Commonwealth Numbered Acts Commonwealth Numbered ActsInternational Tax Agreements Act 1953
2 After section 11ZF
3 At the end of the Act
Schedule 42—South African agreement
DESIRING to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, the South
African agreement means the Agreement between the Government of Australia and
the Government of the Republic of South Africa for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
and the protocol to that agreement, being the agreement and protocol a copy of
each of which in the English language is set out in Schedule 42.
Subject to this Act, on and after the date of entry into force of the South
African agreement, the provisions of the agreement, so far as those provisions
affect Australian tax, have the force of law according to their tenor.
HAVE AGREED as
follows:
This Agreement shall apply to persons who
are residents of one or both of the Contracting States.
1 The existing taxes to which this Agreement shall apply are:
(a) in the case of Australia:
the income tax, and the resource rent tax in respect of offshore projects
relating to exploration for or exploitation of petroleum resources, imposed
under the federal law of Australia;
(b) in the case of South Africa:
(i) the normal tax; and
(ii) the secondary tax on companies.
2 The Agreement shall apply also to
any identical or substantially similar taxes which are imposed under
the federal law of Australia or by the Government of the Republic of
South Africa under its domestic law after the date of signature of the
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 law of
their respective States relating to the taxes to which the Agreement
applies within a reasonable period of time after those changes.
1 For the purposes of this Agreement,
unless the context otherwise requires:
(a) the term "Australia", when used in a geographical sense, excludes all
external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in this subparagraph) in respect of which
there is for the time being in force, consistently with international law, a
law of Australia dealing with the exploration for or exploitation of any of
the natural resources of the seabed and subsoil of the continental shelf;
(b) the term "South Africa" means the Republic of South Africa and, when
used in a geographical sense, includes its territorial sea as well as
any area outside the territorial sea, including the continental shelf,
which has been or may hereafter be designated, under the laws of South
Africa and in accordance with international law, as an area within
which South Africa may exercise sovereign rights or jurisdiction;
(c) the term "Australian tax" means tax imposed by Australia, being tax to
which the Agreement applies by virtue of Article 2;
(d) the term "South African tax" means tax imposed by South Africa, being
tax to which the Agreement applies by virtue of Article 2;
(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 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 South Africa, the Commissioner for
the South African Revenue Service or an authorised representative of
the Commissioner;
(g) the terms "a Contracting State" and "other Contracting State" mean
Australia or South Africa, as the context requires;
(h) 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 South
Africa, as the context requires;
(i) the term "international traffic" means any transport by a ship or
aircraft operated by an enterprise of a Contracting State, except when
the ship or aircraft is operated solely from a place or between places
in the other Contracting State;
(j) the term "person" includes an individual, a company and any other body
of persons;
(k) the term "tax" means Australian tax or South African tax as the
context requires, but does not include any penalty or interest imposed
under the law of either Contracting State relating to its tax.
2 As
regards the application of the Agreement at any time by a Contracting
State, any term not defined in the Agreement shall, unless the context
otherwise requires, have the meaning which it has at that time under
the law of that State concerning the taxes to which the Agreement
applies, any meaning under the applicable law of that State prevailing
over a meaning given to the term under other law of that State.
1 For the purposes of this Agreement, a person
is a resident of a Contracting State:
(a) in the case of Australia, if the person is a resident of Australia for
the purposes of Australian tax but does not include any person who is
liable to tax in Australia in respect only of income from sources in
Australia; and
(b) in the case of South Africa, any individual who is ordinarily resident
in South Africa and any other person which has its place of effective
management in South Africa.
The term "resident" also includes a
Contracting State and any political subdivision or local authority of
that State.
2 Where by reason of the preceding provisions of this
Article a person, being an individual, is a resident of both
Contracting States, then the person shall be deemed to be a resident
only of the Contracting State in which a permanent home is available
to the person, or 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 only of the Contracting State with which the
person's personal and economic relations are closer.
3 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 only of the State in which its place of
effective management is situated.
1 For the purposes of this Agreement, the term "permanent
establishment" means a fixed place of business through which the
business of the enterprise is wholly or partly carried on.
2 The term
"permanent establishment" includes:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place relating to
the exploration for or exploitation of natural resources;
(g) an agricultural, pastoral or forestry property; and
(h) a building site or construction, installation or assembly project
which exists for more than 12 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
irregular 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 irregular
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.
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 12
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 by, for or under
contract with the enterprise; or
(c) a person acting in a Contracting State on behalf of an enterprise of
the other Contracting State manufactures or processes in the
firstmentioned State for the enterprise goods or merchandise belonging
to 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 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.
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 5 of Article 11 and paragraph 5 of
Article 12 whether there is a permanent establishment outside both
Contracting States, and whether an enterprise, not being an enterprise
of a Contracting State, has a permanent establishment in a Contracting
State.
1 Income
from real property may be taxed in the Contracting State in which the
real property is situated.
2 In this Article, the term "real
property":
(a) in the case of Australia, has the meaning which it has under the law
of Australia and includes:
(i) a lease of land and any other interest in or over land, whether
improved or not, including a right to explore for mineral, oil or gas
deposits or other natural resources, and a right to mine those
deposits or resources; and
(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, oil or gas deposits, quarries or other places of
extraction or exploitation of natural resources; and
(b) in the case of South Africa, means such property which according to
the law of South Africa is immovable property, and includes:
(i) property accessory to immovable property;
(ii) rights to which the provisions of general law respecting landed
property apply;
(iii) usufruct of immovable property; and
(iv) a right to receive variable or fixed payments either as consideration
for or in respect of the exploitation of, or the right to explore for
or exploit, mineral, oil or gas deposits, quarries or other places of
extraction or exploitation of natural resources.
3 Any interest or
right referred to in paragraph 2 shall be regarded as situated where
the land, immovable property, mineral, oil or gas deposits, quarries
or natural resources, as the case may be, are situated or where the
exploration may take place.
4 The provisions of paragraph 1 shall
apply to income derived from the direct use, letting or use in any
other form of real property.
5 The provisions of paragraphs 1, 3 and
4 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.
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 reasonably 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
determining the profits of a permanent establishment, there shall be
allowed as deductions expenses of the enterprise, being expenses which
are incurred for the purposes of the permanent establishment
(including executive and general administrative expenses so incurred)
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, including determinations 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 it is practicable
to do so, 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 the 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.
For the purposes of this paragraph, in the case of
South Africa "trust estate" means a trust.
1 Profits of an enterprise of a Contracting State derived
from the operation of ships or aircraft shall be taxable only in that
State.
2 Notwithstanding the provisions of paragraph 1, those 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 The
profits to which the provisions of paragraphs 1 and 2 apply shall
include profits from:
(a) the lease of ships or aircraft on a bareboat basis, and of containers
and related equipment, which is merely incidental to the international
operation of ships or aircraft by the lessor, provided that the leased
ships or aircraft, or the containers and related equipment, are used
in international operations by the lessee; and
(b) the operation of ships or aircraft derived through participation in a
pool service or other profit sharing arrangement.
4 For the purposes
of this Article, profits derived from the carriage by ships or
aircraft of passengers, livestock, mail, goods or merchandise which
are shipped in a Contracting State and are discharged at a place in
that State shall be treated as profits from ship or aircraft
operations confined solely to places in that State.
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 reasonably be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might reasonably have been expected to accrue to one of
the enterprises but, by reason of those conditions, have not so
accrued, may be included in the profits of that enterprise and taxed
accordingly.
2 Nothing in this Article shall affect the application
of any law of a Contracting State relating to the determination of the
tax liability of a person, including determinations in cases where the
information available to the competent authority of that State is
inadequate to determine the profits accruing 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 the provisions 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 reasonably 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 reasonably 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 the tax charged on those profits in the firstmentioned
State if that State agrees with the primary adjustment. In determining
the adjustment by the firstmentioned State, 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.
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:
(a) no tax shall be charged on dividends where those dividends are paid
out of profits that have borne the normal rate of company tax where
those dividends are paid to a company which holds directly at least 10
per cent of the capital of the company paying the dividends; and
(b) tax charged shall not exceed 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 of company tax:
(a) in Australia, to the extent to which the dividends have been fully
"franked" in accordance with its law relating to tax; and
(b) in South Africa, where they have been subject to South African tax.
4
The term "dividends" as used in this Article means income from shares,
as well as other amounts which are subjected to the same taxation
treatment as income from shares by the law of the State of which the
company making the distribution is a resident for the purposes of its
tax.
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 Where a company is
a resident of a Contracting State, the other Contracting State may not
impose any tax on dividends paid by the company, except insofar as:
(a) a resident of that other State is beneficially entitled to the
dividends; or
(b) the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment or a fixed base situated in
that other State; or
(c) (i) that other State does not subject profits attributable to a
permanent establishment to tax in excess of the rate of income tax (in
the case of Australia) or normal tax (in the case of South Africa)
payable on the profits of a company which is a resident of that State;
and
(ii) the dividends are paid out of profits attributable to one or more
permanent establishments which the company has in that other State.
Where subparagraph (c) applies and subparagraphs (a) and (b) do not
apply, the tax shall not exceed 5 per cent of the gross amount of the
dividends. 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 South Africa for the
purposes of South African tax.
7 Notwithstanding any other provisions
of the Agreement, where a company which is a resident of a Contracting
State has a permanent establishment in the other Contracting State,
that other State may tax the profits attributable to the permanent
establishment at a rate not exceeding by more than 5 percentage
points:
(a) in the case of Australia, the rate of income tax payable on the
profits of a company which is a resident of Australia; and
(b) in the case of South Africa, the rate of normal tax payable on the
profits of a company which is a resident of South Africa.