AUSTRALIAN TAX TREATIES
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) has modified the application of this tax treaty. A synthesised text of the MLI and this tax treaty is available to facilitate the understanding of how the MLI modifies this tax treaty.
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 of this Article), French tax paid under the law of France and in accordance with this Convention, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in France shall be allowed as a credit against Australian tax payable in respect of that income. 2.
In the case of France, double taxation shall be avoided in the following manner:
(a) Notwithstanding any other provision of this Convention, income which may be taxed or shall be taxable only in Australia in accordance with the provisions of this Convention shall be taken into account for the computation of the French tax where the beneficiary of such income is a resident of France and where such income is not exempted from corporation tax according to French domestic law. In that case, the Australian tax shall not be deductible from such income but the resident of France shall, subject to the conditions and limits provided for in subparagraph (i) and (ii), be entitled to a tax credit against French tax. Such tax credit shall be equal:
(i) in the case of income other than mentioned in subparagraph (ii), to the amount of French tax attributable to such income provided that the resident of France is subject to Australian tax in respect of such income;
(ii) in the case of income referred to in Article 7 and paragraph 2 of Article 13 which is subject to the corporation tax, and in the case of income referred to in Article 10 , Article 11 , Article 12 , paragraph 1 of Article 13 and paragraph 3 of Article 14 , Article 15 , Article 16 and Article 20 , to the amount of tax paid in Australia in accordance with the provisions of those Articles. However, such tax credit shall not exceed the amount of French tax attributable to such income.
(b) The term " amount of French tax attributable to such income " as used in subparagraph (a) means:
(i) where the tax of such income is computed by applying a proportional rate, the amount of the net income concerned multiplied by the rate which actually applies to that income;
(ii) where the tax on such income is computed by applying a progressive scale, the amount of the net income concerned multiplied by the rate resulting from the ratio of the tax actually payable on the total net income taxable in accordance with French law to the amount of that total net income.