedule 1, items 9
and 10; subsection 3(1) and section 3C in the Taxation (Interest on Overpayments and
Early Payments) Act 1983]
Evidence
1.48 In proceedings for recovery of a foreign revenue claim, the
Commissioner may produce an evidentiary certificate. The evidentiary
certificate may state any of the following (in addition to any of the matters
already permitted to be set out in an evidentiary certificate):
· that a foreign revenue claim has been made by a foreign
competent authority;
· that the foreign revenue claim has complied with all the
requirements that it must meet under the relevant
international agreement that the foreign revenue claim was
made under;
· that the claim had been registered;
14
Mutual assistance in the collection of debts
· that, as at the date of the certificate, whether the
Commissioner has received advice from a foreign competent
authority as to the reduction or discharge of the debt; and
· the particulars of any reduction or discharge in the amount
of the debt, if the Commissioner did receive advice from a
foreign competent authority.
1.49 An evidentiary certificate will be prima facie evidence of the
matter in a proceeding to recover an amount or in proceedings with
respect to conservancy. This means that once the Commissioner produces
a valid evidentiary certificate, the onus is on the foreign country debtor to
prove that the contents of the evidentiary certificate are incorrect.
[Schedule 1, items 6 and 7; section 255-45 in Schedule 1 to the TAA 1953]
What if the foreign country debtor disputes their liability?
1.50 The Assistance in collection Article in the international
agreement will normally provide that proceedings about the existence,
validity or amount of a revenue claim of a contracting state shall not be
brought before the courts or administrative bodies of the other contracting
state (eg, see Article 27(6) of the New Zealand Agreement).
Consequently, if the foreign country debtor considers that they have a
legitimate legal argument that they are not required to pay the foreign tax
debt, the matter must be litigated and resolved in the country in which the
tax debt arose, under the laws of that country. Those arguments cannot be
raised in proceedings in Australia for recovery of a registered foreign
revenue claim.
Remittance of collected amounts
1.51 If the Commissioner recovers any of the amounts from a foreign
country debtor with respect to a foreign revenue claim, the Commissioner
must pay that amount to the relevant foreign competent authority or
another entity on behalf of that competent authority.
1.52 The Commissioner may also pay any amounts collected from the
foreign country debtor in relation to general interest charges in accordance
with any arrangements the Commissioner has with the relevant foreign
competent authority. [Schedule 1, item 8; section 263-40 in Schedule 1 to the TAA
1953)]
When Australia makes a request to a foreign country to collect taxes on
Australia's behalf
1.53 The reciprocal nature of Article 27 of the OECD Model means
that while the Commissioner can be required to collect taxes on behalf of
15
International Tax Agreements Amendment Bill (No. 1) 2006
an overseas entity, foreign competent authorities can also be required to
collect Australian tax-related debts on behalf of Australia.
1.54 The legal and administrative frameworks that the overseas
entities use to reflect their obligations will be up to those overseas entities,
however the foreign competent authority will be required to remit to the
Commissioner any monies collected pursuant to an Assistance in
collection request.
1.55 Although the Commissioner may be required, under the law of
an overseas entity, to make the Assistance in collection request in a
foreign currency, the amount remitted to the Commissioner from the
foreign competent authority may be in A$.
1.56 If an amount is remitted to the Commissioner in a foreign
currency, as a result of the Commissioner making an Assistance in
collection request, before that amount can be allocated to the foreign
country debtor's running balance account as a `credit', the amount must
be converted into an A$ amount. [Schedule 1, item 3; section 8AAZA (definition
of `credit') in the TAA 1953]
1.57 After conversion to an A$ amount, the whole of the A$ amount
may be allocated as a credit to the foreign country debtor's running
balance account in order to reduce the outstanding debt in relation to
which the Assistance in collection request was first made.
1.58 As a result of appreciation or depreciation in the exchange rate
in the intervening period between when the Assistance in collection
request was made and the amount was remitted, the credit may or may not
completely offset the initial debt.
1.59 The normal rules in Part II B of the TAA 1953 about payments
and credits will apply.
Application and transitional provisions
1.60 These amendments apply to claims for assistance in collection of
foreign debts made after the day on which this Bill receives Royal Assent,
provided that the relevant international agreement under which this
request has been made, has entered into force. [Schedule 1, item 11]
16
Chapter 2
Exchange of information
Outline of chapter
2.1 Schedule 2 to this Bill amends the International Tax Agreements
Act 1953 and the Taxation Administration Act 1953 (TAA 1953). This
chapter explains the legislative framework giving effect to Australia's
current and future treaty obligations to exchange information on tax
matters with other jurisdictions.
Context of amendments
2.2 Exchange of information generally operates to allow the tax
administration of one country to request taxpayer information from the
treaty partner for the purposes of carrying out the tax treaty or for
administering the country's domestic tax laws.
2.3 Australia's previous treaty practice has been to exchange
information only in relation to the taxes covered by a treaty (generally
income tax including petroleum resource rent tax, fringe benefits tax and
any identical or substantially similar taxes imposed under the federal law
of Australia).
2.4 Consistent with the Organisation for Economic Co-operation
and Development (OECD) Model Tax Convention on Income and on
Capital (OECD Model), the New Zealand Protocol provides for the
exchange of information on an expanded range of taxes.
2.5 Therefore, this Bill provides a statutory legal basis for giving
effect to Australia's obligations to gather and exchange tax information
under future international agreements. In addition, this Bill codifies
current practice in relation to existing international agreements.
17
International Tax Agreements Amendment Bill (No. 1) 2006
Summary of new law
2.6 Schedule 2 to this Bill provides the legislative framework to
facilitate the gathering and exchange of tax information under an
obligation in an international agreement. That legislative framework will:
· allow the Commissioner of Taxation (Commissioner) to
utilise existing information gathering provisions to meet
those obligations. For example, domestic information
gathering powers are contained in sections 263 and 264 of
the Income Tax Assessment Act 1936 (ITAA 1936);
· ensure that the exchange of information in accordance with
the terms of an international agreement will not constitute a
breach of a secrecy provision of a taxation law prohibiting
the Commissioner or an officer from making a record of, or
disclosing, information; and
· codify the Commissioner's ability to gather and exchange
information regardless of whether such information is
required by the Commissioner for domestic tax purposes.
Comparison of key features of new law and current law
New law Current law
This measure facilitates exchange of No express equivalent, although the
information in respect of Australia's Commissioner may rely on existing
current and future tax treaties, tax legislative measures dealing with the
information exchange agreements, collection of information and
and other international agreements evidence to meet an obligation under
dealing with tax matters by enabling an international agreement.
the Commissioner to exercise
existing information gathering
powers for the purpose of meeting an
obligation under an international
agreement.
The new law provides a single Various provisions, for example
exception, in place of and in addition sections 3C and 355-5 of the
to existing provisions, which ensures TAA 1953 which provide exceptions
that the disclosure of information to the secrecy provisions allowing
under an international obligation will Australia to meet its obligations
not be a breach of a secrecy under the Timor Sea Treaty.
provision.
18
Exchange of information
Detailed explanation of new law
Use of information gathering provisions
2.7 The Commissioner or an authorised representative may use the
information gathering provisions contained in the various laws
administered by the Commissioner for the purpose of gathering
information to be exchanged pursuant to an international agreement.
[Schedule 2, subsection 23(1)]
2.8 The law is not intended to create a separate information
gathering power in itself. Rather, it provides an express link to existing
information gathering provisions to allow the Commissioner to exchange
information to the widest possible extent in accordance with an obligation
the Commissioner has pursuant to an international agreement.
Example 2.1
The Commissioner, in accordance with an international agreement,
receives a request for information and documents concerning a
property developer's claim for input tax credits on the purchase of
commercial residential property. Where the Commissioner is not in
possession of the requested material (eg, a tax invoice recording the
transaction), it may be gathered through the use of the Commissioner's
powers contained in sections 353-10 and/or 353-15 of the TAA 1953.
Example 2.2
The Commissioner, in accordance with an international agreement,
receives a request for information and documents concerning a tax
which is levied by another jurisdiction but has no Australian
equivalent. In these circumstances, it may be gathered through the use
of any of the information gathering provisions at the Commissioner's
disposal.
Gathering and disclosing information is not a breach of taxation
secrecy law
2.9 To date, exchange of information in Australia's international
agreements generally extended to income tax only. Secrecy provisions
preventing the disclosure of information relating to income tax are
contained in section 16 of the ITAA 1936.
2.10 Section 16 of the ITAA 1936 is overridden for the purpose of
Exchange of information Articles in Australia's international agreements
by virtue of section 4 of the International Tax Agreements Act 1953.
Section 4 incorporates the Assessment Acts (Income Tax Assessment
19
International Tax Agreements Amendment Bill (No. 1) 2006
Act 1936 (ITAA 1936) and Income Tax Assessment Act 1997
(ITAA 1997)) into the International Tax Agreements Act 1953 and
requires the latter Act to override the former Acts to the extent of any
inconsistency between the two. As a result, treaties contained in the
International Tax Agreements Act 1953 override section 16 of the
ITAA 1936 and information can be exchanged in relation to income tax.
2.11 The incorporation of the ITAA 1936 and the ITAA 1997 into the
International Tax Agreements Act 1953 ensures that the disclosure of
information, when discharged by the Commissioner or a duly authorised
officer thereof, in accordance with the international agreement is not a
breach of the secrecy provisions in the ITAA 1936.
2.12 Similar secrecy provisions preventing the disclosure of
information exist in the various other tax Acts administered by the
Commissioner. For example:
· section 45 of the Superannuation Guarantee
(Administration) Act 1992; and
· sections 3C and 355-5 of the TAA 1953.
2.13 In addition, subsection 23(2) of this Bill ensures that the
gathering and disclosure of information by a duly authorised officer of the
Commissioner, falls within the performance of that officer's duties as an
officer. In these circumstances, there is no breach of a secrecy provision
of a taxation law covered by an international agreement. [Schedule 2,
subsection 23(2)]
A domestic tax interest is not required
2.14 Section 23 codifies expressly the Commissioner's power to
gather and exchange information regardless of whether or not there is a
domestic interest in the information sought. [Schedule 2, subsection 23(3)]
2.15 This is consistent with OECD standards on the exchange of
information.
2.16 In most instances, a domestic tax interest will also exist because
the provision of information to a foreign revenue authority may result in
information relevant to the taxpayer's Australian tax position (even if it
merely confirms the accuracy of the assessment). There are cases,
however, where this is not the case and the exchange is purely for the
purpose of the other revenue authority.
20
Exchange of information
The meaning of an `information gathering provision'
2.17 An information gathering provision encompasses the various
powers to access and powers to obtain information and evidence conferred
under Acts administered by the Commissioner. For example, the powers
available in respect of indirect tax matters contained in sections 353-10
and 353-15 of the TAA 1953 are information gathering provisions for
these purposes. [Schedule 2, subsection 23(4)]
The meaning of an `international agreement'
2.18 For the purposes of this provision an international agreement
encompasses:
· an agreement given the force of law under the International
Tax Agreements Act 1953; or
· some other agreement which allows for the exchange of
information on taxation matters to which Australia and any
of the following:
- another country or a constituent part of a foreign
country; or
- an overseas territory,
are a party.
[Schedule 2, subsection 23(4)]
2.19 For example, an agreement falling within the second category
would be a tax information exchange agreement which is not a Schedule
to the International Tax Agreements Act 1953.
21
Chapter 3
The Protocol with New Zealand
Outline of chapter
3.1 Schedule 3 amends the International Tax Agreements Act 1953.
This chapter explains the rules that apply in the Protocol to amend the
existing tax treaty with New Zealand -- 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 Agreement).
Context of amendments
3.2 The extension of the wine equalisation tax rebate to
New Zealand wine producers exporting to Australia made it desirable to
amend the Agreement to cover administrative matters relating to the
rebate and to other taxes generally. The Protocol achieves this by
extending the scope of the exchange of information provisions to all
federal taxes administered by the Commissioner of Taxation
(Commissioner) and to all New Zealand taxes.
3.3 The Protocol also provides for trans-Tasman assistance in
collection of taxes and includes an obligation that New Zealand will enter
into negotiations to lower withholding taxes on dividends, interest and
royalties, should New Zealand reduce these taxes in a future tax treaty
with another country to levels below those in the existing Agreement.
These amendments reflect the importance both Australia and
New Zealand place on closer economic and administrative relations.
Summary of new law
3.4 The Protocol will:
· closely align the Exchange of information Article in the
Agreement to the new Organisation for Economic
Co-operation and Development (OECD) standard, including
expanding the range of taxes in respect of which information
may be exchanged to all Australian federal taxes
administered by the Commissioner and all New Zealand
taxes;
23
International Tax Agreements Amendment Bill (No. 1) 2006
· insert a new Article into the Agreement providing for
assistance in the collection of cross-border tax debts; and
· insert a new `most favoured nation' provision into the
Agreement which will ensure that Australia will have access
to lower withholding taxes on dividends, interest and
royalties should New Zealand reduce these taxes in a treaty
with another country to levels below those in our current
treaty.
Comparison of key features of new law and current law
New law Current law
Closely aligns Article 26 (Exchange In the case of Australia, the taxes to
of information) to the new OECD which the current Exchange of
standard. The effect of the changes information Article apply are:
is to expand the range of taxes to · the income tax;
which the Article applies and to
· the resource rent tax (in
clarify that bank secrecy laws do not
respect of offshore projects
limit the exchange of information.
relating to exploration for or
exploitation of petroleum
resources);
· the fringe benefits tax; and
· any identical or substantially
similar taxes imposed under the
federal law of Australia.
Inserts a new Article 27 (Assistance No equivalent.
in collection of taxes) into the
Agreement which authorises and
requires Australia and New Zealand
to provide assistance to each other in
the collection of cross-border tax
debts.
Inserts a new `most favoured nation' No equivalent.
provision into the Agreement which
will ensure Australia will have
access to lower withholding taxes on
dividends, interest and royalties
should New Zealand reduce these
taxes in a treaty with another country
to levels below those in our current
treaty.
24
The Protocol with New Zealand
Detailed explanation of new law
Article 1 of the Protocol
Amends Article 2 of the Agreement -- Taxes covered
3.5 Article 1 of the Protocol expands the range of taxes covered for
purposes of Exchange of information and Assistance in collection Articles
by inserting a new paragraph 3 into Article 2 (Taxes covered) of the
Agreement.
3.6 The new paragraph specifies the taxes to which Article 26
(Exchange of information) and Article 27 (Assistance in collection of
taxes) will apply. The taxes to which these Articles apply are, in the case
of Australia, all federal taxes administered by the Commissioner, and in
the case of New Zealand, all taxes. [Article 2, new paragraph 3 of the
Agreement]
Article 2 of the Protocol
Substitutes new Article 26 of the Agreement -- Exchange of
information
3.7 The Protocol will substitute a new Article 26 (Exchange of
information) into the Agreement that closely aligns the information
exchange provisions to the new OECD standard. The new Article differs
from the previous approach in the following ways:
· The scope is expanded to a wider range of taxes.
· The new provision clarifies that the Commissioner is
obliged to obtain information for New Zealand tax authorities
regardless of whether Australia has a domestic tax interest in
the information sought.
· Bank secrecy laws do not limit the exchange of information.
Foreseeably relevant information
3.8 New Article 26 authorises and limits the exchange of
information by the two competent authorities to information foreseeably
relevant to the administration or enforcement of the relevant taxes. The
exchange of information is not restricted by Article 1 (Persons covered)
of the Agreement, and may therefore cover persons who are not residents
of Australia or New Zealand.
25
International Tax Agreements Amendment Bill (No. 1) 2006
3.9 The standard of foreseeable relevance is intended to ensure that
information may be exchanged to the widest possible extent. However,
competent authorities are not entitled to request information from the
other country which is unlikely to be relevant to the tax affairs of a
taxpayer, or to the administration and enforcement of tax laws.
[New Article 26, paragraph 1 of the Agreement]
3.10 The change in wording to a `foreseeably relevant' standard
reflects the wording in Article 26 of the 2005 OECD Model Tax
Convention on Income and on Capital (OECD Model) and no difference
in effect is intended.
Taxes to which this new Article applies
3.11 Under the former Article, the information that could be
requested and exchanged between the two countries was limited to
information in relation to taxes specified in paragraphs 1 and 2 of
Article 2 (Taxes covered) of the Agreement. In the case of Australia these
taxes are:
· the income tax;
· the resource rent tax (in respect of offshore projects relating
to exploration for or exploitation of petroleum resources);
· the fringe benefits tax; and
· any identical or substantially similar taxes imposed under
the federal law of Australia; and
in the case of New Zealand, taxes covered by paragraphs 1 and 2 are:
· the income tax;
· the fringe benefits tax; and
· any identical or substantially similar taxes imposed under
the law of New Zealand.
3.12 Under the new provision, the range of taxes for which
information may be requested and exchanged has been expanded. In the
case of Australia, the Australian competent authority1 can now request
and obtain information concerning all federal taxes administered by the
Commissioner from their counterpart in New Zealand. This means, for
1
`Competent authority' means in the case of Australia, the Commissioner or an authorised
representative of that Commissioner. In the case of New Zealand, the `competent authority'
is the Commissioner of Inland Revenue or an authorised representative of that
Commissioner.
26
The Protocol with New Zealand
example, that information concerning indirect taxes (ie, the goods and
services tax) may be requested and obtained from New Zealand.
3.13 Similarly, in the case of New Zealand, the New Zealand
competent authority can now request and obtain information concerning
taxes of every kind and description imposed under its tax laws, from the
Australian competent authority.
Use of exchanged information
3.14 The purposes for which the exchanged information may be used
and the persons to whom it may be disclosed, are restricted consistent
with the former Article and the approach taken in the OECD Model. Any
information received by a country must be treated as secret in the same
manner as information obtained under the domestic law of that country.
[New Article 26, paragraph 2 of the Agreement]
No domestic tax interest required
3.15 When requested, a country is required to obtain information in
the same manner as if it were administering its domestic tax system,
notwithstanding that the country may not require the information for its
own purposes. Australia would recognise this obligation to obtain
relevant information for treaty partner countries, even in the absence of an
explicit provision to this effect. [New Article 26, paragraph 4 of the Agreement]
Limitations
3.16 The country requested to provide information under this Article
is not obliged to provide such information where:
· it would be required to carry out administrative procedures
incompatible with its own law or the administrative practice,
or those of the country requesting the information; or
· such information is not obtainable within the limitations
imposed under its domestic law or in the normal course of
administration by the competent authority in that country or
the country requesting the information. Australia is not
obliged, for example, to use police powers to obtain
information requested by New Zealand, although information
gathered in that way which is in the possession of the
Commissioner may be exchanged.
[New Article 26, subparagraphs 3(a) and (b) of the Agreement]
27
International Tax Agreements Amendment Bill (No. 1) 2006
3.17 Also, in no case is the country receiving the request obliged to
supply information under this Article that would:
· disclose any trade, business, industrial, commercial or
professional secret or trade process; or
· be contrary to public policy.
[New Article 26, subparagraph 3(c) of the Agreement]
Information held by banks, other financial institutions, nominees etc
3.18 This new paragraph ensures that paragraph 3 of this Article
cannot be used to prevent the exchange of information held by banks,
other financial institutions, nominees etc. The addition of this paragraph
should not be interpreted as suggesting the previous treaty did not cover
the exchange of such information. Inclusion of paragraph 5 merely
clarifies Australia's current treaty practice, and reflects recent changes to
Article 26 (Exchange of information) of the OECD Model. [New Article 26,
paragraph 5 of the Agreement]
Article 3 of the Protocol
3.19 The Protocol inserts a new Article 27 (Assistance in collection of
taxes) in the Agreement. As a consequence, Article 3 is required to
renumber existing Articles 27 (Diplomatic agents and consular officers),
28 (Entry into force) and 29 (Termination) as Articles 28, 29 and 30
respectively.
Article 4 of the Protocol
Inserts new Article 27 of the Agreement -- Assistance in collection of
taxes
Assistance in collection of revenue claims
3.20 The new Article 27 (Assistance in collection of taxes) authorises
and requires Australia and New Zealand to provide assistance to each
other in the collection of revenue claims. This assistance is not to be
restricted by the terms of Article 1 (Personal scope) of the Agreement.
Assistance must therefore be provided as regards a revenue claim owed to
either country by any person, whether or not a resident of Australia or
New Zealand. The form of the assistance is set out in paragraphs 3 and 4
of Article 27 (Assistance in collection of taxes). [New Article 27, paragraph 1
of the Agreement]
28
The Protocol with New Zealand
3.21 The term revenue claim is defined for the purposes of this
Article to mean an amount owed in respect of taxes referred to in Article 2
(Taxes covered) of the Agreement (as amended by Article 1 of the
Protocol). A revenue claim may cover any New Zealand tax, or any
Australian federal tax administered by the Commissioner, but only insofar
as the imposition of such taxes is not contrary to this Agreement or any
other instrument in force between Australia and New Zealand. It also
applies to interest, administrative penalties and costs of collection or
conservancy related to such amount. [New Article 27, paragraph 2 of the
Agreement]
3.22 This Article will apply from the date agreed in an exchange of
notes through the diplomatic channel. [Article 6, paragraph 3 of the Protocol]
3.23 Consistent with the intention noted in the OECD Model
Commentary on the equivalent Article, requests for assistance in
collection of revenue claims that arise before Article 4 of the Protocol
enters into effect may be accepted, as long as such assistance is provided
after the treaty has entered into force and the provisions of this Article
have become effective.
Enforceable revenue claims
3.24 Assistance in collection will only be provided by Australia in
relation to a revenue claim that is enforceable in New Zealand. Similarly,
New Zealand is not required to provide assistance in collection in respect
of an Australian revenue claim that is not enforceable in Australia. A
revenue claim will be enforceable where the requesting country has the
right, under its domestic law, to collect the revenue claim. Further, the
revenue claim must be owed by a person who, at that time, under the law
of that country, has no administrative or judicial rights to prevent its
collection.
3.25 Paragraph 3 of this Article regulates the way in which the
revenue claim of the requesting country is to be collected by the requested
country. Other than in relation to time limits and priority (see paragraphs
3.29 to 3.32 ), the requested country is required to collect the revenue
claim as though it were its own revenue claim. This obligation applies
even if, at that time, the requested country has no need to undertake
collection actions related to that taxpayer for its own tax purposes. [New
Article 27, paragraph 3 of the Agreement]
3.26 Where a request from New Zealand concerns a tax that does not
exist in Australia, Australia will follow the procedure applicable to a
claim for a similar Australian tax or any other appropriate procedure if no
similar tax exists.
29
International Tax Agreements Amendment Bill (No. 1) 2006
Measures of conservancy
3.27 Paragraph 4 of this Article enables Australia or New Zealand to
request the other country to take measures of conservancy even where it
cannot yet ask for assistance in collection, such as where the revenue
claim is not yet enforceable or when the debtor still has the right to
prevent its collection. An example of a conservancy measure is the
seizure or the freezing of assets before final judgment, to guarantee that
the assets will still be available when collection can subsequently take
place.
3.28 If requested to do so by New Zealand, Australia is required to
take measures of conservancy in respect of the revenue claim in
accordance with the provisions of Australian law as if the revenue claim
were an Australian revenue claim. Although Australia does not have
specific conservancy measures, the Commissioner may apply for a
Mareva injunction, which would prevent the taxpayer and their associates
from dealing with certain assets. [New Article 27, paragraph 4 of the Agreement]
Time limits
3.29 Paragraph 5 of this Article provides that the requested country's
domestic law time limitations beyond which a revenue claim cannot be
enforced or collected do not apply to a revenue claim in respect of which
the other country has made a request for assistance in collection. Rather,
the time limits of the requesting country apply. [New Article 27, paragraph 5
of the Agreement]
3.30 This paragraph follows the OECD Model provision, but has no
practical effect at this time, since neither Australia nor New Zealand
currently imposes a time limit on the collection of a revenue claim.
Priority of claims
3.31 Paragraph 5 of this Article also provides that the rules of
Australia and New Zealand which give priority to tax debts over the
claims of other creditors do not apply to a revenue claim of the other
country. This restriction applies regardless of the fact that the requested
country must generally treat the claim as its own revenue claim.
3.32 The words `by reason of its nature as such' in paragraph 5
indicate that any time limits and priority rules to which the paragraph
applies are only those that are specific to unpaid taxes. Consequently,
paragraph 5 does not prevent the application of general rules concerning
time limits or priority which would apply to all debts, such as rules giving
priority to a claim by reason of that claim having arisen or having been
registered before another one. [New Article 27, paragraph 5 of the Agreement]
30
The Protocol with New Zealand
Restriction on judicial and administrative proceedings
3.33 Paragraph 6 of this Article ensures that any legal or
administrative objection concerning the existence, validity or the amount
of a revenue claim of the requesting country is to be exclusively dealt with
in that country. For example, no legal or administrative proceedings, such
as a request for judicial review, may be initiated in Australia with respect
to the existence, validity or amount of a New Zealand revenue claim.
[New Article 27, paragraph 6 of the Agreement]
Change in circumstances
3.34 Paragraph 7 of this Article deals with the situation where the
conditions in paragraph 3 or 4 are no longer satisfied after a request for
assistance has been made, but before the revenue claim has been collected
and remitted by the requested country. An example of such a situation
would be where a request for assistance in collection has been made by
New Zealand, but the revenue claim ceases to be enforceable in
New Zealand prior to its collection by Australia.
3.35 Where the relevant conditions in paragraph 3 or 4 of this Article
are no longer satisfied, paragraph 7 requires the competent authority of the
requesting country to promptly notify the competent authority of the
requested country of that fact.
3.36 Following such notification, the requested country has the
option to ask the requesting country to either suspend or withdraw its
request for assistance. If the request is suspended, the suspension applies
until such time as the requesting country informs the other country that
the conditions necessary for making a request as regards the revenue
claim are again satisfied or that it withdraws its request. [New Article 27,
paragraph 7 of the Agreement]
Limitations
3.37 Paragraph 8 of this Article contains certain limitations to the
obligations imposed on the country which receives a request for
assistance. The requested country is permitted to refuse the request for
assistance where those limitations apply.
3.38 The first limitation is that the requested country is not required
to exceed the bounds of its own domestic laws and administrative practice
or those of the other country in fulfilling its obligations under this Article.
[New Article 27, subparagraph 8(a) of the Agreement]
3.39 However, subparagraph 8(a) of this Article does not
prevent Australia from applying administrative measures to collect a
31
International Tax Agreements Amendment Bill (No. 1) 2006
New Zealand revenue claim, even though invoked solely to provide
assistance in the collection of New Zealand taxes.
3.40 Subparagraph 8(b) limits the application of this Article where it
would require the carrying out of measures that are contrary to public
policy, such as where providing assistance may affect the vital interests of
the country itself. [New Article 27, subparagraph 8(b) of the Agreement]
3.41 The third limitation provides that neither country is obliged to
satisfy a request for assistance if the other country has not pursued all
reasonable measures of collection or conservancy that are available under
its own laws or administrative practice. [New Article 27, subparagraph 8(c) of
the Agreement]
3.42 Under subparagraph 8(d) of this Article either country may
reject a request for assistance on the basis of practical administrative
considerations such as when the costs of recovering a revenue claim
would exceed the amount of the revenue claim itself. [New Article 27,
subparagraph 8(d) of the Agreement]
3.43 The final limitation allows either country to refuse to provide
assistance if it considers that the taxes with respect to which assistance is
requested are imposed contrary to generally accepted taxation principles.
[New Article 27, subparagraph 8(e) of the Agreement]
Article 5 of the Protocol
Inserts a most favoured nation clause in to the Agreement
3.44 This Article provides most favoured nation status to Australia
vis-à-vis New Zealand. Should New Zealand reduce withholding taxes on
dividends, interest and royalties in a treaty with another country to levels
below the rates prescribed in the Dividends, Interest and Royalties
Articles of this Agreement, the Government of New Zealand will inform
the Government of Australia without undue delay and will commence
negotiations with a view to providing the same favourable treatment to
Australia. [Article 5 of the Protocol]
3.45 This will assist in ensuring that Australian investors will not be
at a competitive disadvantage vis-à-vis investors from other treaty
countries in the event that New Zealand agrees to lower withholding tax
rate limits in another treaty.
32
The Protocol with New Zealand
Article 6 of the Protocol
Date of entry into force
3.46 This Article provides for the entry into force of the Protocol.
The Protocol will enter into force on the date of last notification by
diplomatic note that the domestic requirements to give the Protocol the
force of law in the respective countries have been completed. The
Protocol forms an integral part of the Agreement. [Article 6, paragraphs 1
and 2 of the Protocol]
3.47 In Australia, enactment of the legislation giving the force of law
to the tax treaty, along with tabling the treaty in Parliament, are
prerequisites to the exchange of diplomatic notes.
Date of application for Australian taxes
3.48 The provisions of the Protocol will have effect from the date of
entry into force of the Protocol. The extension of the exchange of
information provisions to a broader range of taxes under the new
Article 26 (Exchange of information) will apply to requests for exchange
of information received on or after the date of entry into force of the
Protocol. However, information that may be exchanged under such
requests may relate to transactions that predate the entry into force of the
Protocol.
Date of application for Article 27 (Assistance in the collection of taxes)
3.49 Notwithstanding that the Protocol enters into force on the date of
last notification, Article 4 of the Protocol, which inserts a new Article 27
dealing with assistance in collection of taxes, will have effect only from
the date agreed in a subsequent exchange of notes through the diplomatic
channel. [Article 6, paragraph 3 of the Protocol]
33
Index
Schedule 1: Mutual assistance in collection of tax debts
Bill reference Paragraph number
Item 3; section 8AAZA (definition of `credit') in the TAA 1953 1.56
Items 4 and 8; subsections 250-10(2) and 263-30(1) in Schedule 1 1.29
to the TAA 1953
Item 5; section 255-40 in Schedule 1 to the TAA 1953 1.37
Items 6 and 7; section 255-45 in Schedule 1 to the TAA 1953 1.49
Item 8; section 263-15 in Schedule 1 to the TAA 1953; item 1, 1.22
subsection 995-1(1) in the ITAA 1997
Item 8; section 263-20 in Schedule 1 to the TAA 1953 1.28
Item 8; sections 263-20 and 263-25 in Schedule 1 to the TAA 1953 1.25
Item 8; subsection 263-30(2) in Schedule 1 to the TAA 1953 1.33 and 1.38
Items 2 and 8; subsection 263-30(3) in Schedule 1 to the TAA 1953 1.39
and subsection 8AAB(5) in the TAA 1953
Item 8; subsection 263-35(1) in Schedule 1 to the TAA 1953 1.43
Item 8; paragraph 263-35(2)(a) in Schedule 1 to the TAA 1953 1.41
Item 8; paragraph 263-35(2)(b) in Schedule 1 to the TAA 1953 1.42
Item 8; paragraph 263-35(2)(b) and subsection 263-35(6)in 1.46
Schedule 1 to the TAA 1953
Item 8; subsections 263-35(3) and (4)in Schedule 1 to the 1.44
TAA 1953
Item 8; subsections 263-35(4) and (5) in Schedule 1 to the 1.45
TAA 1953
Item 8; section 263-40 in Schedule 1 to the TAA 1953) 1.52
Items 9 and 10; subsection 3(1) and section 3C in the Taxation 1.47
(Interest on Overpayments and Early Payments) Act 1983
Item 11 1.60
35
International Tax Agreements Amendment Bill (No. 1) 2006
Schedule 2: Exchange of information
Bill reference Paragraph number
Subsection 23(1) 2.7
Subsection 23(2) 2.13
Subsection 23(3) 2.14
Subsection 23(4) 2.17, 2.18
36
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