[pic] International Tax Agreements Act 1953 Act No. 82 of 1953 as amended This compilation was prepared on 16 October 2009 taking into account amendments up to Act No. 105 of 2009 Volume 1 includes: Sections 1-24 Schedules 1-24 The text of any of those amendments not in force on that date is appended in the Notes section The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section Volume 2 includes: Schedules 25-49 Note 1 Table of Acts Act Notes Table of Amendments Table A Prepared by the Office of Legislative Drafting and Publishing, Attorney-General's Department, Canberra Contents 1 Short title [see Note 1] 1 2 Commencement [see Note 1] 1 3 Interpretation 1 3AA Source of income from funds management activities 16 3A Alienation of real property through interposed entities 17 4 Incorporation of Assessment Act 18 4AA Incorporation of Fringe Benefits Tax Assessment Act 18 4A Treasurer to notify entry into force of agreements, exchanges of letters under agreements etc. 18 5 The 2003 United Kingdom convention 19 5A Previous United Kingdom agreements etc. 19 6 Convention with United States of America 19 6AA Protocol with the United States of America 20 6A Convention with Canada 20 6AB Protocol with Canada 21 6B Agreement with New Zealand 21 6C New Zealand protocol 22 7 Agreement with Singapore 22 7A Protocol with Singapore 22 8 Convention with Japan 22 9 The 2006 French convention 23 9A Previous French agreements etc. 23 10 Airline profits agreement with Italy 23 10A Convention with Italy 23 11 Agreement with the Federal Republic of Germany 24 11A Agreement with the Kingdom of the Netherlands 24 11AA Second protocol with the Kingdom of the Netherlands 25 11B Airline profits agreement with the Hellenic Republic 25 11C Agreement with the Kingdom of Belgium 25 11CA Protocol with the Kingdom of Belgium 26 11D Agreement with the Republic of the Philippines 26 11E Agreement with the Swiss Federal Council 26 11F Agreement with Malaysia 27 11FA First protocol with Malaysia 27 11FB Second protocol with Malaysia 28 11G Agreement with Sweden 28 11H Agreement with the Kingdom of Denmark 28 11K Agreement with Ireland 29 11L Convention with the Republic of Korea 29 11M The 2006 Norwegian convention 30 11MA The 1982 Norwegian convention 30 11N Agreement with Malta 30 11P The 2006 Finnish agreement 30 11PA Previous Finnish agreements etc. 31 11Q Airline profits agreement with the People's Republic of China 31 11R Agreement with the Republic of Austria 31 11S Agreement with the People's Republic of China 31 11T Agreement with the Independent State of Papua New Guinea 32 11U Agreement with Thailand 32 11V Agreement with Sri Lanka 32 11W Agreement with Fiji 32 11X Agreement with the Republic of Hungary 33 11Y Agreement with Kiribati 33 11Z Agreement with the Republic of India 33 11ZA Agreement with the Republic of Poland 33 11ZB Agreement with the Republic of Indonesia 33 11ZC Agreement with the Socialist Republic of Vietnam 34 11ZCA Exchange of Notes between Australia and the Socialist Republic of Vietnam 34 11ZD Agreement with the Kingdom of Spain 34 11ZE Agreement with the Czech Republic 34 11ZF Agreement with Taipei Economic and Cultural Office 34 11ZG Agreement with the Republic of South Africa 36 11ZGA Protocol with the Republic of South Africa 36 11ZH Agreement with the Slovak Republic 36 11ZI Argentine agreement 36 11ZJ Agreement with Romania 37 11ZK Agreement with Russia 37 11ZL Agreement with Mexico 37 11ZM Agreement with the British Virgin Islands 37 11ZN Agreement with the Isle of Man 37 16 Rebates of excess tax on income included in assessable income 37 17A Withholding tax 38 18 Source of dividends 39 20 Collection of tax due to the United States of America 39 21 Regulations 40 22 Application of this Act 41 23 Gathering and exchanging information 41 24 Relief from double taxation where profits adjusted 42 Schedules 42 Schedule 1-2003 United Kingdom convention and notes 42 Schedule 2-Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 107 Schedule 2A-United States protocol 135 Schedule 3-Convention between Australia and Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 164 Schedule 3A-Canadian protocol 185 Schedule 4-Agreement between the Government of Australia and the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 200 Schedule 4A-The New Zealand protocol 224 Schedule 5-Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 231 Schedule 5A-Protocol amending the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 251 Schedule 6-Convention between Australia and Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income 264 Schedule 8-Agreement between the Government of the Commonwealth of Australia and the Government of Italy for the Avoidance of Double Taxation of Income derived from International Air Transport 319 Schedule 9-The Commonwealth of Australia and the Federal Republic of Germany 323 Schedule 10-Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 344 Schedule 10A-Second Protocol amending the Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income with Protocol 367 Schedule 11-2006 French convention 370 Schedule 12-Agreement between the Government of Australia and the Government of the Hellenic Republic for the Avoidance of Double Taxation of Income derived from International Air Transport 419 Schedule 13-Agreement between Australia and the Kingdom of Belgium for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 422 Schedule 13A-Protocol amending the Agreement between Australia and the Kingdom of Belgium for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed at Canberra on 13 October 1977 445 Schedule 14-Agreement between the Government of Australia and the Government of the Republic of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 448 Schedule 15-Agreement between Australia and Switzerland for the Avoidance of Double Taxation with respect to Taxes on Income 472 Schedule 16-Agreement between the Government of Australia and the Government of Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 493 Schedule 16A-Malaysian protocol 517 Schedule 16B-second Malaysian protocol 528 Schedule 17-Agreement between the Government of Australia and the Government of Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 536 Schedule 18-Agreement between the Government of Australia and the Government of the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 558 Schedule 20-Agreement between the Government of Australia and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains 580 Schedule 21-Convention between Australia and the Republic of Italy for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 604 Schedule 22-Convention between the Government of Australia and the Government of the Republic of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 627 Schedule 23-2006 Norwegian convention 652 Schedule 24-Agreement between Australia and Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 691 An Act to give the force of Law to certain Conventions and Agreements with respect to Taxes on Income and Fringe Benefits, and for purposes incidental thereto 1 Short title [see Note 1] This Act may be cited as the International Tax Agreements Act 1953. 2 Commencement [see Note 1] This Act shall come into operation on the day on which it receives the Royal Assent. 3 Interpretation (1) In this Act, unless the contrary intention appears: agreement means: (a) a convention or agreement a copy of which is set out in a Schedule to this Act; or (b) the 1946 United Kingdom agreement; or (ba) the 1967 United Kingdom agreement; or (bb) the 1967 United Kingdom agreement as amended by the 1980 Protocol to the 1967 United Kingdom agreement; or (bc) the 1969 French airline profits agreement; or (bd) the 1976 French agreement; or (be) the 1976 French agreement as amended by the 1989 French protocol; or (c) the 1960 New Zealand agreement; or (ca) the 1972 New Zealand agreement; or (cb) the 1982 Norwegian convention; or (cc) the 1984 Finnish agreement; or (cd) the 1984 Finnish agreement as amended by the 1997 Finnish protocol; or (d) the previous Canadian agreement; or (e) the previous United States convention; or (f) the 1969 Japanese agreement. Australian tax means: (a) income tax imposed as such by an Act; or (b) fringe benefits tax imposed by the Fringe Benefits Tax Act 1986. calendar year means a year commencing on 1 January. foreign tax means tax, other than Australian tax, which is the subject of an agreement. prescribed trust estate, in relation to a year of income, means a trust estate that: (a) is a corporate unit trust, within the meaning of Division 6B of Part III of the Assessment Act, in relation to the year of income; or (b) is a public trading trust, within the meaning of Division 6C of Part III of the Assessment Act, in relation to the year of income. the 1946 United Kingdom agreement means the Agreement between the Government of Australia and the Government of the United Kingdom for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at London on 29 October 1946. the 1967 United Kingdom agreement means the Agreement between the Government of the Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains that was signed at Canberra on 7 December 1967. the 1969 French airline profits agreement means the Agreement between the Government of Australia and the Government of the French Republic for the avoidance of double taxation of income derived from international air transport that was signed at Canberra on 27 March 1969. the 1969 Japanese agreement means the Agreement between the Government of the Commonwealth of Australia and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol that was signed at Canberra on 20 March 1969. the 1976 French agreement means the Agreement between the Government of Australia and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Canberra on 13 April 1976. the 1980 Protocol to the 1967 United Kingdom agreement means the Protocol, signed at Canberra on 29 January 1980, between the Government of the Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland amending the 1967 United Kingdom agreement. the 1982 Norwegian convention means the Convention between Australia and the Kingdom of Norway for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and the protocol to that convention, being the convention and protocol that were signed at Canberra on 6 May 1982. the 1984 Finnish agreement means the Agreement between Australia and Finland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol that were signed at Canberra on 12 September 1984. the 1989 French protocol means the Protocol, signed at Paris on 19 June 1989, between the Government of Australia and the Government of the French Republic amending the 1976 French agreement. the 1997 Finnish protocol means the Protocol, signed at Canberra on 5 November 1997, between Australia and Finland amending the 1984 Finnish agreement. the 2003 United Kingdom convention means the Convention between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains, as affected by the 2003 United Kingdom notes. A copy of the convention and of the notes is set out in Schedule 1. the 2003 United Kingdom notes means the exchange of notes between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland in connection with the 2003 United Kingdom convention that was carried out at Canberra on 21 August 2003. A copy of the notes is set out in Schedule 1. the 2006 Finnish agreement means the Agreement between the Government of Australia and the Government of Finland for the avoidance of double taxation with respect to taxes on income and the prevention of fiscal evasion and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 25. the 2006 French convention means the Convention between the Government of Australia and the Government of the French Republic for the avoidance of double taxation with respect to taxes on income and the prevention of fiscal evasion and the protocol to that convention, being the convention and protocol a copy of each of which in the English language is set out in Schedule 11. the 2006 Norwegian convention means the Convention between Australia and the Kingdom of Norway for the avoidance of double taxation with respect to taxes on income and the prevention of fiscal evasion, being the convention a copy of which is set out in Schedule 23. the 2008 Japanese convention means the Convention between Australia and Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that convention, being the convention and protocol a copy of each of which in the English language is set out in Schedule 6. the Argentine agreement means the Agreement between the Government of Australia and the Government of the Argentine Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 44. the Assessment Act means the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997. the Austrian agreement means the Agreement between Australia and the Republic of Austria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 27. the Belgian agreement means the Agreement between Australia and the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (being the agreement a copy of which in the English language is set out in Schedule 13), as amended by the Belgian protocol. the Belgian protocol means the Protocol amending the Agreement between Australia and the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the protocol a copy of which in the English language is set out in Schedule 13A. the British Virgin Islands agreement means the Agreement between the Government of Australia and the Government of the British Virgin Islands for the allocation of taxing rights with respect to certain income of individuals, being the agreement a copy of which is set out in Schedule 48. the Canadian convention means the Convention between the Government of Australia and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the convention a copy of which in the English language is set out in Schedule 3, as amended by the Canadian protocol. the Canadian protocol means the Protocol amending the Convention between the Government of Australia and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the protocol a copy of which in the English language is set out in Schedule 3A. the Chinese agreement means the Agreement between the Government of Australia and the Government of the People's Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 28. the Chinese airline profits agreement means the Agreement between the Government of Australia and the Government of the People's Republic of China for the avoidance of double taxation of income and revenues derived by air transport enterprises from international air transport, being the agreement a copy of which in the English language is set out in Schedule 26. the Czech agreement means the Agreement between Australia and the Czech Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 40. the Danish agreement means the Agreement between the Government of Australia and the Government of the Kingdom of Denmark for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 18. the Fijian agreement means the Agreement between Australia and Fiji for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 32. the first Malaysian protocol means the Protocol, signed 2 August 1999, amending the Agreement between Australia and Malaysia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the protocol a copy of which in the English language is set out in Schedule 16A. the German agreement means the Agreement between the Government of Australia and the Government of the Federal Republic of Germany for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital and to certain other taxes and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 9. the Greek airline profits agreement means the Agreement between the Government of Australia and the Government of the Hellenic Republic for the avoidance of double taxation of income derived from international air transport, being the agreement a copy of which is set out in the English language in Schedule 12. the Hungarian agreement means the Agreement between Australia and the Republic of Hungary for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 33. the Indian agreement means the Agreement between the Government of Australia and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 35. the Indonesian agreement means the Agreement between the Government of Australia and the Government of the Republic of Indonesia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 37. the Irish agreement means the Agreement between the Government of Australia and the Government of Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, being the agreement a copy of which is set out in Schedule 20. the Isle of Man agreement means the Agreement between the Government of Australia and the Government of the Isle of Man for the allocation of taxing rights with respect to certain income of individuals and to establish a mutual agreement procedure in respect of transfer pricing adjustments, being the agreement a copy of which is set out in Schedule 49. the Italian airline profits agreement means the Agreement between the Government of Australia and the Government of Italy for the avoidance of double taxation of income derived from international air transport, being the agreement a copy of which in the English language is set out in Schedule 8. the Italian convention means the Convention between Australia and the Republic of Italy for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that convention, being the convention and protocol a copy of each of which in the English language is set out in Schedule 21. the Kiribati agreement means the Agreement between Australia and the Republic of Kiribati for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 34. the Korean convention means the Convention between the Government of Australia and the Government of the Republic of Korea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that convention, being the convention and protocol a copy of each of which in the English language is set out in Schedule 22. the Malaysian agreement means the Agreement between Australia and Malaysia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in the English language in Schedule 16, as amended by the first and second Malaysian protocols. the Maltese agreement means the Agreement between Australia and Malta for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 24. the Mexican agreement means the Agreement between the Government of Australia and the Government of the United Mexican States for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income as affected by the protocol to that agreement. A copy of the agreement, and of the protocol, in the English language is set out in Schedule 47. the Netherlands agreement means the Agreement between the Government of Australia and the Government of the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 10, as amended by the second Netherlands protocol. the 1960 New Zealand agreement means 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 that was signed at Canberra on 12 May 1960. the 1972 New Zealand agreement means 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 that was signed at Melbourne on 8 November 1972. the New Zealand agreement means 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, being the agreement a copy of which is set out in Schedule 4, as amended by the New Zealand protocol. the New Zealand protocol means 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. A copy of the protocol is set out in Schedule 4A. the Papua New Guinea agreement means the Agreement between Australia and the Independent State of Papua New Guinea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 29. the Philippine agreement means the Agreement between the Government of Australia and the Government of the Republic of the Philippines for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 14. the Polish agreement means the Agreement between Australia and the Republic of Poland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 36. the previous Canadian agreement means the Agreement between the Government of Australia and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Mont Tremblant on 1 October 1957. the previous United States convention means the Convention between the Government of Australia and the Government of the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Washington on 14 May 1953. the Romanian agreement means the Agreement between Australia and Romania for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 45. the Russian agreement means the Agreement between the Government of Australia and the Government of the Russian Federation for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 46. the second Malaysian protocol means the Protocol, signed 28 July 2002, amending the agreement between Australia and Malaysia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the protocol a copy of which in the English language is set out in Schedule 16B. the second Netherlands protocol means the protocol a copy of which in the English language is set out in Schedule 10A, being the Second Protocol amending the Agreement between Australia and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to tax on income with Protocol. the Singapore agreement means the Agreement between the Government of Australia and the Government of the Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which is set out in Schedule 5, as amended by the Singapore protocol. the Singapore protocol means the Protocol amending the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the protocol a copy of which is set out in Schedule 5A. the Slovak agreement means the Agreement between Australia and the Slovak Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 43. the South African agreement means the Agreement between the Government of Australia and the Government of the Republic of South Africa for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 42, as amended by the South African protocol. the South African protocol means the Protocol amending the Agreement between the Government of Australia and the Government of the Republic of South Africa for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. A copy of the protocol is set out in Schedule 42A. the Spanish agreement means the Agreement between Australia and the Kingdom of Spain for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 39. the Sri Lankan agreement means the Agreement between Australia and the Democratic Socialist Republic of Sri Lanka for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 31. the Swedish agreement means the Agreement between the Government of Australia and the Government of Sweden for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 17. the Swiss agreement means the Agreement between the Government of Australia and the Swiss Federal Council for the avoidance of double taxation with respect to taxes on income and the protocol to that agreement, being the agreement and protocol a copy of each of which in the English language is set out in Schedule 15. the Taipei agreement means: (a) the Agreement between the Australian Commerce and Industry Office and the Taipei Economic and Cultural Office concerning the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; and (b) the annex to that agreement; a copy of each of which in the English language is set out in Schedule 41. the Thai Agreement means the Agreement between Australia and the Kingdom of Thailand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 30. the United States convention means the Convention between the Government of Australia and the Government of the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the convention a copy of which is set out in Schedule 2, as amended by the United States protocol. the United States protocol means the Protocol amending the Convention between the Government of Australia and the Government of the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the protocol a copy of which is set out in Schedule 2A. the Vietnamese agreement means the Agreement between the Government of Australia and the Government of the Socialist Republic of Vietnam for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, being the agreement a copy of which in the English language is set out in Schedule 38, as amended by the Vietnamese notes. the Vietnamese notes means the Exchange of Notes between the Government of Australia and the Government of the Socialist Republic of Vietnam amending the Vietnamese agreement, that was carried out on 22 November 1996. A copy of the Notes is set out in Schedule 38A. (2) For the purpose of this Act and the Assessment Act, a reference in an agreement to profits of an activity or business shall, in relation to Australian tax, be read, where the context so permits, as a reference to taxable income derived from that activity or business. (2A) After the commencement of this subsection, a reference in an agreement to income from shares, or to income from other rights participating in profits, does not include a reference to a return on a debt interest (as defined in Subdivision 974-B of the Income Tax Assessment Act 1997). (3) For the purposes of this Act, an amount of income derived by a person, being income other than interest or royalties, shall be deemed to be income attributable to interest or royalties, as the case may be: (a) if the person derived the amount of income by reason of being beneficially entitled to an amount representing the interest or royalties; or (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to the interest or royalties or to an amount that is to be deemed, by any application or successive applications of this subsection, to be an amount of income attributable to the interest or royalties. (4) Where a beneficiary in a trust estate, other than a trust estate that is a prescribed trust estate, in relation to the year of income, is presently entitled to income of the trust estate, that income shall, for the purposes of this Act, be deemed to be an amount of income derived by the person. (7) For the purposes of this Act, the texts in English language of the 1976 French agreement, the 2006 French convention and the 1969 Japanese Agreement shall, unless the context otherwise requires, be construed as if: (a) words in the singular included the plural; and (b) words in the plural included the singular. (7A) For the purposes of this Act, a reference in the 1969 Japanese Agreement to an area adjacent to Australia as specified in the Second Schedule to the Petroleum (Submerged Lands) Act 1967-1968 is to be read as including a reference to an area adjacent to Australia as specified in Schedule 1 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006. (8) Where, by virtue of a provision of an agreement, the expression royalties as used in, or in a particular provision of, that agreement has the meaning that that expression has under the law of Australia relating to income tax, that expression has, for the purposes of that agreement or of that particular provision, as the case may be, the meaning that that expression has by virtue of subsection 6 (1) of the Assessment Act. (9) Where, by virtue of a provision of an agreement, expressions used in, or in a particular provision of, that agreement and not otherwise defined for the purposes of that agreement or of that particular provision have the meanings that those expressions have under the law of Australia relating to income tax, subsection (8) does not affect the interpretation of that agreement or of that particular provision, as the case may be, in relation to the meaning of expressions other than the expression royalties. (10) For the purposes of this Act, Medicare levy shall be deemed to be income tax and to be imposed as such and, unless the contrary intention appears, references to income tax or tax shall be construed accordingly. (11) Where: (a) a beneficiary of a trust estate (not being a prescribed trust estate) who is a resident of a country with which, or with the government of which, Australia, or the Government of Australia, has made an agreement before the commencement of this subsection is presently entitled, either directly or through one or more interposed trust estates, to a share of the income of the trust estate derived from the carrying on by the trustee in Australia of a business through a permanent establishment in Australia; and (b) under the agreement, the income is to be dealt with in accordance with the article (in this subsection referred to as the business profits article) of the agreement relating to the taxing of income of an enterprise of a Contracting State where the enterprise carries on a business in the other Contracting State through a permanent establishment in the other Contracting State; for the purpose of determining whether the beneficiary's share of the income may be taxed in Australia in accordance with the business profits article: (c) the beneficiary shall be deemed to carry on in Australia, through a permanent establishment in Australia, the business carried on in Australia by the trustee; and (d) the beneficiary's share of the income shall be deemed to be attributable to that permanent establishment. (11A) If: (a) the licensee of a spectrum licence (within the meaning of the Radiocommunications Act 1992), or a person authorised under section 68 of that Act by the licensee, derives income from operating radiocommunications devices (within the meaning of that Act) under the licence or from authorising others to do so; and (b) the licensee or authorised person is a resident of a country (other than Australia), or a territory (other than an Australian--controlled territory), to whose residents an agreement applies; and (c) under the agreement, the income is to be dealt with in accordance with the business profits article of the agreement referred to in paragraph 3(11)(b); for the purpose of determining whether the income may be taxed in Australia in accordance with the business profits article: (d) the licensee or authorised person is taken to carry on a business, through a permanent establishment, in Australia; and (e) the income is taken to be attributable to that permanent establishment. (12) In subsections (11) and (11A): Contracting State, in relation to an agreement, means a country which, or the government of which, is a party to the agreement. income includes profit. permanent establishment in relation to an agreement, has the same meaning as in the agreement. 3AA Source of income from funds management activities (1) This section applies to a beneficiary of a widely held unit trust if: (a) the beneficiary is a resident of a country (other than Australia) for the purposes of an agreement that is given the force of law under this Act; and (b) the beneficiary is presently entitled, either: (i) directly; or (ii) indirectly through fixed entitlements in one or more interposed trust estates (whether widely held unit trusts or not); to a share of the income of the widely held unit trust derived from the carrying on by the trustee in Australia of funds management activities through a permanent establishment in Australia (the funds management income). (2) In working out for the purposes of the Assessment Act whether the funds management income of the beneficiary is attributable to sources in Australia, these provisions (the source of income provisions) do not apply: (a) Article 21 of the 2003 United Kingdom convention; (b) a corresponding provision of another agreement; (c) subsections 11(3), 11S(2) and 11ZF(2) of this Act, and any provision of this Act of similar effect enacted after the commencement of this section. (3) However, the source of income provisions do apply to the extent to which the income derived from the carrying on by the trustee of funds management activities is adjusted under: (a) Article 7(2) or 9(1) of the 2003 United Kingdom convention; or (b) a corresponding provision of another agreement. (4) In this section: closely held has the meaning given by section 272-105 in Schedule 2F to the Income Tax Assessment Act 1936. funds management activities means activities carried on by: (a) a managed investment scheme (as defined by section 9 of the Corporations Act 2001) that is a widely held unit trust; or (b) a managed investment scheme (as so defined) that is a unit trust that is closely held by one or more of these: (i) a managed investment scheme (as so defined) that is a widely held unit trust; (ii) a complying superannuation entity; (iii) a life insurance company. permanent establishment, in relation to an agreement, has the same meaning as in the agreement. widely held unit trust has the meaning given by section 272-105 in Schedule 2F to the Income Tax Assessment Act 1936. 3A Alienation of real property through interposed entities (1) This section applies if: (a) an agreement makes provision in relation to income, profits or gains from the alienation or disposition of shares or comparable interests in companies, or of interests in other entities, whose assets consist wholly or principally of real property (within the meaning of the agreement) or other interests in relation to land; and (b) this Act gave that provision the force of law before 27 April 1998. (2) For the purposes of this Act, that provision is taken to extend to the alienation or disposition of shares or any other interests in companies, and in any other entities, the value of whose assets is wholly or principally attributable, whether directly, or indirectly through one or more interposed companies or other entities, to such real property or interests. (3) However, subsection (2) applies only if the real property or land concerned is situated in Australia (within the meaning of the relevant agreement). (4) If, after the commencement of this section, this Act is amended so as to give the force of law to an amendment or substitution of a provision mentioned in subsection (1), this section ceases to apply to that provision from the time that the amendment of the Act takes effect. (5) In this section: entity has the same meaning as in the Income Tax Assessment Act 1997, but does not include an individual in his or her personal capacity. 4 Incorporation of Assessment Act (1) Subject to subsection (2), the Assessment Act is incorporated and shall be read as one with this Act. (2) The provisions of this Act have effect notwithstanding anything inconsistent with those provisions contained in the Assessment Act (other than Part IVA of that Act) or in an Act imposing Australian tax. 4AA Incorporation of Fringe Benefits Tax Assessment Act (1) Subject to subsection (2), the Fringe Benefits Tax Assessment Act 1986 is incorporated and is to be read as one with this Act. (2) The provisions of this Act have effect in spite of anything inconsistent with those provisions contained in the Fringe Benefits Tax Assessment Act 1986 (other than section 67 of that Act). 4A Treasurer to notify entry into force of agreements, exchanges of letters under agreements etc. (1) This section applies to the following events: (a) the entry into force of an agreement; (b) the giving of notice of termination of an agreement; (c) the exchange of letters under a provision of an agreement; (d) the exchange of instruments of ratification under an agreement; (e) the confirmation of receipt of a notice under a provision of an agreement; (f) the occurrence of any similar thing. (2) As soon as practicable after any such event occurs, the Treasurer must cause to be published in the Gazette a notice setting out particulars of the event. 5 The 2003 United Kingdom convention Subject to this Act, on and after the date of entry into force of the 2003 United Kingdom convention, the provisions of the convention, so far as those provisions affect Australian tax, have the force of law according to their tenor. 5A Previous United Kingdom agreements etc. The provisions of: (a) the 1946 United Kingdom agreement; and (b) the 1967 United Kingdom agreement; and (c) the 1967 United Kingdom agreement as amended by the 1980 Protocol to the 1967 United Kingdom agreement; so far as those provisions affect Australian tax, continue to have the force of law for tax in respect of income in relation to which the agreements remain effective. Note 1: Paragraph 3 of Article 29 of the 2003 United Kingdom convention preserves the operation of Article 16 of the 1967 United Kingdom agreement (which exempts from tax the income of visiting professors and teachers). This applies to individuals who are entitled to the exemption at the time when the 2003 United Kingdom convention enters into force. The exemption is preserved until the individual concerned would have ceased to be entitled to it under the 1967 United Kingdom agreement. Note 2: Article 16 of the 1967 United Kingdom agreement is affected by Article I of the 1980 Protocol to the 1967 United Kingdom agreement. 6 Convention with United States of America (1) Subject to this Act, on and after the date of entry into force of the United States convention, the provisions of Articles 1 to 22 (inclusive) and Articles 24 to 29 (inclusive) of the convention, so far as those provisions affect Australian tax, have the force of law in relation to tax in respect of: (a) income, being dividends, interest or royalties to which Article 10, 11 or 12, as the case may be, of the convention applies, derived on or after the first day of the second month following the month in which the convention enters into force, and in relation to which the convention remains effective; and (b) income to which paragraph (a) does not apply, being income of a year of income commencing on or after the first day of the second month following the month in which the convention enters into force, and in relation to which the convention remains effective. (3) The provisions of the previous United States convention, so far as those provisions affect Australian tax, continue to have the force of law in relation to tax in respect of income in relation to which the convention remains effective. (4) The provisions of the convention with the United States of America do not have the effect of subjecting to Australian tax any interest paid by a resident of Australia to a resident of the United States of America that, apart from that convention, would not be subject to Australian tax. 6AA Protocol with the United States of America Subject to this Act, on and after the date of entry into force of the United States protocol, the provisions of the protocol, so far as those provisions affect Australian tax, have the force of law according to their tenor. 6A Convention with Canada (1) Subject to this Act, on and after the date of entry into force of the Canadian convention, the provisions of the convention, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1975 and in relation to which the convention remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July 1975 and in relation to which the convention remains effective. (3) The provisions of the previous Canadian agreement, so far as those provisions affect Australian tax, continue to have the force of law in relation to tax in respect of income in relation to which the agreement remains effective. 6AB Protocol with Canada Subject to this Act, on and after the date of entry into force of the Canadian protocol, the provisions of the protocol, so far as those provisions affect Australian tax, have, and are to be taken to have had, the force of law according to their tenor. 6B Agreement with New Zealand (1A) Subject to this Act, on and after the date of entry into force of the New Zealand agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. (1) Subject to this Act, the provisions of the 1972 New Zealand agreement, so far as those provisions affect Australian tax, continue to have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1972, and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of the year of income that commenced on 1 July 1972, or of a subsequent year of income in relation to which the agreement remains effective. (2) Subject to this Act, the provisions of subparagraph (b) of paragraph (3) of Article 18 of the 1972 New Zealand agreement continue to have the force of law for the purposes of paragraph 23(q) of the Assessment Act in relation to income of the year of income that ended on 30 June 1972, and of the 13 years of income immediately preceding that year of income. (3) The provisions of the 1960 New Zealand agreement, so far as those provisions affect Australian tax, continue to have the force of law in relation to tax in respect of income in relation to which the agreement remains effective. 6C New Zealand protocol Subject to this Act, on and after the date of entry into force of a provision of the New Zealand protocol, the provision has the force of law according to its tenor. 7 Agreement with Singapore (1) Subject to this Act, the provisions of the Singapore agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1969, and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of the year of income that commences on 1 July 1969, or of a subsequent year of income in relation to which the agreement remains effective. 7A Protocol with Singapore Subject to this Act, on and after the date of entry into force of the Singapore protocol, the provisions of the protocol, so far as those provisions affect Australian tax, have, and are to be taken to have had, the force of law according to their tenor. 8 Convention with Japan (1) Subject to this Act, on and after the date of entry into force of the 2008 Japanese convention, the provisions of the convention have the force of law according to their tenor. (2) The provisions of the 1969 Japanese agreement, so far as those provisions affect Australian tax, continue to have the force of law in relation to tax in respect of income in relation to which the agreement remains effective. Note: Paragraph 5 of Article 31 of the 2008 Japanese convention preserves the operation of Article 15 of the 1969 Japanese agreement (which provides that the income received in respect of teaching or conducting research by visiting professors and teachers is exempt from tax in the country where the teaching or research activities are conducted). This applies to individuals who are entitled to the benefit at the time when the 2008 Japanese convention enters into force. The benefit is preserved until the individual concerned would have ceased to be entitled to it under the 1969 Japanese agreement. 9 The 2006 French convention Subject to this Act, on and after the date of entry into force of a provision of the 2006 French convention, the provision has the force of law according to its tenor. 9A Previous French agreements etc. The provisions of: (a) the 1969 French airline profits agreement; and (b) the 1976 French agreement; and (c) the 1976 French agreement as amended by the 1989 French protocol; so far as those provisions affect Australian tax, continue to have the force of law for tax in respect of income in relation to which the agreements remain effective. Note 1: Paragraph 3 of Article 30 of the 2006 French convention preserves the operation of Article 19 of the 1976 French agreement (which provides that the income received in respect of teaching or conducting research by visiting professors and teachers is taxed only in their home country). This applies to individuals who are entitled to the benefit at the time when the 2006 French convention enters into force. The benefit is preserved until the individual concerned would have ceased to be entitled to it under the 1976 French agreement. Note 2: Article 19 of the 1976 French agreement is affected by Article 8 of the 1989 French protocol. 10 Airline profits agreement with Italy (1) Subject to this Act, on and after the date of entry into force of the Italian airline profits agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law in relation to tax in respect of income of the year of income that commenced on 1 July 1966, or of a subsequent year of income in relation to which the agreement remains effective. 10A Convention with Italy (1) Subject to this Act, on and after the date of entry into force of the Italian convention, the provisions of the convention, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1976 and in relation to which the convention remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July 1976 and in relation to which the convention remains effective. 11 Agreement with the Federal Republic of Germany (1) Subject to this Act, on and after the date of entry into force of the German agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1971 and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of the year of income that commenced on 1 July 1971 and of a subsequent year of income in relation to which the agreement remains effective. (3) For the purposes of the Assessment Act, income derived by a person who is a resident of the Federal Republic of Germany for the purposes of the German agreement, being income that under Articles 6 to 8 and 10 to 16 of the agreement may be taxed in Australia, shall be deemed to be derived from sources in Australia. 11A Agreement with the Kingdom of the Netherlands (1) Subject to this Act, on and after the date of entry into force of the Netherlands agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1975 and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of the year of income that commenced on 1 July 1975 and of a subsequent year of income in relation to which the agreement remains effective. (3) For the purposes of the Assessment Act, income from a lease of land, income from any other direct interest in or over land, whether or not improved, and income from debt--claims of every kind, excluding bonds or debentures, secured by mortgage of real property or of any other direct interest in or over land, being income that under Article 6 of the Netherlands agreement is to be regarded as income from real property, shall be deemed to be derived from sources in the place in which the land to which the lease, other direct interest or mortgage relates is situated. 11AA Second protocol with the Kingdom of the Netherlands (1) Subject to this Act, on and after the date of entry into force of the second Netherlands protocol, the provisions of the protocol, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law in relation to tax in respect of: (a) income, being income to which subparagraph (1)(a) of Article 3 of the protocol applies, of any year of income commencing on or after 1 July 1988; and (b) income, being income to which subparagraph (1)(b) of Article 3 of the protocol applies, of any year of income commencing on or after 1 July 1986. 11B Airline profits agreement with the Hellenic Republic (1) Subject to this Act, on and after the date of entry into force of the Greek airline profits agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law in relation to tax in respect of income derived on or after 1 March 1972 and in relation to which the agreement remains effective. 11C Agreement with the Kingdom of Belgium (1) Subject to this Act, on and after the date of entry into force of the Belgian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective. 11CA Protocol with the Kingdom of Belgium (1) Subject to this Act, on and after the date of entry into force of the Belgian protocol, the provisions of the protocol, so far as those provisions affect Australian tax, have the force of law in relation to tax in respect of income of any year of income commencing on or after 1 July in the calendar year immediately following that in which the protocol enters into force. 11D Agreement with the Republic of the Philippines (1) Subject to this Act, on and after the date of entry into force of the Philippine agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January in the calendar year in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year in which the agreement enters into force and in relation to which the agreement remains effective. 11E Agreement with the Swiss Federal Council (1) Subject to this Act, on and after the date of entry into force of the Swiss agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January 1979 and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of the year of income that commenced on 1 July 1979 and of a subsequent year of income in relation to which the agreement remains effective. 11F Agreement with Malaysia (1) Subject to this Act, on and after the date of entry into force of the Malaysian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July 1979 and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income that commenced on or after 1 July 1979 and in relation to which the agreement remains effective. (4) The provisions of the Malaysian agreement shall not have the effect of subjecting to Australian tax interest or royalties paid by a resident of Australia to a resident of Malaysia that, but for that agreement, would not be subject to Australian tax. 11FA First protocol with Malaysia (1) Subject to this Act, on and after the date of entry into force of the first Malaysian protocol, the provisions of the protocol, so far as those provisions affect Australian tax, have, and are taken to have had, the force of law according to their tenor. (2) Nothing in section 170 of the Income Tax Assessment Act 1936 prevents the amendment of an assessment made before the commencement of this section for the purpose of giving effect to the first Malaysian protocol. (3) Nothing in former Division 19 of Part III of the Income Tax Assessment Act 1936 prevents the amendment of a determination made, or taken to have been made, under that Division before the commencement of this section for the purpose of giving effect to the first Malaysian protocol. 11FB Second protocol with Malaysia (1) Subject to this Act, on and after the date of entry into force of the second Malaysian protocol, the provisions of that protocol, so far as those provisions affect Australian tax, have, and are taken to have had, the force of law according to their tenor. (2) Nothing in section 170 of the Income Tax Assessment Act 1936 prevents the amendment of an assessment made before the commencement of this section for the purpose of giving effect to the second Malaysian protocol. (3) Nothing in former Division 19 of Part III of the Income Tax Assessment Act 1936 prevents the amendment of a determination made, or taken to have been made, under that Division before the commencement of this section for the purpose of giving effect to the second Malaysian protocol. 11G Agreement with Sweden (1) Subject to this Act, on and after the date of entry into force of the Swedish agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective. 11H Agreement with the Kingdom of Denmark (1) Subject to this Act, on and after the date of entry into force of the Danish agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective. (3) Where an amount of tax credit is to be treated as assessable income of a taxpayer in accordance with paragraph (7) of Article 10 of the Danish agreement: (a) the amount of the tax credit shall be included in the assessable income of the taxpayer of the year of income in which the dividend to which the tax credit relates is paid; and (b) the amount of the tax credit shall be added to the amount of the dividend to which the tax credit relates and the sum of the two amounts shall be deemed to be one dividend for the purposes of this Act and the Assessment Act. 11K Agreement with Ireland (1) Subject to this Act, on and after the date of entry into force of the Irish agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective. 11L Convention with the Republic of Korea (1) Subject to this Act, on and after the date of entry into force of the Korean convention, the provisions of the convention, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January 1982 and in relation to which the convention remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July 1982 and in relation to which the convention remains effective. 11M The 2006 Norwegian convention Subject to this Act, on and after the date of entry into force of a provision of the 2006 Norwegian convention, the provision has the force of law according to its tenor. 11MA The 1982 Norwegian convention The provisions of the 1982 Norwegian convention, so far as those provisions affect Australian tax, continue to have the force of law for tax in respect of income in relation to which the convention remains effective. 11N Agreement with Malta (1) Subject to this Act, on and after the date of entry into force of the Maltese agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January in the calendar year next following that in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year next following that in which the agreement enters into force and in relation to which the agreement remains effective. 11P The 2006 Finnish agreement Subject to this Act, on and after the date of entry into force of a provision of the 2006 Finnish agreement, the provision has the force of law according to its tenor. 11PA Previous Finnish agreements etc. The provisions of: (a) the 1984 Finnish agreement; and (b) the 1984 Finnish agreement as amended by the 1997 Finnish protocol; so far as those provisions affect Australian tax, continue to have the force of law for tax in respect of income in relation to which the agreements remain effective. 11Q Airline profits agreement with the People's Republic of China (1) Subject to this Act, on and after the date of entry into force of the Chinese airline profits agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law in relation to tax in respect of income derived on or after 1 July 1984 and in relation to which the agreement remains effective. 11R Agreement with the Republic of Austria (1) Subject to this Act, on and after the date of entry into force of the Austrian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law: (a) in relation to withholding tax-in respect of dividends or interest derived on or after 1 January in the calendar year next following that in which the agreement enters into force and in relation to which the agreement remains effective; and (b) in relation to tax other than withholding tax-in respect of income of any year of income commencing on or after 1 July in the calendar year next following that in which the agreement enters into force and in relation to which the agreement remains effective. 11S Agreement with the People's Republic of China (1) Subject to this Act, on and after the date of entry into force of the Chinese agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. (2) For the purposes of the Assessment Act, income, profits or gains derived by a person who is a resident of China for the purposes of the Chinese agreement, being income, profits or gains that under Articles 6 to 8, 10 to 17 and 19 to 22 of the agreement may be taxed in Australia, are taken to be derived from sources in Australia. (3) The provisions of the Chinese agreement do not have the effect of subjecting to Australian tax any interest or royalties paid by a resident of Australia to a resident of China that, apart from that agreement, would not be subject to Australian tax. 11T Agreement with the Independent State of Papua New Guinea Subject to this Act, on and after the date of entry into force of the Papua New Guinea agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11U Agreement with Thailand Subject to this Act, on and after the date of entry into force of the Thai agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11V Agreement with Sri Lanka Subject to this Act, on and after the date of entry into force of the Sri Lankan agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11W Agreement with Fiji Subject to this Act, on and after the date of entry into force of the Fijian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11X Agreement with the Republic of Hungary Subject to this Act, on and after the date of entry into force of the Hungarian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11Y Agreement with Kiribati Subject to this Act, on and after the date of entry into force of the Kiribati agreement, the provisions of the agreement, as far as those provisions affect Australian tax, have the force of law according to their tenor. 11Z Agreement with the Republic of India Subject to this Act, on and after the date of entry into force of the Indian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZA Agreement with the Republic of Poland (1) Subject to this Act, on and after the date of entry into force of the Polish agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. (2) The provisions of the Polish agreement do not have the effect of subjecting to Australian tax any interest or royalties paid by a resident of Australia to a resident of Poland that, apart from that agreement, would not be subject to Australian tax. 11ZB Agreement with the Republic of Indonesia Subject to this Act, on and after the date of entry into force of the Indonesian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZC Agreement with the Socialist Republic of Vietnam Subject to this Act, on and after the date of entry into force of the Vietnamese agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZCA Exchange of Notes between Australia and the Socialist Republic of Vietnam (1) Subject to this Act, on or after the date of entry into force of the Vietnamese notes, the provisions of the notes, so far as those provisions affect Australian tax, have the force of law according to their tenor. (2) The Commissioner may amend an assessment made before the date of entry into force of the Vietnamese notes for the purpose of giving effect to subsection (1). 11ZD Agreement with the Kingdom of Spain Subject to this Act, on and after the date of entry into force of the Spanish agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZE Agreement with the Czech Republic Subject to this Act, on and after the date of entry into force of the Czech agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZF Agreement with Taipei Economic and Cultural Office (1) Subject to this Act, on and after the date of entry into effect of the Taipei agreement, the provisions of the agreement, so far as they affect Australian tax, have, and are taken to have had, the force of law according to their tenor. (2) For the purposes of the Assessment Act, if: (a) a person derives income, profits or gains; and (b) for the purposes of the Taipei agreement, the person is a resident of the foreign territory; and (c) under any of Articles 6 to 8, 10 to 17 and 19 to 21 of the agreement, the income, profits or gains may be taxed in the Australian territory; the income, profits or gains are taken to be derived from sources in the Australian territory. (3) For the purposes of the Assessment Act and Article 22 of the Taipei agreement, if: (a) a person derives income, profits or gains; and (b) for the purposes of the agreement, the person is a resident of the Australian territory; and (c) under any of Articles 6 to 8, 10 to 17 and 19 to 21 of the agreement, the income, profits or gains may be taxed in the foreign territory; the income, profits or gains are taken to have been derived from sources in the foreign territory. (4) The provisions of the Taipei agreement do not have the effect of subjecting to Australian tax any interest or royalties paid by a resident of the Australian territory to a resident of the foreign territory that, apart from the agreement, would not be subject to Australian tax. (5) Section 170 of the Assessment Act does not prevent the amendment of an assessment made before the commencement of this section for the purpose of giving effect to the Taipei agreement. (6) If: (a) an exchange of letters takes place for the purposes of paragraph 2 of the Annex mentioned in paragraph (b) of the definition of Taipei agreement in subsection 3(1); and (b) as a result of the exchange, income, profits or gains derived by an organisation before the exchange become taxable under paragraph 2 of the Annex solely in the Australian territory or solely in the foreign territory; and (c) before the exchange and whether before or after the commencement of this section, an assessment was made in which the income, profits or gains were not taxed in that way; section 170 of the Assessment Act does not prevent the amendment of the assessment for the purpose of taxing the income, profits or gains in that way. (7) In this section: Australian territory means the territory mentioned in subparagraph 1(a) of Article 2 of the Taipei agreement. foreign territory means the territory mentioned in subparagraph 1(b) of Article 2 of the Taipei agreement. 11ZG Agreement with the Republic of South Africa Subject to this Act, on and after the date of entry into force of the South African agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZGA Protocol with the Republic of South Africa Subject to this Act, on and after the date of entry into force of the South African protocol, the provisions of the protocol have the force of law according to their tenor. 11ZH Agreement with the Slovak Republic Subject to this Act, on and after the date of entry into force of the Slovak agreement, the provisions of the agreement so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZI Argentine agreement (1) Subject to this Act, on and after the date of entry into force of the Argentine agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and are taken to have had, the force of law according to their tenor. (2) Nothing in section 170 of the Income Tax Assessment Act 1936 prevents the amendment of an assessment made before the commencement of this section for the purpose of giving effect to the Argentine agreement. 11ZJ Agreement with Romania Subject to this Act, on and after the date of entry into force of the Romanian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZK Agreement with Russia Subject to this Act, on or after the date of entry into force of the Russian agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZL Agreement with Mexico Subject to this Act, on and after the date of entry into force of the Mexican agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law according to their tenor. 11ZM Agreement with the British Virgin Islands Subject to this Act, on and after the date of entry into force of a provision of the British Virgin Islands agreement, the provision has the force of law according to its tenor. 11ZN Agreement with the Isle of Man Subject to this Act, on and after the date of entry into force of a provision of the Isle of Man agreement, the provision has the force of law according to its tenor. 16 Rebates of excess tax on income included in assessable income (1) This section applies in relation to each relevant part of a taxpayer's income of the year of income that consists of income in respect of which a provision of an agreement limits the amount of Australian tax payable. (2) The taxpayer is entitled, in respect of each relevant part of the taxpayer's income of the year of income to which this section applies, to a rebate of the amount (if any) by which the amount ascertained in accordance with the last preceding section as the amount of Australian tax payable in respect of that part exceeds the limit applicable under the provisions of the agreement in relation to that part. (3) The rebate to which a taxpayer is entitled under this section in respect of a relevant part of the taxpayer's income shall be allowed in the taxpayer's assessment in respect of income of the year of income in the assessable income of which that part is included. (4) A rebate, or the sum of the rebates, a taxpayer is entitled to under subsection (2), in respect of income of a year of income, must not exceed the amount of Australian tax payable in respect of the taxpayer's taxable income of that year after all other rebates of, and deductions from, that tax have been taken into account. 17A Withholding tax (1) Where a provision of an agreement limits the amount of Australian tax payable in respect of a dividend or a royalty, being a dividend or a royalty in respect of which withholding tax is payable, and the amount of that withholding tax exceeds the limit specified in the agreement, the liability of the taxpayer for the withholding tax shall be reduced by an amount equal to the amount of the excess. (2) Where the liability of a taxpayer for withholding tax payable in respect of a unit trust dividend would have been reduced in pursuance of subsection (1) if that unit trust dividend had been a dividend paid to the taxpayer by a company that is a resident, that liability shall be reduced by an amount equal to the amount by which the liability would have been reduced if the unit trust dividend had been a dividend paid to the taxpayer by a company that is a resident. (3) In subsection (2): unit trust dividend means a unit trust dividend within the meaning of Division 6B or 6C of Part III of the Assessment Act. (4) If: (a) a provision (basic royalty provision) of an agreement is covered by either of the following subparagraphs: (i) paragraph 1 or 2 of Article 12 of the Chinese agreement; (ii) a corresponding provision of another agreement; and (b) another provision of the agreement expressly excludes particular royalties (excluded royalties) from the scope of the basic royalty provision; section 128B of the Assessment Act (which deals with liability for withholding tax) does not apply to the excluded royalties. (5) Section 128B of the Assessment Act (which deals with liability for withholding tax) does not apply to the payment of a royalty as defined in subsection 6(1) of that Act if: (a) the royalty is paid to a person who is a resident of a Contracting State or territory (other than Australia) for the purposes of an agreement; and (b) the agreement does not treat the amount paid as a royalty. 18 Source of dividends (1) Where a company is not a resident of Australia but, for the purposes of a law of a country with which, or with the government of which, an agreement has been made (being a law which imposes foreign tax), is resident in that other country, a dividend paid by the company shall, for the purposes of the agreement, be deemed to be derived from a source in that country. (2) Subsection (1) does not limit the operation of a provision of an agreement by virtue of which a dividend is deemed to be derived from a source outside Australia. 20 Collection of tax due to the United States of America (1) The purpose of this section is to enable the Government of Australia to give effect to its obligation under paragraph (5) of Article 25 of the United States convention and accordingly the amounts of United States tax to which this section applies are amounts of United States tax the collection of which is necessary in order to ensure that the benefit of exemptions from United States tax, or of reductions in rates of United States tax, provided for by the convention is not received by a person not entitled to that benefit. (2) Where a person is liable to pay an amount of United States tax to which this section applies, there is payable by that person to the Commissioner as a debt due to the Queen on behalf of Australia an amount equivalent to that amount, and the amount so payable may be sued for and recovered in any court of competent jurisdiction by the Commissioner, a Second Commissioner or a Deputy Commissioner suing in his or her official name. (3) An amount payable to the Commissioner under the last preceding subsection may be collected by the Commissioner under section 218 of the Assessment Act and, for that purpose, a reference in that section to a taxpayer shall be read as a reference to the person by whom that amount is payable and a reference to an amount due by a taxpayer in respect of tax shall be read as a reference to the amount so payable. (4) The Commissioner, a Second Commissioner or a Deputy Commissioner may, by writing under his or her hand, certify: (a) that, on a date specified in the certificate, a person specified in the certificate was liable to pay an amount of United States tax; (b) that that amount was an amount of United States tax to which this section applies; and (c) that an amount specified in the certificate is an amount equivalent to the amount of United States tax; and such a certificate is, in all courts and for all purposes, evidence of the matters stated in the certificate and that the person specified in the certificate has, during the period from the date specified in the certificate until the date of the certificate, continued to be liable to pay the amount of United States tax. (5) The Commissioner shall pay to the Government of the United States of America an amount equal to any amount paid or recovered by virtue of this section. (6) In this section: United States tax has the same meaning as in the United States convention. 21 Regulations The power to make regulations conferred by section 266 of the Assessment Act shall be deemed to extend to the making of regulations, not inconsistent with this Act, prescribing all matters which by this Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to this Act. 22 Application of this Act Nothing in this Act affects assessments in respect of income, or the ascertainment of credits against tax on income, of a year of income before the year of income that commenced on 1 July 1953. 23 Gathering and exchanging information (1) The Commissioner or an officer authorised by the Commissioner may use the information gathering provisions for the purpose of gathering information to be exchanged in accordance with the Commissioner's obligations under an international agreement. (2) Making a record of, and exchanging, information in accordance with the Commissioner's obligations under an international agreement is not a breach of a provision of a taxation law that prohibits the Commissioner or an officer from making a record of, or disclosing, information. Example: An example of such a provision is section 3C of the Taxation Administration Act 1953. (3) Subsections (1) and (2) have effect whether or not the information relates to Australian tax. (4) In this section: information gathering provision means a provision of a taxation law that allows the Commissioner: (a) to access land, premises, documents, information, goods or other property; or (b) to require or direct a person to provide information; or (c) to require or direct a person to appear before the Commissioner or an officer and give evidence or produce documents. international agreement means: (a) an agreement given the force of law under this Act; or (b) some other agreement that allows for the exchange of information on tax matters between Australia and: (i) a foreign country or a constituent part of a foreign country; or (ii) an overseas territory. taxation law has the same meaning as in the Income Tax Assessment Act 1997. 24 Relief from double taxation where profits adjusted Application (1) This section applies if: (a) Australia has an agreement with one of the following (a treaty partner): (i) a foreign country or a constituent part of a foreign country; (ii) an overseas territory; and (b) the treaty partner taxes profits, or purports to tax profits, in accordance with, or consistent with the principles of: (i) if the treaty partner is the United Kingdom-Article 9 of the 2003 United Kingdom convention; or (ii) otherwise-a corresponding provision of another agreement. Note: Article 9 of the 2003 United Kingdom Convention deals with associated enterprises. Object (2) The object of this section is to prevent double taxation of the profits, to the extent that the Commissioner considers the taxation of the profits by the treaty partner to be in accordance with the agreement. Adjustment of taxable income or tax loss (3) The Commissioner may determine the amount of a taxpayer's taxable income or tax loss of a year of income to be an amount that is appropriate having regard to the object of this section. Note: The Commissioner may amend an assessment at any time to give effect to this section: see subsection 170(11) of the Income Tax Assessment Act 1936. Schedules Schedule 1-2003 United Kingdom convention and notes Note: See section 3. CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS The Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains, Have agreed as follows: ARTICLE 1 Persons covered This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 Taxes covered 1 The existing taxes to which this Convention shall apply are: (a) in the case of the United Kingdom: (i) the income tax; (ii) the corporation tax; and (iii) the capital gains tax; (b) in the case of Australia: the income tax, the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, and the fringe benefits tax, imposed under the federal law of Australia. 2 This Convention shall also apply to any identical or substantially similar taxes which are imposed under the federal law of Australia or the law of the United Kingdom after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes that have been made in the law of their respective States relating to the taxes to which this Convention applies within a reasonable period of time after those changes. ARTICLE 3 General definitions 1 For the purposes of this Convention, unless the context otherwise requires: (a) the term "United Kingdom" means Great Britain and Northern Ireland, including any area outside the territorial sea of the United Kingdom which in accordance with international law has been or may hereafter be designated, under the laws of the United Kingdom concerning the Continental Shelf, as an area within which the rights of the United Kingdom with respect to the seabed and subsoil and their natural resources may be exercised; (b) the term "Australia", when used in a geographical sense, excludes all external territories other than: (i) the Territory of Norfolk Island; (ii) the Territory of Christmas Island; (iii) the Territory of Cocos (Keeling) Islands; (iv) the Territory of Ashmore and Cartier Islands; (v) the Territory of Heard Island and McDonald Islands; and (vi) the Coral Sea Islands Territory, and includes any area adjacent to the territorial limits of Australia (including the Territories specified in this subparagraph) in respect of which there is for the time being in force, consistently with international law, a law of Australia dealing with the exploration for or exploitation of any of the natural resources of the seabed and subsoil of the Continental Shelf; (c) the term "Australian tax" means tax imposed by Australia, being tax to which this Convention applies by virtue of Article 2; (d) the term "United Kingdom tax" means tax imposed by the United Kingdom, being tax to which this Convention applies by virtue of Article 2; (e) the terms "a Contracting State" and "the other Contracting State" mean the United Kingdom or Australia, as the context requires; (f) the term "person" includes an individual, a company and any other body of persons, but subject to paragraph 2 of this Article does not include a partnership; (g) the term "company" means any body corporate or anything that is treated as a company or body corporate for tax purposes; (h) the term "enterprise" applies to the carrying on of any business; (i) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (j) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely from a place or between places in the other Contracting State; (k) the term "competent authority" means: (i) in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorised representative; (ii) in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner; (l) the term "national" means: (i) in relation to the United Kingdom, any British citizen, or any British subject not possessing the citizenship of any other Commonwealth country or territory, provided that individual has the right of abode in the United Kingdom; and any company deriving its status as such from the law in force in the United Kingdom; (ii) in relation to Australia, an Australian citizen or an individual not possessing citizenship who has been granted permanent residency status; and any company deriving its status as such from the law in force in Australia; (m) the term "business" includes the performance of professional services and of other activities of an independent character; (n) the term "tax" means Australian tax or United Kingdom tax as the context requires, but does not include any penalty or interest imposed under the law of either Contracting State relating to its tax; (o) the term "recognised stock exchange" means: (i) the Australian Stock Exchange and any other Australian stock exchange recognised as such under Australian law; (ii) the London Stock Exchange and any other United Kingdom investment exchange recognised under United Kingdom law; or (iii) any other stock exchange agreed upon by the competent authorities. 2 A partnership deriving its status from Australian law as a limited partnership which is treated as a taxable unit under the law of Australia shall be treated as a person for the purposes of this Convention. 3 As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the laws of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. ARTICLE 4 Residence 1 For the purposes of this Convention, a person is a resident of a Contracting State: (a) in the case of the United Kingdom, if the person is a resident of the United Kingdom for the purposes of United Kingdom tax; and (b) in the case of Australia, if the person is a resident of Australia for the purposes of Australian tax. A Contracting State or a political subdivision or local authority of that State is also a resident of that State for the purposes of this Convention. 2 A person is not a resident of a Contracting State for the purposes of this Convention if that person is liable to tax in that State in respect only of income or gains from sources in that State. 3 The status of an individual who, by reason of the preceding provisions of this Article is a resident of both Contracting States, shall be determined as follows: (a) that individual shall be deemed to be a resident only of the Contracting State in which a permanent home is available to that individual; but if a permanent home is available in both States, or in neither of them, that individual shall be deemed to be a resident only of the State with which the individual's personal and economic relations are closer (centre of vital interests); (b) if the Contracting State in which the centre of vital interests is situated cannot be determined, the individual shall be deemed to be a resident only of the State of which that individual is a national; (c) if the individual is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall endeavour to resolve the question by mutual agreement. 4 Where by reason of the preceding provisions of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. 5 Notwithstanding paragraph 4 of this Article, where by reason of paragraph 1 of this Article a company, which is a participant in a dual listed company arrangement, is a resident of both Contracting States then it shall be deemed to be a resident only of the Contracting State in which it is incorporated, provided it has its primary stock exchange listing in that State. 6 The term "dual listed company arrangement" as used in this Article means an arrangement pursuant to which two publicly listed companies, while maintaining their separate legal entity status, shareholdings and listings, align their strategic directions and the economic interests of their respective shareholders through: (a) the appointment of common (or almost identical) boards of directors; (b) management of the operations of the two companies on a unified basis; (c) equalised distributions to shareholders in accordance with an equalisation ratio applying between the two companies, including in the event of a winding up of one or both of the companies; (d) the shareholders of both companies voting in effect as a single decision-making body on substantial issues affecting their combined interests; and (e) cross-guarantees as to, or similar financial support for, each other's material obligations or operations, except where the effect of the relevant regulatory requirements prevents such guarantees or financial support. ARTICLE 5 Permanent establishment 1 For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2 The term "permanent establishment" includes especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or exploitation of natural resources; and (g) an agricultural, pastoral or forestry property. 3 An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if: (a) it has a building site or construction or installation project in that State, or it undertakes a supervisory or consultancy activity in that State connected with such a site or project, but only if that site, project or activity lasts more than 12 months; (b) it maintains substantial equipment for rental or other purposes within that other State (excluding equipment let under a hire- purchase agreement) for a period of more than 12 months; or (c) a person acting in a Contracting State on behalf of an enterprise of the other Contracting State manufactures or processes in the first-mentioned State for the enterprise goods or merchandise belonging to the enterprise. 4 (a) The duration of activities under subparagraph (a) of paragraph 3 will be determined by aggregating the periods during which activities are carried on in a Contracting State by associated enterprises provided that the activities of the enterprise in that State are connected with the activities carried on in that State by its associate. (b) The period during which two or more associated enterprises are carrying on concurrent activities will be counted only once for the purpose of determining the duration of activities. (c) Under this Article, an enterprise shall be deemed to be associated with another enterprise if: (i) one is controlled directly or indirectly by the other; or (ii) both are controlled directly or indirectly by a third person or persons. 5 Notwithstanding the preceding provisions of this Article, an enterprise shall not be deemed to have a permanent establishment merely by reason of: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or collecting information, for the enterprise; or (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character. 6 Notwithstanding the provisions of paragraphs 1 and 2 of this Article, where a person - other than an agent of an independent status to whom paragraph 7 of this Article applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for that enterprise unless the activities of such person are limited to those mentioned in paragraph 5 of this Article which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 7 An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such brokers or agents are acting in the ordinary course of their business as such. 8 The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other. ARTICLE 6 Income from real property 1 Income derived by a resident of a Contracting State from real property may be taxed in the Contracting State in which the real property is situated. 2 The term "real property" shall have the meaning which it has under the law of the Contracting State in which the property is situated. The term shall in any case include: (a) a lease of land or any other interest in or over land; (b) property accessory to real property; (c) livestock and equipment used in agriculture and forestry; (d) usufruct of real property; (e) a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and (f) a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources. Ships and aircraft shall not be regarded as real property. 3 Any interest or right referred to in paragraph 2 shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration may take place. 4 The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other form of real property. 5 The provisions of paragraphs 1, 3 and 4 of this Article shall also apply to the income from real property of an enterprise. ARTICLE 7 Business profits 1 The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that other State. If the enterprise carries on business in that manner, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2 Subject to the provisions of paragraph 3 of this Article, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated in that other State, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises. 3 In determining the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. 4 Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment. In such cases that law shall be applied, having regard to the information that is available, consistently with the principles of this Article. 5 No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6 Where profits include items of income or gains which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. 7 Nothing in this Article shall affect the operation of any law of a Contracting State relating to tax imposed on profits from insurance with non-residents provided that if the relevant law in force in either Contracting State at the date of signature of this Convention is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate. ARTICLE 8 Shipping and air transport 1 Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 2 Notwithstanding the provisions of paragraph 1 of this Article, profits of an enterprise of a Contracting State from the operation of ships or aircraft may be taxed in the other Contracting State to the extent that they are profits derived from ship or aircraft operations confined solely to places in that other State. 3 For the purposes of this Article, profits from the operation of ships or aircraft in international traffic include: (a) profits from the rental on a bareboat basis of ships or aircraft; and (b) profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise; provided such rental or such use, maintenance or rental, as the case may be, is directly connected or ancillary to the operation of ships or aircraft in international traffic. 4 The provisions of paragraphs 1 and 2 of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency, but only to so much of the profits so derived as is attributable to the participant in proportion to its share in the joint operation. 5 For the purposes of this Article, profits derived from: (a) the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise which are shipped in a Contracting State and are discharged at the same or another place in that State; or (b) the use of a ship or aircraft for haulage, survey or dredging activities, or for exploration or extraction activities in relation to natural resources, where such activities are undertaken in a Contracting State; shall be treated as profits from ship or aircraft operations confined solely to places in that State. ARTICLE 9 Associated enterprises 1 Where: (a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State; and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which might, but for those conditions, have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2 Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits accruing to an enterprise. In such cases that law shall be applied, having regard to the information that is available, consistently with the principles of this Article. 3 Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included, by virtue of the provisions of paragraphs 1 or 2, in the profits of an enterprise of the other Contracting State and charged to tax in that other State, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-mentioned State shall make an appropriate adjustment to the amount of tax it has charged on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other. ARTICLE 10 Dividends 1 Dividends paid by a company which is a resident of a Contracting State for the purposes of its tax, being dividends beneficially owned by a resident of the other Contracting State, may be taxed in that other State. 2 However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax charged shall not exceed: (a) 5 per cent of the gross amount of the dividends, if the beneficial owner of the dividends is a company which holds directly at least 10 per cent of the voting power in the company paying the dividends; and (b) 15 per cent of the gross amount of the dividends in all other cases. 3 Notwithstanding the provisions of paragraph 2 of this Article, dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is a company that is a resident of the other Contracting State that has owned shares representing 80 per cent or more of the voting power of the company paying the dividends for a 12 month period ending on the date the dividend is declared and the company that is the beneficial owner of the dividends: (a) has its principal class of shares listed on a recognised stock exchange specified in subparagraph (i) or (ii) of subparagraph (o) of paragraph 1 of Article 3 and regularly traded on one or more recognised stock exchanges; (b) is owned directly or indirectly by one or more companies whose principal class of shares is listed on a recognised stock exchange specified in subparagraph (i) or (ii) of subparagraph (o) of paragraph 1 of Article 3 and regularly traded on one or more recognised stock exchanges; or (c) does not meet the requirements of subparagraphs (a) or (b) of this paragraph but the competent authority of the first-mentioned Contracting State determines, in accordance with the law of that State, that the establishment, acquisition or maintenance of the company that is the beneficial owner of the dividends and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under this Convention. The competent authority of the first-mentioned Contracting State shall consult the competent authority of the other Contracting State before refusing to grant benefits of this Convention under this subparagraph. 4 The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident and also includes any other item which, under the laws of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of a company. 5 The provisions of paragraphs 1, 2 and 3 of this Article shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other State and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 of this Convention shall apply. 6 Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, being dividends beneficially owned by a person who is not a resident of the other Contracting State, except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. This paragraph shall not apply in relation to dividends paid by any company which is a resident of Australia for the purposes of Australian tax and which is also a resident of the United Kingdom for the purposes of United Kingdom tax. 7 No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment. 8 For the purposes of paragraph 3 of this Article, the term "principal class of shares" means the ordinary or common shares of the company, provided that such class of shares represents the majority of the voting power and value of the company. If no single class of ordinary or common shares represents the majority of the voting power and value of the company, the "principal class of shares" is that class or those classes that in the aggregate represent a majority of the voting power and value of the company. ARTICLE 11 Interest 1 Interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other State. 2 However, that interest may also be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 3 Notwithstanding paragraph 2, interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may not be taxed in the first-mentioned State if: (a) the interest is derived by a Contracting State or by a political or administrative sub-division or a local authority thereof, or by any other body exercising governmental functions in a Contracting State, or by a bank performing central banking functions in a Contracting State; or (b) the interest is derived by a financial institution which is unrelated to and dealing wholly independently with the payer. For the purposes of this Article, the term "financial institution" means a bank or other enterprise substantially deriving its profits by raising debt finance in the financial markets or by taking deposits at interest and using those funds in carrying on a business of providing finance. 4 Notwithstanding paragraph 3, interest referred to in subparagraph (b) of that paragraph may be taxed in the State in which it arises at a rate not exceeding 10 per cent of the gross amount of the interest if the interest is paid as part of an arrangement involving back-to-back loans or other arrangement that is economically equivalent and intended to have a similar effect to back-to-back loans. 5 The term "interest" as used in this Article means income from debt- claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, and income from any other form of indebtedness. The term "interest" also includes income which is subjected to the same taxation treatment as income from money lent by the law of the Contracting State in which the income arises. The term "interest" shall not include any item which is treated as a dividend under the provisions of Article 10 of this Convention. 6 The provisions of paragraphs 1 and 2, subparagraph (b) of paragraph 3 and paragraph 4 of this Article shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State, in which the interest arises, through a permanent establishment situated in that other State and the indebtedness in respect of which the interest is paid or credited is effectively connected with such permanent establishment. In such case, the provisions of Article 7 of this Convention shall apply. 7 Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment, then the interest shall be deemed to arise in the State in which the permanent establishment is situated. 8 Where, by reason of a special relationship between the payer and the beneficial owner of the interest, or between both of them and some other person, the amount of the interest paid or credited exceeds, for whatever reason, the amount which might reasonably have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last- mentioned amount. In such case, the excess part of the amount of the interest paid or credited shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. 9 No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment. ARTICLE 12 Royalties 1 Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other State. 2 However, those royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 5 per cent of the gross amount of the royalties. 3 The term "royalties" in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for: (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right; (b) the supply of scientific, technical, industrial or commercial knowledge or information; (c) the supply of any ancillary and subsidiary assistance that is furnished as a means of enabling the application or enjoyment of any such item as is mentioned in subparagraph (a) or (b) of this paragraph; (d) the use of or the right to use: (i) motion picture films; or (ii) films or audio or video tapes or disks, or any other means of image or sound reproduction or transmission for use in connection with television, radio or other broadcasting; or (e) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph. 4 The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated in that other State, and the right or property in respect of which the royalties are paid or credited is effectively connected with that permanent establishment. In that case the provisions of Article 7 of this Convention shall apply. 5 Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment, then the royalties shall be deemed to arise in the State in which the permanent establishment is situated. 6 Where, by reason of a special relationship between the payer and the beneficial owner of the royalties, or between both of them and some other person, the amount of the royalties paid or credited exceeds, for whatever reason, the amount which might reasonably have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last- mentioned amount. In such case, the excess paid or credited shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. 7 The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment. ARTICLE 13 Alienation of property 1 Income or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State. 2 Income or gains from the alienation of property, other than real property, forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such income or gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State. 3 Income or gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic, or of property (other than real property) pertaining to the operation of those ships or aircraft, shall be taxable only in that Contracting State. 4 Income or gains derived by a resident of a Contracting State from the alienation of any shares or other interests in a company, or of an interest of any kind in a partnership, trust or other entity, where the value of the assets of such entity, whether they are held directly or indirectly (including through one or more interposed entities, such as, for example, through a chain of companies), is principally attributable to real property situated in the other Contracting State, may be taxed in that other State. 5 An individual who elects, under the taxation law of a Contracting State, to defer taxation on income or gains relating to property which would otherwise be taxed in that State upon the individual ceasing to be a resident of that State for the purposes of its tax, shall, if the individual is a resident of the other State, be taxable on income or gains from the subsequent alienation of that property only in that other State. 6 Nothing in this Convention affects the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply. 7 In this Article, the term "real property" has the same meaning as it has in Article 6. 8 The situation of interests or rights referred to in paragraph 2 of Article 6 shall be determined for the purposes of this Article in accordance with paragraph 3 of Article 6. 9 The provisions of this Article shall not affect the right of the United Kingdom to levy according to its laws a tax chargeable in respect of income or gains from the alienation of any property on a person who is a resident of the United Kingdom at any time during the fiscal year in which the property is alienated, or has been so resident at any time during the 6 years immediately preceding that year. ARTICLE 14 Income from employment 1 Subject to the provisions of Articles 17 and 18 of this Convention, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State. 2 Notwithstanding the provisions of paragraph 1 of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year or year of income of that other State; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not deductible in determining taxable profits of a permanent establishment which the employer has in the other State. 3 Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State of which the enterprise operating the ship or aircraft is a resident. 4 In relation to remuneration of a director of a company derived from the company the preceding provisions of this Article shall apply as if the remuneration were remuneration of an employee in respect of an employment and as if the references to an employer were references to the company. ARTICLE 15 Fringe benefits 1 Where, except for the application of this Article, a fringe benefit is taxable in both Contracting States the benefit will be taxable only in the Contracting State which would have the primary taxing right over that benefit if the value of the benefit were paid to the employee as ordinary employment income. 2. For the purposes of this Article: (a) "fringe benefit" has the meaning it has under Australia's Fringe Benefits Tax Assessment Act 1986 (Commonwealth), as it may be amended from time to time, and does not include a benefit arising from the acquisition of an option over shares under an employee share scheme; (b) a Contracting State has a "primary taxing right" to the extent that it has a taxing right under this Convention in respect of the remuneration for the relevant employment and the other Contracting State is required under this Convention to allow relief for any taxes imposed in respect of such remuneration by the first- mentioned Contracting State. ARTICLE 16 Entertainers and sportspersons 1 Notwithstanding the provisions of Articles 7 and 14 of this Convention, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person's personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2 Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person's capacity as such accrues not to that person but to another person, that income may, notwithstanding the provisions of Articles 7 and 14 of this Convention, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. ARTICLE 17 Pensions and annuities 1 Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State. 2 The term "annuity" means a stated sum payable periodically to an individual at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth. ARTICLE 18 Government service 1 Salaries, wages and other similar remuneration, other than a pension or annuity, paid by a Contracting State or a political subdivision or local authority of that State to an individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that other State who: (a) is a national of that State; or (b) did not become a resident of that State solely for the purpose of rendering the services. 2 The provisions of paragraph 1 of this Article shall not apply to salaries, wages and other similar remuneration in respect of services rendered in connection with any trade or business carried on by a Contracting State or a political subdivision or local authority of that State. In that case, the provisions of Article 14, 15 or 16, as the case may be, shall apply. ARTICLE 19 Students Where a student, who is a resident of a Contracting State or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State solely for the purpose of the student's education, receives payments from sources outside that other State for the purpose of the student's maintenance or education, those payments shall be exempt from tax in that other State. ARTICLE 20 Other income 1 Items of income beneficially owned by a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. 2 The provisions of paragraph 1 of this Article shall not apply to income, other than income from real property as defined in paragraph 2 of Article 6 of this Convention, derived by a resident of a Contracting State who carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In that case the provisions of Article 7 of this Convention shall apply. 3 Notwithstanding the provisions of paragraphs 1 and 2 of this Article, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention from sources in the other Contracting State may also be taxed in the other Contracting State. 4 Where, by reason of a special relationship between the person referred to in paragraph 1 of this Article and some other person, or between both of them and some third person, the amount of the income referred to in that paragraph exceeds the amount (if any) which might reasonably have been expected to have been agreed upon between them in the absence of such a relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the income shall remain taxable according to the laws of each Contracting State, due regard being had to the other applicable provisions of this Convention. 5 A person may not rely on this Article to obtain relief from taxation if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the income is derived to take advantage of this Article by means of that creation or assignment. ARTICLE 21 Source of income Income or gains derived by a resident of the United Kingdom which, under any one or more of Articles 6 to 8 and 10 to 16 and 18, may be taxed in Australia shall for the purposes of the laws of Australia relating to its tax be deemed to arise from sources in Australia. ARTICLE 22 Elimination of double taxation 1 Subject to the provisions of the laws of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article): (a) United Kingdom tax paid under the laws of the United Kingdom and in accordance with this Convention, whether directly or by deduction, in respect of income or gains derived by a person who is a resident of Australia from sources in the United Kingdom shall be allowed as a credit against Australian tax payable in respect of that income; (b) Where a company which is a resident of the United Kingdom and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly at least 10 per cent of the voting power of the first-mentioned company, the credit shall include the United Kingdom tax paid by that first-mentioned company in respect of that portion of its profits out of which the dividend is paid. 2 Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof): (a) Australian tax payable under the laws of Australia and in accordance with this Convention, whether directly or by deduction, on income or chargeable gains from sources within Australia (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same income or chargeable gains by reference to which the Australian tax is computed; (b) in the case of a dividend paid by a company which is a resident of Australia to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Australian tax for which credit may be allowed under the provisions of subparagraph (a) of this paragraph) the Australian tax payable by the company in respect of the profits out of which such dividend is paid. 3 For the purposes of paragraph 1 and 2 of this Article, income or gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other Contracting State. ARTICLE 23 Limitation of relief 1 Where under this Convention any income or gains are relieved from tax in a Contracting State and, under the law in force in the other Contracting State, a person in respect of that income or those gains is taxed by reference to the amount thereof which is remitted to or received in that other State and not by reference to the full amount thereof, then the relief to be allowed under this Convention in the first-mentioned State shall apply only to so much of the income or gains as is taxed in the other State. 2 Where under this Convention any income or gains are relieved from tax in a Contracting State and, under the law in force in the other Contracting State, an individual in respect of that income or those gains is exempt from tax by virtue of being a temporary resident of the other State within the meaning of the applicable tax laws of that other State, then the relief to be allowed under this Convention in the first-mentioned State shall not apply to the extent that that income or those gains are exempt from tax in the other State. ARTICLE 24 Partnerships Where a partnership is treated as a taxable unit under the law of a Contracting State and under any provision of this Convention is entitled, as a resident of that State, to relief from tax in the other Contracting State on any income or gains, that provision shall not be construed as restricting the right of that other State to tax any member of the partnership who is a resident of that other State on that member's share of such income or gains; but any such income or gains shall be treated for the purposes of Article 22 of this Convention as income or gains from sources in the first-mentioned State. ARTICLE 25 Non-discrimination 1 Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. 2 The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in similar circumstances. 3 Except where the provisions of paragraph 1 of Article 9, paragraph 8 or 9 of Article 11, paragraph 6 or 7 of Article 12, or paragraph 4 or 5 of Article 20 of this Convention apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 4 Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State in similar circumstances are or may be subjected. 5 Nothing contained in this Article shall be construed as obliging a Contracting State to grant to individuals who are residents of the other Contracting State any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals so resident. 6 This Article shall not apply to any provision of the laws of a Contracting State which: (a) is designed to prevent the avoidance or evasion of taxes; (b) does not permit the deferral of tax arising on the transfer of an asset where the subsequent transfer of the asset by the transferee would be beyond the taxing jurisdiction of the Contracting State under its laws; (c) provides for consolidation of group entities for treatment as a single entity for tax purposes provided that Australian resident companies that are owned directly or indirectly by residents of the United Kingdom can access such consolidation treatment on the same terms and conditions as other Australian resident companies; (d) provides deductions to eligible taxpayers for expenditure on research and development; or (e) is otherwise agreed to be unaffected by this Article in an Exchange of Notes between the Government of Australia and the Government of the United Kingdom. 7 The provisions of this Article shall apply to the taxes which are the subject of this Convention. ARTICLE 26 Mutual agreement procedure 1 Where a person who is a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with this Convention, that person may, irrespective of the remedies provided by the domestic law of those States concerning taxes to which this Convention applies, present a case to the competent authority of the Contracting State of which that person is a resident or, if the case comes under paragraph 1 of Article 25 of this Convention, to that of the Contracting State of which that person is a national. 2 The competent authority shall endeavour, if the case appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention. 3 The competent authorities of the Contracting States shall jointly endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention. 4 The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. 5 For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 3 of this Article or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States. ARTICLE 27 Exchange of information 1 The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant to the administration or enforcement of the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes to which this Convention applies insofar as the taxation under those laws is not contrary to this Convention. The exchange of information is not restricted by Article 1 of this Convention. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes to which this Convention applies. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2 If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall obtain that information in the same manner and to the same extent as if the tax of the first-mentioned State were the tax of that other State and were being imposed by that other State, notwithstanding that the other State may not, at that time, need such information for the purposes of its own tax. 3 In no case shall the provisions of paragraphs 1 or 2 of this Article be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State; (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; or (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or to supply information the disclosure of which would be contrary to public policy. ARTICLE 28 Members of diplomatic missions or permanent missions and consular posts Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or permanent missions or consular posts under the general rules of international law or under the provisions of special international agreements. ARTICLE 29 Entry into force 1 Each of the Contracting States shall notify the other in writing through the diplomatic channel of the completion of the procedures required by its law for the entry into force of this Convention. This Convention shall enter into force on the date of the later notification, and shall thereupon have effect: (a) in the case of Australia: (i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 July next following the date on which this Convention enters into force; (ii) in respect of fringe benefits tax, in relation to fringe benefits provided on or after 1 April next following the date on which this Convention enters into force; (iii) in respect of other Australian tax, in relation to income or gains of any year of income beginning on or after 1 July next following the date on which this Convention enters into force; (b) in the case of the United Kingdom: (i) in respect of taxes withheld at source, for amounts paid or credited on or after 1 July next following the date on which this Convention enters into force; (ii) in respect of income tax not described in clause (i) of this subparagraph and capital gains tax, for any year of assessment beginning on or after 6 April next following the date on which this Convention enters into force; (iii) in respect of corporation tax, for any financial year beginning on or after 1 April next following the date on which this Convention enters into force. 2 The Agreement between the Government of the Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland signed at Canberra on 7 December 1967 (as amended by the Protocol signed at Canberra on 29 January 1980) ("the Agreement") shall be terminated and shall cease to have effect in respect of the taxes to which this Convention applies in accordance with the provisions of paragraph 1 of this Article. In relation to tax credits in respect of dividends paid by companies which are residents of the United Kingdom, the Agreement shall be terminated and shall cease to have effect in respect of dividends paid on or after 1 July next following the date on which this Convention enters into force. 3 Notwithstanding the entry into force of this Convention, an individual who is entitled to the benefits of Article 16 of the Agreement at the time of the entry into force of this Convention shall continue to be entitled to such benefits until such time as the individual would have ceased to be entitled to such benefits if the Agreement had remained in force. ARTICLE 30 Termination This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may, on or before 30 June in any calendar year beginning after the expiration of 5 years from the date of its entry into force, give written notice of termination through the diplomatic channel and, in that event, the Convention shall cease to have effect: (a) in the case of Australia: (i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the notice of termination is given; (ii) in respect of fringe benefits tax, in relation to fringe benefits provided on or after 1 April in the calendar year next following that in which the notice of termination is given; (iii) in respect of other Australian tax, in relation to income or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given; (b) in the case of the United Kingdom: (i) in respect of taxes withheld at source, for amounts paid or credited on or after 1 January in the calendar year next following that in which the notice of termination is given; (ii) in respect of income tax not described in clause (i) of this subparagraph and capital gains tax, for any year of assessment beginning on or after 6 April in the calendar year next following that in which the notice of termination is given; (iii) in respect of corporation tax, for any financial year beginning on or after 1 April in the calendar year next following that in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Convention. DONE in duplicate at Canberra this 21st day of August 2003 FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF AUSTRALIA THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND PETER COSTELLO ALASTAIR GOODLAD [Signatures omitted] 2003 UNITED KINGDOM NOTES No LGB 03/170 The Department of Foreign Affairs and Trade presents its compliments to the British High Commission to Australia and has the honour to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains which has been signed today (the "Convention"). The Department has the honour to make the following proposals on behalf of the Government of Australia: 1. With reference generally to the application of the Convention (including these Notes), the Contracting States agree that: (a) the term "income or gains" includes "profits"; (b) the term "laws" includes the full body of law, and is not limited to statutory law; (c) the terms "paid or credited" and "payments or credits" shall not include the recording of internal transactions between a permanent establishment and another part of the same enterprise; (d) the expression "any provision of the laws of a Contracting State which is designed to prevent the avoidance or evasion of taxes" includes: (i) measures designed to address thin capitalisation, dividend stripping and transfer pricing; (ii) controlled foreign company, transferor trust and foreign investment fund rules; (iii) measures designed to ensure that taxes can be effectively recovered (conservancy measures); and (e) nothing in the Convention shall be construed as restricting, in any manner, the application of any provision of the laws of a Contracting State which is designed to prevent the avoidance or evasion of taxes. 2. With reference to Article 5 (Permanent establishment), the Contracting States agree that the term "permanent establishment" fully encompasses the concept of a "fixed base" used in other double tax treaties in the context of independent personal services. 3. With reference to Article 7 (Business profits), the Contracting States agree that: (a) nothing in paragraph 3 of the Article shall permit the deduction of an expense which would not be deductible if the permanent establishment were an independent enterprise which incurred the expense; and (b) where: (i) a resident of a Contracting State is beneficially entitled, whether directly or through one or more interposed trust estates, to a share of the business profits of an enterprise carried on in the other Contracting State by the trustee of a trust estate other than a trust estate which is treated as a company for tax purposes; and (ii) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in that other State, the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and that share of business profits shall be attributed to that permanent establishment. 4. With reference to Article 9 (Associated enterprises), the Contracting States note that the expression "dealing wholly independently with one another" is included in paragraph 1 of the Article to conform to Australia's consistent treaty practice and to address Australia's concerns that the appropriate benchmark for determining the conditions operating between the associated enterprises should have regard to whether those dealings between the enterprises occurred on a truly independent basis. 5. With reference to Article 10 (Dividends), the Contracting States agree that if the relevant law in either Contracting State at the date of signature of the Convention is varied otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of paragraph 2 and 3 of the Article as may be appropriate. 6. With reference to Article 11 (Interest), the Contracting States agree that: (a) the term "financial institution" shall not include a corporate treasury or a member of a corporate group performing financing services for the group; and (b) nothing in the Convention shall have the effect of subjecting to tax in a Contracting State any interest paid by a resident of that State to a resident of the other State where the payer has outside both Contracting States a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment. 7. With reference to Article 12 (Royalties), the Contracting States agree that: (a) the term "royalties" shall not include payments for the use of spectrum licences. The provisions of Article 7 of the Convention shall apply to such payments; and (b) nothing in the Convention shall have the effect of subjecting to tax in a Contracting State any royalties paid by a resident of that State to a resident of the other State where the payer has outside both Contracting States a permanent establishment in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment. 8. With reference to Article 14 (Income from employment), the Contracting States agree that: (a) income or gains derived by employees in relation to share option schemes shall be treated as "other similar remuneration" for the purposes of Article 14; (b) unless the facts otherwise indicate, the period of employment to which the option relates shall be taken to be the period between the grant of the option and the date on which all the conditions for its exercise have been satisfied (the vesting of the option); and (c) where a resident of a Contracting State derives such income or gains, and (i) the period of employment to which the share option relates is the period between grant and vesting of the option; (ii) the employee remains in that employment at the date of alienation or exercise of the option; and (iii) that employment has been exercised by the employee in the other Contracting State during all or part of the period between grant and vesting of the option; the proportion of the income or gain which shall be attributable to employment exercised in the other Contracting State shall be determined in accordance with the ratio of the number of days of employment exercised in that State between grant and vesting of the option to the total number of days of employment exercised between grant and vesting of the option. 9. With reference to Article 25 (Non-discrimination), the Contracting States agree that: (a) in relation to paragraph 4 and subparagraph 6(c) of the Article, the reference to capital being owned or controlled "directly or indirectly" includes cases where the capital is held through a chain of companies or other entities; and (b) nothing in the Article shall be construed as obliging a Contracting State to allow tax rebates and credits in relation to dividends received by a person who is a resident of the other Contracting State. 10. With reference to Article 26 (Mutual agreement procedure) and Article 27 (Exchange of information), the Contracting States agree that the provisions of the Articles shall have effect from the date of entry into force of the Convention, without regard to the date of the relevant transactions or the taxable or chargeable period to which the matter relates. 11. With reference to Article 26 (Mutual agreement procedure), the Contracting States agree that in relation to paragraph 1 of the Article, the applicable time limits in the domestic laws bearing on the time available for presenting a case to the relevant competent authority shall apply, whether or not those applicable time limits specifically refer to the competent authority process. 12. Miscellaneous The Contracting States agree that the two Governments shall consult each other at intervals of not more than five years regarding the terms, operation and application of the Convention with a view to ensuring that it continues to serve the purposes of avoiding double taxation and preventing fiscal evasion. The first such consultation shall take place no later than the end of the fifth year after the entry into force of the Convention. If the foregoing proposals are acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland, the Department has the honour to propose that the present Note and the High Commission's confirmatory Note in reply shall constitute an Agreement on certain matters between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains, which shall enter into force at the same time as the entry into force of the Convention. The Department of Foreign Affairs and Trade avails itself of this opportunity to renew to the British High Commission to Australia the assurances of its highest consideration. [Seal omitted] CANBERRA 21 August 2003 41/03 The British High Commission to Australia presents its compliments to the Department of Foreign Affairs and Trade and has the honour to refer to the Department's Note No LGB 03/170 of 21 August 2003 which reads as follows: "The Department of Foreign Affairs and Trade presents its compliments to the British High Commission to Australia and has the honour to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains which has been signed today (the "Convention"). The Department has the honour to make the following proposals on behalf of the Government of Australia: 1. With reference generally to the application of the Convention (including these Notes), the Contracting States agree that: (a) the term "income or gains" includes "profits"; (b) the term "laws" includes the full body of law, and is not limited to statutory law; (c) the terms "paid or credited" and "payments or credits" shall not include the recording of internal transactions between a permanent establishment and another part of the same enterprise; (d) the expression "any provision of the laws of a Contracting State which is designed to prevent the avoidance or evasion of taxes" includes: (i) measures designed to address thin capitalisation, dividend stripping and transfer pricing; (ii) controlled foreign company, transferor trust and foreign investment fund rules; (iii) measures designed to ensure that taxes can be effectively recovered (conservancy measures); and (e) nothing in the Convention shall be construed as restricting, in any manner, the application of any provision of the laws of a Contracting State which is designed to prevent the avoidance or evasion of taxes. 2. With reference to Article 5 (Permanent establishment), the Contracting States agree that the term "permanent establishment" fully encompasses the concept of a "fixed base" used in other double tax treaties in the context of independent personal services. 3. With reference to Article 7 (Business profits), the Contracting States agree that: (a) nothing in paragraph 3 of the Article shall permit the deduction of an expense which would not be deductible if the permanent establishment were an independent enterprise which incurred the expense; and (b) where: (i) a resident of a Contracting State is beneficially entitled, whether directly or through one or more interposed trust estates, to a share of the business profits of an enterprise carried on in the other Contracting State by the trustee of a trust estate other than a trust estate which is treated as a company for tax purposes; and (ii) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in that other State, the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and that share of business profits shall be attributed to that permanent establishment. 4. With reference to Article 9 (Associated enterprises), the Contracting States note that the expression "dealing wholly independently with one another" is included in paragraph 1 of the Article to conform to Australia's consistent treaty practice and to address Australia's concerns that the appropriate benchmark for determining the conditions operating between the associated enterprises should have regard to whether those dealings between the enterprises occurred on a truly independent basis. 5. With reference to Article 10 (Dividends), the Contracting States agree that if the relevant law in either Contracting State at the date of signature of the Convention is varied otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of paragraph 2 and 3 of the Article as may be appropriate. 6. With reference to Article 11 (Interest), the Contracting States agree that: (a) the term "financial institution" shall not include a corporate treasury or a member of a corporate group performing financing services for the group; and (b) nothing in the Convention shall have the effect of subjecting to tax in a Contracting State any interest paid by a resident of that State to a resident of the other State where the payer has outside both Contracting States a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment. 7. With reference to Article 12 (Royalties), the Contracting States agree that: (a) the term "royalties" shall not include payments for the use of spectrum licences. The provisions of Article 7 of the Convention shall apply to such payments; and (b) nothing in the Convention shall have the effect of subjecting to tax in a Contracting State any royalties paid by a resident of that State to a resident of the other State where the payer has outside both Contracting States a permanent establishment in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment. 8. With reference to Article 14 (Income from employment), the Contracting States agree that: (a) income or gains derived by employees in relation to share option schemes shall be treated as "other similar remuneration" for the purposes of Article 14; (b) unless the facts otherwise indicate, the period of employment to which the option relates shall be taken to be the period between the grant of the option and the date on which all the conditions for its exercise have been satisfied (the vesting of the option); and (c) where a resident of a Contracting State derives such income or gains, and (i) the period of employment to which the share option relates is the period between grant and vesting of the option; (ii) the employee remains in that employment at the date of alienation or exercise of the option; and (iii) that employment has been exercised by the employee in the other Contracting State during all or part of the period between grant and vesting of the option; the proportion of the income or gain which shall be attributable to employment exercised in the other Contracting State shall be determined in accordance with the ratio of the number of days of employment exercised in that State between grant and vesting of the option to the total number of days of employment exercised between grant and vesting of the option. 9. With reference to Article 25 (Non-discrimination), the Contracting States agree that: (a) in relation to paragraph 4 and subparagraph 6(c) of the Article, the reference to capital being owned or controlled "directly or indirectly" includes cases where the capital is held through a chain of companies or other entities; and (b) nothing in the Article shall be construed as obliging a Contracting State to allow tax rebates and credits in relation to dividends received by a person who is a resident of the other Contracting State. 10. With reference to Article 26 (Mutual agreement procedure) and Article 27 (Exchange of information), the Contracting States agree that the provisions of the Articles shall have effect from the date of entry into force of the Convention, without regard to the date of the relevant transactions or the taxable or chargeable period to which the matter relates. 11. With reference to Article 26 (Mutual agreement procedure), the Contracting States agree that in relation to paragraph 1 of the Article, the applicable time limits in the domestic laws bearing on the time available for presenting a case to the relevant competent authority shall apply, whether or not those applicable time limits specifically refer to the competent authority process. 12. Miscellaneous The Contracting States agree that the two Governments shall consult each other at intervals of not more than five years regarding the terms, operation and application of the Convention with a view to ensuring that it continues to serve the purposes of avoiding double taxation and preventing fiscal evasion. The first such consultation shall take place no later than the end of the fifth year after the entry into force of the Convention. If the foregoing proposals are acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland, the Department has the honour to propose that the present Note and the High Commission's confirmatory Note in reply shall constitute an Agreement on certain matters between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains, which shall enter into force at the same time as the entry into force of the Convention. The Department of Foreign Affairs and Trade avails itself of this opportunity to renew to the British High Commission to Australia the assurances of its highest consideration." The High Commission has the honour to advise that the Department's proposals are acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland and that the Department's Note and this confirmatory Note in reply shall constitute an Agreement on certain matters between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains, which shall enter into force at the same time as the entry into force of the Convention. The British High Commission to Australia avails itself of this opportunity to renew to the Department of Foreign Affairs and Trade the assurances of its highest consideration. [Seal omitted] CANBERRA 21 August 2003 Schedule 2-Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Section 3 The Government of Australia and the Government of the United States of America, Desiring to conclude a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, Have agreed as follows: ARTICLE 1 Personal Scope (1) Except as otherwise provided in this Convention, this Convention shall apply to persons who are residents of one or both of the Contracting States. (2) This Convention shall not restrict in any manner any exclusion, exemption, deduction, rebate, credit or other allowance accorded from time to time: (a) by the laws of either Contracting State; or (b) by any other agreement between the Contracting States. (3) Notwithstanding any provision of this Convention, except paragraph (4) of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)) and individuals electing under its domestic law to be taxed as residents of that State, and by reason of citizenship may tax its citizens, as if this Convention had not entered into force. For this purpose, the term "citizen" shall, with respect to United States source income according to United States law relating to United States tax, include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss. (4) The provisions of paragraph (3) shall not affect: (a) the benefits conferred by a Contracting State under paragraph (2) of Article 9 (Associated Enterprises), paragraph (2) or (6) of Article 18 (Pensions, Annuities, Alimony and Child Support), Article 22 (Relief from Double Taxation), 23 (Non--Discrimination), 24 (Mutual Agreement Procedure) or paragraph (1) of Article 27 (Miscellaneous); or (b) the benefits conferred by a Contracting State under Article 19 (Governmental Remuneration), 20 (Students) or 26 (Diplomatic and Consular Privileges) upon individuals who are neither citizens of, nor have immigrant status in, that State (in the case of benefits conferred by the United States), or who are not ordinarily resident in that State (in the case of benefits conferred by Australia). ARTICLE 2 Taxes Covered (1) The existing taxes to which this Convention shall apply are: (a) in the United States: the Federal income taxes imposed by the Internal Revenue Code, but excluding the accumulated earnings tax and the personal holding company tax; and (b) in Australia: the Australian income tax, including the additional tax upon the undistributed amount of the distributable income of a private company. (2) This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes. At the end of each calendar year, the competent authority of each Contracting State shall notify the competent authority of the other Contracting State of any substantial changes which have been made during that year in the laws of his State relating to the taxes to which this Convention applies or in the official interpretation of those laws or of this Convention. ARTICLE 3 General Definitions (1) For the purposes of this Convention, unless the context otherwise requires: (a) the term "person" includes an individual, an estate of a deceased individual, a trust, a partnership, a company and any other body of persons; (b) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes; (c) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean an enterprise carried on by a resident of Australia or an enterprise carried on by a resident of the United States, as the context requires; (d) the term "international traffic" means any transport by a ship or aircraft, except where such transport is solely between places within a Contracting State; (e) the term "competent authority" means: (i) in the case of the United States: the Secretary of the Treasury or his delegate; and (ii) in the case of Australia: the Commissioner of Taxation or his authorized representative; (f) the terms "Contracting State", "one of the Contracting States" and "the other Contracting State" mean the United States or Australia, as the context requires; (g) (i) the term "United States corporation" means a corporation which, under United States law relating to United States tax, is a domestic corporation or an unincorporated entity treated as a domestic corporation, and which is not, under the law of Australia relating to Australian tax, a resident of Australia; and (ii) the term "Australian corporation" means a company, as defined under the law of Australia relating to Australian tax, which, under that law, is a resident of Australia, and which is not, under United States law relating to United States tax, a domestic corporation or an unincorporated entity treated as a domestic corporation; (h) the term "State" means any National State, whether or not one of the Contracting States; (i) the term "United States tax" means tax imposed by the United States to which this Convention applies by virtue of Article 2 (Taxes Covered) and the term "Australian tax" means tax imposed by Australia to which this Convention applies by virtue of Article 2 (Taxes Covered), but neither term includes any amount which represents a penalty or interest imposed under the law of either Contracting State relating to United States tax or Australian tax; (j) (i) the term "United States" means the United States of America; and (ii) when used in a geographical sense, the term "United States" means the states thereof and the District of Columbia and also includes: (A) the territorial waters thereof; and (B) the sea--bed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial waters, over which the United States exercises rights, in accordance with international law, for the purposes of exploration for, or exploitation of, the natural resources of those areas; (k) the term "Australia" means the Commonwealth of Australia and, when used in a geographical sense, includes: (i) the Territory of Norfolk Island; (ii) the Territory of Christmas Island; (iii) the Territory of Cocos (Keeling) Islands; (iv) the Territory of Ashmore and Cartier Islands; (v) the Coral Sea Islands Territory; and (vi) any area adjacent to the territorial limits of Australia or of the said Territories in respect of which there is for the time being in force, consistently with international law, a law of Australia or of a State or part of Australia or of a Territory aforesaid dealing with the exploitation of any of the natural resources of the sea--bed and subsoil of the continental shelf; (l) the terms "resident of one of the Contracting States" and "resident of the other Contracting State" mean a resident of Australia or a resident of the United States, as the context requires. (2) As regards the application of this Convention by one of the Contracting States, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws of that State relating to the taxes to which this Convention applies. ARTICLE 4 Residence (1) For the purposes of this Convention: (a) a person is a resident of Australia if the person is: (i) an Australian corporation; or (ii) any other person (except a company as defined under the law of Australia relating to Australian tax) who, under that law, is a resident of Australia, provided that, in relation to any income, a person who: (iii) is subject to Australian tax on income which is from sources in Australia; or (iv) is a partnership, an estate of a deceased individual or a trust (other than a trust that is a provident, benefit, superannuation or retirement fund, or that is established for public charitable purposes or for the purpose of enabling scientific research to be conducted by or in conjunction with a public university or public hospital, the income of which is exempt from tax under the law of Australia relating to Australian tax), shall not be treated as a resident of Australia except to the extent that the income is subject to Australian tax as the income of a resident, either in the hands of that person or in the hands of a partner or beneficiary, or, if that income is exempt from Australian tax, is so exempt solely because it is subject to United States tax; and (b) a person is a resident of the United States if the person is: (i) a United States corporation; or (ii) any other person (except a corporation or unincorporated entity treated as a corporation for United States tax purposes) resident in the United States for purposes of its tax, provided that, in relation to any income derived by a partnership, an estate of a deceased individual or a trust, such person shall not be treated as a resident of the United States except to the extent that the income is subject to United States tax as the income of a resident, either in its hands or in the hands of a partner or beneficiary, or, if that income is exempt from United States tax, is exempt other than because such person, partner or beneficiary is not a United States person according to United States law relating to United States tax. (2) Where by application of paragraph (1) an individual is a resident of both Contracting States, he shall be deemed to be a resident of the State: (a) in which he maintains his permanent home; (b) if the provisions of sub--paragraph (a) do not apply, in which he has an habitual abode if he has his permanent home in both Contracting States or in neither of the Contracting States; or (c) if the provisions of sub--paragraphs (a) and (b) do not apply, with which his personal and economic relations are closer if he has an habitual abode in both Contracting States or in neither of the Contracting States. For the purposes of this paragraph, in determining an individual's permanent home, regard shall be given to the place where the individual dwells with his family, and in determining the Contracting State with which an individual's personal and economic relations are closer, regard shall be given to his citizenship (if he is a citizen of one of the Contracting States). (3) An individual who is deemed to be a resident of one of the Contracting States for any year of income, or taxable year, as the case may be by reason of the provisions of paragraph (2) shall, for all purposes of this Convention, be deemed to be a resident only of that State for such year. ARTICLE 5 Permanent Establishment (1) For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. (2) The term "permanent establishment" shall include especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) an agricultural, pastoral or forestry property; (h) a building site or construction, assembly or installation project which exists for more than 9 months; and (i) an installation, drilling rig or ship that, for an aggregate period of at least 6 months in any 24 month period, is used by an enterprise of one of the Contracting States in the other Contracting State for dredging or for or in connection with the exploration or exploitation of natural resources of the sea--bed and subsoil. (3) Notwithstanding paragraphs (1) and (2), an enterprise of one of the Contracting States shall not be regarded as having a permanent establishment solely as a result of one or more of the following: (a) the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise; (e) the maintenance of a fixed place of business for the purpose of activities which have a preparatory or auxiliary character, such as advertising or scientific research, for the enterprise; (f) the maintenance of a building site or construction, assembly or installation project which does not exist for more than 9 months; or (g) the use by that enterprise in the other Contracting State, of an installation, drilling rig or ship for dredging, or for or in connection with the exploration or exploitation of natural resources of the sea--bed and subsoil, provided that such use is not for an aggregate period of at least 6 months in any 24 month period. (4) Notwithstanding paragraphs (1) and (2), an enterprise of one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State if: (a) it carries on business in that other State through a person, other than an agent of independent status to whom paragraph (5) applies, who has authority to conclude contracts on behalf of that enterprise and habitually exercises that authority in that other State, unless the activities of such person are limited to those mentioned in paragraph (3) which, if exercised through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of that paragraph; (b) it maintains substantial equipment for rental or other purposes within that other State (excluding equipment let under a hire-- purchase agreement) for a period of more than 12 months; (c) it engages in supervisory activities in that other State for more than 9 months in any 24 month period in connection with a building site or construction, assembly or installation project in that other State; or (d) it has goods or merchandise belonging to it that: (i) were purchased by it in that other State, and not subjected to prior substantial processing outside that other State; or (ii) were produced by it or on its behalf in that other State, and are, after such purchase or production, subjected to substantial processing in that other State by an enterprise where either enterprise participates directly or indirectly in the management, control or capital of the other enterprise, or where the same persons participate directly or indirectly in the management, control or capital of the other enterprise, or where the same persons participate directly or indirectly in the management, control or capital of both enterprises. (5) An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because that enterprise carries on business in that other State through a broker, general commission agent, or any other agent of independent status, where such broker or agent is acting in the ordinary course of his business as a broker, general commission agent or other agent of independent status. (6) The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. (7) The principles set forth in the preceding paragraphs of this Article shall be applied in determining for purposes of this Convention whether there is a permanent establishment in a State other than one of the Contracting States and whether an enterprise other than an enterprise of one of the Contracting States has a permanent establishment in one of the Contracting States. ARTICLE 6 Income from Real Property (1) Income from real property may be taxed by the Contracting State in which such real property is situated. (2) For the purposes of this Convention: (i) a leasehold interest in land, whether or not improved, shall be regarded as real property situated where the land to which the interest relates is situated; and (ii) rights to exploit or to explore for natural resources shall be regarded as real property situated where the natural resources are situated or sought. ARTICLE 7 Business Profits (1) The business profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the business profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. (2) Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the business profits which it might be expected to make if it were a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals. (3) In the determination of the business profits of a permanent establishment, there shall be allowed as deductions expenses which are reasonably connected with the profits (including executive and general administrative expenses) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. (4) No business profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. (5) For the purposes of the preceding paragraphs of this Article, the business profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. (6) Where business profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. (7) Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that, on the basis of the available information, the determination of the profits of the permanent establishment is consistent with the principles stated in this Article. (8) Nothing in this Article shall in a Contracting State prevent the operation in that State of its law relating specifically to the taxation of any person who carries on the business of any form of insurance (as long as that law as in effect on the date of signature of this Convention is not varied otherwise than in minor respects so as not to affect its general character). ARTICLE 8 Shipping and Air Transport (1) Profits derived by a resident of one of the Contracting States from the operation in international traffic of ships or aircraft shall be taxable only in that State. For the purposes of this Article, profits from the operation in international traffic of ships or aircraft include: (a) profits from the lease on a full basis of ships or aircraft operated in international traffic by the lessee, provided that the lessor either operates ships or aircraft otherwise than solely between places in the other Contracting State or regularly leases ships or aircraft on a full basis; and (b) profits from the lease of ships or aircraft on a bare boat basis or of containers and related equipment, provided that such lease is merely incidental to the operation in international traffic of ships or aircraft by the lessor and the leased ships or aircraft are operated in international traffic, or the containers and related equipment are used in international traffic, by the lessee. (2) The provisions of paragraph (1) shall apply to the share of the profits from the operation in international traffic of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organization or in an international operating agency. (3) For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in a Contracting State for discharge at another place in that State shall not be treated as profits from the operation in international traffic of ships or aircraft and may be taxed in that State. ARTICLE 9 Associated Enterprises (1) Where: (a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State, and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. (2) Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1), in the profits of an enterprise of the other Contracting State and taxed accordingly, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-- mentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the first--mentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other. (3) Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the income to be attributed to an enterprise, provided that, on the basis of the available information, the determination of that tax liability is consistent with the principles stated in this Article. ARTICLE 10 Dividends (1) Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) Such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed 15 percent of the gross amount of the dividends. (3) The term "dividends" in this Article means income from shares and other income assimilated to income from shares by the taxation law of the Contracting State of which the company making the distribution is a resident for the purposes of its tax. (4) The provisions of paragraph (2) shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business in the other Contracting State, being the State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. (5) Where a company is a resident of one of the Contracting States, the other Contracting State may not impose any tax on dividends paid by the company, except insofar as: (a) a resident of that other State is beneficially entitled to the dividends; (b) the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State; or (c) that other State does not impose a tax of the kind described in paragraph (6) (excluding the accumulated earnings tax and the personal holding company tax imposed by the United States) and the dividends are paid out of profits attributable to one or more permanent establishments which such company had in that other State, provided that the gross income attributable to such permanent establishments constituted at least 50 percent of such company's gross income from all sources. Where sub--paragraph (c) applies and sub--paragraphs (a) and (b) do not apply, any such tax shall not exceed 15 percent of the dividends. (6) Nothing in this Convention shall be construed as preventing a Contracting State from imposing on the income of a company which is a resident of the other Contracting State, tax in addition to the taxes referred to in Article 2 in relation to the first--mentioned Contracting State which are payable by a company which is a resident of the first-- mentioned State, provided that any such additional tax shall not exceed 15 percent of the amount by which the taxable income of the first--mentioned company of a year of income exceeds the tax payable on that taxable income to the first--mentioned State. Any tax payable to a Contracting State on the undistributed profits of a company which is a resident of the other Contracting State shall be calculated as if that company were not liable to the additional tax referred to in this paragraph and had paid dividends of such amount that tax equal to the amount of that additional tax would have been payable on the dividends in accordance with paragraph (2) of this Article. ARTICLE 11 Interest (1) Interest from sources in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) Such interest may be taxed in the Contracting State in which it has its source, and according to the law of that State, but the tax so charged shall not exceed 10 percent of the gross amount of the interest. (3) Paragraph (2) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State or performs independent personal services in that other State from a fixed base situated therein and the indebtedness giving rise to the interest is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. (4) Where, owing to a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last--mentioned amount. In that case, the excess part of the amount of the interest paid shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention. (5) The term "interest" as used in this Convention includes income which, under the taxation law of the Contracting State in which the income has its source, is assimilated to income from money lent. (6) A Contracting State may not impose any tax on interest paid by a resident of the other Contracting State, except insofar as: (a) such interest has its source in the first--mentioned State, or is interest to which a resident of that State is beneficially entitled; or (b) the indebtedness in respect of which the interest is paid is effectively connected with a permanent establishment or a fixed base of the beneficial owner of the interest situated in the first-- mentioned State. (7) Interest shall be treated as income from sources in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether he is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to have its source in the State in which the permanent establishment or fixed base is situated. ARTICLE 12 Royalties (1) Royalties from sources in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) Such royalties may be taxed in the Contracting State in which they have their source, and according to the law of that State, but the tax so charged shall not exceed 10 percent of the gross amount of the royalties. (3) Paragraph (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State or performs independent personal services in that other State from a fixed base situated therein, and the property or rights giving rise to the royalties are effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. (4) The term "royalties" in this Article means: (a) payments or credits of any kind to the extent to which they are consideration for the use of or the right to use any: (i) copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right; (ii) industrial, commercial or scientific equipment, other than equipment let under a hire purchase agreement; (iii) motion picture films; or (iv) films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting; (b) payments or credits of any kind to the extent to which they are consideration for: (i) the supply of scientific, technical, industrial or commercial knowledge or information owned by any person; (ii) the supply of any assistance of an ancillary and subsidiary nature furnished as a means of enabling the application or enjoyment of knowledge or information referred to in sub-- paragraph (b) (i) or of any other property or right to which this Article applies; or (iii) a total or partial forbearance in respect of the use or supply of any property or right described in this paragraph; or (c) income derived from the sale, exchange or other disposition of any property or right described in this paragraph to the extent to which the amounts realized on such sale, exchange or other disposition are contingent on the productivity, use or further disposition of such property or right. (5) Where, owing to a special relationship between the payer and the person beneficially entitled to the royalties or between both of them and some other person, the amount of the royalties paid or credited, having regard to what they are paid or credited for, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last--mentioned amount. In that case, the excess part of the amount of the royalties paid or credited shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention. (6) (a) Royalties shall be treated as income from sources in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment or fixed base, then the royalties shall be deemed to have their source in the State in which the permanent establishment or fixed base is situated. (b) Where sub--paragraph (a) does not operate to treat royalties as being from sources in one of the Contracting States, and the royalties relate to use or the right to use in one of the Contracting States of any property or right described in paragraph (4), the royalties shall be treated as income from sources in that State. ARTICLE 13 Alienation of Property (1) Income or gains derived by a resident of one of the Contracting States from the alienation or disposition of real property situated in the other Contracting State may be taxed in that other State. (2) For the purposes of this Article: (a) the term "real property situated in the other Contracting State", where the United States is that other Contracting State, includes a United States real property interest, and real property referred to in Article 6 which is situated in the United States; and (b) the term "real property", in the case of Australia, shall have the meaning which it has under the laws in force from time to time in Australia and, without limiting the foregoing, includes: (i) real property referred to in Article 6; (ii) shares or comparable interests in a company, the assets of which consist wholly or principally of real property situated in Australia; and (iii) an interst in a partership, trust or estate of a deceased individual, the assets of which consist wholly or principally of real property situated in Australia. (3) Income or gains derived by an enterprise of one of the Contracting States from the alienation of ships, aircraft or containers operated or used by it in international traffic shall, except to the extent to which that enterprise has been allowed depreciation in the other Contracting State in respect of those ships, aircraft or containers, be taxable only in that State, and income described in sub--paragraph (4) (c) of Article 12 (Royalties) shall be taxable only in accordance with the provisions of Article 12. (4) For the purposes of this Article, real property consisting of shares in a company referred to in sub--paragraph (2) (b) (ii), and interests in a partnership, trust or estate referred to in sub--paragraph (2) (b) (iii), shall be deemed to be situated in Australia. ARTICLE 14 Independent Personal Services Income derived by an individual who is a resident of one of the Contracting States from the performance of personal services in an independent capacity shall be taxable only in that State unless such services are performed in the other Contracting State and: (a) the individual is present in that other State for a period or periods aggregating more than 183 days in the taxable year or year of income of that other State; or (b) the individual has a fixed base regularly available to him in that other State for the purpose of performing his activities, in which case so much of the income as is attributable to that fixed base may be taxed in such other State. ARTICLE 15 Dependent Personal Services (1) Subject to the provisions of Articles 18 (Pensions, Annuities, Alimony and Child Support) and 19 (Governmental Remuneration), salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment or in respect of services performed as a director of a company shall be taxable only in that State unless the employment is exercised or the services performed in the other Contracting State. If the employment is so exercised or the services so performed, such remuneration as is derived from that exercise or performance may be taxed in that other State. (2) Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment exercised in the other Contracting State or in respect of services performed in the other Contracting State as a director of a company shall be taxable only in the first--mentioned State if: (a) the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days in the taxable year or year of income of that other State; (b) the remuneration is paid by, or on behalf of, an employer or company who is not a resident of that other State; and (c) the remuneration is not deductible in determining taxable profits of a permanent establishment, a fixed base or a trade or business which the employer or company has in that other State. (3) Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States may be taxed in that State. ARTICLE 16 Limitation on Benefits (1) A person (other than an individual) which is a resident of one of the Contracting States shall not be entitled under this Convention to relief from taxation in the other Contracting State unless: (a) more than 75 percent of the beneficial interest in such person (or in the case of a company, more than 75 percent of the number of shares of each class of the company's shares) is owned, directly or indirectly, by any combination of one or more of: (i) individuals who are residents of the United States; (ii) citizens of the United States; (iii) individuals who are residents of Australia; (iv) companies as described in sub--paragraph (b); and (v) the Contracting States; (b) it is a company in whose principal class of shares there is substantial and regular trading on a recognized stock exchange in one of the Contracting States; or (c) the establishment, acquisition and maintenance of such person and the conduct of its operations did not have as one of its principal purposes the purpose of obtaining benefits under the Convention. (2) For the purposes of sub--paragraph (1) (b), the term "a recognized stock exchange" includes, in relation to the United States, the NASDAQ System owned by the National Association of Securities Dealers, Inc. (3) Where: (a) income derived by a trustee is to be treated for the purposes of this Convention as income of a resident of one of the Contracting States; and (b) the trustee derived the income in connection with a scheme a principal purpose of which was to obtain a benefit under this Convention, then, notwithstanding any other provision of this Convention, the Convention does not apply in relation to that income. ARTICLE 17 Entertainers (1) Notwithstanding the provisions of Articles 14 (Independent Personal Services) and 15 (Dependent Personal Services), income derived by entertainers (such as theatrical, motion picture, radio or television artistes, musicians and athletes) from their personal activities as such may be taxed in the Contracting State in which these activities are exercised, except where the amount of the gross receipts derived by any such entertainer, including expenses reimbursed to him or borne on his behalf, from such activities does not exceed ten thousand United States dollars ($10,000) or its equivalent in Australian dollars for the taxable year or year of income concerned. (2) Where income in respect of activities exercised by an entertainer in his capacity as such accrues not to the entertainer but to another person, that income may, notwithstanding the provisions of Articles 7 (Business Profits), 14 (Independent Personal Services) and 15 (Dependent Personal Services), be taxed in the Contracting State in which the activities of the entertainer are exercised, unless it is established that neither the entertainer nor any person related to him participates directly or indirectly in any profits of such other person in any manner, including the receipt of deferred remuneration, bonuses, fees, dividends, partnership distributions or other distributions. ARTICLE 18 Pensions, Annuities, Alimony and Child Support (1) Subject to the provisions of Article 19 (Governmental Remuneration), pensions and other similar remuneration paid to an individual who is a resident of one of the Contracting States in consideration of past employment shall be taxable only in that State. (2) Social security payments and other public pensions paid by one of the Contracting States to an individual who is a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first--mentioned State. (3) Annuities paid to an individual who is a resident of one of the Contracting States shall be taxable only in that State. (4) The term "pensions and other similar remuneration", as used in this Article, means periodic payments made by reason of retirement or death, in consideration for services rendered, or by way of compensation paid after retirement for injuries received in connection with past employment. (5) The term "annuities", as used in this Article, means stated sums paid periodically at stated times during life, or during a specified or ascertainable number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered or to be rendered). (6) Any alimony or other maintenance payments, including payments for the support of a minor child, arising in one of the Contracting States and paid to a resident of the other Contracting State, shall be taxable only in the first--mentioned State. ARTICLE 19 Governmental Remuneration Wages, salaries, and similar remuneration, including pensions, paid from funds of one of the Contracting States, of a state or other political subdivision thereof or of an agency or authority of any of the foregoing for labor or personal services performed as an employee of any of the above in the discharge of governmental functions to a citizen of that State shall be exempt from tax by the other Contracting State. ARTICLE 20 Students Where a student, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State for the purpose of his full--time education, receives payments from sources outside that other State for the purpose of his maintenance or education, those payments shall be exempt from tax in that other State. ARTICLE 21 Income Not Expressly Mentioned (1) Items of income of a resident of one of the Contracting States which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that State. (2) However, if such income is derived by a resident of one of the Contracting States from sources in the other Contracting State, such income may also be taxed in the State in which it has its source. (3) The provisions of paragraph (1) shall not apply to income derived by a resident of one of the Contracting States which is effectively connected with a permanent establishment situated in the other Contracting State. In such a case, the provisions of Article 7 (Business Profits) shall apply. ARTICLE 22 Relief from Double Taxation (1) Subject to paragraph (4) and in accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), in the case of the United States, double taxation shall be avoided as follows: (a) the United States shall allow to a resident or citizen of the United States as a credit against United States tax the appropriate amount of income tax paid to Australia; and (b) in the case of a United States corporation owning at least 10 percent of the voting stock of a company which is a resident of Australia from which it receives dividends in any taxable year, the United States shall also allow as a credit against United States tax the appropriate amount of income tax paid to Australia by that company with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of income tax paid to Australia. For purposes of applying the United States credit in relation to income tax paid to Australia the taxes referred to in sub--paragraph (1) (b) and paragraph (2) of Article 2 (Taxes Covered) shall be considered to be income taxes. No provision of this Convention relating to source of income shall apply in determining credits against United States tax for foreign taxes other than those referred to in sub--paragraph (1) (b) and paragraph (2) of Article 2 (Taxes Covered). (2) Subject to paragraph (4), United States tax paid under the law of the United States and in accordance with this Convention, other than United States tax imposed in accordance with paragraph (3) of Article 1 (Personal Scope) solely by reason of citizenship or by reason of an election by an individual under United States domestic law to be taxed as a resident of the United States, in respect of income derived from sources in the United States by a person who, under Australian law relating to Australian tax, is a resident of Australia shall be allowed as a credit against Australian tax payable in respect of the income. The credit shall not exceed the amount of Australian tax payable on the income or any class thereof or on income from sources outside Australia. Subject to these general principles, the credit shall be in accordance with the provisions and subject to the limitations of the law of Australia as that law may be in force from time to time. (3) An Australian corporation that owns at least 10 percent of the voting power in a United States corporation is, in accordance with the law of Australia as in force at the date of signature of this Convention, entitled to a rebate in its assessment, at the average rate of tax payable by it, in respect of dividends paid by the United States corporation that are included in the taxable income of the Australian corporation. However, should the law as so in force be amended so that the rebate in relation to the dividends ceases to be allowable under that law, Australia shall allow credit under paragraph (2) for the United States tax paid on the profits out of which the dividends are paid as well as for the United States tax paid on the dividends. (4) For the purposes of computing United States tax, where a United States citizen is a resident of Australia, the United States shall allow as a credit against United States tax the income tax paid to Australia after the credit referred to in paragraph (2). The credit so allowed against United States tax shall not reduce that portion of the United States tax that is creditable against Australian tax in accordance with paragraph (2). ARTICLE 23 Non--Discrimination (1) Each Contracting State in enacting tax measures shall ensure that: (a) citizens of a Contracting State who are residents of the other Contracting State shall not be subjected in that other State to any taxation or any requirement connected therewith which is more burdensome than the taxation or connected requirements to which citizens of that other State who are residents of that other State in the same circumstances are or may be subjected; (b) except where the provisions of paragraph (1) of Article 9 (Associated Enterprises), paragraph (4) of Article 11 (Interest) or paragraph (5) of Article 12 (Royalties) apply, interest, royalties and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of the resident of the first-- mentioned State, be deductible under the same conditions as if they had been paid to a resident of the first--mentioned State; (c) a corporation of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first--mentioned State to any taxation or any requirement connected therewith which is more burdensome than the taxation or connected requirements to which other similar corporations of the first--mentioned State in the same circumstances are or may be subjected; and (d) the taxation on a permanent establishment which a resident of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on residents of that other State that carry on the same activities in the same circumstances. (2) Nothing in this Article relates to any provision of the taxation laws of a Contracting State: (a) in force on the date of signature of this Convention; (b) adopted after the date of signature of this Convention but which is substantially similar in general purpose or intent to a provision covered by subparagraph (a); or (c) reasonably designed to prevent the avoidance or evasion of taxes; provided that, with respect to provisions covered by subparagraphs (b) or (c), such provisions (other than provisions in international agreements) do not discriminate between citizens or residents of the other Contracting State and those of any third State. (3) Without limiting by implication the interpretation of this Article, it is hereby declared that, except to the extent expressly so provided, nothing in the Article prevents a Contracting State from distinguishing in its taxation laws between residents and non--residents solely on the ground of their residence. (4) Where one of the Contracting States considers that the taxation measures of the other Contracting State infringe the principles set forth in this Article the Contracting States shall consult together in an endeavor to resolve the matter. ARTICLE 24 Mutual Agreement Procedure (1) (a) Where a resident of one of the Contracting States considers that the action of one or both of the Contracting States results or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the domestic laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or citizen. The case must be presented within three years from the first notification of that action. (b) Should the claim be considered to have merit by the competent authority of the Contracting State to which the claim is made, that competent authority shall seek to come to an agreement with the competent authority of the other Contracting State with a view to the avoidance of taxation contrary to the provisions of this Convention. Any agreement reached shall be implemented notwithstanding any time limits or other procedural limitations in the domestic law of the Contracting States. (2) The competent authorities of the Contracting States shall seek to resolve by agreement any difficulties or doubts arising as to the application or interpretation of this Convention. In particular the competent authorities of the Contracting States may agree: (a) to the same attribution of income, deductions, credits, or allowances of an enterprise of one of the Contracting States to its permanent establishment situated in the other Contracting State; (b) to the same allocation of income, deductions, credits, or allowances between persons; (c) to the same determination of the source of particular items of income; (d) to the same meaning of any term used in this Convention; or (e) to which of the Contracting States an individual described in subparagraph (2) (c) of Article 4 (Residence) has closer personal and economic relations. (3) The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of this Article. ARTICLE 25 Exchange of Information (1) The competent authorities shall exchange such information as is necessary for carrying out the provisions of this Convention or for the prevention of fraud or for the administration of statutory provisions concerning taxes to which this Convention applies provided the information is of a class that can be obtained under the laws and administrative practices of each Contracting State with respect to its own taxes. (2) Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than those (including a Court or administrative body) concerned with the assessment, collection, administration or enforcement of, or with litigation with respect to, the taxes to which this Convention applies. (3) No information shall be exchanged which would be contrary to public policy. (4) If specifically requested by the competent authority of one of the Contracting States, the competent authority of the other Contracting State shall provide information under this Article in the form of copies of unedited original documents (including books, papers, statements, records, accounts or writings) to the same extent such documents can be obtained under the laws and administrative practices of that other State with respect to its own taxes. (5) Each of the Contracting States shall endeavor to collect on behalf of the other Contracting State amounts equal to such taxes imposed by the other State as will ensure that any exemption or reduction in rate of tax granted under this Convention by that other State shall not be enjoyed by persons not entitled to such benefits. ARTICLE 26 Diplomatic and Consular Privileges Nothing in this Convention shall affect diplomatic and consular privileges under the general rules of international law or under the provisions of special agreements. ARTICLE 27 Miscellaneous (1) (a) Income derived by a resident of the United States which, under this Convention, may be taxed in Australia shall for the purposes of the income tax law of Australia and of this Convention be deemed to be income from sources in Australia. (b) Income derived by a resident of Australia which, under this Convention, may be taxed in the United States, other than income taxed by the United States in accordance with paragraph (3) of Article 1 (Personal Scope) solely by reason of citizenship or by reason of an election by an individual under United States domestic law to be taxed as a resident of the United States, shall for the purposes of paragraph (2) of Article 22 (Relief from Double Taxation) and of the income tax law of Australia be deemed to be income from sources in the United States. (c) Where paragraph (4) of Article 22 (Relief from Double Taxation) applies, income referred to in that paragraph shall be deemed to have its source in Australia to the extent necessary to give effect to the provisions of that paragraph. (2) Any exemption from tax by one of the Contracting States provided for in Article 14 (Independent Personal Services), 15 (Dependent Personal Services), 17 (Entertainers) or 19 (Governmental Remuneration) shall be inapplicable to the extent that the income to which the exemption relates is not or, upon the application of the relevant Article of this Convention (prior to application of this paragraph), will not be subject to tax by the other Contracting State. ARTICLE 28 Entry into Force (1) This Convention shall be subject to ratification in accordance with the applicable procedures of each Contracting State, and instruments of ratification shall be exchanged at Washington, D.C., as soon as possible. (2) The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect: (a) with respect to those dividends, interest and royalties to which Articles 10 (Dividends), 11 (Interest) and 12 (Royalties), respectively, apply and which are paid, credited or otherwise derived on or after the first day of the second month following the date on which the Convention enters into force; and (b) with respect to all other income of a taxpayer, for the taxpayer's years of income or taxable years, as the case may be, commencing on or after the first day of the second month following the date on which the Convention enters into force. (3) Subject to paragraph (4), the Convention between the Government of the United States of America and the Government of the Commonwealth of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed at Washington on May 14, 1953 (in this Article referred to as the 1953 Convention) shall cease to have effect with respect to taxes to which this Convention applies under paragraph (2). (4) The 1953 Convention shall terminate on the expiration of the last date on which it has effect in accordance with the foregoing provisions of this Article. ARTICLE 29 Termination (1) This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention at any time after 5 years from the date on which the Convention enters into force, provided that at least 6 months prior notice of termination has been given through the diplomatic channel. In such event, the Convention shall cease to have effect: (a) with respect to those dividends, interest and royalties to which Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) respectively apply, and which are paid, credited or otherwise derived on or after the first day of January following the expiration of the 6 month period; and (b) with respect to all other income of a taxpayer, for the taxpayer's years of income or taxable years, as the case may be, commencing on or after the first day of January following the expiration of the 6 month period. (2) Notwithstanding the provisions of paragraph (1), upon prior notice to be given through the diplomatic channel, the provisions of paragraph (2) of Article 18 (Pensions, Annuities, Alimony and Child Support) may be terminated by either Contracting State at any time after this Convention enters into force. DONE in duplicate at Sydney this sixth day of August 1982. |JOHN HOWARD |R.D. NESEN | |FOR THE GOVERNMENT OF |FOR THE GOVERNMENT OF THE | |AUSTRALIA |UNITED STATES OF AMERICA | Schedule 2A-United States protocol Note: See section 3. PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of Australia and the Government of the United States of America, Desiring to amend the Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed at Sydney on the sixth day of August 1982 (in this Protocol referred to as "the Convention"), Have agreed as follows: ARTICLE 1 Article 1 of the Convention is amended by: (a) inserting in the last sentence of paragraph (3) "or long-term resident" after "include a former citizen"; and (b) by omitting in the last sentence of paragraph (3) "citizenship" and substituting "such status". ARTICLE 2 Article 2 of the Convention is amended by omitting paragraph (1) and substituting: "(1) The existing taxes to which this Convention shall apply are: (a) in the United States: the Federal income taxes imposed by the Internal Revenue Code; and (b) in Australia: (i) the Australian income tax, including tax on capital gains; and (ii) the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of Australia.". ARTICLE 3 Article 4 of the Convention is amended by: (a) deleting "or" at the end of sub-paragraph (1)(b)(i) and inserting after that sub-paragraph the following: "(ii) a United States citizen, other than a United States citizen who is a resident of a State other than Australia for the purposes of a double tax agreement between that State and Australia; or"; and (b) renumbering sub-paragraph (1)(b)(ii) as sub- paragraph (1)(b)(iii). ARTICLE 4 Article 7 of the Convention is amended by inserting: "(9) Where: (a) a resident of one of the Contracting States is beneficially entitled, whether directly or through one or more interposed fiscally transparent entities, to a share of the business profits of an enterprise carried on in the other Contracting State by the fiscally transparent entity (or, in the case of a trust, by the trustee of the trust estate); and (b) in relation to that enterprise, that fiscally transparent entity (or trustee) would, in accordance with the principles of Article 5 (Permanent Establishment), have a permanent establishment in that other State, that enterprise carried on by that fiscally transparent entity (or trustee) shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and that share of business profits shall be attributed to that permanent establishment.". ARTICLE 5 Article 8 of the Convention is amended by: (a) omitting sub-paragraph (1)(b) and substituting: "(b) profits from the lease of ships or aircraft on a bare boat basis, provided that such lease is merely incidental to the operation in international traffic of ships or aircraft by the lessor."; and (b) omitting paragraphs (2) and (3) and substituting: "(2) Profits of an enterprise of one of the Contracting States from the use, maintenance, or rental of containers (including trailers, barges, and related equipment for the transport of containers) used in international traffic shall be taxable only in that State. (3) The profits to which the provisions of paragraphs (1) and (2) apply include profits from the participation in a pool service or other profit sharing arrangement. (4) For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise taken on board in a Contracting State for discharge in that State shall not be treated as profits from the operation in international traffic of ships or aircraft and may be taxed in that State.". ARTICLE 6 Article 10 of the Convention is omitted and the following Article is substituted: "ARTICLE 10 Dividends (1) Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but: (a) the tax charged shall not exceed 5 percent of the gross amount of the dividends, if the person beneficially entitled to those dividends is a company which holds directly at least 10 percent of the voting power in the company paying the dividends; and (b) the tax charged shall not exceed 15 percent of the gross amount of the dividends to the extent to which those dividends are not within sub-paragraph (a), provided that if the relevant law in either Contracting State is varied after the effective date of this provision otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate. (3) Notwithstanding the provisions of paragraph (2), dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the person who is beneficially entitled to the dividends is a company that is a resident of the other Contracting State that has owned shares representing 80 percent or more of the voting power of the company paying the dividends for a 12-month period ending on the date the dividend is declared and: (a) is a qualified person by reason of sub-paragraph (c) of paragraph (2) of Article 16 (Limitation on Benefits); or (b) is entitled to benefits with respect to the dividends under paragraph (5) of that Article. (4) (a) Sub-paragraph (a) of paragraph (2) and paragraph (3) shall not apply in the case of dividends paid by a Regulated Investment Company (RIC) or a Real Estate Investment Trust (REIT). (b) In the case of dividends paid by a RIC, sub-paragraph (b) of paragraph (2) shall apply. (c) In the case of dividends paid by a REIT, sub-paragraph (b) of paragraph (2) shall apply only if: (i) the person beneficially entitled to the dividends is an individual holding an interest of not more than 10 percent in the REIT; (ii) the dividends are paid with respect to a class of stock that is publicly traded and the person beneficially entitled to the dividends holds an interest of not more than 5 percent of any class of the REIT's stock; or (iii) the person beneficially entitled to the dividends holds an interest of not more than 10 percent in the REIT and the gross value of no single interest in real property held by the REIT exceeds 10 percent of the gross value of the REIT's total interest in real property. (d) Notwithstanding sub-paragraph (c), sub-paragraph (b) of paragraph (2) shall apply with respect to dividends paid by a REIT to a listed Australian property trust ("LAPT"). However, if the responsible entity for the LAPT knows or has reason to know that one or more unitholders each owns 5 percent or more of the beneficial interests in the LAPT, each of such 5 percent or more unitholders shall, for purposes of this paragraph, be deemed to hold such proportion of the LAPT's direct interest in the REIT as equals that person's proportionate interest in the LAPT and shall be deemed to be beneficially entitled to the REIT dividends paid with respect thereto, and the provisions of sub-paragraph (c) shall apply to that person. For purposes of this paragraph, dividends paid with respect to REIT shares held by an LAPT shall be deemed to be paid with respect to a class of stock that is publicly traded. For these purposes, a "listed Australian property trust" means an Australian unit trust registered as a "Managed Investment Scheme" under the Australian Corporations Act in which the principal class of units is listed on a recognized stock exchange in Australia and regularly traded on one or more recognized stock exchanges (as defined in Article 16 (Limitation on Benefits)). (5) The above provisions of this Article shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. (6) The term "dividends" as used in this Article means income from shares, as well as other amounts which are subjected to the same taxation treatment as income from shares by the law of the State of which the company making the distribution is a resident for the purposes of its tax. (7) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company-being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled-except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor may it impose tax on a company's undistributed profits, except as provided in paragraph (8), even if the dividends paid consist wholly or partly of profits or income arising in such other State. (8) A company which is a resident of one of the Contracting States and that has a permanent establishment in the other State or that is subject to tax in the other State on a net basis on its income or gains that may be taxed in the other State under Article 6 (Income from Real Property) or under paragraph (1) or (3) of Article 13 (Alienation of Property) may be subject in that other State to a tax in addition to the tax allowable under the other provisions of this Convention. Such tax, however, may be imposed on only the portion of the business profits of the company attributable to the permanent establishment and the portion of the income or gains referred to in the preceding sentence that is subject to tax under Article 6 (Income from Real Property) or under paragraph (1) or (3) of Article 13 (Alienation of Property) that, in the case of the United States, represents the dividend equivalent amount of such profits, income or gains and, in the case of Australia, is an amount that is analogous to the dividend equivalent amount. This paragraph shall not apply in the case of a company which: (a) is a qualified person by reason of sub-paragraph (c) of paragraph (2) of Article 16 (Limitation on Benefits) of this Convention; or (b) is entitled to benefits with respect to the dividends under paragraph (5) of that Article. (9) The tax referred to in paragraph (8) may not be imposed at a rate in excess of the rate specified in sub-paragraph (a) of paragraph (2).". ARTICLE 7 Article 11 of the Convention is omitted and the following Article is substituted: "ARTICLE 11 Interest (1) Interest arising in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) However, that interest may also be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 percent of the gross amount of the interest. (3) Notwithstanding paragraph (2), interest arising in one of the Contracting States to which a resident of the other Contracting State is beneficially entitled may not be taxed in the first-mentioned State if: (a) the interest is derived by one of the Contracting States or by a political or administrative sub-division or a local authority thereof, or by any other body exercising governmental functions in a Contracting State, or by a bank performing central banking functions in a Contracting State; (b) the interest is derived by a financial institution which is unrelated to and dealing wholly independently with the payer. For the purposes of this Article, the term "financial institution" means a bank or other enterprise substantially deriving its profits by raising debt finance in the financial markets or by taking deposits at interest and using those funds in carrying on a business of providing finance. (4) (a) Notwithstanding paragraph (3), interest referred to in sub- paragraph (b) of that paragraph may be taxed in the State in which it arises at a rate not exceeding 10 percent of the gross amount of the interest if the interest is paid as part of an arrangement involving back-to-back loans or other arrangement that is economically equivalent and intended to have a similar effect to back-to-back loans. (b) Nothing in this Article shall be construed as restricting, in any manner, the right of a Contracting State to apply any anti- avoidance provisions of its taxation law. (5) The term "interest" in this Article means interest from government securities or from bonds or debentures (including premiums attaching to such securities, bonds or debentures), whether or not secured by mortgage and whether or not carrying a right to participate in profits, interest from any other form of indebtedness, as well as income which is subjected to the same taxation treatment as income from money lent by the law of the Contracting State in which the income arises. Income dealt with in Article 10 (Dividends) and penalty charges for late payment shall not be regarded as interest for the purposes of this Article. (6) The provisions of paragraphs (1), (2), (3) and (4) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, carries on business in the other Contracting State, in which the interest arises, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the indebtedness in respect of which the interest is paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. (7) Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment or fixed base, then the interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. (8) Where, by reason of a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might reasonably have been expected to have been agreed upon by the payer and the person so entitled in the absence of that relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case the excess part of the amount of the interest paid shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention. (9) Notwithstanding the provisions of paragraphs (1), (2), (3) and (4): (a) interest that is paid by a resident of one of the Contracting States and that is determined with reference to the profits of the issuer or of one of its associated enterprises, as defined in sub- paragraph (a) or (b) of paragraph (1) of Article 9 (Associated Enterprises), being interest to which a resident of the other State is beneficially entitled, also may be taxed in the Contracting State in which it arises, and according to the laws of that State, at a rate not exceeding 15 percent of the gross amount of the interest; and (b) interest that is paid with respect to the ownership interests in a person used for the securitization of real estate mortgages or other assets, to the extent that the amount of interest paid exceeds the normal rate of return on publicly-traded debt instruments with a similar risk profile, may be taxed by each State in accordance with its domestic law. (10) Where interest expense is deductible in determining the profits, income or gains of a company resident in one of the Contracting States, being profits, income or gains which: (a) are attributable to a permanent establishment of that company in the other Contracting State; or (b) may be taxed in the other Contracting State under Article 6 (Income from Real Property) or paragraph (1) or (3) of Article 13 (Alienation of Property), and that interest expense exceeds the interest paid by that permanent establishment or paid with respect to the debt secured by real property located in the other Contracting State, the amount of that excess shall be deemed to be interest arising in that other Contracting State to which a resident of the first-mentioned Contracting State is beneficially entitled.". ARTICLE 8 Article 12 of the Convention is amended by: (a) omitting "10" and substituting "5" in paragraph (2); and (b) omitting sub-paragraph (a) of paragraph (4) and substituting: "(a) payments or credits of any kind to the extent to which they are consideration for the use of or the right to use any: (i) copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right; (ii) motion picture films; or (iii) films or audio or video tapes or disks, or any other means of image or sound reproduction or transmission for use in connection with television, radio or other broadcasting;". ARTICLE 9 Article 13 of the Convention is amended by: (a) omitting paragraph (3) and substituting: "(3) Income or gains from the alienation of property, other than real property, that forms part of the business property of a permanent establishment which an enterprise of one of the Contracting States has in the other Contracting State or pertains to a fixed base available in that other State to a resident of the first-mentioned State for the purpose of performing independent personal services, including income or gains from the alienation of that permanent establishment (alone or with the whole enterprise) or of that fixed base, may be taxed in that other State. (4) Income or gains derived by an enterprise of one of the Contracting States from the alienation of ships, aircraft or containers operated or used in international traffic or property, other than real property, pertaining to the operation or use of such ships, aircraft, or containers shall be taxable only in that State. (5) Where an individual who, upon ceasing to be a resident of one of the Contracting States, is treated under the taxation law of that State as having alienated any property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other Contracting State as if the individual had, immediately before ceasing to be a resident of the first-mentioned State, alienated and re-acquired the property for an amount equal to its fair market value at that time. (6) An individual who elects, under the taxation law of a Contracting State, to defer taxation on income or gains relating to property which would otherwise be taxed in that State upon the individual ceasing to be a resident of that State for the purposes of its tax, shall, if the individual is a resident of the other State, be taxable on income or gains from the subsequent alienation of that property only in that other State. (7) Except as provided in the preceding paragraphs of this Article, each Contracting State may tax capital gains in accordance with the provisions of its domestic law."; and (b) renumbering paragraph (4) as paragraph (8). ARTICLE 10 Article 16 of the Convention is omitted and the following Article is substituted: "ARTICLE 16 Limitation on Benefits (1) Except as otherwise provided in this Article, a resident of one of the Contracting States that derives income from the other Contracting State shall not be entitled to the benefits of this Convention otherwise accorded to residents of one of the Contracting States unless such resident is a "qualified person" as defined in paragraph (2). (2) A resident of one of the Contracting States shall be a qualified person for a taxable year if the resident is: (a) an individual; (b) that State, any political subdivision or local authority thereof or any agency or instrumentality of such State; (c) a company, if: (i) the principal class of its shares is listed on a recognized stock exchange specified in sub-paragraph (a) or (b) of paragraph (6) of this Article and is regularly traded on one or more recognized stock exchanges; or (ii) at least 50 percent of the aggregate vote and value of the shares in the company is owned directly or indirectly by five or fewer companies entitled to benefits under clause (i) of this sub- paragraph, provided that, in the case of indirect ownership, each intermediate owner is a resident of either Contracting State; (d) a person other than an individual or a company, if: (i) the principal class of units in that person is listed or admitted to dealings on a recognized stock exchange specified in sub-paragraph (a) or (b) of paragraph (6) of this Article and is regularly traded on one or more of the recognized stock exchanges; or (ii) the direct or indirect owners of at least 50 percent of the beneficial interests in that person are qualified persons by reason of clause (i) of sub-paragraph (c) or clause (i) of this sub-paragraph; (e) an entity organized under the laws of one of the Contracting States and established and maintained in that State exclusively for a religious, charitable, educational, scientific, or other similar purpose, even if the entity is generally exempt from tax in that State; (f) an entity organized under the laws of one of the Contracting States and established and maintained in that State to provide, pursuant to a plan, pensions or other similar benefits to employed and self-employed persons, even if the entity is generally exempt from tax in that State, provided that more than 50 percent of the entity's beneficiaries, members or participants are individuals resident in either Contracting State; (g) a person other than an individual, if: (i) on at least half the days of the taxable year persons that are qualified persons by reason of sub-paragraph (a), (b), (c)(i), or (d)(i) of this paragraph own, directly or indirectly, at least 50 percent of the aggregate vote and value of the shares or other beneficial interests in the person; and (ii) less than 50 percent of the person's gross income for the taxable year is paid or accrued, directly or indirectly, to persons who are not residents of either Contracting State in the form of payments that are deductible for purposes of the taxes covered by this Convention in the person's State of residence (but not including arm's length payments in the ordinary course of business for services or tangible property and payments in respect of financial obligations to a bank, provided that where such a bank is not a resident of one of the Contracting States such payment is attributable to a permanent establishment of that bank located in one of the Contracting States); or (h) a recognized headquarters company for a multinational corporate group. For purposes of this paragraph, a person shall be considered a recognized headquarters company if: (i) it provides in its State of residence a substantial portion of the overall supervision and administration of a group of companies (which may be part of a larger group of companies), which may include, but cannot be principally, group financing; (ii) the group of companies consists of corporations resident in, and engaged in an active business in, at least five countries (or groupings of countries), and the business activities carried on in each of the five countries (or groupings of countries) generate at least 10 percent of the gross income of the group; (iii) the business activities carried on in any one country other than the Contracting State of residence of the headquarters company generate less than 50 percent of the gross income of the group; (iv) no more than 25 percent of its gross income is derived from the other Contracting State; (v) it has, and exercises, independent discretionary authority to carry out the functions referred to in sub-paragraph (i); (vi) it is subject to generally applicable rules of taxation in its country of residence; and (vii) the income derived in the other Contracting State either is derived in connection with, or is incidental to, the active business referred to in sub- paragraph (ii). If the income requirements for being considered a recognized headquarters company (sub-paragraphs (ii), (iii), or (iv)) are not fulfilled, they will be deemed to be fulfilled if the required percentages are met when averaging the gross income of the preceding four years. (3) (a) A resident of one of the Contracting States will be entitled to the benefits of the Convention with respect to an item of income derived from the other State, regardless of whether the resident is a qualified person, if the resident is engaged in the active conduct of a trade or business in the first-mentioned State (other than the business of making or managing investments for the resident's own account, unless these activities are banking, insurance or securities activities carried on by a bank, insurance company or a registered, licensed or authorized securities dealer), and the income derived from the other Contracting State is derived in connection with, or is incidental to, that trade or business. (b) If the resident or any of its associated enterprises carries on a trade or business activity in the other Contracting State which gives rise to an item of income, sub-paragraph (a) of this paragraph shall apply to such item only if the trade or business activity in the first-mentioned State is substantial in relation to the trade or business activity in the other State. Whether a trade or business activity is substantial for purposes of this paragraph will be determined based on all the facts and circumstances. (c) In determining whether a person is "engaged in the active conduct of a trade or business" in a Contracting State under sub- paragraph (a) of this paragraph, activities conducted by a partnership in which that person is a partner and activities conducted by persons connected to such person shall be deemed to be conducted by such person. A person shall be connected to another if one possesses at least 50 percent of the beneficial interest in the other (or, in the case of a company, at least 50 percent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) or another person possesses, directly or indirectly, at least 50 percent of the beneficial interest (or, in the case of a company, at least 50 percent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) in each person. In any case, a person shall be considered to be connected to another if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same person or persons. (4) Notwithstanding the preceding provisions of this Article, if a company that is a resident of one of the Contracting States, or a company that owns at least 50 percent of the aggregate vote or value of such a company, has outstanding a class of shares: (a) which is subject to terms or other arrangements which entitle its holders to a portion of the income of the company derived from the other Contracting State that is larger than the portion such holders would receive absent such terms or arrangements ("the disproportionate part of the income"); and (b) 50 percent or more of the voting power and value of which is owned by persons who are not qualified persons, the benefits of this Convention shall not apply to the disproportionate part of the income. (5) A resident of one of the Contracting States that is not a qualified person pursuant to the provisions of paragraph (2) of this Article shall, nevertheless, be granted benefits of the Convention if the competent authority of the other Contracting State determines, in accordance with the law of that other State, that the establishment, acquisition or maintenance of such person and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under the Convention. (6) For purposes of this Article the term "recognized stock exchange" means: (a) the NASDAQ System owned by the National Association of Securities Dealers, Inc., and any stock exchange registered with the U.S. Securities and Exchange Commission as a national securities exchange under the U.S. Securities Exchange Act of 1934; (b) the Australian Stock Exchange and any other Australian stock exchange recognized as such under Australian law; and (c) any other stock exchange agreed upon by the competent authorities. (7) Nothing in this Article shall be construed as restricting, in any manner, the right of a Contracting State to apply any anti-avoidance provisions of its taxation law.". ARTICLE 11 Article 21 of the Convention is omitted and the following Article is substituted: "ARTICLE 21 Other Income (1) Items of income of a resident of one of the Contracting States, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. (2) The provisions of paragraph (1) shall not apply to income, other than income from real property as defined in paragraph (2) of Article 6 (Income from Real Property), derived by a resident of one of the Contracting States where that income is effectively connected with a permanent establishment or fixed base situated in the other Contracting State. In that case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. (3) Notwithstanding the provisions of paragraphs (1) and (2), items of income of a resident of one of the Contracting States not dealt with in the foregoing Articles of this Convention from sources in the other Contracting State may also be taxed in the other Contracting State.". ARTICLE 12 Article 22 of the Convention is amended by omitting in paragraph (1) "sub- paragraph (1)(b)" and substituting "sub-paragraph (1)(b)(i)" in each place it occurs. ARTICLE 13 (1) This Protocol shall be subject to ratification in accordance with the applicable procedures of each Contracting State, and instruments of ratification shall be exchanged as soon as possible. (2) This Protocol, which shall form an integral part of the Convention, shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect: (a) in Australia: (i) in respect of withholding tax on dividends, royalties and interest that is derived by a non-resident, in relation to income derived on or after the later of: (A) the first day of the second month next following the date on which the Protocol enters into force; or (B) 1 July, 2003; (ii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the Protocol enters into force; and (b) in the United States: (i) in respect of withholding tax on dividends, royalties and interest that is derived by a non-resident, in relation to income derived on or after the later of: (A) the first day of the second month next following the date on which the Protocol enters into force; or (B) 1 July, 2003; (ii) in respect of other taxes, for taxable periods beginning on or after 1 January in the calendar year next following that in which the Protocol enters into force. (3) Notwithstanding paragraph (2), Article 6 of this Protocol shall not apply to dividends paid by a REIT if the person beneficially entitled to the dividends is an LAPT (as defined in paragraph (4) of Article 10 (Dividends) of the Convention as amended by this Protocol) and the shares in respect of which the dividends are paid were: (a) owned by the LAPT on March 26, 2001; (b) acquired by the LAPT pursuant to a binding contract entered into on or before March 26, 2001; or (c) acquired by the LAPT pursuant to a reinvestment of dividends (ordinary or capital) with respect to such shares. In such case, the provisions of Article 10 (Dividends), as it was on March 26, 2001, shall apply. IN WITNESS WHEREOF the undersigned, being duly authorized, have signed this Protocol. DONE in duplicate at Canberra, this twenty-seventh day of September 2001. FOR THE GOVERNMENT OF FOR THE GOVERNMENT AUSTRALIA: OF THE UNITED STATES OF AMERICA: PETER COSTELLO J THOMAS SCHIEFFER [Signatures omitted] Schedule 3-Convention between Australia and Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Section 3 The Government of Australia and the Government of Canada Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: CHAPTER I SCOPE OF THE CONVENTION ARTICLE 1 Personal Scope This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 Taxes Covered (1) The existing taxes to which this Convention shall apply are- (a) in Australia: the Australian income tax, including the additional tax upon the undistributed amount of the distributable income of a private company; (b) in Canada: the income taxes imposed by the Government of Canada. (2) This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes. At the end of each calendar year, each Contracting State shall notify the other Contracting State of any substantial changes which have been made in its laws relating to the taxes to which this Convention applies. CHAPTER II DEFINITIONS ARTICLE 3 General Definitions (1) In this Convention, unless the context otherwise requires- (a) the term "Australia" means the Commonwealth of Australia and, when used in a geographical sense, includes: (i) the Territory of Norfolk Island; (ii) the Territory of Christmas Island; (iii) the Territory of Cocos (Keeling) Islands; (iv) the Territory of Ashmore and Cartier Islands; (v) the Coral Sea Islands Territory; and (vi) any area adjacent to the territorial limits of Australia or of the said Territories which is an area where Australia may, in accordance with its national legislation and international law, exercise rights in respect of the seabed and sub--soil and their natural resources. (b) the term "Canada" used in a geographical sense, means the territory of Canada, including any area beyond the territorial waters of Canada which is an area where Canada may, in accordance with its national legislation and international law, exercise rights with respect to the seabed and sub--soil and their natural resources; (c) the terms "Contracting State, one of the Contracting States" and "other Contracting State" mean Australia or Canada, as the context requires; (d) the term "person" includes an individual, an estate, a trust, a company and any other body of persons; (e) the term "company" means any body corporate or any entity which is assimilated to a body corporate for tax purposes, in French, the term "société" also means a "corporation" within the meaning of Canadian Law; (f) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of one of the Contracting States and an enterprise carried on by a resident of the other Contracting State; (g) the term "tax" means Australian tax or Canadian tax, as the context requires; (h) the term "Australian tax" means tax imposed by Australia, being tax to which this Convention applies by virtue of Article 2; (i) the term "Canadian tax" means tax imposed by Canada, being tax to which this Convention applies by virtue of Article 2; (j) the term "competent authority" means, in the case of Australia, the Commissioner of Taxation or his authorized representative, and in the case of Canada, the Minister of National Revenue or his authorized representative; (k) words in the singular include the plural and words in the plural include the singular. (2) In this Convention, the terms "Australian tax" and "Canadian tax" do not include any penalty or interest imposed under the law of either Contracting State relating to the taxes to which this Convention applies by virtue of Article 2. (3) In the application of this Convention by a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes to which this Convention applies. ARTICLE 4 Residence (1) Subject to paragraph (2), for the purposes of this Convention, a person is a resident of one of the Contracting States if that person is a resident of that State for the purposes of its tax. (2) In relation to income from sources in Canada, a person who is subject to Australian tax on income which is from sources in Australia shall not be treated as a resident of Australia unless the income from sources in Canada is subject to Australian tax or, if that income is exempt from Australian tax, it is so exempt solely because it is subject to Canadian tax. (3) Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules: (a) he shall be deemed to be a resident solely of the Contracting State in which he has a permanent home available to him; (b) if he has a permanent home available to him in both Contracting States, or if he does not have a permanent home available to him in either of them, he shall be deemed to be a resident solely of the Contracting State with which his personal and economic relations are the closer. (4) Where by reason of the provisions of paragraph (1) a person other than an individual is a resident of both Contracting States, then the person's status shall be determined as follows: (a) it shall be deemed to be a resident of the Contracting State in which it is incorporated or otherwise constituted; (b) if it is not incorporated or otherwise constituted in either of the Contracting States, it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated. ARTICLE 5 Permanent Establishment (1) For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. (2) The term "permanent establishment" includes especially- (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, quarry or other place of extraction of natural resources; (g) an agricultural, pastoral or forestry property; (h) a building site or construction, installation or assembly project which exists for more than twelve months. (3) An enterprise shall not be deemed to have a permanent establishment merely by reason of- (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising or scientific research. (4) An enterprise shall be deemed to have a permanent establishment in one of the Contracting States and to carry on business through that permanent establishment if- (a) it carries on supervisory activities in that State for more than twelve months in connection with a building site, or a construction, installation or assembly project which is being undertaken in that State; or (b) substantial equipment is being used in that State for more than twelve months by, for or under contract with the enterprise in exploration for, or the exploitation of, natural resources or in activities connected with such exploration or exploitation. (5) A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State-other than an agent of an independent status to whom paragraph (6) applies-shall be deemed to be a permanent establishment of that enterprise in the first--mentioned State if- (a) he has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or (b) in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise. (6) An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where that person is acting in the ordinary course of his business as such a broker or agent. (7) The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself make either company a permanent establishment of the other. (8) The principles set forth in paragraphs (1) to (7) inclusive shall be applied in determining for the purposes of this Convention whether there is a permanent establishment outside both Contracting States and whether an enterprise, not being an enterprise of one of the Contracting States, has a permanent establishment in one of the Contracting States. CHAPTER III TAXATION OF INCOME ARTICLE 6 Income from Real Property (1) Income from real property, including royalties and other payments in respect of the operation of mines or quarries or of the exploitation of any natural resource, may be taxed in the Contracting State in which the real property, mines, quarries, or natural resources are situated. (2) Income from real property or from any direct interest in or over land shall be regarded as income from real property situated where the real property or land is situated. (3) Ships, boats or aircraft shall not be regarded as real property. (4) The provisions of paragraphs (1) and (2) shall also apply to the income from real property of an enterprise and to income from real property used for the performance of professional services. ARTICLE 7 Business Profits (1) The profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment. (2) Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals. (3) In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. (4) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. (5) If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to the permanent establishment of an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article. (6) For the purposes of this Article, except as provided in the Articles referred to in this paragraph, the profits of an enterprise do not include items of income dealt with in Articles 6, 8, 10, 11, 12, 13, 14, 16 and 17 and paragraphs (3) and (4) of Article 21. (7) Nothing in this Article shall affect the operation of any law of a Contracting State relating specifically to taxation of any person who carries on a business of any form of insurance, provided that if the law in force in either Contracting State at the date of signature of this Convention is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate. ARTICLE 8 Shipping and Air Transport (1) Profits from the operation of ships or aircraft derived by a resident of one of the Contracting States shall be taxable only in that State. (2) Notwithstanding the provisions of paragraph (1), such profits may be taxed in the other Contracting State where they are profits from operations of ships or aircraft confined solely to places in that other State. (3) The provisions of paragraphs (1) and (2) shall apply in relation to the share of the profits from the operation of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organisation or in an international operating agency. (4) For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise taken on board in a Contracting State for discharge at another place in that State shall be treated as profits from operations confined solely to places in that State. ARTICLE 9 Associated Enterprises (1) Where- (a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State, and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. (2) If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person, provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article. (3) Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1) or (2), in the profits of an enterprise of the other Contracting State and taxed accordingly, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first--mentioned State shall, subject to paragraph (4), make an appropriate adjustment to the amount of tax charged on those profits in the first--mentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Convention in relation to the nature of the income, and for this purpose the competent authorities of the Contracting States shall if necessary consult each other. (4) The provisions of paragraph (3) relating to an appropriate adjustment are not applicable after the expiration of six years from the end of the year of income or taxation year in respect of which a Contracting State has charged to tax the profits to which the adjustment would relate. ARTICLE 10 Dividends (1) Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) Such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. (3) Dividends paid by a company which is a resident of one of the Contracting States, being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled, shall be exempt from tax in that other State except insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State. Provided that this paragraph shall not apply in relation to dividends paid by any company which is a resident of Australia for the purposes of Australian tax and which is also a resident of Canada for the purposes of Canadian tax. (4) The term "dividends" in this Article means income from shares and other income assimilated to income from shares by the taxation law of the Contracting State of which the company making the distribution is a resident. (5) The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, or performs professional services from a fixed base situated in that other State, being the State of which the company paying the dividends is a resident and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment or fixed base. In such a case, the provisions of Article 7 or 14, as the case may be, shall apply. (6) Canada may impose tax, on the earnings attributable to a permanent establishment in Canada of a company which is a resident of Australia, in addition to the tax which would be chargeable on the earnings of a company which is a resident of Canada; provided that any additional tax so imposed shall not exceed 15 per cent of the amount of such earnings which have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term "earnings" means the profits attributable to a permanent establishment in Canada in a year and previous years, after deducting therefrom all taxes, other than the additional tax referred to herein, imposed on such profits in Canada. (7) Australia may impose an income tax (in this paragraph called a "branch profits tax") on the reduced taxable income of a company that is a resident of Canada in addition to the income tax (in this paragraph called "the general income tax") payable by the company in respect of its taxable income; provided that any branch profits tax so imposed in respect of a year of income shall not exceed 15 per cent of the amount by which the reduced taxable income of that year of income exceeds the general income tax payable in respect of the reduced taxable income of that year of income. ARTICLE 11 Interest (1) Interest arising in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) Such interest may be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the interest. (3) The term "interest" in this Article includes interest from Government securities or from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and interest from any other form of indebtedness as well as all other income assimilated to interest by the taxation law of the Contracting State in which the income arises. (4) The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, or performs professional services from a fixed base situated in that other State, being the State in which the interest arises, and the indebtedness giving rise to the interest is effectively connected with that permanent establishment or fixed base. In such a case, the provisions of Article 7 or 14, as the case may be, shall apply. (5) Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political sub--division or a local authority thereof or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether he is a resident of one of the Contracting States or not, has in a State other than that of which he is a resident a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. (6) Where, owing to a special relationship between the payer and the person beneficially entitled to the interest or between both of them and some other person the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last--mentioned amount. In that case, the excess part of the amount of the interest paid shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention. ARTICLE 12 Royalties (1) Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. (2) Such royalties may be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. (3) The term "royalties" in this Article means payments (including credits), whether periodical or not, and however described or computed, to the extent to which they are paid as consideration for the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right, or industrial, commercial or scientific equipment, or for the supply of scientific, technical, industrial or commercial knowledge or information, or for the supply of any assistance of an ancillary and subsidiary nature furnished as a means of enabling the application or enjoyment of such knowledge or information or any other property or right to which this Article applies and includes any payments to the extent to which they are paid as consideration for the use of, or the right to use, motion picture films, films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, or for total or partial forbearance in respect of the use of a property or right referred to in this paragraph. (4) The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, or performs professional services from a fixed base situated in that other State, being the State in which the royalties arise and the asset giving rise to the royalties is effectively connected with that permanent establishment or fixed base. In such a case, the provisions of Article 7 or 14, as the case may be, shall apply. (5) Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political sub--division or a local authority thereof or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in a State other than that of which he is a resident a permanent establishment or a fixed base in connection with which the obligation to pay the royalties was incurred, and those royalties are borne by that permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. (6) Where, owing to a special relationship between the payer and the person beneficially entitled to the royalties or between both of them and some other person the amount of the royalties paid, having regard to what they are paid for, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last--mentioned amount. In that case, the excess part of the amount of the royalties paid shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention. ARTICLE 13 Alienation of Property Income or gains from the alienation of real property or of a direct interest in or over land or of a right to exploit, or to explore for, a natural resource may be taxed in the Contracting State in which the real property, the land or the natural resource is situated. ARTICLE 14 Independent Personal Services (1) Income derived by an individual who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to activities exercised from that fixed base. (2) The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the exercise of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. ARTICLE 15 Dependent Personal Services (1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State. (2) Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment exercised in the other Contracting State shall be taxable only in the first--mentioned State if the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the year of income or the taxation year as the case may be, of that other State and either- (a) the remuneration does not exceed in the said year the greater of the following amounts: (i) three thousand Canadian dollars and (ii) two thousand six hundred Australian dollars; or (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State and the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State. (3) The Treasurer of Australia and the Minister of National Revenue of Canada may agree, in letters exchanged for the purpose, to variations in the amounts specified in sub--paragraph (a) of paragraph (2) and the variations so agreed shall have effect according to the tenor of the letters. (4) Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States may be taxed in that State. ARTICLE 16 Directors' Fees Directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. ARTICLE 17 Entertainers (1) Notwithstanding the provisions of Articles 14 and 15, income derived by entertainers (such as theatrical, motion picture, radio or television artistes and musicians and athletes) from their personal activities as such may be taxed in the Contracting State in which these activities are exercised. (2) Where income in respect of the personal activities of an entertainer as such accrues not to the entertainer but to another person, that income may, notwithstanding the provisions of Articles 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised. (3) The provisions of paragraph (2) shall not apply if it is established that neither the entertainer nor persons related to the entertainer, participate directly or indirectly in the profits of the other person referred to in that paragraph. ARTICLE 18 Pensions and Annuities (1) Pensions and annuities arising in a Contracting State for the benefit of and paid to a resident of the other Contracting State may be taxed in that other State. (2) Pensions and annuities arising in a Contracting State in a year of income or taxation year may be taxed in that State and according to the law of that State, but the tax so charged shall not exceed the lesser of: (a) 15 per cent of the pension or annuity received in the year; and (b) the tax that would be payable in respect of the pension or annuity received in the year if the recipient were a resident of the Contracting State in which the pension or annuity arises. However, the limitation on the tax that may be charged in the Contracting State in which pensions and annuities arise does not apply to payments of any kind under an income--averaging annuity contract. (3) Any alimony or other maintenance payment arising in a Contracting State and paid to a resident of the other Contracting State, shall be taxable only in the first--mentioned State. ARTICLE 19 Government Service (1) Remuneration (other than a pension or annuity) paid by a Contracting State or a political sub--division or a local authority thereof to any individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that State who: (a) is a citizen of that State; or (b) did not become a resident of that State solely for the purpose of performing the services. (2) The provisions of paragraph (1) shall not apply to remuneration in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a political sub--division or a local authority thereof. In such a case the provisions of Articles 15 and 16 shall apply. ARTICLE 20 Students Where a student, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in the other State solely for the purpose of his education, receives payments from sources outside the other State for the purpose of his maintenance or education, those payments shall be exempt from tax in the other State. ARTICLE 21 Income Not Expressly Mentioned (1) Subject to the provisions of paragraph (2), items of income of a resident of one of the Contracting States which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that Contracting State. (2) However, if such income is derived by a resident of one of the Contracting States from sources in the other Contracting State, such income may also be taxed in the Contracting State in which it arises and, subject to paragraph (3), according to the law of that State. (3) Where the income is income derived from an estate or trust resident in Canada by a resident of Australia the Canadian tax on that income shall not exceed 15 per cent of the gross amount of the income if it is subject to tax in Australia. (4) The provisions of paragraph (3) shall not apply if the recipient of the income, being a resident of Australia, carries on in Canada a business through a permanent establishment situated therein, or performs in Canada professional services from a fixed base situted therein, and the right or interest in the estate or trust in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or 14, as the case may be, shall apply. ARTICLE 22 Source of Income (1) Income derived by a resident of one of the Contracting States which, under any one or more of Articles 6 to 8 and 10 to 18 may be taxed in the other Contracting State, shall for the purposes of Article 23, be deemed to be income from sources in that other State. (2) Income derived by a resident of Canada which, under any one or more of Articles 6 to 8 and 10 to 18, may be taxed in Australia may be deemed, for the purposes of the Australian income tax law, to be income from sources in Australia. CHAPTER IV METHODS OF PREVENTION OF DOUBLE TAXATION ARTICLE 23 Elimination of double taxation (1) Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), tax paid in Canada, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Canada (not including, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income. (2) In the case of Canada, double taxation shall be avoided as follows: (a) Subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which, however, shall not affect the general principle hereof) and unless a greater deduction or relief is provided under the law of Canada, tax paid in Australia in accordance with this Convention on profits, income or gains arising in Australia shall be deducted from any Canadian tax payable in respect of such profits, income or gains. (b) Subject to the existing provisions of the law of Canada regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions (which, however, shall not affect the general principle hereof) for the purpose of computing Canadian tax, a company which is a resident of Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate which is a resident of Australia. CHAPTER V SPECIAL PROVISIONS ARTICLE 24 Mutual Agreement Procedure (1) Where a resident of a Contracting State considers that the actions of the competent authority of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, without prejudice to the remedies provided by the national laws of those States, present his case in writing to the competent authority of the Contracting State of which he is a resident. (2) The competent authority shall endeavour, if the taxpayer's claim appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention. (3) The competent authorities of the Contracting States shall jointly endeavour to resolve any difficulties or doubts arising as to the application of this Convention. (4) The competent authorities of the Contracting States may consult together with respect to the elimination of double taxation in cases not provided for in the Convention. (5) The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Convention. ARTICLE 25 Exchange of Information (1) The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention or of the domestic laws of the Contracting States concerning the taxes to which this Convention applies insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Article 1. Any information received by the competent authority of a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment, collection or enforcement of the taxes to which this Convention applies, or with the determination of appeals in relation thereto, and shall be used only for such purposes. (2) In no case shall the provisions of paragraph (1) be construed so as to impose on a Contracting State the obligation- (a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State; (b) to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or to supply information the disclosure of which would be contrary to public policy. ARTICLE 26 Diplomatic and Consular Officials (1) Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. (2) This Convention shall not apply to International Organizations, to organs or officials thereof and to persons who are members of a diplomatic, consular or permanent mission of a third State, being present in a Contracting State and who are not liable in either Contracting State to the same obligations in relation to tax on their total world income as are residents thereof. CHAPTER VI FINAL PROVISIONS ARTICLE 27 Entry Into Force (1) This Convention shall come into force on the date on which the Government of Australia and the Government of Canada exchange notes through the diplomatic channel notifying each other that the last of such things has been done as is necessary to give this Convention the force of law in Australia and in Canada, as the case may be, and thereupon this Convention shall have effect- (a) in Australia- (i) in respect of withholding tax on income that is derived by a non--resident, in respect of income derived on or after 1 July 1975 (ii) in respect of other Australian tax, for any year of income beginning on or after 1 July 1975 (b) in Canada- (i) in respect of tax withheld at the source on amounts paid or credited to non--residents on or after 1 January 1976 (ii) in respect of other Canadian tax, for taxation years beginning on or after 1 January 1976. (2) Subject to paragraph (3) of this Article, the Agreement between the Government of the Commonwealth of Australia and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Mont Tremblant on 1 October 1957 (in this Article referred to as "the 1957 Agreement") shall cease to have effect in relation to any tax in respect of which this Convention comes into effect in accordance with paragraph (1) of this Article. (3) Where any provision of the 1957 Agreement would have afforded any greater relief from tax in one of the Contracting States than is afforded by this Convention, any such provision shall continue to have effect in that Contracting State- (a) in the case of Australia in respect of withholding tax on income that is derived by a non--resident, in respect of income derived during any financial year beginning before the date of signature of this Convention and, in respect of other Australian tax, for any year of income beginning before that date; (b) in the case of Canada in respect of tax withheld at the source on amounts paid or credited to non--residents before 31 December in the calendar year during which this Convention was signed and, in respect of other Canadian tax for any taxation year beginning on or before that date. (4) The 1957 Agreement shall terminate on the last date on which it has effect in accordance with the foregoing provisions of this Article. ARTICLE 28 Termination This Convention shall continue in effect indefinitely, but the Government of Australia or the Government of Canada may, on or before 30 June in any calendar year after the year 1983, give to the other Government through the diplomatic channel written notice of termination and, in that event, this Convention shall cease to be effective- (a) in Australia- (i) in respect of withholding tax on income that is derived by a non--resident, in respect of income derived on or after 1 July in the calendar year next following that in which the notice of termination is given; (ii) in respect of other Australian tax, for any year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given; (b) in Canada- (i) in respect of tax withheld at the source on amounts paid or credited to non--residents on or after 1 January in the second calendar year next following that in which the notice of termination is given; (ii) in respect of other Canadian tax, for any taxation year beginning on or after 1 January in the second calendar year next following that in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Convention. DONE in Canberra on the twenty--first day of May 1980 in the English and French languages, the two versions being equally authentic. |JOHN HOWARD |EDWARD LUMLEY | |For the Government of |For the Government of Canada| |Australia | | Schedule 3A-Canadian protocol Note: See section 3. PROTOCOL AMENDING THE CONVENTION BETWEEN AUSTRALIA AND CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of Australia and the Government of Canada, Desiring to amend the Convention between Australia and Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Canberra on 21 May 1980 (in this Protocol referred to as the "Convention"), Have agreed as follows: ARTICLE 1 Article 2 of the Convention shall be deleted and replaced by the following: "Article 2 TAXES COVERED (1) The existing taxes to which this Convention shall apply are: (a) in the case of Australia: the income tax, and the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of Australia; (b) in the case of Canada: the income taxes imposed by the Government of Canada under the Income Tax Act. (2) This Convention shall apply also to any identical or substantially similar taxes which are imposed under the federal law of Australia or the law of Canada after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in the law of their respective States relating to the taxes to which this Convention applies within a reasonable period of time after those changes.". ARTICLE 2 1. Subparagraphs (a) and (k) of paragraph (1) of Article 3 of the Convention shall be deleted and respectively replaced by the following: "(a) the term "Australia", when used in a geographical sense, excludes all external territories other than: (i) the Territory of Norfolk Island; (ii) the Territory of Christmas Island; (iii) the Territory of Cocos (Keeling) Islands; (iv) the Territory of Ashmore and Cartier Islands; (v) the Territory of Heard Island and McDonald Islands; and (vi) the Coral Sea Islands Territory, and includes any area adjacent to the territorial limits of Australia (including the Territories specified in this subparagraph) in respect of which there is for the time being in force, consistently with international law, a law of Australia dealing with the exploration for or the exploitation of any of the natural resources of the seabed and subsoil of the continental shelf;"; and "(k) the term "international traffic" means any voyage of a ship or aircraft operated by an enterprise of a Contracting State to transport passengers or property except where the principal purpose of the voyage is to transport passengers or property between places within the other Contracting State.". 2. Paragraph (3) of Article 3 of the Convention shall be deleted and replaced by the following: "(3) As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under the applicable tax law of that State prevailing over a meaning given to the term under other law of that State.". ARTICLE 3 Paragraphs (1) and (2) of Article 4 of the Convention shall be deleted and replaced by the following: "(1) Subject to paragraph (2), for the purposes of this Convention, a person is a resident of a Contracting State if that person is a resident of that State for the purposes of its tax. A Contracting State or any political subdivision or local authority thereof or any agency or instrumentality of any such State, subdivision or authority is also a resident of that State for the purposes of this Convention. (2) A person is not a resident of a Contracting State for the purposes of this Convention if the person is liable to tax in that State in respect only of income from sources in that State.". ARTICLE 4 Subparagraph (b) of paragraph (4) of Article 5 of the Convention shall be deleted and replaced by the following: "(b) substantial equipment is being used in that State by, for or under contract with the enterprise other than in connection with a building site or construction, installation or assembly project of the enterprise.". ARTICLE 5 Article 6 of the Convention shall be deleted and replaced by the following: "Article 6 INCOME FROM REAL PROPERTY (1) Income from real property may be taxed in the Contracting State in which the real property is situated. (2) For the purposes of this Convention, the term "real property" in relation to a Contracting State, shall have the meaning which it has under the law of that State and shall include: (a) a lease of land and any other interest in or over land, whether improved or not, including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and (b) a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources. (3) Any interest or right referred to in paragraph (2) shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration may take place. (4) The provisions of paragraphs (1) and (3) shall also apply to the income from real property of an enterprise and to income from real property used for the performance of independent personal services.". ARTICLE 6 1. Paragraph (6) of Article 7 of the Convention shall be deleted and replaced by the following: "(6) Where profits include items which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.". 2. A new paragraph (8) shall be added to Article 7 of the Convention as follows: "(8) Where: (a) a resident of Canada is beneficially entitled, whether directly or through one or more interposed trusts, to a share of the business profits of an enterprise carried on in Australia by the trustee of a trust other than a trust which is treated as a company for tax purposes; and (b) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in Australia, the enterprise carried on by the trustee shall be deemed to be a business carried on in Australia by that resident through a permanent establishment situated in Australia and that share of business profits shall be attributable to that permanent establishment.". ARTICLE 7 Paragraph (4) of Article 8 of the Convention shall be deleted and replaced by the following: "(4) For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise taken on board in a Contracting State for discharge at a place in that State shall be treated as profits from operations confined solely to places in that State.". ARTICLE 8 1. Paragraphs (2), (4) and (6) of Article 10 of the Convention shall be deleted and respectively replaced by the following: "(2) However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed: (a) (i) in the case of dividends paid by a company that is a resident of Australia for the purposes of its tax, 5 per cent of the gross amount of the dividends, to the extent to which the dividends have been fully franked in accordance with the law of Australia, if a company that holds directly at least 10 per cent of the voting power of the company paying the dividends is beneficially entitled to those dividends; and (ii) in the case of dividends paid by a company that is a resident of Canada for the purposes of its tax, except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada for the purposes of its tax, 5 per cent of the gross amount of the dividends if a company that controls directly or indirectly at least 10 percent of the voting power in the company paying the dividends is beneficially entitled to those dividends; and (b) 15 per cent of the gross amount of the dividends in all other cases, and if the relevant law of either Contracting State is varied in a manner that bears upon this provision, otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate."; "(4) The term "dividends" as used in this Article means income from shares, as well as other amounts which are subjected to the same taxation treatment as income from shares by the law of the State of which the company making the distribution is a resident for the purposes of its tax."; and "(6) Canada may impose, on the earnings attributable to a permanent establishment in Canada of a company which is a resident of Australia or on the earnings of such company attributable to the alienation of real property situated in Canada where the company is carrying on a trade in real property, a tax (in this paragraph referred to as a "branch tax") in addition to the tax that would be chargeable on the earnings of a company that is a resident of Canada, except that any branch tax so imposed shall not exceed 5 per cent of the amount of such earnings that have not been subjected to such branch tax in previous taxation years. For the purposes of this provision, the term "earnings" means the earnings attributable to the alienation of such real property situated in Canada as may be taxed by Canada under the provisions of Article 6 or paragraph (1) of Article 13, and the profits, including any gains, attributable to a permanent establishment in Canada in a year and previous years after deducting therefrom all other taxes, other than the branch tax referred to herein, imposed on such profits in Canada.". 2. The reference in paragraph (7) of Article 10 of the Convention to "15 per cent" shall be deleted and replaced by a reference to "5 per cent". ARTICLE 9 The reference in paragraph (2) of Article 11 of the Convention to "15 per cent" shall be deleted and replaced by a reference to "10 per cent". ARTICLE 10 1. Paragraph (3) of Article 12 of the Convention shall be deleted and replaced by the following: "(3) The term "royalties" as used in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for: (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trade mark or other like property or right; or (b) the use of, or the right to use, any industrial, commercial or scientific equipment; or (c) the supply of scientific, technical, industrial or commercial knowledge or information; or (d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such knowledge or information as is mentioned in subparagraph (c); or (e) the use of, or the right to use: (i) motion picture films; or (ii) films or videotapes or other means of reproduction for use in connection with television; or (iii) tapes for use in connection with radio broadcasting; or (f) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.". 2. A new paragraph (7) shall be added to Article 12 of the Convention as follows: "(7) Without prejudice to whether or not such payments would be dealt with as royalties under this Article in the absence of this paragraph, the term "royalties" as used in this Article shall not include payments or credits made as consideration for the supply of, or the right to use, source code in a computer software program, provided that the right to use the source code is limited to such use as is necessary to enable effective operation of the program by the user.". 3. A new paragraph (8) shall be added to Article 12 of the Convention as follows: "(8) Without prejudice to whether or not such payments would be dealt with as royalties under this Article in the absence of this paragraph, the term "royalties" as used in this Article shall include payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for: (a) the reception of, or the right to receive, visual images or sounds, or both, that are transmitted to the public by satellite or by cable, optic fibre or similar technology; or (b) the use of, or the right to use, in connection with television or radio broadcasting, visual images or sounds, or both, that are transmitted by satellite or by cable, optic fibre or similar technology; or (c) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.". ARTICLE 11 Article 13 of the Convention shall be deleted and replaced by the following: "Article 13 ALIENATION OF PROPERTY (1) Income, profits or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State. (2) Income, profits or gains from the alienation of property, other than real property, that forms part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or pertains to a fixed base available in that other State to a resident of the first-mentioned State for the purpose of performing independent personal services, including income, profits or gains from the alienation of that permanent establishment (alone or with the whole enterprise) or of that fixed base, may be taxed in that other State. (3) Income, profits or gains from the alienation of ships or aircraft operated in international traffic, or of property, other than real property, pertaining to the operation of those ships or aircraft, shall be taxable only in the Contracting State of which the enterprise alienating such ships, aircraft, or other property is a resident. (4) Income, profits or gains derived by a resident of a Contracting State from the alienation of any shares or other interests in a company, or of an interest of any kind in a partnership, trust or other entity, where the value of the assets of such entity is derived principally, whether directly or indirectly (including through one or more interposed entities, such as, for example, through a chain of companies), from real property situated in the other Contracting State, may be taxed in that other State. (5) Nothing in this Convention shall affect the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply. (6) Where an individual who ceases to be a resident of a Contracting State, and immediately thereafter becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first- mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, disposed of and re-acquired the property for an amount equal to its fair market value at that time.". ARTICLE 12 1. Paragraphs (2) and (3) of Article 15 of the Convention shall be deleted and replaced by the following: "(2) Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the year of income or taxation year of that other State; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and (c) the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State.". 2. Paragraph (4) of Article 15 of the Convention shall be renumbered as paragraph (3). ARTICLE 13 Article 22 of the Convention shall be deleted and replaced by the following: "Article 22 SOURCE OF INCOME (1) Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State, shall for the purposes of the law of that other Contracting State relating to its tax be deemed to be income from sources in that other Contracting State. (2) Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State, shall for the purposes of Article 23 and of the law of the first-mentioned Contracting State relating to its tax be deemed to be income from sources in the other Contracting State.". ARTICLE 14 Article 23 of the Convention shall be deleted and replaced by the following: "Article 23 ELIMINATION OF DOUBLE TAXATION (1) In the case of Australia, double taxation shall be avoided as follows: (a) subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article), Canadian tax paid under the law of Canada and in accordance with this Convention, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Canada shall be allowed as a credit against Australian tax payable in respect of that income; (b) subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article), where a company which is a resident of Canada and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly at least 10 per cent of the voting power of the first-mentioned company, the credit referred to in subparagraph (a) shall include the Canadian tax paid by that first-mentioned company in respect of that portion of its profits out of which the dividend is paid. (2) In the case of Canada, double taxation shall be avoided as follows: (a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Australia on profits, income or gains from sources in Australia shall be deducted from any Canadian tax payable in respect of such profits, income or gains; (b) subject to the existing provisions of the law of Canada regarding the allowance as a credit against Canadian tax of tax payable in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) where a company which is a resident of Australia pays a dividend to a company which is a resident of Canada and which controls directly or indirectly at least 10 per cent of the voting power in the first- mentioned company, the credit shall take into account the tax payable in Australia by that first-mentioned company in respect of the profits out of which such dividend is paid; and (c) where, in accordance with any provision of this Convention, income derived by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income, take into account the exempted income.". ARTICLE 15 A new paragraph (6) shall be added to Article 24 of the Convention as follows: "(6) For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph (3) of this Article or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.". ARTICLE 16 A new Article 26A shall be added to the Convention immediately after Article 26 as follows: "ARTICLE 26A VARIOUS INTERESTS OF CANADIAN RESIDENTS Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada with respect to a partnership, trust, or controlled foreign affiliate, in which that resident has an interest.". ARTICLE 17 The Government of Australia and the Government of Canada shall notify each other through the diplomatic channel of the completion of their respective internal procedures required for the bringing into force of this Protocol which shall form an integral part of the Convention. The Protocol shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect: (a) in Australia: (i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the Protocol enters into force; and (ii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the Protocol enters into force; (b) in Canada: (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after 1 January in the calendar year next following that in which the Protocol enters into force; and (ii) in respect of other Canadian tax, for taxation years beginning on or after 1 January in the calendar year next following that in which the Protocol enters into force. IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Protocol. DONE at Canberra, this twenty-third day of January 2002, in the English and French languages, the two versions being equally authentic. FOR THE GOVERNMENT FOR THE GOVERNMENT OF AUSTRALIA: OF CANADA: Helen Lloyd Coonan Jean T. Fournier [Signatures omitted] Schedule 4-Agreement between the Government of Australia and the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Section 3 THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF NEW ZEALAND DESIRING to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, HAVE AGREED as follows: Article 1 Personal scope This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes covered 1. The existing taxes to which this Agreement shall apply are: (a) In New Zealand: the income tax and the fringe benefit tax; (b) In Australia: the income tax, the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources and the fringe benefits tax imposed under the federal law of Australia. 2. This Agreement shall apply also to any identical or substantially similar taxes which are imposed under the federal law of Australia or the law of New Zealand after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other within a reasonable period of time of any significant changes which have been made in the law of their respective States relating to the taxes to which this Agreement applies. Article 3 General definitions 1. For the purposes of this Agreement, unless the context otherwise requires: (a) (i) the term "New Zealand" means the territory of New Zealand but does not include Tokelau or the Associated Self Governing States of the Cook Islands and Niue; it also includes any area beyond the territorial sea which by New Zealand legislation and in accordance with international law has been, or may hereafter be, designated as an area in which the rights of New Zealand with respect to natural resources may be exercised; (ii) the term "Australia", when used in a geographical sense, excludes all external territories other than: (A) the Territory of Norfolk Island; (B) the Territory of Christmas Island; (C) the Territory of Cocos (Keeling) Islands; (D) the Territory of Ashmore and Cartier Islands; (E) the Territory of Heard Island and McDonald Islands; and (F) the Coral Sea Islands Territory, and includes any area adjacent to the territorial limits of Australia (including the Territories specified in this subparagraph) in respect of which there is for the time being in force, consistently with international law, a law of Australia dealing with the exploration for or exploitation of any of the natural resources of the seabed and subsoil of the continental shelf; (b) the term "Australian tax" means tax imposed by Australia, being tax to which this Agreement applies by virtue of Article 2; (c) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes; (d) the term "competent authority" means: (i) in the case of New Zealand, the Commissioner of Inland Revenue or an authorised representative of the Commissioner; and (ii) in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner; (e) the terms "a Contracting State" and "other Contracting State" mean New Zealand or Australia, the Governments of which have concluded this Agreement, as the context requires; (f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely from a place or between places in the other Contracting State; (h) the term "New Zealand tax" means tax imposed by New Zealand, being tax to which this Agreement applies by virtue of Article 2; (i) the term "paid", in relation to any amount, includes distributed (whether in cash or other property), credited or dealt with on behalf of a person or at that person's direction; and the terms "pay, payable" and "payment" have corresponding meanings; (j) the term "person" includes an individual, a company and any other body of persons; (k) the term "tax" means New Zealand tax or Australian tax, as the context requires, but does not include any penalty or interest imposed under the law of either Contracting State relating to its tax. 2. For the purposes of Articles 10, 11 and 12, a trustee subject to tax in a Contracting State in respect of dividends, interest or royalties shall be deemed to be beneficially entitled to such dividends, interest or royalties. 3. In the application of this Agreement by a Contracting State, any term not defined in this Agreement shall, unless the context otherwise requires, have the meaning which it has under the law of that State from time to time in force relating to the taxes to which this Agreement applies. Article 4 Residence 1. For the purposes of this Agreement, a person is a resident of a Contracting State: (a) in the case of New Zealand, if the person is resident in New Zealand for the purposes of New Zealand tax; and (b) in the case of Australia, if the person is a resident of Australia for the purposes of Australian tax. 2. A person is not a resident of a Contracting State for the purposes of this Agreement if the person is liable to tax in that State in respect only of income from sources in that State. 3. Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Contracting States, then the status of the person shall be determined in accordance with the following rules: (a) the person shall be deemed to be a resident solely of the State in which a permanent home is available to the person; if a permanent home is available to the person in both States, the person shall be deemed to be a resident solely of the State with which the person's personal and economic relations are closer; (b) if the person is unable to be deemed to be a resident solely of a State in accordance with the provisions of subparagraph (a), the person shall be deemed to be a resident solely of the State in which the person has an habitual abode; (c) if the person has an habitual abode in both States or in neither of them, the person shall be deemed to be a resident solely of the State of which the person is a citizen. 4. Where by reason of the provisions of paragraphs 1 and 2 a person other than an individual is a resident of both Contracting States then it shall be deemed to be a resident solely of the Contracting State in which its place of effective management is situated. Article 5 Permanent establishment 1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term "permanent establishment" includes especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; and (g) an agricultural, pastoral or forestry property. 3. A building site, or a construction, installation or assembly project constitutes a permanent establishment if it lasts for more than 6 months. 4. An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if: (a) it carries on supervisory activities in that State for more than 6 months in connection with a building site or a construction, installation or assembly project which is being undertaken in that State; or (b) in that State it carries on activities which consist of, or which are connected with, the exploration for or exploitation of natural resources situated in that State; or (c) substantial equipment is being used in that State by, for or under contract with the enterprise; or (d) it performs in that State any operations for the felling, removal or other exploitation of standing timber. 5. For the purposes of determining the duration of activities under paragraph 3 and subparagraph 4(a), the period during which activities are carried on in a Contracting State by an enterprise associated with another enterprise shall be aggregated with the period during which activities are carried on by the enterprise with which it is associated if the firstmentioned activities are connected with the activities carried on in that State by the lastmentioned enterprise, provided that any period during which two or more associated enterprises are carrying on concurrent activities is counted only once. An enterprise shall be deemed to be associated with another enterprise if one is controlled directly or indirectly by the other, or if both are controlled directly or indirectly by a third person or persons. 6. An enterprise shall not be deemed to have a "permanent establishment" merely by reason of: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; or (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; or (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; or (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; or (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character, such as advertising or scientific research. 7. Notwithstanding the provisions of paragraphs 1 and 2, a person acting in a Contracting State on behalf of an enterprise of the other Contracting State-other than an agent of an independent status to whom paragraph 8 applies-shall be deemed to be a permanent establishment of that enterprise in the firstmentioned State if: (a) the person has and habitually exercises in the firstmentioned State an authority to conclude contracts on behalf of that enterprise, unless the activities of that person are limited to those described in paragraph 6 and, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or (b) in so acting, the person manufactures or processes in that State for the enterprise goods or merchandise belonging to that enterprise. 8. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a person who is a broker, general commission agent or any other agent of an independent status and is acting in the ordinary course of the person's business as such a broker or agent. 9. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other. 10. The principles set forth in the preceding paragraphs of this Article shall be applied in determining for the purposes of paragraph 5 of Article 11 and paragraph 5 of Article 12 whether there is a permanent establishment outside both Contracting States, and whether an enterprise, not being an enterprise of a Contracting State, has a permanent establishment in a Contracting State. Article 6 Income from real property 1. Income derived by a resident of a Contracting State from real property situated in the other Contracting State may be taxed in that other State. 2. The term "real property" shall have the meaning which it has under the law of the Contracting State in which that property is situated and shall in any case include: (a) a lease of land and any other interest in or over land, whether that land is improved or not; (b) a right to explore for or exploit mineral, oil or gas deposits, or other natural resources; (c) a right to receive variable or fixed payments either: (i) as consideration for or in respect of the exploitation of, or (ii) for the right to explore for or exploit, mineral, oil or gas deposits, or other natural resources. 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of real property. 4. Any interest or right referred to in paragraph 2 shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration or exploitation may take place. 5. The provisions of paragraphs 1, 3 and 4 shall also apply to income from real property of an enterprise and to income from real property used for the performance of independent personal services. Article 7 Business profits 1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that other State. If the enterprise carries on business in that manner, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated in that other State, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals. 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred), whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. However, no deduction is allowable in respect of expenses which are not deductible under the law of the Contracting State in which the permanent establishment is situated. 4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5. Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that that law shall be applied, so far as the information available to the competent authority permits, consistently with the principles of this Article. 6. For the purposes of the preceding paragraphs of this Article, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where: (a) a resident of a Contracting State is beneficially entitled, whether directly or through one or more interposed trusts, to a share of the business profits of an enterprise carried on in the other Contracting State by the trustee of a trust other than a trust which is treated as a company for tax purposes; and (b) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in that other State, the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and that share of business profits shall be attributed to that permanent establishment. 8. Where profits include items of income or gains which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. 9. Nothing in this Article shall affect the operation of any law of a Contracting State relating to tax imposed on any income, profits or gains from the business of any form of insurance. Provided that if the relevant law in force in either Contracting State at the date of signature of this Agreement is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate. Article 8 Ships and aircraft 1. Profits from ship or aircraft operations derived by a resident of a Contracting State shall be taxable only in that State. 2. Notwithstanding the provisions of paragraph 1, such profits may be taxed in the other Contracting State where they are profits from ship or aircraft operations confined solely to places in that other State. 3. The provisions of paragraphs 1 and 2 shall apply in relation to the share of the profits from ship or aircraft operations derived by a resident of a Contracting State through participation in a pool service, in a joint business or operating organisation or in an international operating agency. 4. For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise which are shipped in a Contracting State for discharge at a place in that State shall be treated as profits from ship or aircraft operations confined solely to places in that State. Article 9 Associated enterprises 1. Where: (a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2. Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the income to be attributed to an enterprise, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles of this Article. 3. Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included, by virtue of paragraph 1 or 2, in the profits of an enterprise of the other Contracting State and charged to tax in that other State, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the firstmentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the firstmentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Agreement and for this purpose the competent authorities of the Contracting States shall if necessary consult each other. Article 10 Dividends 1. Dividends paid by a company which is a resident of a Contracting State for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. 2. Those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. Provided that any deemed dividend arising from the business of life insurance consequent upon an election made and approved under section 204M of the Income Tax Act 1976 of New Zealand, or any legislation enacted in substitution for that section, shall be taxed at a rate not exceeding 5 per cent of the gross amount of such dividend. 3. The term "dividends" in this Article means income from shares and other income assimilated to income from shares by the law, relating to tax, of the Contracting State of which the company making the payment is a resident for the purposes of its tax. 4. The provisions of paragraph 2 shall not apply if the person beneficially entitled to the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment or fixed base. In that case, the provisions of Article 7 or 14, as the case may be, shall apply. 5. Dividends paid by a company which is a resident of a Contracting State, being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled, shall be exempt from tax in that other State except in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or fixed base situated in that other State. This paragraph shall not apply in relation to dividends paid by any company which is a resident of Australia for the purposes of Australian tax and which is also resident in New Zealand for the purposes of New Zealand tax. Article 11 Interest 1. Interest arising in a Contracting State, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. 2. That interest may be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 3. The term "interest" in this Article includes interest on indebtedness of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and in particular, interest from government securities and income from bonds or debentures, including premiums and prizes attaching to such bonds or debentures, as well as all other income assimilated to income from money lent by the law, relating to tax, of the Contracting State in which the income arises, but does not include any income which is treated as a dividend under Article 10. 4. The provisions of paragraph 2 shall not apply if the person beneficially entitled to the interest, being a resident of a Contracting State, carries on business in the other Contracting State, in which the interest arises, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the indebtedness in respect of which the interest is paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 or 14, as the case may be, shall apply. 5. Interest shall be deemed to arise in a Contracting State when the payer is that State itself or a political subdivision or a local authority of that State, or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is deductible in determining the income, profits or gains attributable to that permanent establishment or fixed base, then the interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon in the absence of that relationship by the payer and the person beneficially entitled, the provisions of this Article shall apply only to the lastmentioned amount. In that case the excess part of the amount of the interest paid shall remain taxable according to the law, relating to tax, of each Contracting State, subject to the other provisions of this Agreement. Article 12 Royalties 1. Royalties arising in a Contracting State, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. 2. Those royalties may be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. 3. The term "royalties" in this Article means payments of any kind, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for: (a) the use of, or the right to use, any copyright, patent, trademark, design or model, plan, secret formula or process, or other like property or right; or (b) the use of, or the right to use, any industrial, scientific or commercial equipment; or (c) the supply of scientific, technical, industrial or commercial knowledge or information; or (d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such knowledge or information as is mentioned in subparagraph (c); or (e) the use of, or the right to use, any: (i) motion picture film; or (ii) film or videotape for use in connection with television; or (iii) tape for use in connection with radio broadcasting; or (f) the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by: (i) satellite; or (ii) cable, optic fibre or similar technology; or (g) the use in connection with television broadcasting or radio broadcasting, or the right to use in connection with television broadcasting or radio broadcasting, visual images or sounds, or both, transmitted by: (i) satellite; or (ii) cable, optic fibre or similar technology; or (h) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph. 4. The provisions of paragraph 2 shall not apply if the person beneficially entitled to the royalties, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the property or right in respect of which the royalties are paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 or 14, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether the person is a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are deductible in determining the income, profits or gains attributable to that permanent establishment or fixed base, then the royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of a special relationship between the payer and the person beneficially entitled to the royalties, or between both of them and some other person, the amount of the royalties, having regard to what they are paid for, exceeds the amount which might have been expected to have been agreed upon in the absence of that relationship by the payer and the person beneficially entitled, the provisions of this Article shall apply only to the lastmentioned amount. In that case the excess part of the amount of the royalties paid shall remain taxable according to the law, relating to tax, of each Contracting State, subject to the other provisions of this Agreement. Article 13 Alienation of property 1. Income, profits or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State. 2. Income, profits or gains from the alienation of property, other than real property, forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including income, profits or gains from the alienation of that permanent establishment (alone or with the whole enterprise) or of that fixed base, may be taxed in that other State. 3. Income, profits or gains derived by a resident of a Contracting State from the alienation of shares or comparable interests in a company, the assets of which consist wholly or principally of real property situated in the other Contracting State, may be taxed in that other State. 4. Income, profits or gains from the alienation of ships or aircraft operated in international traffic, or of property (other than real property) pertaining to the operation of those ships or aircraft, shall be taxable only in the Contracting State in which the enterprise alienating such ships, aircraft or other property is a resident. 5. Nothing in this Agreement affects the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply. 6. In this Article, the term "real property" has the same meaning as it has in Article 6. 7. For the purposes of this Article, the situation of real property shall be determined in accordance with paragraph 4 of Article 6. Article 14 Independent personal services 1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other independent activities shall be taxable only in that State unless such services are performed in the other Contracting State and: (a) the individual is present in the other State for a period or periods exceeding in the aggregate 183 days in any 12 month period commencing or ending in the year of income concerned; or (b) a fixed base is regularly available to the individual in the other State for the purpose of performing the individual's activities. If the provisions of subparagraphs (a) or (b) are satisfied, the income may be taxed in that other State but only so much of it as is attributable to activities performed during such period or periods or from that fixed base. 2. The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the performance of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15 Dependent personal services 1. Subject to the provisions of Articles 16, 17, 19 and 20, salaries, wages and other similar remuneration derived by an individual who is a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by an individual who is a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if: (a) the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the year of income concerned; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and (c) the remuneration is not deductible in determining the taxable profits of a permanent establishment or fixed base which the employer has in that other State; and (d) the remuneration is, or upon application of this Article will be, subject to tax in the firstmentioned State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of a Contracting State may be taxed in that State. Article 16 Fringe benefits 1. Where, except for the application of this Article, a fringe benefit would be subject to tax in both Contracting States the benefit will be taxable solely in the Contracting State which has the sole or primary taxing right in respect of the remuneration from the employment to which the benefit relates. 2. For the purposes of this Article: (a) "fringe benefit" includes a benefit provided to an employee or to an associate of an employee by: (i) an employer, (ii) an associate of an employer, or (iii) a person under an arrangement between that person and the employer, associate of an employer, or another person in respect of the employment of that employee, and includes an accommodation allowance or housing benefit so provided; (b) a Contracting State has a "primary taxing right" if it has a taxing right under this Agreement in respect of the remuneration for the relevant employment and the other Contracting State is required under this Agreement to allow relief for any taxes imposed in respect of such remuneration by the first Contracting State. Article 17 Directors' fees Directors' fees and similar payments derived by a resident of a Contracting State in that person's capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 18 Entertainers 1. Notwithstanding the provisions of Articles 14 and 15, income derived by entertainers (such as theatrical, motion picture, radio or television artistes, musicians, athletes and other sportspersons) from their personal activities as such may be taxed in the Contracting State in which these activities are exercised. 2. Where income in respect of the personal activities of an entertainer as such accrues not to that entertainer but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised. 3. The provisions of paragraphs 1 and 2 shall not apply to the income of a sportsperson, being a resident of one or both of the Contracting States for the purposes of its tax, derived as a member or associate of a recognised team regularly playing in a league competition organised and conducted solely in both Contracting States, except in respect of performance as a member or associate of a national representative team of either Contracting State. 4. The term "associate", as used in paragraph 3 includes any manager, coach, trainer, runner, physician, physiotherapist or other provider of a like support service. Article 19 Pensions and annuities 1. Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State. 2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth. 3. Any alimony or other maintenance payment arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the firstmentioned State. Article 20 Government service 1. Remuneration (other than a pension or annuity) paid by the Government of Australia, any Australian State, the Australian Capital Territory or the Northern Territory, or any other Australian political subdivision or local authority to an individual in respect of services rendered to any such government in the discharge of governmental functions shall be exempt from New Zealand tax if the individual is not a resident of New Zealand for the purposes of New Zealand tax or is resident in New Zealand for the purposes of New Zealand tax solely for the purpose of rendering those services. 2. Remuneration (other than a pension or annuity) paid by the Government of New Zealand, a New Zealand political subdivision or local authority to an individual in respect of services rendered to that Government, subdivision or authority in the discharge of governmental functions shall be exempt from Australian tax if the individual is not a resident of Australia for the purposes of Australian tax or is resident in Australia for the purposes of Australian tax solely for the purpose of rendering those services. 3. The provisions of paragraphs 1 and 2 shall not apply to remuneration in respect of services rendered in connection with any trade or business carried on by a government referred to in those paragraphs. In that case the provisions of Article 15 or 17, as the case may be, shall apply. Article 21 Students Where a student, who is a resident of a Contracting State or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State solely for the purpose of the student's education, receives payments from sources outside that other State for the purpose of the student's maintenance or education, those payments shall be exempt from tax in that other State. Article 22 Other income 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the preceding Articles of this Agreement shall be taxable only in that State except that if such income is derived from sources within the other Contracting State, that income may also be taxed in that other State. 2. The provisions of paragraph 1 shall not apply to income, other than income from real property as defined in paragraph 2 of Article 6, derived by a resident of a Contracting State where that income is effectively connected with a permanent establishment or fixed base situated in the other Contracting State. In that case the provisions of Article 7 or 14, as the case may be, shall apply. Article 23 Source of income 1. Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8, 10 to 20 and 22, may be taxed in the other Contracting State shall, for the purposes of the law of that other Contracting State relating to its tax, be deemed to be income from sources in that other Contracting State. 2. Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8, 10 to 20 and 22, may be taxed in the other Contracting State shall, for the purposes of Article 24 and of the law of the firstmentioned Contracting State relating to its tax, be deemed to be income from sources in the other Contracting State. Article 24 Elimination of double taxation 1. Subject to the provisions of the law of New Zealand from time to time in force which relate to the allowance of a credit against New Zealand income tax of tax paid in a country outside New Zealand (which shall not affect the general principle of this Article), Australian tax paid under the law of Australia and consistently with this Agreement, whether directly or by deduction, in respect of income derived by a resident of New Zealand from sources in Australia (excluding, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against New Zealand tax payable in respect of that income. 2. Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian income tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article), New Zealand tax paid under the law of New Zealand and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in New Zealand (excluding, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Australian income tax payable in respect of that income. Article 25 Mutual agreement procedure 1. Where a person who is a resident of a Contracting State considers that the actions of one or both of the competent authorities of the Contracting States result or will result for the person in taxation not in accordance with the provisions of this Agreement, the person may, irrespective of the remedies provided by the domestic law of the Contracting States, present a case to the competent authority of the Contracting State of which the person is a resident. The case must be presented within three years from the first notification of the action which results in taxation not in accordance with the provisions of this Agreement. 2. The competent authority shall endeavour, if the claim appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the provisions of this Agreement. The solution so reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. The competent authorities of the Contracting States shall jointly endeavour to resolve any difficulties or doubts arising as to the interpretation or application of the provisions of this Agreement. 4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Agreement. Article 26 Exchange of information 1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic law of the Contracting States concerning the taxes to which this Agreement applies insofar as the taxation under that law is not contrary to this Agreement. The exchange of information is not restricted by Article 1. Any information received by the competent authority of a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes to which this Agreement applies. Such persons or authorities shall use the information only for such purposes. 2. In no case shall the provisions of paragraph 1 be construed so as to impose on the competent authority of a Contracting State the obligation: (a) to carry out administrative measures at variance with the law or administrative practice of that or of the other Contracting State; (b) to supply information which is not obtainable under the law or in the normal course of the administration of that or of the other Contracting State; or (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or to supply information the disclosure of which would be contrary to public policy. Article 27 Diplomatic agents and consular officers Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special international agreements. Article 28 Entry into force 1. This Agreement shall enter into force on the last date on which the Contracting States exchange notes through the diplomatic channel notifying each other that the last of such things has been done as is necessary to give this Agreement the force of law in New Zealand and in Australia, as the case may be, and, in that event, this Agreement shall have effect: (a) in New Zealand: (i) in respect of withholding tax on income that is derived by a non--resident, in relation to income derived on or after 1 April next following the date on which the Agreement enters into force; (ii) in respect of other New Zealand tax, for any income year beginning on or after 1 April next following the date on which the Agreement enters into force; (b) in Australia: (i) in respect of withholding tax on income that is derived by a non--resident, in relation to income derived on or after 1 April next following the date on which the Agreement enters into force; (ii) in respect of fringe benefits tax, in relation to fringe benefits provided on or after 1 April next following the date on which the Agreement enters into force; (iii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July next following the date on which the Agreement enters into force. 2. The Agreement between the Government of the Commonwealth of Australia and the Government of New Zealand signed at Melbourne on 8 November 1972 shall terminate and cease to have effect in relation to any tax in respect of which this Agreement comes into effect in accordance with paragraph 1. Article 29 Termination This Agreement shall continue in effect indefinitely, but either Contracting State may, on or before 30 June in any calendar year beginning after the expiration of 5 years from the date of its entry into force, give to the other Contracting State through the diplomatic channel written notice of termination and, in that event, this Agreement shall cease to be effective: (a) in New Zealand: (i) in respect of withholding tax on income that is derived by a non--resident, on or after 1 April in the calendar year next following that in which the notice of termination is given; (ii) in respect of other New Zealand tax, for any income year beginning on or after 1 April in the calendar year next following that in which the notice of termination is given; (b) in Australia: (i) in respect of withholding tax on income that is derived by a non--resident, in relation to income derived on or after 1 April in the calendar year next following that in which the notice of termination is given; (ii) in respect of fringe benefits tax, in relation to fringe benefits provided on or after 1 April in the calendar year next following that in which the notice of termination is given; (iii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement. DONE in duplicate at MELBOURNE this 27th day of JANUARY, One thousand nine hundred and ninety--five in the English language. |FOR THE GOVERNMENT OF |FOR THE GOVERNMENT OF NEW | |AUSTRALIA: |ZEALAND: | |RALPH WILLIS |BILL BIRCH | Schedule 4A-The New Zealand protocol Note: See section 6C PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF NEW ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME MELBOURNE, 15 NOVEMBER 2005 PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF NEW ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. The Government of Australia and the Government of New Zealand, Desiring to amend the Agreement between the Government of New Zealand and the Government of Australia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Melbourne on the 27th day of January 1995 (in this Protocol referred to as "the Agreement"), Have agreed as follows: ARTICLE 1 ARTICLE 2 OF THE AGREEMENT IS AMENDED BY INSERTING: "3. Notwithstanding paragraphs 1 and 2, the taxes to which Articles 26 and 27 shall apply are: a) in the case of New Zealand, taxes of every kind and description imposed under its tax laws; and b) in the case of Australia, taxes of every kind and description imposed under the federal tax laws administered by the Commissioner of Taxation." ARTICLE 2 ARTICLE 26 OF THE AGREEMENT IS OMITTED AND THE FOLLOWING ARTICLE IS SUBSTITUTED: "Article 26 exchange of information 1. The competent authorities of the Contracting States shall exchange such information as is forseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic law concerning taxes referred to in Article 2, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1. 2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to, the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation: a) to carry out administrative measures at variance with the law and administrative practice of that or of the other Contracting State; b) to supply information which is not obtainable by the competent authority under the law or in the normal course of the administration of that or of the other Contracting State; c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person." ARTICLE 3 ARTICLE 27, ARTICLE 28 AND ARTICLE 29 OF THE AGREEMENT ARE RENUMBERED AS ARTICLE 28, ARTICLE 29 AND ARTICLE 30 RESPECTIVELY. ARTICLE 4 THE AGREEMENT IS AMENDED BY INSERTING: "Article 27 Assistance in collection OF TAXES 1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Article 1. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article. 2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes referred to in Article 2, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount. 3. When a revenue claim of a Contracting State is enforceable under the law of that State and is owed by a person who, at that time, cannot, under the law of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its law applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State. 4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its law as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection. 5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the law of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the law of the other Contracting State. 6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State. 7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the law of that State and is owed by a person who, at that time, cannot, under the law of that State, prevent its collection, or b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request. 8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation: a) to carry out administrative measures at variance with the law and administrative practice of that or of the other Contracting State; b) to carry out measures which would be contrary to public policy (ordre public); c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its law or administrative practice; d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State; e) to provide assistance if that State considers that the taxes with respect to which assistance is requested are imposed contrary to generally accepted taxation principles." ARTICLE 5 With reference to Articles 10, 11 and 12, if in any future Agreement with any other State, New Zealand should limit its taxation at source of dividends, interest or royalties to a rate lower than the one provided for in any of those Articles, the Government of New Zealand shall without undue delay inform the Government of Australia and shall enter into negotiations with the Government of Australia with a view to providing the same treatment. ARTICLE 6 1. THE GOVERNMENT OF NEW ZEALAND AND THE GOVERNMENT OF AUSTRALIA SHALL NOTIFY EACH OTHER IN WRITING THROUGH THE DIPLOMATIC CHANNEL OF THE COMPLETION OF THEIR DOMESTIC REQUIREMENTS FOR THE ENTRY INTO FORCE OF THIS PROTOCOL. 2. The Protocol, which shall form an integral part of the Agreement, shall enter into force on the date of the last notification, and thereupon the Protocol shall have effect. 3. Notwithstanding paragraph 2, Article 4 shall have effect from the date agreed in a subsequent exchange of notes through the diplomatic channel. In WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Protocol. DONE at Melbourne in duplicate this fifteenth day of November two thousand and five in the English language. |FOR THE GOVERNMENT OF |FOR THE GOVERNMENT OF | |AUSTRALIA: |NEW ZEALAND: | | | | | | | | | | |Peter Costello |Kate Lackey | [Signatures omitted] Schedule 5-Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Section 3 The Government of the Commonwealth of Australia and the Government of the Republic of Singapore, Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: ARTICLE 1 1. The existing taxes to which this Agreement applies are- (a) in Australia: the Commonwealth income tax, including the additional tax upon the undistributed amount of the distributable income of a private company; (b) in Singapore: the income tax. 2. This Agreement applies also to any identical or substantially similar taxes which are imposed subsequent to the date of signature of this Agreement by Singapore or the Commonwealth in addition to, or in place of, the existing taxes to which this Agreement applies. ARTICLE 2 1. In this Agreement, unless the context otherwise requires- (a) the term "the Commonwealth" means the Commonwealth of Australia; (b) the term "Australia" means the whole of the Commonwealth and includes- (i) the Territory of Norfolk Island; (ii) the Territory of Christmas Island; (iii) the Territory of Cocos (Keeling) Islands; (iv) the Territory of Ashmore and Cartier Islands; (v) any territory which, subsequent to the date of signature of this Agreement, becomes a Territory of the Commonwealth; and (vi) any area outside the territorial limits of the Commonwealth and the said Territories in respect of which there is for the time being in force a law of the Commonwealth or of a State or part of the Commonwealth or of a Territory aforesaid dealing with the exploitation of any of the natural resources of the sea--bed and sub--soil of the continental shelf; (c) the term "Singapore" means the Republic of Singapore; (d) the terms "Contracting State", "one of the Contracting States", and "other Contracting State" mean Australia or Singapore, as the context requires; (e) the terms "Australian tax" and "Singapore tax" mean tax imposed by the Commonwealth and tax imposed by Singapore respectively, being tax to which this Agreement applies by virtue of Article 1; (f) the term "company" includes any body or association which is treated as a company for tax purposes; (g) the term "competent authority" means, in the case of Australia, the Commissioner of Taxation or his authorised representative and in the case of Singapore, the Minister for Finance or his authorised representative; (h) the term "enterprise" includes undertaking; (i) the term "Malaysian company" means a company which, for the purposes of income tax in Malaysia, is resident in Malaysia; (j) the term "person" includes an individual, a company and any body of persons, corporate or not corporate; (k) the terms "profits of a Singapore enterprise" and "profits of an Australian enterprise" mean profits of a Singapore enterprise or profits of an Australian enterprise respectively, but do not include- (i) dividends, interest (as defined in Article 9), or royalties (including those payments which come within the meaning of "royalties" for the purposes of Article 10) other than such dividends, interest or royalties that are effectively connected with a trade or business carried on through a permanent establishment in one of the Contracting States by an enterprise of the other Contracting State; (ii) rent; (iii) remuneration or other income for personal (including professional) services; (iv) profits from the operation of ships or aircraft; (v) payments to the extent to which they are received as consideration for the use of, or the right to use, motion picture films, literary, dramatic, musical or artistic copyrights, films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting; or (vi) payments to the extent to which they are received as consideration for the supply of scientific, technical, industrial or commercial knowledge, information or assistance (other than those payments which come within the meaning of "royalties" for the purposes of Article 10); (l) the term "resident in Singapore" has the meaning which it has under the laws of Singapore relating to Singapore tax; and the term "resident of Australia" has the meaning which it has under the laws of the Commonwealth relating to Australian tax; (m) the term "tax" means Australian tax or Singapore tax, as the context requires; (n) words in singular include the plural and words in the plural include the singular. 2. The terms "Australian tax" and "Singapore tax" do not include any amount which represents a penalty or interest imposed under the law in force in Australia or Singapore relating to the taxes to which this Agreement applies. 3. Where under this Agreement income is relieved from tax in one of the Contracting States and, under the law in force in the other Contracting State, a person, in respect of the said income, is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the relief to be allowed under this Agreement in the first--mentioned Contracting State shall apply only to so much of the income as is remitted to or received in the other Contracting State. 4. Unless the context otherwise requires, any term of this Agreement not otherwise defined shall have, in a Contracting State, the meaning which it has under the laws in that Contracting State relating to the taxes to which this Agreement applies. ARTICLE 3 1. For the purposes of this Agreement- (a) the term Australian company means any company which being a resident of Australia- (i) is incorporated in Australia and has its centre of administrative or practical management in Australia whether or not any person outside Australia exercises or is capable of exercising any overriding control or direction of the company or of its policy or affairs in any way whatsoever; or (ii) is managed and controlled in Australia; (b) the term Singapore company means any company which is managed and controlled in Singapore and which is not an Australian company; (c) the term Singapore resident means any Singapore company and any person (other than a company) who is resident in Singapore; and (d) the term Australian resident means any Australian company and any other person (other than a Singapore company) who is a resident of Australia. 2. Where by reason of the provisions of paragraph 1 of this Article an individual is both a Singapore resident and an Australian resident- (a) he shall be treated solely as a Singapore resident- (i) if he has a permanent home available to him in Singapore and has not a permanent home available to him in Australia; (ii) if sub--paragraph (a) (i) of this paragraph is not applicable but he has an habitual abode in Singapore and has not an habitual abode in Australia; (iii) if neither sub--paragraph (a) (i) nor sub--paragraph (a) (ii) of this paragraph is applicable but the Contracting State with which his personal and economic relations are closest is Singapore; (b) he shall be treated solely as an Australian resident- (i) if he has a permanent home available to him in Australia and has not a permanent home available to him in Singapore; (ii) if sub--paragraph (b) (i) of this paragraph is not applicable but he has an habitual abode in Australia and has not an habitual abode in Singapore; (iii) if neither sub--paragraph (b) (i) nor sub--paragraph (b) (ii) of this paragraph is applicable but the Contracting State with which his personal and economic relations are closest is Australia. 3. Where by reason of the provisions of paragraph 1 of this Article a person other than an individual is both a Singapore resident and an Australian resident- (a) it shall be treated solely as a Singapore resident if it is managed and controlled in Singapore; (b) it shall be treated solely as an Australian resident if it is managed and controlled in Australia. 4. In this Agreement the term "resident of one of the Contracting States" and the term "resident of the other Contracting State" mean a person who is a Singapore resident or a person who is an Australian resident as the context requires. 5. In this Agreement, the term "Singapore enterprise" and the term "Australian enterprise" mean an industrial or commercial enterprise (including a mining, agricultural, pastoral, forestry or plantation enterprise) carried on by a Singapore resident or by an Australian resident respectively, and the term "enterprise of one of the Contracting States" and the term "enterprise of the other Contracting State" mean an Australian enterprise or a Singapore enterprise, as the context requires. ARTICLE 4 1. For the purposes of this Agreement the term "permanent establishment" in relation to an enterprise means a fixed place of trade or business in which the trade or business of the enterprise is wholly or partly carried on. 2. The term "permanent establishment" includes- (a) a management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, quarry or other place of extraction of natural resources; (g) an agricultural, pastoral, forestry or plantation property; (h) a building site or a construction, installation or assembly project which exists for more than six months. 3. The term "permanent establishment" shall not be deemed to include- (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of trade or business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise; or (e) the maintenance of a fixed place of trade or business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising or scientific research. 4. An enterprise of one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State and to carry on trade or business through that permanent establishment if- (a) it carries on supervisory activities in that other Contracting State for more than six months in connection with a building site, or a construction, installation or assembly project which is being undertaken, in that other Contracting State; or (b) substantial equipment is in that other Contracting State being used or installed by, for or under contract with the enterprise. 5. A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State (other than an agent of independent status to whom paragraph 6 of this Article applies) shall be deemed to be a permanent establishment of that enterprise in the first-- mentioned Contracting State- (a) if he has, and habitually exercises in that first--mentioned Contracting State, an authority to conclude contracts on behalf of the enterprise and his activities are not limited solely to the purchase of goods or merchandise for the enterprise; (b) if there is maintained in that first--mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he habitually fills orders on behalf of the enterprise; or (c) if in so acting he manufactures or processes in that first--mentioned Contracting State any goods for the enterprise. 6. An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on trade or business in that other Contracting State through a broker, a general commission agent or any other agent of independent status, where such a person is acting in the ordinary course of his business as a broker, a general commission agent or other agent of independent status. 7. The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on trade or business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. 8. Where an enterprise of one of the Contracting States sells goods manufactured, assembled, processed, packed or distributed in the other Contracting State by an industrial or commercial enterprise for, or at, or to the order of, that first--mentioned enterprise and- (a) either enterprise participates directly or indirectly in the management, control or capital of the other enterprise; or (b) the same persons participate directly or indirectly in the management, control or capital of both enterprises, then, for the purposes of this Agreement that first--mentioned enterprise shall be deemed to have a permanent establishment in the other Contracting State and to carry on trade or business in the other Contracting State through that permanent establishment ARTICLE 5 1. Profits of an Australian enterprise shall not be subject to Singapore tax unless the enterprise carries on trade or business in Singapore through a permanent establishment in Singapore. If it carries on trade or business as aforesaid, Singapore tax may be imposed on those profits but only on so much of them as is attributable to that permanent establishment. 2. Profits of a Singapore enterprise shall not be subject to Australian tax unless the enterprise carries on trade or business in Australia through a permanent establishment in Australia. If it carries on trade or business as aforesaid, Australian tax may be imposed on those profits but only on so much of them as is attributable to that permanent establishment. 3. Where an enterprise of one of the Contracting States carries on trade or business in the other Contracting State through a permanent establishment situated therein, there shall be attributed to that permanent establishment the profits which it might be expected to make in that other Contracting State if it were a distinct and separate enterprise engaged in the same or similar activities and dealing wholly independently with the enterprise of which it is a permanent establishment or with an independent enterprise; and the profits so attributed shall be deemed to be income derived from sources in that other Contracting State and shall be taxed accordingly. 4. In determining the profits attributable to a permanent establishment in one of the Contracting States, there shall be allowed as deductions all expenses of the enterprise, including executive and general administrative expenses, which would be deductible if the permanent establishment were an independent enterprise and which are reasonably allocable to the permanent establishment, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere, but where goods manufactured out of that Contracting State by the enterprise are imported into that Contracting State, and the goods are, either before or after importation, sold in that Contracting State by the enterprise, the profits of the enterprise taxable in that Contracting State may be determined by deducting from the sale price of the goods the amount for which, at the date the goods were shipped to that Contracting State, goods of the same nature and quality could be purchased by a wholesale buyer in the country of manufacture, and the expenses incurred in transporting them to and selling them in that Contracting State. 5. If the information available to the competent authority of the Contracting State concerned is inadequate to determine the profits to be attributed to the permanent establishment, nothing in this Article shall affect the application of any law of that Contracting State in relation to the liability of the enterprise to pay tax, in respect of the permanent establishment, on an amount determined by the exercise of a discretion or the making of an estimate by the competent authority of that Contracting State. Provided that the discretion shall be exercised or the estimate shall be made, so far as the information available to the competent authority permits, in accordance with the principles stated in this Article. 6. Profits shall not be attributed to a permanent establishment by reason of the mere purchase or mere purchase and transportation by that permanent establishment of goods or merchandise for the enterprise. 7. Nothing in this Article shall apply to either Contracting State to prevent the operation in the Contracting State of any provisions of its law relating specifically to the taxation of any person who carries on a business of any form of insurance or to the taxation of a non--resident who derives income under any contract or agreement with any person in relation to the carrying on in the Contracting State by that person of any form of film business controlled abroad. Provided that if the law in force in either Contracting State at the date of signature of this Agreement relating to the taxation of such persons is varied (otherwise than in minor respects so as not to affect its general character), the Contracting Governments shall consult with each other with a view to agreeing to such amendment of this paragraph as may be necessary. ARTICLE 6 1. Where- (a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State, and, in either case, conditions are operative between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between distinct and separate enterprises dealing wholly independently with one another, then, if by reason of those circumstances profits which might be expected to accrue to one of the enterprises do not accrue to that enterprise, there may be included in the profits of that enterprise the profits which might have been expected so to accrue to it if it were a distinct and separate enterprise engaged in the same or similar activities and its dealings with the other enterprise were dealings wholly independently with that enterprise or an independent enterprise. 2. Profits included in the profits of an enterprise of one of the Contracting States under paragraph 1 of this Article shall be deemed to be income of that enterprise derived from sources in that Contracting State and shall be taxed accordingly. 3. If the information available to the competent authority of a Contracting State is inadequate to determine, for the purposes of paragraph 1 of this Article, the profits which might have been expected to accrue to an enterprise, nothing in this Article shall affect the application of any law of that Contracting State in relation to the liability of that enterprise to pay tax on an amount determined by the exercise of a discretion or the making of an estimate by the competent authority of that Contracting State. Provided that the discretion shall be exercised or the estimate shall be made, so far as the information available to the competent authority permits, in accordance with the principles stated in this Article. ARTICLE 7 1. The tax payable in a Contracting State by a resident of the other Contracting State in respect of profits from the operation of ships, other than profits from voyages or operations of ships confined solely to places in the first--mentioned Contracting State, shall not exceed half the amount which would be payable in respect of those profits but for this paragraph. 2. A resident of one of the Contracting States shall be exempt from tax in the other Contracting State on profits from the operation of aircraft, other than profits from flights of aircraft confined solely to places in the other Contracting State. 3. The relief provided in paragraphs 1 and 2 of this Article shall apply in relation to the share of the profits from the operation of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organisation or in an international operating agency but only to the extent to which the share of the profits is not attributable to profits from voyages, flights or operations confined solely to places in the other Contracting State. 4. For the purpose of this Article profits derived from the carriage of passengers, livestock, mails or goods shipped in one of the Contracting States for discharge at another place in that Contracting State or, in the case of Australia, at a place in the Territory of Papua or the Trust Territory of New Guinea are profits from a voyage or flight of a ship or aircraft confined solely to places in that Contracting State. ARTICLE 8 1. The Australian tax on dividends, being dividends paid by a company which is a resident of Australia, derived by a Singapore resident who is beneficially entitled to the dividends, shall not exceed 15 per centum of the gross amount of the dividends. 2. Subject to the provisions of this Article dividends paid by a company which is resident in Singapore, and dividends paid by a Malaysian company out of profits derived from sources in Singapore, being dividends derived by an Australian resident who is beneficially entitled to the dividends, shall be exempt from any tax in Singapore which may be chargeable on dividends in addition to the tax chargeable in respect of the profits of the company. 3. Nothing in the preceding paragraph shall affect the provisions of Singapore law under which the tax in respect of a dividend paid by a company which is resident in Singapore, or by a Malaysian company out of profits derived from sources in Singapore, from which Singapore tax has been, or has been deemed to be, deducted may be adjusted by reference to the rate of tax appropriate to the Singapore year of assessment immediately following that in which the dividend was paid. 4. If Singapore, subsequent to the signing of this Agreement, imposes a tax on dividends paid by a company which is resident in Singapore or by a Malaysian company out of profits derived from sources in Singapore, which is in addition to the tax chargeable in respect of the profits of the company, such tax may be charged but the tax so charged on such dividends derived by an Australian resident who is beneficially entitled to the dividends shall not exceed 15 per centum of the gross amount of the dividends. 5. Paragraphs 1, 2 and 4 of this Article shall not apply if the resident of one of the Contracting States who is beneficially entitled to the dividends has in the other Contracting State a permanent establishment and the holding giving rise to the dividends is effectively connected with a trade or business carried on through that permanent establishment. 6. Dividends paid by a company which is a resident of one of the Contracting States, being dividends derived by a person who is beneficially entitled to the dividends and who is not a resident of the other Contracting State, shall be exempt from tax in that other Contracting State. This paragraph shall not apply in relation to a Singapore company which is also a resident of Australia or any Australian company which is also resident in Singapore. ARTICLE 9 1. The Australian tax on interest derived by a Singapore resident who is beneficially entitled to the interest shall not exceed 10 per centum of the gross amount of the interest. 2. The Singapore tax on interest derived by an Australian resident who is beneficially entitled to the interest shall not exceed 10 per centum of the gross amount of the interest. 3. Paragraphs 1 and 2 of this Article shall not apply if the resident of one of the Contracting States who is beneficially entitled to the interest has in the other Contracting State a permanent establishment and the indebtedness giving rise to the interest is effectively connected with a trade or business carried on through that permanent establishment. 4. Where, owing to a special relationship between the payer and the person beneficially entitled to the interest or between both of them and some other person, the amount of the interest paid exceeds the amount which might have been expected to have been agreed upon in the absence of such relationship, the provisions of this Article shall apply only to the last-- mentioned amount. 5. In this Article the term "interest" means interest, and amounts in the nature of interest, on bonds, securities, debentures or on any other form of indebtedness. ARTICLE 10 1. The Australian tax on royalties derived by a Singapore resident who is beneficially entitled to the royalties shall not exceed 10 per centum of the gross amount of the royalties. 2. The Singapore tax on royalties derived by an Australian resident who is beneficially entitled to the royalties shall not exceed 10 per centum of the gross amount of the royalties. 3. In this Article royalties means payments of any kind to the extent to which they are received as consideration for- (a) the use of, or the right to use, any- (i) copyright (other than a literary, dramatic, musical or artistic copyright), patent, design or model, plan, secret formula or process, trademark, or other like property or right; or (ii) industrial, commercial or scientific equipment; or (b) the supply of information concerning industrial, commercial or scientific experience, but does not include royalties or other payments in respect of the operation of mines or quarries or of the exploitation of natural resources or payments to the extent to which they are received as consideration for the use of, or the right to use, motion picture films, tapes for use in connection with radio broadcasting or films or video tapes for use in connection with television. 4. Paragraphs 1 and 2 of this Article shall not apply if the resident of one of the Contracting States who is beneficially entitled to the royalties has in the other Contracting State a permanent establishment and the information, right or property giving rise to the royalties is effectively connected with a trade or business carried on through that permanent establishment. 5. Where, owing to a special relationship between the payer and the person who is beneficially entitled to the royalties or between both of them and some other person, the amount of the royalties paid exceeds the amount which might have been expected to have been agreed upon in the absence of such relationship, the provisions of this Article shall apply only to the last--mentioned amount. ARTICLE 11 1. Subject to this Article and to Articles 12, 13 and 14 remuneration or other income derived by an individual who is a resident of one of the Contracting States in respect of personal (including professional) services shall be subject to tax only in that Contracting State unless the services are performed or exercised in the other Contracting State. If the services are so performed or exercised such remuneration or other income as is derived therefrom shall be deemed to have a source in, and may be taxed in, that other Contracting State. 2. In relation to remuneration of a director of a company derived from the company, the provisions of this Article and of Article 12 shall apply as if the remuneration were remuneration in respect of personal services. Director's fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State shall be deemed to be derived in respect of personal services performed in, and may be taxed in, that other Contracting State. 3. An individual who is a resident of one of the Contracting States shall be exempt from tax in the other Contracting State on remuneration from an employment exercised on ships or aircraft in international traffic. ARTICLE 12 1. Remuneration or other income derived by an individual who is a resident of one of the Contracting States in respect of personal (including professional) services performed or exercised in the other Contracting State shall be exempt from tax in the other Contracting State if- (a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the year of income or in the basis period for the year of assessment as the case may be of that other Contracting State; (b) the services are performed or exercised for or on behalf of a person who is a resident of the first--mentioned Contracting State; and (c) the remuneration or other income is not deductible in determining the profits for tax purposes in the other Contracting State of a permanent establishment in that other Contracting State of that person. 2. Paragraph 1 of this Article shall not apply to remuneration or other income derived by public entertainers (such as stage, motion picture, radio or television artistes, musicians and athletes) from their personal activities as such. 3. Notwithstanding anything contained in this Agreement, where an enterprise of one of the Contracting States derives profits arising from, or in relation to, contracts or obligations to provide in the other Contracting State services of public entertainers referred to in paragraph 2 of this Article, the profits may be taxed in the other Contracting State and shall be deemed to have a source in that other Contracting State, except where the enterprise is, in connection with the provisions of these services, substantially supported from the public funds of a Government of the first--mentioned Contracting State, in which case the profits shall be exempt from tax in the other Contracting State. 4. For the purposes of paragraph 3 of this Article, "a Government of the first--mentioned Contracting State" means, in the case of Singapore, the Government of Singapore and, in the case of Australia, the Government of the Commonwealth or of any State of the Commonwealth. ARTICLE 13 1. A pension or an annuity, derived from sources within one of the Contracting States by an individual who is a resident of the other Contracting State, shall be exempt from tax in the first--mentioned Contracting State. 2. The term "annuity" means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth. 3. This Article shall not apply to a pension paid to an individual by the Government of the Commonwealth or of any State of the Commonwealth or the Government of Singapore in respect of services rendered in the discharge of governmental functions. ARTICLE 14 1. Remuneration (other than pensions) paid by the Government of the Commonwealth or of any State of the Commonwealth to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Singapore tax, except where the individual is resident in Singapore and is not an Australian citizen. 2. Remuneration (other than pensions) paid by the Government of Singapore to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Australian tax, except where the individual is a resident of Australia and is not a Singapore resident. 3. This Article shall not apply to any remuneration in respect of services rendered in connection with any trade or business carried on by a Government for purposes of profit. ARTICLE 15 A student or trainee who is, or was immediately before visiting one of the Contracting States, a resident of the other Contracting State and is present in the first--mentioned Contracting State solely for the purpose of his education or training shall not be taxed in that first--mentioned Contracting State on payments which he receives for the purpose of his maintenance, education or training provided that such payments are made to him from outside that first--mentioned Contracting State. ARTICLE 16 1. This Article shall apply to a person who is a resident of Australia and is also resident in Singapore. 2. Where such a person is treated for the purposes of this Agreement solely as a resident of one of the Contracting States he shall be exempt in the other Contracting State from tax on any income in respect of which he is subject to tax in the first--mentioned Contracting State if the income is derived- (a) from sources in the first--mentioned Contracting State; or (b) from sources outside both Contracting States. ARTICLE 17 1. For the purposes of this Agreement- (a) (i) dividends paid by a company which is a resident of Australia shall be treated in Singapore as income from sources in Australia; (ii) dividends paid by a company which is resident in Singapore shall be treated in Australia as income from sources in Singapore; (b) dividends paid by a Malaysian company out of profits derived from sources in Singapore shall be treated in Australia as income from sources in Singapore; (c) profits derived by a resident of one of the Contracting States from the carriage by ships or aircraft of passengers, livestock, mails or goods shipped in the other Contracting State, or from the operations of ships or aircraft in that other Contracting State, shall be treated as having a source in that other Contracting State; (d) an amount which is included, for the purposes of tax in one of the Contracting States, in the taxable or chargeable income of a person who is a resident of the other Contracting State, and which is so included under any provision of the law of the first--mentioned Contracting State for the time being in force regarding taxation of income of a business of any form of insurance or of income derived under a contract or agreement with a person who carries on in the first--mentioned Contracting State any form of film business controlled abroad shall be treated as having a source in that first-- mentioned Contracting State; (e) pensions paid by the Government of the Commonwealth or of any State of the Commonwealth, or the Government of Singapore, in respect of services rendered in the discharge of governmental functions shall be treated as having a source in Australia or Singapore respectively. 2. Interest (as defined in Article 9) derived by a resident of one of the Contracting States shall be treated as having a source in the other Contracting State where the amount- (i) is paid by a Government of the other Contracting State or by a resident of the other Contracting State and is not incurred by the payer in carrying on a trade or business through a permanent establishment of the payer in a country outside the other Contracting State; or (ii) is paid by a person who is not a resident of the other Contracting State and is incurred by the payer in carrying on trade or business through a permanent establishment of the payer in the other Contracting State. 3. For the purposes of paragraph 2 of this Article "a Government of the other Contracting State" means, in relation to Singapore, the Government of Singapore or an authority of Singapore and, in relation to Australia, means the Government of the Commonwealth or of a State of the Commonwealth or an authority of the Commonwealth or of such a State. 4. Royalties (as defined in Article 10) and payments referred to in subparagraph (k) (v) and subparagraph (k) (vi) of paragraph 1 of Article 2 shall be treated as derived from sources within the Contracting State in which the knowledge, assistance, information, right or property giving rise to the royalties or payments is used. 5. Royalties in respect of the operation of mines, quarries or other places of extraction of natural resources shall be treated as derived from sources within the Contracting State in which such mines, quarries or other places of natural resources are situated. ARTICLE 18 1. Subject to any provisions of the law of the Commonwealth which may from time to time be in force and which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Singapore tax paid, whether directly or by deduction, in respect of income derived by a resident of Australia from sources within Singapore (excluding in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income. 2. A company that is a resident of Australia and which beneficially owns at least 10 per centum of the paid--up share capital in a company that is resident in Singapore shall, in accordance with those provisions in the taxation law of the Commonwealth in existence at the date of signature of this Agreement, be entitled to a rebate in its assessment at the average rate of tax payable by the company in respect of dividends paid by the second--mentioned company that are included in its taxable income. 3. For the purposes of paragraph 1 of this Article and of the income tax law of the Commonwealth- (a) a resident of Australia deriving income from sources in Singapore consisting of interest or royalties to which Article 9 or Article 10 applies, being income in respect of which an exemption from or reduction of tax has been granted under Parts V and VI of the Economic Expansion Incentives (Relief from Income Tax) Act, 1967, of Singapore or any other provisions which may subsequently be enacted granting an exemption from or reduction of tax which are agreed by the Contracting Governments in Notes exchanged for these purposes to be of a substantially similar character, shall be deemed to have paid Singapore tax in an amount, or the Singapore tax paid shall be deemed to have been increased by an amount, equal to the amount by which the Singapore tax that otherwise would have been payable is reduced by the exemption or reduction granted; and (b) the amount of the said interest or royalties shall be deemed to be the amount that would have been the amount of the interest or royalties if no Singapore tax had been paid, increased by the amount by which the tax that otherwise would have been payable is reduced by the said exemption or reduction. 4. Paragraph 3 of this Article shall not apply in relation to income derived in any year of income after the year of income that ends on 30th June, 1974 or on any later date that may be agreed by the Contracting Governments in Notes exchanged for this purpose. 5. Subject to the provisions of the laws of Singapore regarding the allowance as a credit against Singapore tax of tax payable in any country other than Singapore, Australian tax payable, whether directly or by deduction, in respect of income from sources within Australia shall be allowed as a credit against Singapore tax payable in respect of that income. Where such income is a dividend paid by a company which is an Australian resident to a company which is a Singapore resident and which owns directly or indirectly not less than 10 per centum of the paid--up share capital in the first--mentioned company the credit shall take into account (in addition to any Australian tax on dividends) the Australian tax paid by the first--mentioned company in respect of its profits. 6. Where profits, on which an enterprise of one of the Contracting States has been charged to tax in that Contracting State, are also included, by virtue of this Agreement, in the profits of an enterprise of the other Contracting State as being profits which, because of the circumstances existing between the two enterprises, might have been expected to accrue to the enterprise of the other Contracting State, the profits so included shall be treated for the purposes of this Article as profits of the enterprise of the first--mentioned Contracting State from a source in the other Contracting State and relief shall be given in accordance with this Article in respect of the extra tax chargeable in the other Contracting State as a result of the inclusion of such profits. ARTICLE 19 1. The competent authorities shall exchange such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary for carrying out the provisions of this Agreement or for the prevention of fraud or for the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of this Agreement. 2. Any information so exchanged shall be treated as secret but may be disclosed to persons (including a court or tribunal) concerned with the assessment, collection, enforcement or prosecution in respect of the taxes which are the subject of this Agreement. 3. No information as aforesaid shall be exchanged which would disclose any trade, business, industrial or professional secret or trade process. ARTICLE 20 1. Where a taxpayer considers that the action of the competent authority in one of the Contracting States has resulted, or is likely to result, in double taxation contrary to the provisions of this Agreement, he shall be entitled to present the facts to the competent authority in the Contracting State of which he is a resident and, should the taxpayer's claim be deemed worthy of consideration, the competent authority in that Contracting State shall endeavour to come to an agreement with the competent authority in the other Contracting State with a view to the avoidance of the double taxation in question. 2. The competent authority in a Contracting State may communicate directly with the competent authority in the other Contracting State for the purpose of giving effect to the provisions of this Agreement and in an endeavour to assure its consistent interpretation and application. In particular, the competent authorities may consult together to endeavour to resolve disputes arising out of the application of paragraph 3 of Article 5 or Article 6. ARTICLE 21 This Agreement shall come into force on the date on which the last of all such things shall have been done in Australia and Singapore as are necessary to give the Agreement the force of law in Australia and Singapore so far as its provisions affect Australian tax and Singapore tax respectively and shall thereupon have effect- (a) in Australia- (i) in respect of withholding tax on income that is derived by a non--resident, in respect of income derived on or after 1st July, 1969; (ii) in respect of other Australian tax, for any year of income beginning on or after 1st July, 1969; (b) in Singapore- for any year of assessment beginning on or after 1st January, 1970. ARTICLE 22 This Agreement shall continue in effect indefinitely, but either Contracting State may, on or before 30th June in any calendar year give to the other Contracting State notice of termination and, in that event, this Agreement shall cease to be effective- (a) in Australia- (i) in respect of withholding tax on income that is derived by a non--resident, in respect of income derived on or after the commencement of the financial year beginning on 1st July in the calendar year next following that in which the notice is given; (ii) in respect of other Australian tax, for any year of income beginning on or after 1st July in the calendar year next following that in which the notice is given; (b) in Singapore- for any year of assessment beginning on or after 1st January in the second calendar year next following that in which the notice is given. IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement. DONE in duplicate at Canberra this Eleventh day of February in the year one thousand nine hundred and sixty--nine in the English language: |William McMahon |S. T. Stewart | |FOR THE GOVERNMENT |FOR THE GOVERNMENT | |OF THE |OF THE | |COMMONWEALTH OF AUSTRALIA |REPUBLIC OF SINGAPORE | Schedule 5A-Protocol amending the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Section 3 The Government of Australia and the Government of the Republic of Singapore, Desiring to amend the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Canberra on 11 February 1969 (in this Protocol referred to as "the Agreement"), Have agreed as follows: ARTICLE 1 The following Article is inserted before Article 1 of the Agreement: "ARTICLE 1A This Agreement shall apply to persons who are residents of one or both of the Contracting States.". ARTICLE 2 Article 1 of the Agreement is amended by omitting subparagraph (1) (a) and substituting: "(a) in Australia: the income tax, and the petroleum resource rent tax in respect of offshore projects, imposed under the federal law of the Commonwealth of Australia;". ARTICLE 3 Article 2 of the Agreement is amended by inserting in paragraph (4) "from time to time in force" after "that Contracting State". ARTICLE 4 Article 4 of the Agreement is omitted and the following Article is substituted: "ARTICLE 4 (1) For the purposes of this Agreement, the term permanent establishment, in relation to an enterprise, means a fixed place of business through which the business of the enterprise is wholly or partly carried on. (2) The term "permanent establishment" includes but is not limited to- (a) a place of management; (b) a branch; (c) an office; (d) a store or other sales outlet; (e) a factory; (f) a workshop; (g) a warehouse except where it is used solely for any of the purposes mentioned in paragraph (4); (h) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; and (i) a building site, or a construction, installation or assembly project, but only where such site or project or any combination of them continues for a period aggregating more than 6 months within any 12-- month period. (3) An enterprise of a Contracting State shall be deemed to have a permanent establishment and to carry on trade or business through that permanent establishment in the other Contracting State if- (a) it carries on supervisory activities in that other State for a period or periods aggregating more than 6 months within any 12--month period in connection with a building site, or a construction, installation or assembly project or any combination of them which is being undertaken in that other State; or (b) substantial equipment is being used in that other State by, for or under contract with the enterprise. (4) An enterprise shall not be deemed to have a permanent establishment merely by reason of- (a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising, the supply of information or scientific research. (5) A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State, other than an agent of an independent status to whom paragraph (6) applies, shall be deemed to be a permanent establishment of the enterprise in the first--mentioned Contracting State if- (a) the person has, and habitually exercises in the first--mentioned Contracting State, an authority to conclude contracts for or on behalf of the enterprise unless the exercise of such authority is limited to the purchase of goods or merchandise for that enterprise; or (b) there is maintained in the first--mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he or she regularly fills orders on behalf of the enterprise; or (c) the person habitually secures orders in the first--mentioned Contracting State wholly or principally for the enterprise itself or for any other enterprise which is controlled by it or has a controlling interest in it; or (d) in so acting the person manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise. (6) An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because that enterprise carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, where such broker or agent is acting in the ordinary course of that person's business. (7) The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.". ARTICLE 5 The following Article is inserted after Article 4 of the Agreement: "ARTICLE 4A (1) Income from real property may be taxed in the Contracting State in which the real property is situated. (2) In this Article, the term real property, in relation to one of the Contracting States, has the meaning which it has under the laws of that State and also includes- (a) a lease of land and any other interest in or over land whether improved or not, including a right to explore for or exploit mineral, oil or gas deposits or other natural resources; and (b) a right to receive variable or fixed payments either as consideration for the exploitation of or the right to explore for or exploit, or in respect of the exploitation of, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources. (3) Any interest or right referred to in paragraph (2) shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration may take place. (4) The provisions of paragraph (1) and (3) shall also apply to income from real property of an enterprise and to income from real property used for the performance of professional services.". ARTICLE 6 Article 5 of the Agreement is omitted and the following Article is substituted: "ARTICLE 5 (1) The profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. (2) Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals. (3) In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. (4) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. (5) Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that that law shall be applied, so far as the information available to the competent authority permits, consistently with the principles of this Article. (6) Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. (7) Nothing in this Article shall affect the operation of any law of a Contracting State relating to tax imposed on profits from insurance with non--residents, provided that if the relevant law in force in either Contracting State at the date of signature of this Agreement is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate. (8) Where- (a) a resident of one of the Contracting States is beneficially entitled, whether directly or through one or more interposed trust estates, to a share of the business profits of an enterprise carried on in the other Contracting State by the trustee of a trust estate other than a trust estate which is treated as a company for tax purposes; and (b) in relation to that enterprise, that trustee would, in accordance with the principles of Article 4, have a permanent establishment in that other State, the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated therein and that share of business profits shall be attributed to that permanent establishment.". ARTICLE 7 Article 6 of the Agreement is omitted and the following Article is substituted: "ARTICLE 6 (1) Where- (a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same person participates directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State, and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. (2) Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the income to be attributed to an enterprise, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles of this Article. (3) Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1) or (2), in the profits of an enterprise of the other Contracting State and charged to tax in that other State, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first--mentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the first-- mentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Agreement and for this purpose the competent authorities of the Contracting States shall if necessary consult each other.". ARTICLE 8 Article 7 of the Agreement is omitted and the following Article is substituted: "ARTICLE 7 (1) Profits from the operation of ships or aircraft derived by a resident of one of the Contracting States shall be taxable only in that State. (2) Notwithstanding the provisions of paragraph (1), such profits may be taxed in the other Contracting State where they are profits from operations of ships or aircraft confined solely to places in that other State. (3) The provisions of paragraphs (1) and (2) shall apply in relation to the share of the profits from the operation of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organization or in an international operating agency. (4) Interest earned on funds held in one of the Contracting States by a resident of the other Contracting State in connection with the operation of ships or aircraft, other than operations confined solely to places in the first--mentioned State, shall be treated as profits from the operation of ships or aircraft. (5) For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in one of the Contracting States for discharge at another place in that Contracting State, or at one or more structures used in connection with the exploration for or exploitation of natural resources situated in waters adjacent to the territorial waters of that Contracting State, shall be treated as profits from operations of ships or aircraft confined solely to places in that State.". ARTICLE 9 Article 8 of the Agreement is amended by adding at the end of paragraph (5): "In any such case, the provisions of Article 5 shall apply.". ARTICLE 10 Article 9 of the Agreement is amended by: (a) adding at the end of paragraph (3): "In any such case, the provisions of Article 5 shall apply."; and (b) adding at the end of paragraph (5): "The term does not include income to which paragraph (4) of Article 7 applies.". ARTICLE 11 Article 10 of the Agreement is amended by: (a) omitting paragraph (3) and substituting: "(3) In this Article royalties means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are received as consideration for- (a) the use of, or the right to use, any- (i) copyright (other than a literary, dramatic, musical or artistic copyright), patent, design or model, plan, secret formula or process, trademark, or other like property or right; or (ii) industrial, commercial or scientific equipment; (b) the supply of scientific, industrial or commercial knowledge or information; or (c) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph, but does not include royalties or other payments in respect of the operation of mines or quarries or of the exploitation of natural resources or payments to the extent to which they are received as consideration for the use of, or the right to use, motion picture films, tapes for use in connection with radio broadcasting or films or video tapes for use in connection with television."; and (b) adding at the end of paragraph (4): "In any such case, the provisions of Article 5 shall apply.". ARTICLE 12 The following Article is inserted after Article 10 of the Agreement: "ARTICLE 10A (1) Income or gains derived by a resident of one of the Contracting States from the alienation of real property referred to in Article 4A and, as provided in that Article, situated in the other Contracting State may be taxed in that other State. (2) Income or gains from the alienation of property, other than real property referred to in Article 4A, that forms part of the business property of a permanent establishment which an enterprise of one of the Contracting States has in the other Contracting State or pertains to a fixed base available to a resident of the first--mentioned State in that other State for the purpose of performing independent personal services, including income or gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other State. (3) Income or gains from the alienation of ships or aircraft operated in international traffic, or of property (other than real property referred to in Article 4A) pertaining to the operation of those ships or aircraft, shall be taxable only in the Contracting State of which the enterprise which operated those ships or aircraft is a resident. (4) Income or gains derived by a resident of one of the Contracting States from the alienation of shares or comparable interests in a company, the assets of which consist wholly or principally of real property in the other Contracting State of a kind referred to in Article 4A and, as provided in that Article, situated in that other State, may be taxed in that other State. (5) Nothing in this Agreement affects the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of property other than that to which any of paragraphs (1), (2), (3) and (4) apply.". ARTICLE 13 The following Article is inserted after Article 16 of the Agreement: "ARTICLE 16A Items of income which are not expressly mentioned in the foregoing Articles of this Agreement shall be taxable according to the laws of the respective Contracting States relating to tax.". ARTICLE 14 Article 17 of the Agreement is omitted and the following Article is substituted: "ARTICLE 17 Profits, income or gains derived by a resident of one of the Contracting States which, under any one or more of Article 4A, Article 5, Articles 7 to 14 and Article 16A, may be taxed in the other Contracting State shall for the purposes of Article 18 and of the laws of the respective Contracting States relating to tax be deemed to be income from sources in that other State.". ARTICLE 15 Article 18 of the Agreement is omitted and the following Article is substituted: "ARTICLE 18 (1) Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Singapore tax paid under the law of Singapore and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Singapore shall be allowed as a credit against Australian tax payable in respect of that income. (2) Where a company which is a resident of Singapore pays a dividend to a company which is a resident of Australia and which controls directly or indirectly not less than 10 per cent of the voting power of the first-- mentioned company, the credit referred to in paragraph (1) shall include the Singapore tax paid by that first--mentioned company in respect of that portion of its profits out of which the dividend is paid. (3) For the purposes of paragraphs (1) and (2), Singapore tax paid shall be deemed to include an amount equivalent to the amount of Singapore tax which, under the law of Singapore relating to Singapore tax and in accordance with this Agreement, would have been payable but for an exemption from or reduction of Singapore tax granted under- (a) section 13 (2) of the Income Tax Act 1985 of Singapore; (b) Parts II, IIIA, IV, VI, VII, VIII, IX, X or XI of the Economic Expansion Incentives (Relief from Income Tax) Act 1988 of Singapore; and (c) Parts III, V, VIA or XII of the Economic Expansion Incentives (Relief from Income Tax) Act 1988 of Singapore except where the exemption or reduction is granted in respect of income attributable to the provision of financial (including insurance) services provided directly or indirectly to a person who is a resident of Australia, insofar as those provisions were in force on, and have not been modified since, the date of signature of the Protocol which first amended the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed in Canberra on 11 February 1969, or have been modified only in minor respects so as not to affect their general character or any other provision which may subsequently be made granting an exemption from or reduction of tax which the Treasurer of Australia and the Minister for Finance of Singapore, or their authorised representatives, agree from time to time in letters exchanged for this purpose to be of a substantially similar character, if that provision has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. (4) The provisions of paragraph (3) shall apply only in relation to income derived in any of the 10 years of income beginning with the year of income that commenced on 1 July 1987 and in any later year of income that may be agreed in an exchange of letters for this purpose by the Treasurer of Australia and the Minister for Finance of Singapore, or their authorised representatives. (5) Subject to the provisions of the laws of Singapore regarding the allowance as a credit against Singapore tax of tax payable in any country other than Singapore, Australian tax payable, whether directly or by deduction, in respect of income from sources within Australia shall be allowed as a credit against Singapore tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of Australia to a company which is a resident of Singapore and which owns directly or indirectly not less than 10 per cent of the voting power of the first--mentioned company, the credit shall take into account the Australian tax paid by the first--mentioned company in respect of that portion of its profits out of which the dividend is paid.". ARTICLE 16 Article 20 of the Agreement is amended by omitting (3) from paragraph (2) and substituting (2). ARTICLE 17 (1) This Protocol, which shall form an integral part of the Agreement, shall enter into force on the date on which the Contracting Governments exchange notes through the diplomatic channel notifying each other that the last of such things has been done as is necessary to give this Protocol the force of law in Australia and in Singapore respectively, and thereupon this Protocol shall, subject to paragraph (2), have effect: (a) in Australia: (i) in the case of interest to which Article 8 and paragraph (b) of Article 10 of the Protocol apply, in respect of tax on income of any year of income beginning on or after 1 July 1983; and (ii) in any other case, in respect of tax on income of any year of income beginning on or after 1 July 1987; (b) in Singapore: (i) in the case of interest to which Article 8 and paragraph (b) of Article 10 of the Protocol apply, for any year of assessment beginning on or after 1 January 1984; and (ii) in any other case, for any year of assessment beginning on or after 1 January 1988. (2) Where any provision of the Agreement that is affected by this Protocol would have afforded any greater relief from tax than is afforded by the amendments made by this Protocol, that provision shall continue to have effect: (a) in Singapore, for any year of assessment beginning before the date on which this Protocol enters into force; (b) in Australia: (i) in the case of paragraph (2) of Article 18 of the Agreement, only in respect of dividends paid before 12 March 1988; (ii) in respect of other income for any year of income beginning before the date on which this Protocol enters into force. IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Protocol. DONE in duplicate at Canberra this sixteenth day of October, one thousand nine hundred and eighty--nine, in the English language |P. J. KEATING |JOSEPH FRANCIS CONCEICAO | |For the Government of |For the Government of the | |Australia |Republic of Singapore. | NOTE ABOUT RECTIFICATION OF THE SINGAPORE PROTOCOL 1. In an exchange of Notes dated 20 October 1989, the Government of Australia and the Government of the Republic of Singapore agreed to regard the text of the Singapore Protocol as rectified ab initio in respect of format errors in Article 11 and Article 15. 2. These rectifications have been incorporated in the text of the copy of the Protocol that is set out in this Act. Schedule 6-Convention between Australia and Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Note: See section 3. Australia and Japan, Desiring to conclude a new Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: Article 1 PERSONS COVERED This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1. This Convention shall apply to the following existing taxes: a) in the case of Japan: (i) the income tax; and (ii) the corporation tax (hereinafter referred to as "Japanese tax"); b) in the case of Australia: (i) the income tax; and (ii) the petroleum resource rent tax (hereinafter referred to as "Australian tax"). 2. This Convention shall apply also to any identical or substantially similar taxes that are imposed by Japan or under the federal law of Australia after the date of signature of the Convention in addition to, or in place of, the existing taxes referred to in paragraph 1. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in the law of their respective Contracting States relating to the taxes to which the Convention applies within a reasonable period of time after such changes.