Agreements for the allocation of taxing rights with respect to certain income of individuals
Australia has entered into tax information exchange agreements (TIEAs) with a number of other offshore jurisdictions. Australia and some of those offshore jurisdictions have also entered into agreements for the allocation of taxing rights with respect to certain income of individuals (ATR agreement).
The TIEAs aim to:
- provide effective exchange of information between Australia and its TIEA partners
- promote fairness and enhance Australia's ability to administer and enforce its domestic tax laws.
The ATR agreements allocate taxing rights in respect of certain categories of income and provide administrative mechanisms for information exchange and the resolution of transfer pricing disputes.
An ATR agreement is similar to a partial tax treaty. Although the detail of these ATR agreements differs between countries, they generally focus on the allocation of taxing rights of income earned by students, pensioners and government employees who are resident for tax purposes of one country but earning income while temporarily a resident in the other.
The ATR agreements may also contain an article dealing with:
- a mutual agreement procedure (MAP) for transfer pricing adjustments. This article provides that each country's 'competent authority' shall to endeavour to resolve any issues arising from a transfer pricing adjustment
- exchange of information for carrying out the provisions of the ATR agreement. Such information is exchanged between each country's competent authority in accordance with the provisions of the TIEA.
Unlike the TIEAs, these ATR agreements are given force of law in Australia by the International Tax Agreements Act 1953. However, these ATR agreements do not enter into force until each country has notified the other that all their domestic requirements have been satisfied. They have effect for the income years specified in the agreement.
For information on how changes to the law in respect of international tax may affect you, visit our New legislation page.
If you need help applying this information to your own situation, you can phone us.
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