Commonwealth Numbered Acts

INCOME TAX (INTERNATIONAL AGREEMENTS) AMENDMENT ACT (NO. 2) 1980 No. 127 of 1980 - SECT 6

6. Schedule 3 to the Principal Act is repealed and the following Schedule
substituted:

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

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 1

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

"societe" 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 219

(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 te nor 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 situated 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 Australia                     For the Government of
Canada
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