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.
With reference to subparagraph (b) of paragraph 3 of Article 11 (Interest) of the Convention:
It is understood that:
(a) a financial institution shall be unrelated to a payer of the interest where, in considering the level of participation in the ownership or control of either the financial institution or the payer by the other party, neither party is able to exert sufficient influence over the other party;
(b) an enterprise shall derive its profits substantially by a certain activity, where the activity constitutes its main activity when compared to any other activity that it undertakes in terms of its contribution to the enterprise ' s overall profits.