Explanatory Memorandum(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)
General outline and financial impact
Swiss Confederation convention
Schedule 1 of this Bill amends the International Tax Agreements Act 1953 (Agreements Act 1953) to give the force of law in Australia to the Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income and its Protocol (the Swiss Convention), which was signed in Sydney on 30 July 2013.
Once in force, the Swiss Convention will replace the Agreement between Australia and Switzerland for the Avoidance of Double Taxation with Respect to Taxes on Income and Protocol (the existing Swiss Agreement), which entered into force on 13 February 1981.
Date of effect: The Swiss Convention must first enter into force. For entry into force, Australia and Switzerland are required to provide notification to each other on the completion of the necessary domestic procedures. Once the Convention enters into force, it will take effect in Australia in four stages, namely:
- in respect of fringe benefits tax, on fringe benefits provided on or after 1 April next following entry into force;
- in respect of withholding tax on income derived by a resident of Switzerland, on income derived on or after 1 January next following entry into force;
- in respect of other Australian tax, on income, profits or gains derived in the income year beginning 1 July next following entry into force; and
- in respect of exchange of information, to information that relates to taxation or business years in course on, or beginning on or after, 1 January next following entry into force.
Proposal announced: Negotiations to update the existing tax treaty between Australia and Switzerland were announced by the former Government, in the then Assistant Treasurer's Media Release No. 026 of 9 February 2011. Signature of the Swiss Convention was announced in the then Assistant Treasurer's Media Release No. 144 of 30 July 2013.
Financial impact: Minimal.
Human rights implications: This Bill is compatible with human rights. See Statement of Compatibility with Human Rights - Chapter 3, paragraphs 3.1 to 3.39.
Compliance cost impact: The text of the Swiss Convention is broadly consistent with international norms and no significant additional compliance costs are expected to result from its entry into force.