Explanatory Memorandum(Circulated by the Treasurer, the Rt. Hon. Sir Arthur Fadden.)
The primary purpose of the Income Tax (International Agreements) Bill 1953 is to give the force of law to international agreements entered into by the Commonwealth for the purposes of relieving international double taxation of incomes and preventing fiscal evasion. Machinery provisions to facilitate the practical application of the agreements are also proposed in the Bill.
In 1946, the Commonwealth and the United Kingdom signed an agreement which had as its primary purpose the relief of double taxation on income derived by residents of Australia from sources in the United Kingdom and on incomes received by residents of the United Kingdom from sources in Australia.
The agreement with the United Kingdom was considered by the Parliament in 1947 and it at present has the force of law by reason of the provisions of Part IIIB. of the Income Tax and Social Services Contribution Assessment Act 1936-1953. The agreement appears as the Third Schedule to that Act.
On 14th May, 1953, a convention was signed by the Commonwealth and the United States of America. The primary purpose of this convention is to relieve double taxation by Australia and the United States on income flowing between the two countries. This convention requires ratification before it becomes effective.
It is proposed in the Income Tax (International Agreements) Bill 1953 to give the force of law to the convention with the United States. In order that the law relating to international agreements concerning income tax may appear in one Act it is proposed to repeal the provisions of the Income Tax and Social Services Contribution Assessment Act relating to the agreement with the United Kingdom. Appropriate provisions enabling the continued application of that agreement are included in the Income Tax (International Agreements) Bill 1953, while the necessary amendments of the existing law are contained in the Income Tax and Social Services Contribution Assessment Bill (No. 3) 1953.
The full text of the agreement with the United Kingdom is set out in the First Schedule to the Income Tax (International Agreements) Bill, while the convention with the United States appears as the Second Schedule to that Bill.
The provisions of the convention with the United States and notes relating to the various Articles will be found in a subsequent part of this explanatory memorandum.