International Tax Agreements Amendment Bill 1999

Second Reading Speech

Senator Ian Campbell

I move:

That these bills be now read a second time.

International Tax Agreements Amendment Bill 1999

This bill will provide legislative authority for the domestic entry into force of three new comprehensive double taxation agreements (with South Africa, Slovakia and Argentina), and an amending protocol to our existing agreement with Malaysia. The bill will insert the text of each of the agreements and the protocol into the International Tax Agreements Act 1953 as schedules to that act.

The agreement between Australia and South Africa was signed on 1 July 1999, whilst the Malaysian Protocol, the Slovak Agreement and the Argentine Agreement were all signed during August 1999.

Details of these agreements and the protocol were announced and copies made publicly available following the respective dates of signature.

The new agreements generally accord with the other comprehensive taxation agreements concluded by Australia in recent years. The agreements and the protocol incorporate revised Alienation of Property Articles which are designed to overcome the adverse decision of the Full Federal Court in Commissioner of Taxation v Lamesa Holdings BV. The agreements with South Africa and Argentina are the first double taxation agreements to be concluded by Australia with an African and a South American country respectively and the agreement with Argentina will, in particular, benefit Australian companies with mining interests in Argentina.

The Malaysian Protocol will operate to relieve Australian residents of double taxation on fees received for consultancy and other services supplied that are utilised in Malaysia, with effect from the 1993-94 income year.

It and an associated exchange of letters will also extend the operation of the tax sparing measures in the Malaysian Agreement to relevant income derived during the 1984-85 to the 1991-92 income years. Those measures apply in relation to certain income derived by Australian residents that Malaysia exempts or taxes at a reduced rate under special development incentive provisions and had previously operated only up to the 1983-84 income year.

The Government believes the conclusion of these new agreements and protocol will go a long way to strengthening of trade, investment, and wider relationships between Australia and each of these countries.

The agreements and protocol will enter into force respectively when diplomatic notes are exchanged advising that all of the necessary domestic processes to give them the force of law in each country have been completed. The enactment of this bill, and the satisfaction of the other procedures relating to proposed treaty actions, will complete the processes followed in Australia for those purposes.

It is not possible to accurately predict the eventual effect of these agreements and the protocol on the revenue, but it is not expected to be significant.

Full details of the amendments are contained in the explanatory memorandum.

I commend the bill.