House of Representatives

International Tax Agreements Amendment Bill (No. 1) 2007

Second Reading Speech

Mr Dutton (Minister for Revenue and Assistant Treasurer)

I move:

That this bill be now read a second time.

The International Tax Agreements Amendment Bill (No. 1) 2007 will give the force of law to renegotiated tax treaties with France and Norway. This is a prerequisite to their entry into force. This bill inserts the text of the convention between Australia and France and the convention between Australia and Norway into the International Tax Agreements Act 1953.

The bill repeals the schedules to the International Tax Agreements Act 1953 that give the force of law to the existing tax treaties with France and Norway and the separate airline profits agreement with France, which deals with taxation of airline profits. The repeal of these schedules is subject to transitional rules in respect of assessments of tax relating to the years in which the existing agreements were in effect.

The conventions between Australia and France and Australia and Norway were signed on 20 June 2006 and 18 August 2006 respectively.

Details of the treaties were announced and copies were made publicly available following signature. The treaties have also been tabled in both houses of parliament and have been reviewed by the Joint Standing Committee on Treaties.

The conventions will further strengthen the economic relations between Australia and the two treaty partners. The conventions serve as another step in facilitating a competitive and modern tax treaty network for companies located in Australia. The conventions will also satisfy Australia's most favoured nation obligations under the existing treaties with France and Norway.

Both conventions will substantially reduce withholding taxes on certain dividend, interest and royalty payments in line with those provided in our tax treaties with the United Kingdom of Great Britain and Northern Ireland and the United States of America. This will provide long-term benefits for business, making it cheaper for Australian-based business to obtain intellectual property, equity and finance for expansion.

The conventions will assist trade and investment flows between Australia and France and Australia and Norway. The treaties further demonstrate the government's commitment to update ageing treaties with major trading partners as recommended by the Review of Business Taxation and the Review of International Tax Arrangements. The treaties will produce a positive economic outcome for Australia. Gains include a larger and faster-growing Australian economy with flow-on effects on employment, trade and investment.

The new conventions achieve a balance of outcomes that will provide Australia with a competitive tax framework for international trade and investment, while ensuring the Australian revenue base is sustainable and suitably protected.

Both conventions facilitate improved integrity aspects of administering and collecting tax from those with tax obligations in either or both jurisdictions. The conventions reflect the government's decision to incorporate enhanced information exchange provisions which meet modern OECD standards and to provide for reciprocal assistance in collection of tax debts.

The government believes that the conclusion of the conventions will strengthen the integrity of Australia's tax treaty network through bilateral cooperation between countries to help ensure all taxpayers pay their fair share of tax.

Both conventions will enter into force after completion of the necessary processes in both countries and will have effect in accordance with their terms. 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.

Full details of the amendments are contained in the explanatory memorandum. I commend this bill to the House.

Debate (on motion by Mr Edwards) adjourned.