International Tax Agreements Act 1953
(Repealed by No 45 of 2011)
Sch 16A repealed by No 45 of 2011, s 3 and Sch 1 item 67, to remove the text of the Malaysian Protocol from this Act, effective 27 June 2011. For transitional provisions see note under s 3(1) . Sch 16A formerly read:
SCHEDULE 16A - Malaysian Protocol
Note: See section 3PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF MALAYSIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Article 3 of the Agreement is amended by:
(a) deleting subparagraphs (a) and (b) of paragraph 1 and substituting the following:; and
" (a) the term " Australia " , when used in a geographical sense, excludes all external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; andand includes any area adjacent to the territorial limits of Australia (including the Territories specified in this subparagraph) in respect of which there is for the time being in force, consistently with international law, a law of Australia dealing with the exploitation of any of the natural resources of the seabed and subsoil of the continental shelf;
(vi) the Coral Sea Islands Territory,
(b) the term " Malaysia " means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the territorial waters, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia and in accordance with international law as an area over which Malaysia has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living; "
(b) deleting the full stop at the end of paragraph 3 and adding " from time to time in force. "
Article 5 of the Agreement is amended by:
(a) deleting " or " immediately following subparagraph (a) of paragraph 4;
(b) deleting the full stop at the end of subparagraph (b) of paragraph 4 and substituting " ; or " ; and
(c) adding after subparagraph (b) of paragraph 4 the following subparagraph:
" (c) it furnishes services, including consultancy services, in that other State through employees or other personnel engaged by the enterprise for such purpose, but only where those activities continue (for the same or a connected project) within the other State for a period or periods aggregating more than three months within any twelve-month period. "
Article 6 of the Agreement is amended by deleting paragraph 2 and substituting the following:
In this Article, the word " land " shall have the meaning which it has under the law of the Contracting State in which the land in question is situated; it shall include any estate or direct interest in land whether improved or not. A right to receive variable or fixed payments either as consideration for the exploitation of or the right to explore for or exploit, or in respect of the exploitation of, mineral deposits, oil or gas wells, quarries or other places of extraction or exploitation of natural resources or for the exploitation of, or the right to exploit or to fell any standing trees, plants or forest produce shall be deemed to be an estate or direct interest in land situated in the Contracting State in which the mineral deposits, oil or gas wells, quarries, natural resources, or standing trees, plants or forest produce, as the case may be, are situated or where the exploration may take place. "
Article 7 of the Agreement is amended by adding after paragraph 7 the following paragraph:
(a) a resident of one of the Contracting States is beneficially entitled, whether directly or indirectly through one or more trusts, to a share of the business profits of an enterprise carried on in the other Contracting State by the trustee of a trust estate other than a trust estate which is treated as a company for tax purposes; and
(b) in relation to that enterprise, that trustee has, in accordance with the principles of Article 5, a permanent establishment in that other State,
the enterprise carried on by the trustee shall be deemed to be a business carried on in that other State by that resident through a permanent establishment situated therein and the resident ' s share of business profits shall be attributed to that permanent establishment. "
Article 11 of the Agreement is amended by:
(a) deleting the words " or a long-term loan " in paragraph 3; and
(b) adding after paragraph 7 the following paragraph:
" 8. Notwithstanding the provisions of paragraph 2, interest derived from the investment of official reserve assets by the Government of a Contracting State or by a bank performing central banking functions in a Contracting State shall be exempt from tax in the other Contracting State. "
Article 13 of the Agreement is deleted and substituted with the following:" ARTICLE 13 Alienation of Property
Income, profits or gains derived by a resident of one of the Contracting States from the alienation of land as defined in Article 6 and, as provided in that Article, situated in the other Contracting State may be taxed in that other State.
Income, profits or gains from the alienation of property, other than land as defined in Article 6, that forms part of the business property of a permanent establishment which an enterprise of one of the Contracting States has in the other Contracting State, including income, profits or gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
Income, profits or gains from the alienation of ships or aircraft operated in international traffic, or of property other than land as defined in Article 6 pertaining to the operation of those ships or aircraft, shall be taxable only in the Contracting State of which the enterprise which operated those ships or aircraft is a resident.
Income, profits or gains derived by a resident of a Contracting State from the alienation of any shares or other interests in a company, or of an interest of any kind in a partnership, trust or other entity, where the value of the assets of such entity, whether they are held directly or indirectly (including through one or more interposed entities, such as, for example, through a chain of companies), is principally attributable to land as defined in Article 6 and, as referred to in that Article, situated in the other Contracting State, may be taxed in that other State.
Nothing in this Agreement affects the application of a law of a Contracting State relating to the taxation of profits or gains of a capital nature derived from the alienation of property other than that to which any of paragraphs 1, 2, 3 and 4 apply. "
Article 20 of the Agreement is amended by:
(a) deleting " Students " in the heading and substituting " Students and Trainees " ; and
(b) inserting " or a trainee " after " student " .
Article 22 of the Agreement is amended by:
(a) deleting " Sources of Income " in the heading and substituting " Sources of Income and Gains " ; and
(b) inserting " or gains " after " Income " in the first line.
Article 23 of the Agreement is deleted and substituted with the following:" ARTICLE 23 Methods of Elimination of Double Taxation
The laws in force in each of the Contracting States shall continue to govern the taxation of income in that Contracting State except where provision to the contrary is made in this Agreement. Where income is subject to tax in both Contracting States, relief from double taxation shall be given in accordance with the following paragraphs.
In the case of Malaysia, subject to the law of Malaysia regarding the allowance as a credit against Malaysian tax of tax payable in any country other than Malaysia, the amount of Australian tax payable under the law of Australia and in accordance with the provisions of this Agreement, by a resident of Malaysia in respect of income from sources within Australia shall be allowed as a credit against Malaysian tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of Australia to a company which is a resident of Malaysia and which owns not less than 10 per cent of the voting shares of the company paying the dividend, the credit shall take into account Australian tax payable by that company in respect of its income out of which the dividend is paid. The credit shall not, however, exceed that part of the Malaysian tax, as computed before the credit is given which is appropriate to such item of income.
(a) Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Malaysian tax paid under the law of Malaysia and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Malaysia shall be allowed as a credit against Australian tax payable in respect of that income.
(b) Where a company which is a resident of Malaysia and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly not less than 10 per cent of the voting power of the first-mentioned company, the credit referred to in subparagraph (a) shall include the Malaysian tax paid by that first-mentioned company in respect of that portion of its profits out of which the dividend is paid.
Where the income or profits on which an enterprise of one of the Contracting States has been charged to tax in that Contracting State are also included in the income or profits of an enterprise of the other Contracting State as being income or profits which, because of the conditions operative between the two enterprises, might have been expected to accrue to the enterprise of that other Contracting State if the enterprises had been independent enterprises dealing at arm ' s length, the income or profits so included shall be treated for the purposes of this Article as income or profits of the enterprise of the first-mentioned Contracting State from a source in the other Contracting State and credit shall be given in accordance with this Article in respect of the extra tax chargeable in that other Contracting State as a result of the inclusion of such income or profits.
For the purposes of paragraph 6, the term " Malaysian tax forgone " means -
(a) an amount which, under the laws of Malaysia and in accordance with this Agreement, would have been payable as Malaysian tax on income had that income not been exempted either wholly or partly from Malaysian tax in accordance with -
(i) Schedule 7A of the Income Tax Act 1967 of Malaysia or sections 22, 23, 29, 35 and 37 of the Promotion of Investments Act 1986 of Malaysia and section 45 of that Act to the extent that it relates to sections 21, 22, 26, or 30Q of the Investment Incentives Act 1968, so far as the sections were in force on, and have not been modified since, the date of signature of the Protocol first amending the Agreement or have been modified only in minor respects so as not to affect their general character; or
(ii) any other provisions which may subsequently be agreed in an Exchange of Letters between the Governments of the Contracting States to be of a substantially similar character;
(b) in the case of interest derived by a resident of Australia which is exempt from Malaysian tax in accordance with paragraph 3 of Article 11, the amount which, under the law of Malaysia and in accordance with this Agreement, would have been payable as Malaysian tax if the interest were interest to which paragraph 3 of Article 11 did not apply, and if the tax referred to in paragraph 2 of Article 11 were not to exceed 10 per cent of the gross amount of the interest; and
(c) in the case of royalties derived by a resident of Australia, being approved industrial royalties which are exempt from Malaysian tax in accordance with paragraph 3 of Article 12, the amount which, under the law of Malaysia and in accordance with this Agreement, would have been payable as Malaysian tax if the royalties were royalties to which paragraph 3 of Article 12 did not apply and if the tax referred to in paragraph 2 of Article 12 were not to exceed 10 per cent of the gross amount of the royalties.
(a) For the purposes of subparagraph (a) or (b) of paragraph 3, Malaysian tax forgone which answers the description in subparagraph (a) of paragraph 5 shall be deemed to be Malaysian tax paid.
(b) For the purposes of subparagraph (a) of paragraph 3, Malaysian tax forgone which answers the description in subparagraph (b) or (c) of paragraph 5 shall be deemed to be Malaysian tax paid.
Paragraphs 5 and 6 shall apply only in relation to income derived in any of the 5 years of income beginning with the year of income that commenced on 1 July 1987 and in any later year of income that may be agreed in an Exchange of Letters for this purpose by the Governments of the Contracting States, or their authorised representatives.
If in an Agreement for the avoidance of double taxation that is subsequently made between Australia and a third State, Australia should agree -
(a) in relation to dividends that are derived by a company which is a resident of Australia from a company which is a resident of the third State, to give credit for tax paid on the profits out of which the dividends are paid on the basis of a test of beneficial ownership by the first-mentioned company of less than 10 per cent of the paid-up share capital of the second-mentioned company; or
(b) to give relief from Australian tax of the kind that is provided for in relation to Malaysia in paragraphs 5 and 6, on a basis that, other than in minor respects, is more favourable in relation to the third State than that so provided for,
the Government of Australia shall immediately inform the Government of Malaysia and shall enter into negotiations with the Government of Malaysia with a view to providing treatment in relation to Malaysia comparable with that provided in relation to that third State.
Where royalties derived by a resident of Australia are, as film rentals, subject to the cinematograph film-hire duty in Malaysia, that duty shall, for the purposes of subparagraph (a) of paragraph 3, be deemed to be Malaysian tax.
Where gains derived by a resident of Australia are subject to real property gains tax in Malaysia, that tax shall, for the purposes of subparagraph 3(a), be deemed to be Malaysian tax. "
ARTICLE 10 Entry into force
This Protocol, which shall form an integral part of the Agreement, shall enter into force on the last of the dates on which the Contracting States exchange notes through the diplomatic channel notifying each other that the last of such things has been done as is necessary to give this Protocol the force of law in Australia and in Malaysia respectively, and thereupon this Protocol shall, subject to paragraph 2, have effect:
(a) in Australia:
(i) subject to subparagraph 1(a)(ii), for the purposes of Article 9 of the Protocol in respect of tax on income of any year of income beginning on or after 1 July 1987;
(ii) to the extent that Article 9 of the Protocol has application in respect of Malaysian tax forgone in accordance with section 35 or 37 of the Promotion of Investments Act 1986 of Malaysia, in respect of tax on income of any year of income beginning on or after 1 July 1985;
(iii) in the case of subparagraph (c) of Article 2 of the Protocol, in respect of tax on income of any year of income beginning on or after 1 July 1993; and
(iv) in any other case, in relation to income of any year of income beginning on or after 1 July in the calendar year next following that in which this Protocol enters into force;
(b) in Malaysia:
(i) for the purposes of Article 9 of the Protocol in respect of Malaysian tax for any year of assessment beginning on or after 1 January 1988;
(ii) in the case of subparagraph (c) of Article 2 of the Protocol in respect of tax for any year of assessment beginning on or after 1 January 1994; and
(iii) in any other case, in respect of Malaysian tax for any year of assessment beginning on or after 1 January in the second calendar year following the calendar year in which this Protocol enters into force.
Where any provision of the Agreement that is affected by this Protocol would have afforded any greater relief from tax than is afforded by the amendments made by this Protocol, that provision shall continue to have effect:
(a) in Australia, for any year of income; and
(b) in Malaysia, for any year of assessment
beginning, in either case, before the entry into force of this Protocol.
IN WITNESS WHEREOF the undersigned, being duly authorised, have signed this Protocol.
DONE in duplicate in English and Bahasa Malaysia, both texts being equally authentic, at Sydney this second day of August, One thousand nine hundred and ninety-nine.
FOR THE GOVERNMENT OF AUSTRALIA:
MARK VAILE [ Signatures omitted]
FOR THE GOVERNMENT OF MALAYSIA:
DATO ' SERI RAFIDAH AZIZ
Sch 16A inserted by No 149 of 1999. The Malaysian protocol entered into force on 27 June 2000.