Income Tax (International Agreements) Amendment Act 1983 (Cth)
Section
1. Short title, &c.
2. Commencement
3. Interpretation
4. Repeal of section 6 and substitution of new section—
6. Convention with United States of America
5. Agreement with Singapore
6. Airline profits agreement with Italy
7. Insertion of new section—
10a. Convention with Italy
8. Agreement with Malaysia
9. Insertion of new sections—
11j. Airline profits agreement with the Republic of India
11k. Agreement with Ireland
11l. Convention with the Republic of Korea
11m. Convention with the Kingdom of Norway
10. Provisions relating to certain income derived from sources in certain countries
11. Repeal of section 19a
12. Collection of tax due to the United States of America
13. Schedule 2
14. Addition of Schedules
[
BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:
(a) by omitting “or” from paragraph (c) of the definition of “agreement” in sub-section (1);
(b) by adding at the end of the definition of “agreement” in sub-section (1) the following word and paragraph:
“or (e) the previous United States convention;”;
(c) by omitting from sub-section (1) the definition of “the Italian agreement” and substituting the following definitions:
“‘the Indian airline profits agreement’ means the Agreement between the Government of Australia and the Government of the Republic of India for the avoidance of double taxation of income derived from international air transport, being the agreement a copy of which in the English language is set out in Schedule 19;
‘the Irish agreement’ means the Agreement between the Government of Australia and the Government of Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, being the agreement a copy of which is set out in Schedule 20;
‘the Italian airline profits agreement’ means the Agreement between the Government of Australia and the Government of Italy for the avoidance of double taxation of income derived from international air transport, being the agreement a copy of which in the English language is set out in Schedule 8;
‘the Italian convention’ means the Convention between Australia and the Republic of Italy for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that convention, being the convention and protocol a copy of each of which in the English language is set out in Schedule 21;”;
(d) by inserting after the definition of “the Japanese agreement” in sub-section (1) the following definition:
“‘the Korean convention’ means the Convention between the Government of Australia and the Government of the Republic of Korea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the protocol to that convention, being the convention and protocol a copy of each of which in the English language is set out in Schedule 22;”;
(e) by inserting after the definition of “the New Zealand agreement” in sub-section (1) the following definition:
“‘the Norwegian convention’ means the Convention between Australia and the Kingdom of Norway for the avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income and on capital and the protocol to that convention, being the convention and protocol a copy of each of which is set out in Schedule 23;”; and
(f) by inserting after the definition of “the previous United Kingdom agreement” in sub-section (1) the following definition:
“‘the previous United States convention’ means the Convention between the Government of Australia and the Government of the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Washington on 14 May 1953;”.
“6. (1) Subject to this Act, on and after the date of entry into force of the United States convention, the provisions of Articles 1 to 22 (inclusive) and Articles 24 to 29 (inclusive) of the convention, so far as those provisions affect Australian tax, have the force of law in relation to tax in respect of—
(a) income, being dividends, interest or royalties to which Article 10, 11 or 12, as the case may be, of the convention applies, derived on or after the first day of the second month following the month in which the convention enters into force, and in relation to which the convention remains effective; and
(b) income to which paragraph (a) does not apply, being income of a year of income commencing on or after the first day of the second month following the month in which the convention enters into force, and in relation to which the convention remains effective.
“(2) As soon as
practicable after the entry into force of the United States convention in
accordance with Article 28 of the convention, the Treasurer shall cause to be
published in the
“(3) The provisions of the previous United States convention, so far as those provisions affect Australian tax, continue to have the force of law in relation to tax in respect of income in relation to which the convention remains effective.”.
“(3) As soon as practicable after an exchange of Notes for the purpose of the making of an agreement under sub-paragraph (a) of paragraph (3) of Article 18 of the Singapore agreement that provisions granting an exemption from or reduction of Singapore tax are of a substantially similar character to the provisions of Parts V and VI of the Economic Expansion Incentives (Relief
from
Income Tax) Act, 1967, of Singapore, the Treasurer shall cause to be published
in the
“10a. (1) Subject to this Act, on and after the date of entry into force of the Italian convention, the provisions of the convention, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law—
(a) in relation to withholding tax—in respect of dividends or interest derived on or after 1 July 1976 and in relation to which the convention remains effective; and
(b) in relation to tax other than withholding tax—in respect of income of any year of income commencing on or after 1 July 1976 and in relation to which the convention remains effective.
“(2)
As soon as practicable after the entry into force of the Italian convention in
accordance with Article 29 of the convention, the Treasurer shall cause to be
published in the
“(5)
As soon as practicable after an Exchange of Letters for the purpose of the
making of an agreement under sub-paragraph (a) (ii) of paragraph 5 of Article
23 of the Malaysian agreement that provisions are of a substantially similar
character to the provisions specified in sub-paragraph (a) (i) of that
paragraph, the Treasurer shall cause to be published in the
“11j. (1) Subject to this Act, on and after the date of entry into force of the Indian airline profits agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law in relation to tax in respect of income derived on or after 1 April 1975 and in relation to which the agreement remains effective.
“(2)
As soon as practicable after the entry into force of the Indian airline profits
agreement in accordance with Article 4 of the agreement, the Treasurer shall
cause to be published in the
“11k. (1) Subject to this Act, on and after the date of entry into force of the Irish agreement, the provisions of the agreement, so far as those provisions affect Australian tax, have the force of law—
(a) in relation to withholding tax—in respect of dividends or interest derived on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective; and
(b) in relation to tax other than withholding tax—in respect of income of any year of income commencing on or after 1 July in the calendar year immediately following that in which the agreement enters into force and in relation to which the agreement remains effective.
“(2)
As soon as practicable after the entry into force of the Irish agreement in
accordance with Article 29 of the agreement, the Treasurer shall cause to be
published in the
“11l. (1) Subject to this Act, on and after the date of entry into force of the Korean convention, the provisions of the convention, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law—
(a) in relation to withholding tax—in respect of dividends or interest derived on or after 1 January 1982 and in relation to which the convention remains effective; and
(b) in relation to tax other than withholding tax—in respect of income of any year of income commencing on or after 1 July 1982 and in relation to which the convention remains effective.
“(2) As soon as practicable after the entry into force of the Korean convention in accordance with Article 28 of the convention, the Treasurer shall
cause
to be published in the
“(3)
As soon as practicable after an exchange of letters for the purpose of the
making of an agreement under sub-paragraph (3) (b) of Article 24 of the Korean
convention as to the provisions of the laws of Korea relating to Korean tax
that fall within the definition of the term ‘the
relevant legislation’ for the
purposes of sub-paragraph (3) (a) of that Article, the Treasurer shall cause to
be published in the
“(4)
As soon as practicable after an exchange of letters for the purpose of the
making of an agreement under paragraph (5) of Article 24 of the Korean
convention fixing a date, the Treasurer shall cause to be published in the
“11m. (1) Subject to this Act, on and after the date of entry into force of the Norwegian convention, the provisions of the convention, so far as those provisions affect Australian tax, have, and shall be deemed to have had, the force of law—
(a) in relation to withholding tax—in respect of dividends or interest derived on or after 1 July 1982 and in relation to which the convention remains effective; and
(b) in relation to tax other than withholding tax—in respect of income of any year of income commencing on or after 1 July 1982 and in relation to which the convention remains effective.
“(2)
As soon as practicable after the entry into force of the Norwegian convention
in accordance with Article 29 of the convention, the Treasurer shall cause to
be published in the
“(3)
As soon as practicable after confirmation of receipt of a note forwarded by the
Government of the Kingdom of Norway for the purposes of sub-paragraph (2) (b)
of the protocol that forms part of the Norwegian convention, the Treasurer
shall cause to be published in the
(a) by omitting from paragraph (1) (an) “or” (last occurring); and
(b) by inserting after paragraph (1) (an) the following paragraphs:
“(ao) income being interest or royalties to which paragraph (1) of Article 11 or paragraph (1) of Article 12 of the United States convention applies, where the income is derived, on or after the first day of the second month following the month in which the convention enters into force, from sources in the United States of America;
“(ap) income being interest or royalties to which paragraph (1) of Article 12 or paragraph (1) of Article 13 of the Irish agreement applies, where the income is derived, in the year of income commencing on 1 July in the calendar year immediately following that in which the agreement enters into force, or a subsequent year of income, from sources in Ireland;
“(aq) income being interest or royalties to which paragraph (1) of Article 11 or paragraph (1) of Article 12 of the Italian convention applies, where the income was derived, in the year of income that commenced on 1 July 1976, or a subsequent year of income, from sources in Italy;
“(ar) income being interest or royalties to which paragraph (1) of Article 11 or paragraph (1) of Article 12 of the Korean convention applies, where the income was derived, in the year of income that commenced on 1 July 1982, or a subsequent year of income, from sources in Korea;
“(as) income being interest or royalties to which paragraph (1) of Article 11 or paragraph (1) of Article 12 of the Norwegian convention applies, where the income was derived, in the year of income that commenced on 1 July 1982, or a subsequent year of income, from sources in Norway; or”.
income unless there is a decrease, by virtue of the Korean convention, in the tax payable under the law of Korea in respect of that income and, where there is such a decrease, the amount of the increase shall not exceed the amount of the decrease expressed in Australian currency.
SCHEDULE TO BE SUBSTITUTED FOR SCHEDULE 2 TO THE PRINCIPAL ACT
“SCHEDULE 2 Section 3
CONVENTION BETWEEN THE GOVERNMENT
OF AUSTRALIA
AND THE GOVERNMENT OF
THE UNITED STATES OF AMERICA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of Australia and the Government of the United States of America,
Desiring to conclude a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income,
Have agreed as follows:
ARTICLE 1
(1) Except as otherwise provided in this Convention, this Convention shall apply to persons who are residents of one or both of the Contracting States.
(2) This Convention shall not restrict in any manner any exclusion, exemption, deduction, rebate, credit or other allowance accorded from time to time:
(a) by the laws of either Contracting State; or
(b) by any other agreement between the Contracting States.
(3) Notwithstanding any provision of this Convention, except paragraph (4) of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)) and individuals electing under its domestic law to be taxed as residents of that State, and by reason of citizenship may tax its citizens, as if this Convention had not entered into force. For this purpose, the term ‘citizen’ shall, with respect to United States source income according to United States law relating to United States tax, include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss.
(4) The provisions of paragraph (3) shall not affect:
(a) the benefits conferred by a Contracting State under paragraph (2) of Article 9 (Associated Enterprises), paragraph (2) or (6) of Article 18 (Pensions, Annuities, Alimony and Child Support), Article 22 (Relief from Double Taxation), 23 (Non-Discrimination), 24 (Mutual Agreement Procedure) or paragraph (1) of Article 27 (Miscellaneous); or
(b) the benefits conferred by a Contracting State under Article 19 (Governmental Remuneration), 20 (Students) or 26 (Diplomatic and Consular Privileges) upon individuals who are neither citizens of, nor have immigrant status in, that State (in the case of benefits conferred by the United States), or who are not ordinarily resident in that State (in the case of benefits conferred by Australia).
ARTICLE 2
(1) The existing taxes to which this Convention shall apply are:
(a) in the United States: the Federal income taxes imposed by the Internal Revenue Code, but excluding the accumulated earnings tax and the personal holding company tax; and
(b) in Australia: the Australian income tax, including the additional tax upon the undistributed amount of the distributable income of a private company.
(2) This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes. At the end of each calendar year, the competent authority of each Contracting State shall notify the competent authority of the other Contracting State of any substantial changes which have been made during that year in the laws of his State relating to the taxes to which this Convention applies or in the official interpretation of those laws or of this Convention.
ARTICLE 3
(1) For the purposes of this Convention, unless the context otherwise requires:
(a) the term ‘person’ includes an individual, an estate of a deceased individual, a trust, a partnership, a company and any other body of persons;
(b) the term ‘company’ means any body corporate or any entity which is treated as a company or body corporate for tax purposes;
(c) the terms ‘enterprise of one of the Contracting States’ and ‘enterprise of the other Contracting State’ mean an enterprise carried on by a resident of Australia or an enterprise carried on by a resident of the United States, as the context requires;
(d) the term ‘international traffic’ means any transport by a ship or aircraft, except where such transport is solely between places within a Contracting State;
(e) the term ‘competent authority’ means:
(i) in the case of the United States: the Secretary of the Treasury or his delegate; and
(ii) in the case of Australia: the Commissioner of Taxation or his authorized representative;
(f) the terms ‘Contracting State’, ‘one of the Contracting States’ and ‘the other Contracting State’ mean the United States or Australia, as the context requires;
(g) (i) the term ‘United States corporation’ means a corporation which, under United States law relating to United States tax, is a domestic corporation or an unincorporated entity treated as a domestic corporation, and which is not, under the law of Australia relating to Australian tax, a resident of Australia; and
(ii) the term ‘Australian corporation’ means a company, as defined under the law of Australia relating to Australian tax, which, under that law, is a resident of Australia, and which is not, under United States law relating to United States tax, a domestic corporation or an unincorporated entity treated as a domestic corporation;
(h) the term ‘State’ means any National State, whether or not one of the Contracting States;
(i) the term ‘United States tax’ means tax imposed by the United States to which this Convention applies by virtue of Article 2 (Taxes Covered) and the term ‘Australian tax’ means tax imposed by Australia to which this Convention applies by virtue of Article 2 (Taxes Covered), but neither term includes any amount which represents a penalty or interest imposed under the law of either Contracting State relating to United States tax or Australian tax;
(j) (i) the term ‘United States’ means the United States of America; and
(ii) when used in a geographical sense, the term ‘United States’ means the states thereof and the District of Columbia and also includes:
(a) the territorial waters thereof; and
(B) the sea-bed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial waters, over which the United States exercises rights, in accordance with international law, for the purposes of exploration for, or exploitation of, the natural resouces of those areas;
(k) the term ‘Australia’ means the Commonwealth of Australia and, when used in a geographical sense, includes:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia or of the said Territories in respect of which there is for the time being in force, consistently with international law, a law of Australia or of a State or part of Australia or of a Territory aforesaid dealing with the exploitation of any of the natural resources of the sea-bed and subsoil of the continental shelf;
(1) the terms ‘resident of one of the Contracting States’ and ‘resident of the other Contracting State’ mean a resident of Australia or a resident of the United States, as the context requires.
(2) As regards the application of this Convention by one of the Contracting States, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws of that State relating to the taxes to which this Convention applies.
ARTICLE 4
(1) For the purposes of this Convention:
(a) a person is a resident of Australia if the person is:
(i) an Australian corporation; or
(ii) any other person (except a company as defined under the law of Australia relating to Australian tax) who, under that law, is a resident of Australia,
provided that, in relation to any income, a person who:
(iii) is subject to Australian tax on income which is from sources in Australia; or
(iv) is a partnership, an estate of a deceased individual or a trust (other than a trust that is a provident, benefit, superannuation or retirement fund, or that is established for public charitable purposes or for the purpose of enabling scientific research to be conducted by or in conjunction with a public university or public hospital, the income of which is exempt from tax under the law of Australia relating to Australian tax),
shall not be treated as a resident of Australia except to the extent that the income is subject to Australian tax as the income of a resident, either in the hands of that person or in the hands of a partner or beneficiary, or, if that income is exempt from Australian tax, is so exempt solely because it is subject to United States tax; and
(b) a person is a resident of the United States if the person is:
(i) a United States corporation; or
(ii) any other person (except a corporation or unincorporated entity treated as a corporation for United States tax purposes) resident in the United States for purposes of its tax, provided that, in relation to any income derived by a partnership, an estate of a deceased individual or a trust, such person shall not be treated as a resident of the United States except to the extent that the income is subject to United States tax as the income of a resident, either in its hands or in the hands of a partner or beneficiary, or, if that income is exempt from United States tax, is exempt other than because such person, partner or beneficiary is not a United States person according to United States law relating to United States tax.
(2) Where by application of paragraph (1) an individual is a resident of both Contracting States, he shall be deemed to be a resident of the State:
(a) in which he maintains his permanent home;
(b) if the provisions of sub-paragraph (a) do not apply, in which he has an habitual abode if he has his permanent home in both Contracting States or in neither of the Contracting States; or
(c) if the provisions of sub-paragraphs (a) and (b) do not apply, with which his personal and economic relations are closer if he has an habitual abode in both Contracting States or in neither of the Contracting States.
For the purposes of this paragraph, in determining an individual’s permanent home, regard shall be given to the place where the individual dwells with his family, and in determining the Contracting State with which an individual’s personal and economic relations are closer, regard shall be given to his citizenship (if he is a citizen of one of the Contracting States).
(3) An individual who is deemed to be a resident of one of the Contracting States for any year of income, or taxable year, as the case may be by reason of the provisions of paragraph (2) shall, for all purposes of this Convention, be deemed to be a resident only of that State for such year.
ARTICLE 5
(1) For the purposes of this Convention, the term ‘permanent establishment’ means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
(2) The term ‘permanent establishment’ shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, assembly or installation project which exists for more than 9 months; and
(i) an installation, drilling rig or ship that, for an aggregate period of at least 6 months in any 24 month period, is used by an enterprise of one of the Contracting States in the other Contracting State for dredging or for or in connection with the exploration or exploitation of natural resources of the sea-bed and subsoil.
(3) Notwithstanding paragraphs (1) and (2), an enterprise of one of the Contracting States shall not be regarded as having a permanent establishment solely as a result of one or more of the following:
(a) the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business for the purpose of activities which have a preparatory or auxiliary character, such as advertising or scientific research, for the enterprise;
(f) the maintenance of a building site or construction, assembly or installation project which does not exist for more than 9 months; or
(g) the use by that enterprise in the other Contracting State, of an installation, drilling rig or ship for dredging, or for or in connection with the exploration or exploitation of natural resources of the sea-bed and subsoil, provided that such use is not for an aggregate period of at least 6 months in any 24 month period.
(4) Notwithstanding paragraphs (1) and (2), an enterprise of one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State if:
(a) it carries on business in that other State through a person, other than an agent of independent status to whom paragraph (5) applies, who has authority to conclude contracts on behalf of that enterprise and habitually exercises that authority in that other State, unless the activities of such person are limited to those mentioned in paragraph (3) which, if exercised through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of that paragraph;
(b) it maintains substantial equipment for rental or other purposes within that other State (excluding equipment let under a hire-purchase agreement) for a period of more than 12 months;
(c) it engages in supervisory activities in that other State for more than 9 months in any 24 month period in connection with a building site or construction, assembly or installation project in that other State; or
(d) it has goods or merchandise belonging to it that:
(i) were purchased by it in that other State, and not subjected to prior substantial processing outside that other State; or
(ii) were produced by it or on its behalf in that other State, and are, after such purchase or production, subjected to substantial processing in that other State by an enterprise where either enterprise participates directly or indirectly in the management, control or capital of the other enterprise, or where the same persons participate directly or indirectly in the management, control or capital of both enterprises.
(5) An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because that enterprise carries on business in that other State through a broker, general commission agent, or any other agent of independent status, where such broker or agent is acting in the ordinary course of his business as a broker, general commission agent or other agent of independent status.
(6) The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
(7) The principles set forth in the preceding paragraphs of this Article shall be applied in determining for purposes of this Convention whether there is a permanent establishment in a State other than one of the Contracting States and whether an enterprise other than an enterprise of one of the Contracting States has a permanent establishment in one of the Contracting States.
ARTICLE 6
(1) Income from real property may be taxed by the Contracting State in which such real property is situated.
(2) For the purposes of this Convention:
(i) a leasehold interest in land, whether or not improved, shall be regarded as real property situated where the land to which the interest relates is situated; and
(ii) rights to exploit or to explore for natural resources shall be regarded as real property situated where the natural resources are situated or sought.
ARTICLE 7
(1) The business profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the business profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the business profits which it might be expected to make if it were a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.
(3) In the determination of the business profits of a permanent establishment, there shall be allowed as deductions expenses which are reasonably connected with the profits (including executive and general administrative expenses) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere.
(4) No business profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
(5) For the purposes of the preceding paragraphs of this Article, the business profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
(6) Where business profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
(7) Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that, on the basis of the available information, the determination of the profits of the permanent establishment is consistent with the principles stated in this Article.
(8) Nothing in this Article shall in a Contracting State prevent the operation in that State of its law relating specifically to the taxation of any person who carries on the business of any form of insurance (as long as that law as in effect on the date of signature of this Convention is not varied otherwise than in minor respects so as not to affect its general character).
ARTICLE 8
(1) Profits derived by a resident of one of the Contracting States from the operation in international traffic of ships or aircraft shall be taxable only in that State. For the purposes of this Article, profits from the operation in international traffic of ships or aircraft include:
(a) profits from the lease on a full basis of ships or aircraft operated in international traffic by the lessee, provided that the lessor either operates ships or aircraft otherwise than solely between places in the other Contracting State or regularly leases ships or aircraft on a full basis; and
(b) profits from the lease of ships or aircraft on a bare boat basis or of containers and related equipment, provided that such lease is merely incidental to the operation in international traffic of ships or aircraft by the lessor and the leased ships or aircraft are operated in international traffic, or the containers and related equipment are used in international traffic, by the lessee.
(2) The provisions of paragraph (1) shall apply to the share of the profits from the operation in international traffic of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organization or in an international operating agency.
(3) For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in a Contracting State for discharge at another place in that State shall not be treated as profits from the operation in international traffic of ships or aircraft and may be taxed in that State.
ARTICLE 9
(1) Where:
(a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State,
and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
(2) Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1), in the profits of an enterprise of the other Contracting State and taxed accordingly, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-mentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the first-mentioned State.
In determining such an adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.
(3) Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the income to be attributed to an enterprise, provided that, on the basis of the available information, the determination of that tax liability is consistent with the principles stated in this Article.
ARTICLE 10
(1) Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed 15 percent of the gross amount of the dividends.
(3) The term ‘dividends’ in this Article means income from shares and other income assimilated to income from shares by the taxation law of the Contracting State of which the company making the distribution is a resident for the purposes of its tax.
(4) The provisions of paragraph (2) shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business in the other Contracting State, being the State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.
(5) Where a company is a resident of one of the Contracting States, the other Contracting State may not impose any tax on dividends paid by the company, except insofar as:
(a) a resident of that other State is beneficially entitled to the dividends;
(b) the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State; or
(c) that other State does not impose a tax of the kind described in paragraph (6) (excluding the accumulated earnings tax and the personal holding company tax imposed by the United States) and the dividends are paid out of profits attributable to one or more permanent establishments which such company had in that other State, provided that the gross income attributable to such permanent establishments constituted at least 50 percent of such company’s gross income from all sources.
Where sub-paragraph (c) applies and sub-paragraphs (a) and (b) do not apply, any such tax shall not exceed 15 percent of the dividends.
(6) Nothing in this Convention shall be construed as preventing a Contracting State from imposing on the income of a company which is a resident of the other Contracting State, tax in addition to the taxes referred to in Article 2 in relation to the first-mentioned Contracting State which are payable by a company which is a resident of the first-mentioned State, provided that any such additional tax shall not exceed 15 percent of the amount by which the taxable income of the first-mentioned company of a year of income exceeds the tax payable on that taxable income to the first-mentioned State. Any tax payable to a Contracting State on the undistributed profits of a company which is a resident of the other Contracting State shall be calculated as if that company were not liable to the additional tax referred to in this paragraph and had paid dividends of such amount that tax equal to the amount of that additional tax would have been payable on the dividends in accordance with paragraph (2) of this Article.
ARTICLE 11
(1) Interest from sources in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such interest may be taxed in the Contracting State in which it has its source, and according to the law of that State, but the tax so charged shall not exceed 10 percent of the gross amount of the interest.
(3) Paragraph (2) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State or performs independent personal services in that other State from a fixed base situated therein and the indebtedness giving rise to the interest is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.
(4) Where, owing to a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the interest paid shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention.
(5) The term ‘interest’ as used in this Convention includes income which, under the taxation law of the Contracting State in which the income has its source, is assimilated to income from money lent.
(6) A Contracting State may not impose any tax on interest paid by a resident of the other Contracting State, except insofar as:
(a) such interest has its source in the first-mentioned State, or is interest to which a resident of that State is beneficially entitled; or
(b) the indebtedness in respect of which the interest is paid is effectively connected with a permanent establishment or a fixed base of the beneficial owner of the interest situated in the first-mentioned State.
(7) Interest shall be treated as income from sources in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether he is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to have its source in the State in which the permanent establishment or fixed base is situated.
ARTICLE 12
(1) Royalties from sources in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.
(2) Such royalties may be taxed in the Contracting State in which they have their source, and according to the law of that State, but the tax so charged shall not exceed 10 percent of the gross amount of the royalties.
(3) Paragraph (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State or performs independent personal services in that other State from a fixed base situated therein, and the property or rights giving rise to the royalties are effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.
(4) The term ‘royalties’ in this Article means:
(a) payments or credits of any kind to the extent to which they are consideration for the use of or the right to use any:
(i) copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right;
(ii) industrial, commercial or scientific equipment, other than equipment let under a hire purchase agreement;
(iii) motion picture films; or
(iv) films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting;
(b) payments or credits of any kind to the extent to which they are consideration for:
(i) the supply of scientific, technical, industrial or commercial knowledge or information owned by any person;
(ii) the supply of any assistance of an ancillary and subsidiary nature furnished as a means of enabling the application or enjoyment of knowledge or information referred to in sub-paragraph (b) (i) or of any other property or right to which this Article applies; or
(iii) a total or partial forbearance in respect of the use or supply of any property or right described in this paragraph; or
(c) income derived from the sale, exchange or other disposition of any property or right described in this paragraph to the extent to which the amounts realized on such sale, exchange or other disposition are contingent on the productivity, use or further disposition of such property or right.
(5) Where, owing to a special relationship between the payer and the person beneficially entitled to the royalties or between both of them and some other person, the amount of the royalties paid or credited, having regard to what they are paid or credited for, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the royalties paid or credited shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention.
(6) (a) Royalties shall be treated as income from sources in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment or fixed base, then the royalties shall be deemed to have their source in the State in which the permanent establishment or fixed base is situated.
(b) Where sub-paragraph (a) does not operate to treat royalties as being from sources in one of the Contracting States, and the royalties relate to use or the right to use in one of the Contracting States of any property or right described in paragraph (4), the royalties shall be treated as income from sources in that State.
ARTICLE 13
(1) Income or gains derived by a resident of one of the Contracting States from the alienation or disposition of real property situated in the other Contracting State may be taxed in that other State.
(2) For the purposes of this Article:
(a) the term ‘real property situated in the other Contracting State’, where the United States is that other Contracting State, includes a United States real property interest, and real property referred to in Article 6 which is situated in the United States; and
(b) the term ‘real property’, in the case of Australia, shall have the meaning which it has under the laws in force from time to time in Australia and, without limiting the foregoing, includes:
(i) real property referred to in Article 6;
(ii) shares or comparable interests in a company, the assets of which consist wholly or principally of real property situated in Australia; and
(iii) an interest in a partnership, trust or estate of a deceased individual, the assets of which consist wholly or principally of real property situated in Australia.
(3) Income or gains derived by an enterprise of one of the Contracting States from the alienation of ships, aircraft or containers operated or used by it in international traffic shall, except to the extent to which that enterprise has been allowed depreciation in the other Contracting State in respect of those ships, aircraft or containers, be taxable only in that State, and income described in sub-paragraph (4) (c) of Article 12 (Royalties) shall be taxable only in accordance with the provisions of Article 12.
(4) For the purposes of this Article, real property consisting of shares in a company referred to in sub-paragraph (2) (b) (ii), and interests in a partnership, trust or estate referred to in sub-paragraph (2) (b) (iii), shall be deemed to be situated in Australia.
ARTICLE 14
Income derived by an individual who is a resident of one of the Contracting States from the performance of personal services in an independent capacity shall be taxable only in that State unless such services are performed in the other Contracting State and:
(a) the individual is present in that other State for a period or periods aggregating more than 183 days in the taxable year or year of income of that other State; or
(b) the individual has a fixed base regularly available to him in that other State for the purpose of performing his activities, in which case so much of the income as is attributable to that fixed base may be taxed in such other State.
ARTICLE 15
(1) Subject to the provisions of Articles 18 (Pensions, Annuities, Alimony and Child Support) and 19 (Governmental Remuneration), salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment or in respect of services performed as a director of a company shall be taxable only in that State unless the employment is exercised or the services performed in the other Contracting State. If the employment is so exercised or the services so performed, such remuneration as is derived from that exercise or performance may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment exercised in the other Contracting State or in respect of services performed in the other Contracting State as a director of a company shall be taxable only in the first-mentioned State if:
(a) the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days in the taxable year or year of income of that other State;
(b) the remuneration is paid by, or on behalf of, an employer or company who is not a resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a permanent establishment, a fixed base or a trade or business which the employer or company has in that other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States may be taxed in that State.
ARTICLE 16
(1) A person (other than an individual) which is a resident of one of the Contracting States shall not be entitled under this Convention to relief from taxation in the other Contracting State unless:
(a) more than 75 percent of the beneficial interest in such person (or in the case of a company, more than 75 percent of the number of shares of each class of the company’s shares) is owned, directly or indirectly, by any combination of one or more of:
(i) individuals who are residents of the United States;
(ii) citizens of the United States;
(iii) individuals who are residents of Australia;
(iv) companies as described in sub-paragraph (b); and
(v) the Contracting States;
(b) it is a company in whose principal class of shares there is substantial and regular trading on a recognized stock exchange in one of the Contracting States; or
(c) the establishment, acquisition and maintenance of such person and the conduct of its operations did not have as one of its principal purposes the purpose of obtaining benefits under the Convention.
(2) For the purposes of sub-paragraph (1) (b), the term ‘a recognized stock exchange’ includes, in relation to the United States, the NASDAQ System owned by the National Association of Securities Dealers, Inc.
(3) Where:
(a) income derived by a trustee is to be treated for the purposes of this Convention as income of a resident of one of the Contracting States; and
(b) in Norway—
in respect of taxes on income or on capital relating to the calendar year immediately following that in which the notice is given, and subsequent calendar years (including accounting periods ending in those years).
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Convention.
DONE in duplicate at Canberra this sixth day of May One thousand nine hundred and eighty-two in the English language.
JOHN HOWARD TORLEIV ANDA
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF THE KINGDOM OF NORWAY
PROTOCOL
The Government of Australia and
The Government of the Kingdom of Norway
Have agreed at the signing today of the Convention between the two States for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital upon the following provisions which shall form an integral part of the said Convention:
(1) With reference to Articles 10, 11 and 12, if after 26 September 1980, in a Convention for the avoidance of double taxation that is made between Australia and a third State being a State that is a member of the Organisation for Economic Co-operation and Development, Australia shall agree to limit the rate of its taxation—
(a) on dividends paid by a company which is a resident of Australia for the purposes of Australian tax to which a company that is a resident of the third State is entitled, to a rate less than that provided in paragraph (2) of Article 10; or
(b) on interest arising in Australia to which a resident of the third State is entitled, to a rate less than that provided in paragraph (2) of Article 11; or
(c) on royalties arising in Australia to which a resident of the third State is entitled, to a rate less than that provided in paragraph (2) of Article 12,
the Government of Australia shall immediately inform the Government of the Kingdom of Norway in writing through the diplomatic channel and shall enter into negotiations with the Government of the Kingdom of Norway to review the provisions specified in (a), (b) and (c) above in order to provide the same treatment for Norway as that provided for the third State.
(2) With reference to Article 25,
(a) if, after 26 September 1980, in a Convention for the avoidance of double taxation that is made between Norway and a third State being a State that is a member of the Organisation for Economic Co-operation and Development, Norway shall agree to give special relief (holding privilege) from its tax in respect of dividends paid by a company which is a resident of that third State to a company resident in Norway, (not being relief that represents a continuation of relief provided for in any such Convention with that State that was in force at that date) the Government of the Kingdom of Norway shall immediately inform the Government of Australia in writing through the diplomatic channel and shall enter into negotiations with the Government of Australia to review the provisions of Article 25 in order to provide the same relief in respect of dividends paid by a company which is a resident of Australia;
(b) if Norway should by note forwarded through the diplomatic channel so request, paragraph (2) of Article 25 shall be replaced by the following text, which shall enter into force on the 30th day after receipt of the note is confirmed through the diplomatic channel, and shall apply in respect of taxes on income relating to the calendar year (including accounting periods ending in such year) immediately following that in which the exchange of notes is made:
‘(2) In the case of Norway:
Where a resident of Norway derives income which in accordance with the provisions of this Convention may be taxed in Australia, Norway shall allow as a deduction from the income tax of that person an amount equal to the tax paid in Australia. Such deduction shall not, however, exceed that part of the Norwegian tax, as computed before the deduction is given, which is appropriate to the income derived from Australia.’
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Protocol.
DONE in duplicate at Canberra this sixth day of May One thousand nine hundred and eighty-two in the English language.
JOHN HOWARD TORLEIV ANDA
FOR THE GOVERNMENT FOR THE GOVERNMENT
OF AUSTRALIA OF THE KINGDOM OF NORWAY”.
1. No. 82, 1953, as amended. For previous amendments, see No. 25, 1958; No. 88, 1959; Nos. 19 and 29, 1960; No. 71, 1963; No. 112, 1964; No. 105, 1965; No. 17, 1966; Nos. 39 and 86, 1967; No. 3, 1968; No. 24, 1969; No. 48, 1972; Nos. 11 and 216, 1973; No. 129, 1974; No. 119, 1975; Nos. 52, 55 and 143, 1976; No. 134, 1977; No. 87, 1978; Nos. 23 and 127, 1980; Nos. 28, 110, 143 and 154, 1981.
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