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  • Taxpayer Alert issued on treaty shopping arrangements

    We have released a Taxpayer Alert (Alert) outlining our concerns about treaty shopping arrangements designed to obtain the benefit of a reduced withholding tax rate under a double tax agreement (DTA) in relation to royalty or dividend payments from Australia.

    The Alert highlights:

    • that we are likely to make follow-up enquiries where we detect treaty shopping arrangements
    • what you should do if your arrangements are potentially within scope of the Alert.

    We are concerned that arrangements described in this Alert may be entered into or carried out by taxpayers for a principal or main purpose of obtaining a treaty benefit to which they would not otherwise be entitled. These arrangements may attract the operation of the anti-avoidance rules provided under Australia’s DTAs.

    As part of our engagement and assurance activities, we are currently reviewing international transactions for these types of arrangements. We are also engaging with taxpayers and advisers about existing and proposed arrangements.

    Next steps

    • If you have entered into, or are contemplating entering into, an arrangement of this type we encourage you to discuss your situation with us by emailing the Tax Treaties mailbox.
    • Even if your arrangement has existed for some time, we encourage you to engage with us as the anti-avoidance rules under our DTAs may potentially apply to payments in the future.

    See also

    Last modified: 20 Jul 2022QC 70057