Second Reading SpeechMr SUKKAR (Deakin - Assistant Treasurer and Minister for Housing)
That this bill be now read a second time.
Australia and Israel share a close friendship and have longstanding trade and investment ties. In 2017-18 total merchandise trade between Australia and Israel was worth over $1 billion, and Israel's investment in Australia was over $300 million.
Behind these numbers are many real-world examples of this close economic relationship. This includes Australian start-ups using the Tel Aviv Landing Pad to access Israel's innovation ecosystem. It also includes two Israeli biotech companies that have established a physical presence in Australia to take advantage of our world-leading clinical research environment.
Importantly, this bill and the treaty contained within will further nurture and strengthen this growing economic relationship.
On 28 March this year the Convention between the Government of Australia and the Government of the State of Israel for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance, as it is formally known, was signed by Australia and Israel.
The first of its kind between our two countries, it brings with it a range of benefits.
The convention will support new trading opportunities for Australian businesses by reducing withholding taxes, helping to create a more favourable bilateral investment environment and making it cheaper for Australian businesses to access Israel's capital and, importantly, their technology.
The convention will also improve tax certainty for business by introducing antidiscrimination and arbitration rules as well as a range of rules to prevent double taxation.
Importantly, the convention will strengthen the integrity of Australia's tax system and help detect and prevent tax evasion. It does this by authorising the revenue authorities of Australia and Israel to exchange taxpayer information on all taxes that are covered by the convention.
Finally, the convention incorporates important integrity provisions from the G20/OECD Base Erosion and Profit Shifting project, known as BEPS. These provisions are designed to minimise tax avoidance opportunities and ensure that multinational corporations pay the appropriate amount of tax.
The new convention will enter into force following the last notification that both countries have completed their domestic requirements, which in our case includes the enactment of this bill I'm introducing today.
As well as amending the International Tax Agreements Act 1953 to give force to the convention, the bill amends the Income Tax Assessment Act 1997 to introduce a new deemed source-of-income rule. This will ensure that Australia can fully exercise the taxing rights it has negotiated under this new convention and future international tax agreements. This is an outstanding achievement for the Morrison government, concluding this double tax treaty with Israel. I commend everybody who's had involvement with this. It is a culmination of the work of many people, many officials, and ultimately it will provide great economic benefits for both Australia and Israel.