Second Reading Speech
Mr SLIPPER (Fisher-Parliamentary Secretary to the Minister for Finance and Administration)I move:
That this bill be now read a second time.
This bill will provide legislative authority for the domestic entry into force of a protocol amending the Australia-Canada double tax convention and a second protocol amending the Australia-Malaysia double tax agreement. The bill will insert the texts of these protocols into the International Tax Agreements Act 1953 as schedules to that act.
The Canadian and second Malaysian protocols were signed on 23 January 2002 and 28 July 2002 respectively. Details of the protocols were announced and copies made publicly available following the respective dates of signature.
The government believes the Canadian protocol will facilitate trade and investment between Australia and Canada by reducing withholding taxes in some circumstances and reducing the possibility of double taxation of capital gains by extending coverage of the Canadian convention to taxes on such gains.
The second Malaysian protocol will protect Australia's tax revenue by denying treaty benefits to those who use the preferential tax treatment under the Labuan offshore business activity regime and other substantially similar regimes. It will also operate to extend tax sparing arrangements in relation to certain designated development incentives provided by Malaysia until 30 June 2003. Furthermore, the second Malaysian protocol will update the Malaysian agreement to reflect modern business and tax treaty practices.
The Canadian and second Malaysian protocols will enter into force when the relevant countries have completed all the requirements necessary to give the protocols effect in the domestic law of the relevant countries.
The enactment of this bill, and the satisfaction of the other procedures relating to proposed treaty actions, will complete the processes necessary in Australia for those purposes.
The bill includes an amendment to ensure that interest that is currently not subject to tax in Australia does not become taxable in Australia as a result of changes to the US convention. The bill will also make a number of minor technical amendments to the International Tax Agreements Act 1953.
Full details of the bill are contained in the explanatory memorandum. I commend the bill to the House and present the explanatory memorandum.