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This is a Bill, not an Act. For current law, see the Acts databases.
1998-1999-2000
The Parliament
of the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
International
Tax Agreements Amendment Bill (No. 1)
2000
No. ,
2000
(Treasury)
A Bill
for an Act to amend the International Tax Agreements Act
1953
ISBN: 0642 430691
Contents
International Tax Agreements Act
1953 3
International Tax Agreements Act
1953 30
International Tax Agreements Act
1953 35
A Bill for an Act to amend the International Tax
Agreements Act 1953
The Parliament of Australia enacts:
This Act may be cited as the International Tax Agreements Amendment
Act (No. 1) 2000.
This Act commences on the day on which it receives the Royal
Assent.
Each Act that is specified in a Schedule to this Act is amended or
repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its
terms.
International
Tax Agreements Act 1953
1 Subsection 3(1)
Insert:
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.
2 After section 11ZI
Insert:
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.
3 At the end of the Act
Add:
Note: See section 3.
AGREEMENT BETWEEN AUSTRALIA AND ROMANIA FOR THE AVOIDANCE OF
DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON
INCOME
AUSTRALIA AND ROMANIA,
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 This Agreement shall apply to the following existing taxes on
income:
(a) in Romania:
(i) the tax on income derived by
individuals;
(ii) the tax on profit;
(iii) the tax on salaries and
other similar remuneration;
(iv) the tax on dividends; and
(v) the
tax on agricultural income;
(b) in Australia:
(i) the income tax;
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.
2 This Agreement shall also apply to any
identical or substantially similar taxes which are imposed under the federal law
of Australia or the law of Romania 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 of any substantial changes which
have been made in the laws of their respective States relating to the taxes to
which this Agreement applies within a reasonable period of time after those
changes.
Article 3
General definitions
1 In this Agreement, unless the context otherwise
requires:
(a) the term “Romania” means the state territory of
Romania, including its territorial sea and air space over the territory and the
territorial sea over which Romania exercises sovereignty, as well as the
contiguous zone and the continental shelf and the exclusive economic zone over
which Romania exercises, in accordance with its legislation and with the rules
and principles of international law, sovereign rights and
jurisdiction;
(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 “Contracting State” means Australia or
Romania, as the context requires;
(d) the term “person”
includes an individual, a company and any other body of persons;
(e) the
term “company” means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(f) the terms
“enterprise of a Contracting State” 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 Romania, as the context
requires;
(g) the term “tax” means Australian tax or Romanian
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;
(h) the term “Romanian tax” means tax imposed by
Romania, being tax to which this Agreement applies by virtue of Article
2;
(i) the term “Australian tax” means tax imposed by
Australia, being tax to which this Agreement applies by virtue of Article
2;
(j) the term “competent authority” means, in the case of
Australia, the Commissioner of Taxation or an authorised representative of the
Commissioner and, in the case of Romania, the Minister of Finance or an
authorised representative of the Minister;
(k) the term
“international traffic” means any transport by a ship or aircraft
operated by an enterprise which has its place of effective management in a
Contracting State, except when the ship or aircraft is operated solely from a
place or between places in the other Contracting State.
2 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 laws of that State relating to the taxes to which this
Agreement applies, in force at the time of that application.
Article 4
Residence
1 For the purposes of this Agreement, the term “resident of a
Contracting State” means any person who is a resident of that State in
accordance with the taxation laws of that State.
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
Contracting State in which a permanent home is available to the
person;
(b) if a permanent home is available to the person in both
Contracting States, or in neither of them, the person shall be deemed to be a
resident solely of the Contracting State with which the person’s economic
and personal relations are the closer; and
(c) in cases where the status
of the person cannot be determined under paragraphs (a) and (b), the competent
authorities of the Contracting States shall consult each other.
4 Where
by reason of the provisions of paragraph 1 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”, 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” 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) a farm, plantation or other place
where agricultural, other farming, forestry or plantation activities are carried
on; and
(h) a building site or construction, installation or assembly
project which exists for more than 9 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; 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 for
collecting information, for the enterprise; or
(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; or
(f) the sale of goods or merchandise belonging to
the enterprise which have been displayed during a non-permanent or occasional
fair or exhibition where the goods or merchandise are sold no later than one
month after the closing of the said fair or exhibition.
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) substantial equipment is being
used in that State for more than 6 months by, for or under contract with the
enterprise.
5 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 6 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 that State, an
authority to conclude contracts on behalf of the enterprise, unless the
person’s activities are limited to the purchase of goods or merchandise
for the enterprise; or
(b) 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 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.
7 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.
8 The principles set
forth in the preceding paragraphs of this Article shall be applied in
determining for the purposes of paragraph 6 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 from real property may be taxed in the Contracting State in
which that property is situated.
2 For the purposes of this Article, the
term “real property”:
(a) in the case of Romania, means such
property which, according to the laws of Romania, is immovable property and
shall in any case include:
(i) property accessory to immovable
property;
(ii) livestock and equipment used in agriculture and
forestry;
(iii) rights to which the provisions of the general law
respecting landed property apply; and
(iv) lease and usufruct of
immovable property and rights to variable or fixed payments either as
consideration for or in respect of the exploitation of, or the right to explore
for or exploit, mineral deposits, oil or gas wells, quarries or other places of
extraction or exploitation of natural resources; and
(b) in the case of
Australia, has the meaning which it has under the laws of Australia, and shall
also include:
(i) a lease of land and any other interest in or over land,
whether improved or not; and
(ii) 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 deposits, oil or gas wells,
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 deposits, oil or gas wells,
quarries or natural resources, as the case may be, are situated or where the
exploration or exploitation may take place.
4 The provisions of paragraph
1 shall apply to income derived from the direct use, letting or use in any other
form of real property.
5 Where the ownership of shares or other corporate
rights in a company entitles the owner of such shares or corporate rights to use
real property held by the company and situated in a Contracting State, the
income from such rights may be taxed in that State.
6 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.
7 The provisions of paragraph 5 shall also
apply to income of an enterprise from a right to use referred to in that
paragraph and shall also apply to income from such a right that is 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.
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 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 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.
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 nonresidents 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 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
(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.
Article 8
Ships and aircraft
1 Profits of an enterprise derived from the operation of ships or
aircraft shall be taxable only in the Contracting State in which the place of
effective management of the enterprise is situated.
2 Notwithstanding the
provisions of paragraph 1, such profits may be taxed in the other Contracting
State to the extent that they are profits derived directly or indirectly from
ship or aircraft operations confined solely to places in that other
State.
3 If the place of effective management of a shipping enterprise is
aboard a ship, then it shall be deemed to be situated in the Contracting State
in which the home harbour of the ship is situated, or, if there is no such home
harbour, in the Contracting State of which the operator of the ship is
resident.
4 The profits to which the provisions of paragraphs 1 and 2
apply include profits from the operation of ships or aircraft derived through
participation in a pool service or other profit sharing
arrangement.
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 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 paragraph 1 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 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) 5 per cent of the gross amount of the dividends, to the
extent to which those dividends are paid out of profits that have borne the
normal rate of company tax, where those dividends are paid to a company (other
than a partnership) which holds directly at least 10 per cent of the capital of
the company paying the dividends; and
(b) 15 per cent of the gross amount
of the dividends in all other cases,
provided that if the relevant law 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.
3 For the purposes
of paragraph 2, profits have borne the normal rate company tax:
(a) in
Romania, where they have been subject to the profits tax; and
(b) in
Australia, to the extent to which the dividends have been fully
“franked” in accordance with its law relating to tax.
4 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 distribution is a resident for
the purposes of its tax.
5 The provisions of paragraphs 1 and 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 Article 14, as the case may be, shall
apply.
6 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 a resident of Romania for the purposes of
Romanian 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 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 Interest derived from the investment of official funds by the
Government of a Contracting State, its monetary institutions or a bank
performing central banking functions in that State, shall be exempt from tax in
the other Contracting State.
4 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, interest from any other form of indebtedness
and all other income assimilated to income from money lent by the law, relating
to tax, of the Contracting State in which the income arises.
5 The
provisions of paragraphs 1 and 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 Article 14, as the case may be, shall
apply.
6 Interest shall be deemed to arise in a Contracting State when
the payer is that State itself or a political subdivision, local authority or an
administrative-territorial unit 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 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.
7 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 that relationship, 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, but 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 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 10 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; 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 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
(f) 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
(g) the use of, or the right to
use:
(i) motion picture films; or
(ii) films or video tapes for
use in connection with television; or
(iii) tapes for use in connection
with radio broadcasting; 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 paragraphs 1 and 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 or credited is effectively connected with that permanent
establishment or fixed base. In that case, the provisions of Article 7 or
Article 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, local authority or an administrative-territorial unit 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 borne by the 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, 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 lastmentioned amount. In that case, the excess part of
the amount of the royalties paid or credited shall remain taxable according to
the law, relating to tax, of each Contracting State, but subject to the other
provisions of this Agreement.
Article 13
Income, profits or gains from the 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 firstmentioned 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 in which the place of effective management
of the enterprise alienating those ships, aircraft or other property is
situated.
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, 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 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 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 The
situation of real property shall be determined for the purposes of this Article
in accordance with the provisions of paragraph 3 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 of a
similar character shall be taxable only in that State unless a fixed base is
regularly available to the individual in the other Contracting State for the
purpose of performing the individual’s activities. If such a fixed base is
available to the individual, 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 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 twelve month period commencing or ending in the
fiscal year concerned 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.
3 Notwithstanding the preceding provisions of this Article,
remuneration in respect of an employment exercised aboard a ship or aircraft
operated in international traffic may be taxed in the Contracting State in which
the place of effective management of the enterprise is situated.
Article 16
Directors’ fees
Directors’ fees and similar payments derived by a resident of a
Contracting State 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 and sportspersons
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 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 or sportsperson as such accrues not to that entertainer or
sportsperson 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 or sportsperson are
exercised.
3 Notwithstanding the provisions of paragraphs 1 and 2, income
derived in respect of activities referred to in paragraph 1 within the framework
of a cultural or sports exchange program agreed to by the Governments of the
Contracting States and carried out other than for the purpose of profit, shall
be exempted from tax in the Contracting State in which these activities are
exercised.
Article 18
Pensions and annuities
1 Pensions (including government pensions) and annuities paid to a
resident of a Contracting State shall be taxable only in that 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 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 19
Government service
1 Remuneration, other than a pension or annuity, paid by a Contracting
State or a political subdivision, local authority or administrative-territorial
unit of that State 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 other State and the recipient is a resident
of that other State who:
(a) has the citizenship 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 a Contracting State or a political subdivision, local
authority or administrative-territorial unit of that State. In that case, the
provisions of Article 15 or Article 16, as the case may be, shall
apply.
Article 20
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 present in that other State solely for the purpose of the
student’s education for a period not exceeding seven years, 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 21
Income not expressly mentioned
1 Items of income of a resident of a Contracting State which are not
expressly mentioned in the foregoing Articles of this Agreement shall be taxable
only in that State.
2 However, any such income derived by a resident of a
Contracting State from sources in the other Contracting State may also be taxed
in that other State.
3 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
Article 14, as the case may be, shall apply.
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, 10 to 19 and 21, 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 19 and 21, may be taxed in the other Contracting State shall for the
purposes of Article 23 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 23
Methods of elimination of double
taxation
1 In the case of Romania, double taxation shall be eliminated as
follows:
(a) subject to subparagraph (b), where a resident of Romania
derives income, profits or gains which, in accordance with the provisions of
this Agreement, are taxable in Australia, then Romania shall exempt from tax
such income, profits or gains. However Romania may, in calculating the amount of
tax on the remaining income of that resident, take into account the exempted
income, profits or gains; and
(b) where a resident of Romania derives
items of income which, in accordance with the provisions of Articles 10, 11 and
12, may be taxed in Australia, Romania shall allow as a deduction from the tax
on the income of that resident an amount equal to the tax paid in Australia.
However, that deduction shall not exceed that part of the tax, as computed
before the deduction is given, which is attributable to that income from
Australia.
2 In the case of Australia, double taxation shall be
eliminated 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), Romanian tax paid under the
law of Romania 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 Romania shall be allowed as a credit against
Australian tax payable in respect of that income; and
(b) where a company
which is a resident of Romania 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 not less than 10 per cent of
the voting power of the firstmentioned company, the credit referred to in
subparagraph (a) shall include the Romanian tax paid by that firstmentioned
company in respect of that portion of its profits out of which the dividend is
paid.
Article 24
Mutual agreement procedure
1 Where a person who is 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 the person in taxation not in accordance with
this Agreement, the person may, notwithstanding the remedies provided by the
domestic laws of those 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 giving rise to
taxation not in accordance with 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 this Agreement. The solution so reached shall
be implemented notwithstanding any time limits in the domestic laws 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
application 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 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 Agreement or of
the domestic laws of the Contracting States concerning the taxes to which this
Agreement applies in so far as the taxation under those laws 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
laws of that State and shall be disclosed only to persons or authorities
(including courts and administrative bodies) concerned with the assessment or
collection of, enforcement or prosecution in respect of, or the determination of
appeals in relation to, the taxes to which this Agreement applies and shall be
used only for such purposes. Those persons or authorities may disclose the
information in public court proceedings or in judicial decisions.
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 laws or the administrative
practice of that or of the other Contracting State; or
(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 26
Members of diplomatic missions and consular
posts
Nothing in this Agreement shall affect the fiscal privileges of members
of diplomatic missions or consular posts under the general rules of
international law or under the provisions of special agreements.
Article 27
Entry into force
Both Contracting States shall notify each other in writing of the
completion of their respective constitutional and legal procedures required for
the entry into force of this Agreement. This Agreement shall enter into force on
the date of the last notification, and thereupon the Agreement shall have
effect:
(a) in Romania:
in respect of taxes on income, profits and
gains for the taxable period starting from 1 January of the next calendar year
following that in which the Agreement enters into force;
(b) in
Australia:
(i) in respect of withholding tax on income that is derived by
a nonresident, in relation to income derived on or after 1 January in the
calendar year next following that in which the Agreement enters into
force;
(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 Agreement enters into
force.
Article 28
Termination
This Agreement shall continue in effect indefinitely, but either of the
Contracting States may, on or before 30 June in any calendar year beginning
after the expiration of five 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 Romania:
in respect of taxes on income, profits
and gains for the taxable period starting from 1 January of the next calendar
year 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 nonresident, 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 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,
have signed this Agreement.
DONE in duplicate at Canberra, this
second day of February, Two thousand, in the English and Romanian languages,
both texts being equally authentic.
FOR AUSTRALIA: FOR
ROMANIA:
ROD KEMP MANUELA VULPE
[Signatures omitted]
PROTOCOL
AUSTRALIA AND ROMANIA
HAVE AGREED at the signing of the
Agreement between the two States for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income upon the following
provision which shall form an integral part of the Agreement:
If, in an
agreement for the avoidance of double taxation that may subsequently be
concluded between Australia and a third State, there is included a
Non-discrimination Article, Australia shall immediately inform Romania in
writing through the diplomatic channel and shall enter into negotiations with
Romania in order to provide the same treatment for Romania as may be provided
for the third State.
IN WITNESS WHEREOF the undersigned, duly
authorised thereto, have signed this Protocol.
DONE in duplicate at
Canberra, this second day of February, Two thousand, in the English and Romanian
languages, both texts being equally authentic.
FOR AUSTRALIA: FOR
ROMANIA:
ROD KEMP MANUELA VULPE
[Signatures omitted]
International
Tax Agreements Act 1953
1 Subsection 3(1) (definition of the Finnish
agreement)
Add at the end “, as amended by the second Finnish
protocol”.
2 Subsection 3(1)
Insert:
the second Finnish protocol means the Protocol to
amend the agreement between Australia and Finland 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 25A.
3 After section 11P
Insert:
Subject to this Act, on and after the date of entry into force of the
second Finnish protocol, the provisions of the protocol, so far as those
provisions affect Australian tax, have the force of law according to their
tenor.
4 After Schedule 25
Insert:
Note: See section 3.
PROTOCOL TO AMEND THE AGREEMENT BETWEEN AUSTRALIA AND
FINLAND 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
FINLAND,
DESIRING to conclude a Protocol to amend the Agreement between
Australia and Finland for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income, signed at Canberra on 12
September 1984,
HAVE AGREED as follows:
Article I
Sub-paragraph (b) of paragraph (1) of Article 2 of the Agreement shall
be deleted and replaced by the following:
“(b) in
Finland:
(i) the state income taxes;
(ii) the corporate income
tax;
(iii) the communal
tax,
(iv) the
church tax;
(v) the tax withheld at source from interest;
and
(vi) the tax withheld at source from non-residents’
income.”
Article II
Article 10 of the Agreement shall be deleted and replaced by the
following:
“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, shall be
taxable only in that other State.
(2) Notwithstanding the provisions of
paragraph (1), dividends, other than dividends that are paid out of profits that
have borne the normal rate of company tax, 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 Contracting State, but the tax so
charged shall not exceed 15 per cent of the gross amount of the dividends. If
the relevant existing law in either Contracting State changes after the date of
signature of this Agreement, other 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.
(3) For the purposes of paragraph (2), profits have borne
the normal rate of company tax:
(a) in Australia, to the extent to which
the dividends have been fully “franked” in accordance with its tax;
and
(b) in Finland, where they have been subject to the corporate income
tax.
(4) The term “dividends” as used 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.
(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 in the other Contracting 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 any such case the provisions of Article 7 or Article 14, as the case may be,
shall apply.
(6) 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 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 Finland for the purposes of Finnish tax.”
Article III
The opening lines and sub-paragraphs (a) and (b) of paragraph (2) of
Article 23 of the Agreement shall be deleted and replaced by the
following:
“(2) Subject to the provisions of Finnish law regarding
the elimination of international double taxation (which shall not affect the
general principle hereof), double taxation shall be eliminated in Finland as
follows:
(a) where a resident of Finland derives income which, in
accordance with the provisions of this Agreement, may be taxed in Australia,
Finland shall, subject to the provisions of sub-paragraph (b), allow as a
deduction from the Finnish tax of that person, an amount equal to the Australian
tax paid under Australian law and in accordance with the Agreement, as computed
by reference to the same income by reference to which the Finnish tax is
computed;
(b) dividends paid by a company being a resident of Australia
to a company which is a resident of Finland and which controls directly at least
10 per cent of the voting power in the company paying the dividends shall be
exempt from Finnish tax.”
Article IV
Sub-paragraph (i) of paragraph (a) of the Protocol to the Agreement
shall be deleted.
Article V
(1) The Contracting States shall notify each other that the
constitutional requirements for the entry into force of this Protocol have been
complied with.
(2) The Protocol shall enter into force thirty days after
the date of the later of the notifications referred to in paragraph (1) and its
provisions shall 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 July in the calendar year next following that in
which the Protocol enters into force;
(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 Finland:
(i) in respect of
taxes withheld at source, on income derived on after 1 January in the calendar
year next following the year in which the Protocol enters into
force;
(ii) in respect of other taxes on income, for taxes chargeable for
any tax year beginning on or after 1 January in the calendar year next
following the year in which the Protocol enters into force.
IN
WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Protocol.
DONE in duplicate at Canberra this fifth day of November
1997, in the English and Finnish languages, both texts being equally
authentic.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF AUSTRALIA: OF
FINLAND:
PETER COSTELLO ESKO HAMILO
[Signatures
omitted]
International
Tax Agreements Act 1953
1 Sub-subparagraph (1)(j)(ii)(B) of Article 3 of
Schedule 2
Omit “resouces”, substitute “resources”.