Commonwealth Numbered Acts

INCOME TAX (INTERNATIONAL AGREEMENTS) AMENDMENT ACT 1980 No. 23 of 1980 - SCHEDULE 1

                                   SCHEDULE 1                          Section
8 

SCHEDULE TO BE INSERTED AFTER SCHEDULE 1
TO THE PRINCIPAL ACT

                                  SCHEDULE 1A                          Section
3 

PROTOCOL BETWEEN THE GOVERNMENT OF THE
COMMONWEALTH OF AUSTRALIA AND THE GOVERNMENT
OF THE UNITED KINGDOM OF GREAT BRITAIN AND
NORTHERN IRELAND AMENDING THE AGREEMENT
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES
ON INCOME AND CAPITAL GAINS, SIGNED AT CANBERRA ON
7 DECEMBER 1967

The Government of the Commonwealth of Australia and the Government of the
United Kingdom of Great Britain and Northern Ireland;

Desiring to conclude a Protocol to amend the Agreement between the Contracting
Governments for the Avoidance of Double Taxation and the prevention of Fiscal
Evasion with respect to Taxes on Income and Capital Gains signed at Canberra
on 7 December 1967 (hereinafter referred to as "the Agreement"); Have agreed
as follows:

ARTICLE 1

The following paragraph shall be added after paragraph (3) of Article 2 of the
Agreement.



"(3)(A) Where under the law in force in one of the territories an individual's
remuneration from an employment is reduced in charging it to tax in
consequence of a period or periods of absence by the individual from that
territory, or of the place where the employment is exercised, or of the
domicile of the individual, by deducting either the whole or a fixed
proportion of the amount arising, then

   (a)  where under this Agreement that remuneration would otherwise be
        relieved from tax in the other territory, the relief shall not extend
        to the amount so deducted; and

   (b)  the amount so deducted shall be regarded as income in respect of which
        the individual is exempt from and not subject to tax in the
        first-mentioned territory."

ARTICLE II Article 8 of the Agreement shall be deleted and replaced by the
following:



"ARTICLE 8

(1) (a) Dividends derived from a company which is resident in the United
Kingdom by an Australian resident may be taxed in Australia.

   (b)  Where an Australian resident is entitled to a tax credit in respect of
        such a dividend under paragraph (2) of this Article tax may also be
        charged in the United Kingdom and according to the laws of the United
        Kingdom on the aggregate of the amount or value of that dividend and
        the amount of that tax credit at a rate not exceeding 15 per cent.

   (c)  Except as aforesaid dividends derived from a company which is resident
        in the United Kingdom and which are beneficially owned by an
        Australian resident shall be exempt from any tax in the United Kingdom
        which is chargeable on dividends.

(2) An Australian resident individual who receives dividends from a company
which is resident in the United Kingdom shall, provided he is the beneficial
owner of the dividends, be entitled to the tax credit in respect thereof to
which an individual resident in the United Kingdom would have been entitled
had he received those dividends, and to the payment of any excess of such
credit over his liability to United Kingdom tax. Any such credit shall be
treated for the purposes of Australian tax as assessable income from sources
in the United Kingdom.

(3) Dividends derived from a company which is a resident of Australia and
which are beneficially owned by a United Kingdom resident may be taxed in the
United Kingdom. Such dividends may also be taxed in Australia but the tax so
charged shall not exceed 15 per cent of the gross amount of the dividends.

(4) The term "dividends" as used in this Article includes any item (other than
interest or royalties relieved from tax under Article 9 or Article 10 of this
Agreement) which-

   (a)  in the case of the United Kingdom is, under the law of the United
        Kingdom, a distribution of a company;

   (b)  in the case of Australia is, or is deemed to be, under the laws in
        force in Australia relating to Australian tax, a dividend.

(5) If the beneficial owner of dividends being an Australian resident owns 10
per cent or more of the class of shares in respect of which the dividends are
paid then paragraphs (1) and (2) of this Article shall not apply to the
dividends to the extent that they can have been paid only out of profits which
the company paying the dividends earned or other income which it received in a
period ending 12 months or more before the relevant date. For the purpose of
this paragraph the term "relevant date" means the date on which the beneficial
owner of the dividends became the owner of 10 per cent or more of the class of
shares in question.

Provided that this paragraph shall apply only if the shares were acquired
primarily for the purpose of securing the benefit of this Article and not for
bona fide commercial reasons.

(6) The provisions of paragraphs (1) and (2) or, as the case may be, paragraph
(3) of this Article shall not apply where a resident of one of the territories
has in the other territory a permanent establishment and the holding by virtue
of which the dividends are paid is effectively connected with the trade or
business carried on through such permanent establishment.

(7) Dividends paid by a company which is a resident of one of the territories
and which are beneficially owned by a person who is not a resident of the
other territory shall be exempt from tax in that other territory except
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment situated in that other
territory . Provided that this paragraph shall not apply in relation to any
United Kingdom company which is also a resident of Australia or any Australian
company which is also resident in the United Kingdom.

(8) The Government of one of the territories shall not impose on a company
which is a resident of the other territory any tax in the nature of an
undistributed profits tax on undistributed profits of the company on a basis
that is less favourable than that applicable in the case of a company which is
a resident of the first-mentioned territory."

ARTICLE III

This Protocol, which shall form an integral part of the Agreement, shall enter
into force on the date when the last of all such things shall have been done
in the United Kingdom and Australia as are necessary to give the Protocol the
force of law in the United Kingdom and Australia respectively, and shall
thereupon have effect:

   (a)  in the United Kingdom:

        (i)    as regards Article I, for any year of assessment beginning on
               or after 6 April 1980;

        (ii)   in relation to any dividend paid on or after 6 April 1977;

   (b)  in Australia:

        (i)    as regards Article I, for any year of income beginning on or
               after 1 July 1980;

        (ii)   in relation to any dividend paid on or after 6 April 1977. In
               witness whereof the undersigned, duly authorised thereto by
               their respective Governments, have signed this Protocol.

Done in duplicate at Canberra this twenty-ninth day of January, One thousand
nine hundred and eighty.
JOHN HOWARD                                        DONALD TEBBIT For the

Government of the                          For the Government of the

Commonwealth of Australia:                         United Kingdom of Great

Britain and Northern Ireland: