AUSTRALIAN TAX TREATIES

Argentine Agreement  

AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE ARGENTINE REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

ARTICLE 1   Personal Scope  
This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2   Taxes Covered  

1  
The existing taxes to which this Agreement shall apply are:


(a) in Australia:
the income tax, and the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of Australia;


(b) in Argentina:
the income tax (impuesto a las ganancias).

2  
This Agreement shall also apply to any identical or substantially similar taxes which are imposed under the law of the Argentine Republic or the federal law of Australia after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in the laws of their respective States relating to the taxes to which this Agreement applies within a reasonable period of time after those changes.

ARTICLE 3   General Definitions  

1  
In this Agreement, unless the context otherwise requires and in accordance with international law:


(a) the term "Argentina", when used in a geographical sense, includes:


(i) the maritime areas adjacent to the outer limit of the territorial sea, to the extent to which the Argentine Republic possesses sovereignty rights and jurisdiction, and

(ii) the continental shelf and exclusive economic zone of the Argentine Republic only in relation to exploration and exploitation of natural resources, and to tourism or recreation on off-shore installations;


(b) 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; and

(vi) the Coral Sea Islands Territory,
and includes:

(i) the 12 nautical mile territorial sea, and

(ii) the contiguous zone for purposes consistent with international law, and

(iii) the continental shelf and exclusive economic zone of Australia but only in relation to exploration for and exploitation of the living and non-living natural resources, and in relation to tourism or recreation on offshore installations;


(c) the term "Argentine tax" means tax imposed by Argentina, being tax to which this Agreement applies by virtue of Article 2;


(d) the term "Australian tax" means tax imposed by Australia, being tax to which this Agreement applies by virtue of Article 2;


(e) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;


(f) the term "competent authority" means, in the case of Argentina, the Ministry of Economy and Works and Public Services, Secretariat of Finance (el Ministerio de Economia y Obras y Servicios Publicos, Secretaria de Hacienda) and, in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner;


(g) the terms "a Contracting State" and "other Contracting State" mean Argentina or Australia, as the context requires;


(h) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean an enterprise carried on by a resident of Australia or an enterprise carried on by a resident of Argentina, as the context requires;


(i) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely from a place or between places in the other Contracting State;


(j) the term "person" includes an individual, a company and any other body of persons;


(k) the term “tax" means Australian tax or Argentine tax, as the context requires, but does not include any penalty or interest imposed under the law of either Contracting State relating to its tax.

2  
As regards the application of this Agreement by a Contracting State at any time, any term not defined in this Agreement shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State concerning the taxes to which this Agreement applies.

ARTICLE 4   Residence  

1  
For the purposes of this Agreement, a person is a resident of one of the Contracting States if the person is a resident of that State under the law of that State relating to its tax.

2  
A person is not a resident of a Contracting State for the purposes of this Agreement if the person is liable to tax in that State in respect only of income from sources in that State.

3  
Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Contracting States, then the person shall be deemed to be a resident solely of the Contracting State in which a permanent home is available to the person, or if a permanent home is available to the person in both Contracting States, or in neither of them, the person shall be deemed to be a resident solely of the Contracting State with which the person's personal and economic relations are closer.

4  
Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the Contracting State in which its place of effective management is situated.

ARTICLE 5   Permanent Establishment  

1  
For the purposes of this Agreement, the term "permanent establishment", in relation to an enterprise, means a fixed place of business through which the business of the enterprise is wholly or partly carried on.

2  
The term "permanent establishment" includes:


(a) a place of management;


(b) a branch;


(c) an office;


(d) a factory;


(e) a workshop;


(f) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or the exploitation of natural resources;


(g) an agricultural, pastoral or forestry property; and


(h) a building site or construction, installation or assembly project which exists for more than 6 months.

3  
An enterprise shall not be deemed to have a permanent establishment merely by reason of:


(a) the use of facilities solelyfor the purpose of storage or display of goods or merchandise belonging to the enterprise; or


(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; or


(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; or


(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; or


(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character.

4  
An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if:


(a) it carries on supervisory activities in that State for more than 6 months in connection with a building site, or a construction, installation or assembly project, which is being undertaken in that State; or


(b) it performs services, including consultancy or managerial services, in that Contracting State through employees or other personnel engaged by the enterprise for such purpose, but only where such activities continue in that State for the same project or a connected project for a period or periods aggregating more than 183 days within any 12 month period; or


(c) substantial equipment is being used in that State by, for or under contract with the enterprise.

5  
A person acting in a Contracting State for an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph 6 applies - shall be deemed to be a permanent establishment of that enterprise in the firstmentioned State if:


(a) the person has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless the person's activities are limited to the purchase of goods or merchandise for the enterprise; or


(b) in so acting, the person manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise.

6  
An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a person who is a broker, general commission agent or any other agent of an independent status and is acting in the ordinary course of the person's business as such a broker or agent.

7  
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other.

ARTICLE 6   Income from Real (Immovable) Property  

1  
Income from real property may be taxed in the Contracting State in which the real property is situated.

2  
In this Article, the term "real property", in relation to a Contracting State, has the meaning which it has under the law of that State and includes:


(a) a lease of land and any other interest in or over land, whether improved or not, including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and


(b) a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources.

3  
Any interest or right referred to in paragraph 2 shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration may take place.

4  
The provisions of paragraph 1 and paragraph 3 shall also apply to income from real property of an enterprise and to income from real property used for the performance of independent personal services.

ARTICLE 7   Business Profits  

1  
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that other State. If the enterprise carries on business in that manner, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to:


(a) that permanent establishment; or


(b) sales within that other Contracting State of goods or merchandise of a similar kind as sold, or other business activities carried on in that other State of the same or similar kind as those carried on, through that permanent establishment, if it may reasonably be concluded that those sales or business activities would not have been made or carried on but for the existence of that permanent establishment or the continued provision by it of goods or services.

2  
Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated in that other State, there shall in each Contracting State be attributed to that permanent establishment the profits which it might reasonably be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.

3  
In determining the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere.

4  
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5  
Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles of this Article.

6  
Where profits include items of income or gains which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

7  
Nothing in this Article shall affect the operation of any law of a Contracting State relating to tax imposed on profits derived by an enterprise of the other Contracting State from insurance or reinsurance provided that if the relevant law in force in either Contracting State at the date of signature of this Agreement is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

8  
Where:


(a) a resident of a Contracting State is beneficially entitled, whether directly or through one or more interposed trust estates, 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 would, in accordance with the principles of Article 5, have a permanent establishment in that other State,

the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated in that other State and that share of business profits shall be attributed to that permanent establishment.

ARTICLE 8   Ships and Aircraft  

1  
Profits of an enterprise of a Contracting State derived from the operation of ships or aircraft are taxable only in that State.

2  
Notwithstanding the provisions of paragraph 1, such profits may be taxed in the other Contracting State to the extent that they are profits derived directly or indirectly from ship or aircraft operations confined solely to places in that other State.

3  
The profits to which the provisions of paragraph 1 and paragraph 2 apply include profits from the operation of ships or aircraft derived through participation in a pool service or other profit sharing arrangement.

4  
Interest earned on funds held in one of the Contracting States by a resident of the other Contracting State in connection with the operation of ships or aircraft, other than operations confined solely to places in the firstmentioned State, and any other income incidental to such operation, shall be treated as profits from the operation of ships or aircraft.

5  
For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise which are shipped in a Contracting State and are discharged at a place in that State shall be treated as profits from ship or aircraft operations confined solely to places in that State.

ARTICLE 9   Associated Enterprises  

1  
Where:


(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or


(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might reasonably be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might reasonably have been expected to accrue to one of the enterprises but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2  
Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the profits which might reasonably be expected to accrue to an enterprise, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles of this Article.

3  
Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included, by virtue of the provisions of paragraph 1 or 2, in the profits of an enterprise of the other Contracting State and charged to tax in that other State, and the profits so included are profits which might reasonably have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might reasonably have been expected to have operated between independent enterprises dealing wholly independently with one another, then the firstmentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the firstmentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Agreement and for this purpose the competent authorities of the Contracting States shall if necessary consult each other.

ARTICLE 10   Dividends  

1  
Dividends paid by a company which is a resident of a Contracting State for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

2  
However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed:


(a) in Australia:


(i) 10 per cent of the gross amount of the dividends to the extent to which the dividends have been "franked" in accordance with Australia's law relating to tax, if the dividends are paid to a person which holds directly at least 10 per cent of the voting power of the company paying the dividends; and

(ii) 15 per cent of the gross amount of the dividends in all other cases; and


(b) in Argentina:


(i) 10 per cent of the gross amount of the dividends if the dividends are paid to a person which holds directly at least 25 per cent of the capital of the company paying the dividends; and

(ii) 15 per cent of the gross amount of the dividends in all other cases;

provided that if the relevant law in either Contracting State at the date of signature of this Agreement is varied, otherwise than in minor respects so as to not affect its general character, the Contracting States shall consult each other with a view to facilitating any amendment of this paragraph as may be appropriate.

3 
The term "dividends" in this Article means income from shares, as well as other amounts which are subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident for the purposes of its tax.

4  
The provisions of paragraph 2 shall not apply if the person beneficially entitled to the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5  
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company - being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled - except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, even if the dividends paid consist wholly or partly of profits or income arising in such other State. This paragraph shall not apply in relation to dividends paid by a company which is a resident of Australia for the purposes of Australian tax and which is also a resident of Argentina for the purposes of Argentine tax.

ARTICLE 11   Interest  

1  
Interest arising in a Contracting State, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

2  
However, that interest may also be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 12 per cent of the gross amount of the interest.

3  
Notwithstanding the provisions of paragraph 2, interest derived from the investment in a Contracting State of official reserve assets by the government of the other Contracting State, a government monetary institution or a bank performing central banking functions in that other State shall be exempt from tax in the firstmentioned State.

4  
The term "interest" in this Article includes interest from government securities or from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, interest from any other form of indebtedness and all other income assimilated to income from money lent by the law, relating to tax, of the Contracting State in which the income arises. However, the term "interest" does not include income dealt with in Article 8 or in Article 10.

5  
The provisions of paragraph 2 shall not apply if the person beneficially entitled to the interest, being a resident of a Contracting State, carries on business in the other Contracting State, in which the interest arises, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the indebtedness in respect of which the interest is paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 or Article 14, as the case may be, shall apply.

6  
Interest shall be deemed to arise in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment or fixed base, then the interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

7  
Where, by reason of a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might reasonably have been expected to have been agreed upon by the payer and the person so entitled in the absence of that relationship, the provisions of this Article shall apply only to the lastmentioned amount. In that case the excess part of the amount of the interest paid shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12   Royalties  

1  
Royalties arising in a Contracting State, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

2  
Those royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed:


(a) 10 per cent of the gross amount of the royalties in the case of payments or credits referred to in:


(i) subparagraph 3(a), provided that this subparagraph 2(a) applies only in relation to copyright of literary, dramatic, musical or other artistic work;

(ii) subparagraphs 3(b)-(d); and

(iii) subparagraph 3(j) that relate to any payment or credit referred to in subparagraphs 2(a)(i) or (ii);


(b) 10 per cent of the net amount of the royalties in the case of payments or credits referred to in subparagraph 3(e). For the purposes of this subparagraph 2(b), the net amount of a royalty refers to the amount of payments or credits remaining after the deduction of the expenses directly related to the rendering of the technical assistance and the costs and expenses of any equipment or material supplied by the provider of the assistance and for the specific purpose of rendering such assistance; and


(c) 15 per cent of the gross amount of the royalties in all other cases, including all copyright other than that referred to in subparagraph 2(a)(i).

3  
The term "royalties" in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process or other intangible property, trademark or other like property or right; or


(b) the use of, or the right to use, any industrial or scientific equipment; or


(c) the supply of scientific, technical, or industrial, knowledge or information; or


(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such knowledge or information as is mentioned in subparagraph (c); or


(e) the rendering of any technical assistance not included in subparagraph 3(d); or


(f) the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by:


(i) satellite; or

(ii) cable, optic fibre or similar technology; or


(g) the use in connection with television broadcasting or radio broadcasting, or the right to use in connection with television broadcasting or radio broadcasting, visual images or sounds, or both, or other means of reproduction for use in connection with television broadcasting or radio broadcasting, transmitted by:


(i) satellite; or

(ii) cable, optic fibre or similar technology; or


(h) the use of, or the right to use:


(i) motion picture films; or

(ii) films or video tapes for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or


(i) the use of, or the right to use, any commercial equipment, and the supply of commercial knowledge or information; or


(j) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.

4  
The provisions of paragraph 2 shall not apply if the person beneficially entitled to the royalties, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the property or right in respect of which the royalties are paid or credited is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5  
Royalties shall be deemed to arise in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whetherthe person is a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment or fixed base, then the royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

6  
Where, by reason of a special relationship between the payer and the person beneficially entitled to the royalties, or between both of them and some other person, the amount of the royalties paid or credited, having regard to what they are paid or credited for, exceeds the amount which might reasonably have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In that case the excess part of the amount of the royalties paid or credited shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13   Alienation of Property  

1  
Income, profits or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State.

2  
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 or trust or other entity, where the value of the assets of that company, partnership, trust, or other 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 real property situated in the other Contracting State, may be taxed in that other State.

3  
Income, profits or gains from the alienation of property, other than real property, that forms part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or pertains to a fixed base available in that other State to a resident of the firstmentioned State for the purpose of performing independent personal services, including income, profits or gains from the alienation of that permanent establishment (alone or with the whole enterprise) or of that fixed base, may be taxed in that other State.

4  
Income, profits or gains from the alienation of ships or aircraft operated in international traffic, or of property (other than real property) pertaining to the operation of those ships or aircraft by an enterprise of a Contracting State, shall be taxable only in that State.

5  
Nothing in this Agreement affects the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply.

6  
In this Article, the term "real property" has the same meaning as it has in Article 6.

7  
The situation of real property shall be determined for the purposes of this Article in accordance with paragraph 3 of Article 6.

ARTICLE 14   Independent Personal Services  

1  
Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State but such income may also be taxed in the other Contracting State if the individual:


(a) has a fixed base regularly available in the other Contracting State for the purpose of performing the individual's activities. If such a fixed base is available to the individual, the income may be taxed in the other State but only so much of the income as is attributable to that fixed base; or


(b) is present in the other State for a period or periods exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal period or year of income concerned. If the individual is so present only so much of the income as is attributable to the activities performed in the other State may be taxed in that State.

2  
The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the exercise of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15   Dependent Personal Services  

1  
Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by an individual who is a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State.

2  
Notwithstanding the provisions of paragraph 1, remuneration derived by an individual who is a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if:


(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal period or year of income concerned, as the case may be; and


(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and


(c) the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State.

3  
Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.

ARTICLE 16   Directors' Fees  
Directors' fees and similar payments derived by a resident of a Contracting State in that person's capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17   Entertainers  

1  
Notwithstanding the provisions of Articles 14 and 15, income derived by an entertainer who is a resident of a Contracting State (such as theatrical, motion picture, radio or television artistes and musicians and sportspersons) from the entertainer's personal activities as such may be taxed in the Contracting State in which these activities are exercised.

2  
Where income in respect of the personal activities of an entertainer as such accrues not to that entertainer but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised.

3  
The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a Contracting State by an entertainer who is a resident of the other Contracting State if the visit to the firstmentioned State is wholly or mainly supported by public funds of the other Contracting State, its political subdivisions or local authorities. In such a case, the income is taxable only in the Contracting State in which the entertainer is resident.

ARTICLE 18   Pensions and Annuities  

1  
Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.

2  
The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

3  
Any alimony or other maintenance payment arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the firstmentioned State.

ARTICLE 19   Government Service  

1  
Salaries, wages and other similar remuneration, other than a pension or annuity, paid by a Contracting State or a political subdivision or local authority of that State to any individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that other State who:


(a) is a citizen of that State; or


(b) did not become a resident of that State solely for the purpose of rendering the services.

2  
The provisions of paragraph 1 shall not apply to salaries, wages and other similar remuneration in respect of services rendered in connection with any trade or business carried on by a Contracting State or a political subdivision or local authority of that State. In that case the provisions of Article 15 or Article 16, as the case may be, shall apply.

ARTICLE 20   Professors and Teachers  

1  
Where a professor or teacher who is a resident of a Contracting State visits the other Contracting State for a period not exceeding 2 years for the purpose of teaching or carrying out advanced study or research at a university, college, school or other educational institution wholly or mainly supported by public funds in that other State, any remuneration the person receives for such teaching, advanced study or research shall be exempt from tax in that other State to the extent to which that remuneration is, or upon the application of this Article will be, subject to tax in the firstmentioned State.

2  
This Article shall not apply to remuneration which a professor or teacher receives for conducting research if the research is undertaken primarily for the private benefit of a specific person or specific persons.

ARTICLE 21   Students  
Where a student, who is a resident of a Contracting State or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State solely for the purpose of the student's education, receives payments from sources outside that other State for the purpose of the student's maintenance or education, those payments shall be exempt from tax in that other State.

ARTICLE 22   Other Income  

1  
Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2  
However, any such income derived by a resident of a Contracting State from sources in the other Contracting State may also be taxed in that other State.

3  
The provisions of paragraph 1 shall not apply to income, other than income from real property as defined in paragraph 2 of Article 6, derived by a resident of a Contracting State where that income is effectively connected with a permanent establishment or fixed base situated in the other Contracting State. In that case the provisions of Article 7 or Article 14, as the case may be, shall apply.

ARTICLE 23   Source of Income  

1  
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State shall for the purposes of the law of that other Contracting State relating to its tax be deemed to be income from sources in that other Contracting State.

2  
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State shall for the purposes of Article 24 and of the law of the firstmentioned Contracting State relating to its tax be deemed to be income from sources in the other Contracting State.

ARTICLE 24   Methods of Elimination of Double Taxation  

1  
In Australia:

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), Argentine tax paid under the law of Argentina 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 Argentina shall be allowed as a credit against Australian tax payable in respect of that income.

2  
In Argentina:

Where a resident of Argentina derives income which, in accordance with the provisions of this Agreement, may be taxed in Australia, Argentina shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in Australia.

Such deduction shall not, however, exceed that part of the income tax as computed before the deduction is given, which is attributable to the income which may be taxed in Australia.

3  
Where under this Agreement income is relieved from tax in a Contracting State and, under the law in force in the other Contracting State, a person, in respect of that income, is subject to tax by reference to that part of the income which is remitted to or received in that other State and not by reference to its full amount, the relief allowed under this Agreement in the firstmentioned State shall apply only to so much of the income as is remitted to or received in, and is subject to tax in, the other State.

4  
For the purposes of paragraph 1, tax payable in Argentina bya company which is a resident of Australia in respect of profits attributable to manufacturing activities or to the exploration for or exploitation of natural resources carried on by it in Argentina shall be deemed to include any amount which would have been payable as Argentine tax for any tax year but for an exemption from, or reduction of, tax granted for that year or any part thereof under specific provisions of Argentine legislation that the Treasurer of Australia and the Minister of Economy and Works and Public Services of Argentina in letters exchanged for this purpose agree should be covered by this paragraph 4. Subject to its terms, such an agreement on applicable provisions shall be valid for as long as those provisions are not modified after the date of that agreement or have been modified only in minor respects so as not to affect their general character. The period for which that agreement is to apply is to be agreed in those letters.

ARTICLE 25   Mutual Agreement Procedure  

1  
Where a person considers that the actions of one or both of the Contracting States result or will result for the person in taxation not in accordance with this Agreement, the person may, irrespective of the remedies provided by the domestic law of those States concerning taxes to which this Agreement applies, present a case to the competent authority of the Contracting State of which the person is a resident. The case must be presented within 3 years from the first notification of the action resulting in taxation not in accordance with this Agreement.

2  
The competent authority shall endeavour, if the claim appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. The solution so reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3  
The competent authorities of the Contracting States shall jointly endeavour to resolve any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4  
The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Agreement.

ARTICLE 26   Exchange of Information  

1  
The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes to which this Agreement applies insofar as the taxation under those laws is not contrary to this Agreement. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes to which this Agreement applies. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

2  
In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:


(a) to carry out administrative measures at variance with the law or the administrative practice of that or of the other Contracting State; or


(b) to supply information which is not obtainable under the law or in the normal course of the administration of that or of the other Contracting State; or


(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or to supply information the disclosure of which would be contrary to public policy.

ARTICLE 27   Members of Diplomatic Missions and Consular Posts  
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special international agreements.

ARTICLE 28   Entry into Force  
Both Contracting States shall notify each other in writing of the completion of their respective statutory and constitutional procedures required for the entry into force of this Agreement.[1]

Notes to this effect were exchanged at Buenos Aires 23-30 December 1999.

This Agreement shall enter into force on the date of the last notification,[2]

The Agreement and Protocol entered into force 30 December 1999.

and thereupon this Agreement shall have effect:


(a) in Australia:


(i) in respect of withholding tax on income that is derived by a nonresident, in relation to income derived on or after 1 January in the calendar year next following that in which the Agreement enters into force;

(ii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the Agreement enters into force;

(iii) in respect of income, profits or gains from the operation of aircraft to which Article 8 or paragraph 4 of Article 13 of this Agreement applies, in relation to tax on such income, profits or gains of any year of income beginning on or after 27 September 1988;


(b) in Argentina:


(i) in respect of taxes withheld at source, on income derived on or after 1 January in the calendar year next following that in which the Agreement enters into force;

(ii) in respect of other Argentine tax, in relation to tax chargeable for any tax year beginning on or after 1 January in the calendar year next following that in which the Agreement enters into force;

(iii) in respect of income, profits or gains from the operation of aircraft to which Article 8 or paragraph 4 of Article 13 of this Agreement applies, in relation to tax on such income, profits or gains of any year of income beginning on or after 27 September 1988.

ARTICLE 29   Termination  
This Agreement shall continue in effect indefinitely, but either of the Contracting States may, on or before 30 June in any calendar year beginning after the expiration of 5 years from the date of its entry into force, give to the other Contracting State through the diplomatic channel written notice of termination and, in that event, this Agreement shall cease to be effective:


(a) in Australia:


(i) in respect of withholding tax on income that is derived by a nonresident, in relation to income derived on or after 1 January in the calendar year next following that in which the notice of termination is given;

(ii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given;


(b) in Argentina:


(i) in respect of taxes withheld at source, in relation to amounts derived on or after 1 January in the calendar year next following that in which the notice of termination is given;

(ii) in respect of other Argentine tax, in relation to tax chargeable for any taxable year beginning on or after 1 January in the calendar year next following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement.

DONE at Buenos Aires, this twenty-seventh day of August, 1999, in duplicate in the English and Spanish languages, both texts being equally authentic.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE ARGENTINE REPUBLIC:
Mark Vaile Andres Cisneros

PROTOCOL  

1  
With respect to Article 7:


(a) nothing in the Agreement shall be construed as preventing a Contracting State from imposing on the profits attributable to a permanent establishment in that Contracting State, being a permanent establishment of a company which is a resident of the other Contracting State, a tax in addition to the tax which would be payable on the profits of a company which is a resident of the firstmentioned State, provided that any such additional tax shall not exceed 10 per cent of the amount by which the profits attributable to that permanent establishment for a year of income exceeds the tax payable on those profits to the firstmentioned State.


(b) in relation to paragraph 3:


(i) it is understood that a Contracting State shall not be required to allow the total deduction of certain expenses where they are limited in some way in the determination of profits under its domestic tax law or to allow the deduction of any expenditure which, by reason of its nature, is not generally allowed as a deduction under its domestic tax law; and

(ii) no deduction shall be allowed in respect of amounts, if any, paid otherwise than towards reimbursement of actual expenses by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on money lent to the permanent establishment. No deduction shall be allowed, in the determination of the profits of a permanent establishment, in respect of amounts received by the permanent establishment otherwise than towards reimbursement of actual expenses from the head office of the enterprise or any other of its branch offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on money lent to the head office of the enterprise or any ofits other branch offices.


(c) in relation to paragraph 4, the export of goods or merchandise purchased by an enterprise shall, notwithstanding the provisions of subparagraph (d) of paragraph 3 of Article 5 of the Agreement, remain subject to the domestic legislation concerning export.

2  
With respect to Article 8, and for the avoidance of doubt, it is understood that the operation of ships or aircraft referred to in that Article includes non-transport activities, such as dredging, fishing, and surveying and that such activities conducted in a place or places in a Contracting State are to be treated as ship or aircraft operations confined solely to places in that State.

3  
With respect to Article 12:


(a) the limitations on the taxation at source provided for under paragraph 2 are, in the case of Argentina, subject to the registration requirements provided for in its domestic law;


(b) in the case of Argentina, royalties also includes any payment derived from the transfer of news by an international news agency but if a resident of Australia is beneficially entitled to that payment the tax charged shall not exceed 3 per cent of the gross amount of the payment.

4  
With respect to Article 24:


(a) in relation to paragraph 4, it is understood that if the Treasurer of Australia does not agree that tax forgone by Argentina under an exemption from or reduction of tax granted under specific provisions of Argentine legislation should be deemed to have been Argentine tax paid for the purposes of paragraph 1, Argentina shall apply the rules provided in Article 21 of the Income Tax Law (Law No. 20628 text approved in 1986 and its subsequent modifications) in force at the date of signature of this Agreement;


(b) it is also understood that the period for which tax sparing agreed in an exchange of letters referred to in paragraph 4 is applicable will be 5 years pursuant to the letters and any later years that may be agreed in a further exchange of letters.

5  
If, after the date of signature of the Agreement, the Argentine Republic concludes a double tax Agreement with a State that is a member country of the Organisation for Economic Cooperation and Development, and the secondmentioned Agreement:


(a) limits the rate of taxation on dividends to which, under the firstmentioned Agreement, a 10 per cent limit applies to a rate that is lower, or specifies a level of participation in the capital of the company lower than 25 per cent, then the Contracting States shall consult each other with a view to agreeing to a rate or level of participation that is lower than that provided for in the firstmentioned Agreement;


(b) limits the rate of taxation on interest to which, under the firstmentioned Agreement, a 12 per cent limit applies to a rate that is lower than that provided for in the firstmentioned Agreement, then the rate provided for in the secondmentioned Agreement or 10 per cent (whichever is the greater) shall apply for the purposes of paragraph 2 of Article 11 as from the date of entry into force of the secondmentioned Agreement;


(c) limits the rate of taxation on royalties to which, under the firstmentioned Agreement, a 15 per cent limit applies to a rate that is lower than that provided for in the firstmentioned Agreement, then the rate provided for in the secondmentioned Agreement or 10 per cent (whichever is the greater) shall apply for the purposes of paragraph 2(b) of Article 12 as from the date of entry into force of the secondmentioned Agreement.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Protocol.

DONE at Buenos Aires, this twenty-seventh day of August, 1999, in duplicate in the English and Spanish languages, both texts being equally authentic.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE ARGENTINE REPUBLIC:
Mark Vaile Andres Cisneros

Aruban Agreement  

AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE KINGDOM OF THE NETHERLANDS, IN RESPECT OF ARUBA, FOR THE ALLOCATION OF TAXING RIGHTS WITH RESPECT TO CERTAIN INCOME OF INDIVIDUALS AND TO ESTABLISH A MUTUAL AGREEMENT PROCEDURE IN RESPECT OF TRANSFER PRICING ADJUSTMENTS  

ARTICLE 1   Persons Covered  
This Agreement shall apply to persons who are residents of one or both of the Parties.

ARTICLE 2   Taxes Covered  

1.  
The existing taxes to which this Agreement shall apply are:


(a) in Australia, the income tax imposed under the federal law of Australia;
(hereinafter referred to as "Australian tax").


(b) in Aruba, the following taxes:


(i) the income tax (inkomstenbelasting);

(ii) the wages tax (loonbelasting); and

(iii) the profit tax (winstbelasting);
(hereinafter referred to as "Aruban tax").

2.  
This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Parties shall notify each other within a reasonable period of time of any substantial changes to the taxation laws covered by this Agreement.

3.  
This Agreement shall not apply to taxes imposed by states, municipalities, local authorities or other political subdivisions, or possessions of a Party.

ARTICLE 3   Definitions  

1.  
For the purposes of this Agreement, unless the context otherwise requires:


(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; and

(vi) the Coral Sea Islands Territory,
and 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 exploration for or exploitation of any of the natural resources of the exclusive economic zone or the seabed and subsoil of the continental shelf;


(b) the term "Aruba" means that part of the Kingdom of the Netherlands that is situated in the Caribbean area and consisting of the Island of Aruba;


(c) the term "competent authority" means in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner and, in the case of Aruba, the Minister of Finance and Economic Affairs or an authorised representative of the Minister;


(d) the term "Party" means Australia or the Kingdom of the Netherlands in respect of Aruba, as the context requires;


(e) the term "national", in relation to a Party, means any individual possessing the nationality or citizenship of that Party;


(f) the term "person" includes an individual, a company and any other body of persons;


(g) the term "tax" means Australian tax or Aruban tax as the context requires; and


(h) the term "transfer pricing adjustment" means an adjustment made by the competent authority of a Party to the profits of an enterprise as a result of applying the domestic law concerning taxes referred to in Article 2 of that Party regarding transfer pricing.

2.  
As regards the application of this Agreement at any time by a Party, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Party, for the purposes of the taxes to which this Agreement applies, with any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party.

ARTICLE 4   Resident  

1.  
For the purposes of this Agreement, the term "resident of a Party" means:


(a) in the case of Australia, a person who is a resident of Australia for the purposes of Australian tax; and


(b) in the case of Aruba, a person whois a resident of Aruba for the purposes of Aruban tax.

2.  
A person is not a resident of a Party for the purposes of this Agreement if the person is liable to tax in that Party in respect only of income from sources in that Party.

3.  
Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Parties, then the person's status shall be determined as follows:


(a) the individual shall be deemed to be a resident only of the Party in which a permanent home is available to that individual; if a permanent home is available in both Parties, or in neither of them, that individual shall be deemed to be a resident only of the Party with which the individual's personal and economic relations are closer (centre of vital interests);


(b) if the Party in which the individual has their centre of vital interests cannot be determined, the individual shall be deemed to be a resident only of the Party of which the individual is a national;


(c) if the individual is a national of both Parties or of neither of them, the competent authorities of the Parties shall endeavour to resolve the question by mutual agreement.

4.  
Where, by reason of paragraph 1, a person other than an individual is a resident of both Parties, then it shall be deemed to be a resident only of the Party in which its place of effective management is situated.

ARTICLE 5   Pensions and Retirement Annuities  

1.  
Pensions (excluding government pensions) and retirement annuities paid to an individual who is a resident of a Party shall be taxable only in that Party. However, pensions and retirement annuities arising in a Party may be taxed in that Party where such income is not subject to tax in the other Party.

2.  
The term "retirement annuity" means:


(a) in the case of Australia, a superannuation annuity payment within the meaning of the taxation laws of Australia;


(b) in the case of Aruba, a stated sum payable in consequence of retirement and paid periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth; and


(c) any other similar periodic payment agreed upon by the competent authorities.

ARTICLE 6   Government Service  

1.  

(a) Salaries, wages and other similar remuneration, other than a pension, paid by a Party or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Party or subdivision or authority shall be taxable only in that Party.


(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Party if the services are rendered in that Party and the individual is a resident of that Party who:


(i) is a national of that Party; or

(ii) did not become a resident of that Party solely for the purpose of rendering the services.

2.  

(a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Party or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Party or subdivision or authority shall be taxable only in that Party.


(b) However, such pensions and other similar remuneration shall be taxable only in the other Party if such income is subject to tax in that Party and if the individual is a resident of, and a national of, that Party and is also not a national of the first-mentioned Party.

3.  
Notwithstanding the provisions of paragraphs 1 and 2, salaries, wages and other similar remuneration in respect of services rendered in connection with any trade or business carried on by a Party or a political subdivision or a local authority thereof may be taxed in accordance with the laws of a Party. The provisions of Article 5 shall apply to pensions in respect of services rendered in connection with any trade or business carried on by a Party or a political subdivision or a local authority thereof.

ARTICLE 7   Students  
Payments which a student or business apprentice, who is or was immediately before visiting a Party a resident of the other Party and who is temporarily present in the first-mentioned Party solely for the purpose of their education or training, receives for the purpose of their maintenance, education or training shall not be taxed in that Party, provided such payments arise from sources outside that Party.

ARTICLE 8   Mutual Agreement Procedure in respect of Transfer Pricing Adjustments  

1.  
Where a resident of a Party considers the actions of the other Party results or will result in a transfer pricing adjustment not in accordance with the arm's length principle, the resident may, irrespective of the remedies provided by the domestic law of those Parties, present a case to the competent authority of the first-mentioned Party. The case must be presented within three years of the first notification of the adjustment.

2.  
The competent authorities shall endeavour to resolve any difficulties or doubts arising as to the application of the arm's length principle by a Party regarding transfer pricing adjustments. They may also communicate with each other directly for the purposes of this Article.

ARTICLE 9   Exchange of Information  
The competent authorities of the Parties shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement. Information may be exchanged by the competent authorities for the purposes of this Article in accordance with the provisions of the Agreement on the Exchange of Information with Respect to Taxes concluded by the Parties (whether or not this Agreement, in whole or in part, forms part of the domestic law of either Party).

ARTICLE 10   Entry into Force  
The Parties shall notify each other, in writing, through the diplomatic channel of the completion of their constitutional and legal procedures for the entry into force of this Agreement. This Agreement shall enter into force on the date of the last notification, and shall, provided an Agreement on the Exchange of Information with Respect to Taxes is in force between the Parties, thereupon have effect:


(a) in respect of Australian tax, for any year of income beginning on or after 1 July in the calendar year next following the year in which this Agreement enters into force; and


(b) in respect of Aruban tax, for any year of income beginning on or after 1 January in the calendar year next following the year in which this Agreement enters into force.

ARTICLE 11   Termination  

1.  
This Agreement shall continue in effect indefinitely, but either of the Parties may, give to the other Party through the diplomatic channel written notice of termination.

2.  
Such termination shall become effective:


(a) in respect of Australian tax, in the year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given;


(b) in respect of Aruban tax, for any year of income beginning on or after 1 January in the calendar year next following that in which the notice of termination is given.

3.  
Notwithstanding the provisions of paragraph 1 or 2, this Agreement shall, on receipt through the diplomatic channel of written notice of termination of the Agreement on the Exchange of Information with Respect to Taxes between the Parties, terminate and cease to be effective on the first day of the month following the expiration of a period of 6 months after the date of receipt of such notice.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement.

DONE at Canberra in duplicate, on this sixteenth day of December 2009.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE KINGDOM OF THE NETHERLANDS,
IN RESPECT OF ARUBA:
The Hon Nick Sherry
Assistant Treasurer
Cornelis Wilhelmus Andreæ
Ambassador

Austrian Agreement  

AGREEMENT BETWEEN AUSTRALIA AND THE REPUBLIC OF AUSTRIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

CHAPTER I - SCOPE OF THE AGREEMENT  

ARTICLE 1   Personal Scope  
This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2   Taxes Covered  

(1)  
The existing taxes to which this Agreement shall apply are:


(a) in the case of Australia:
the income tax imposed under the federal law of the Commonwealth of Australia, including the additional tax upon the undistributed amount of the distributable income of a private company and the tax known as the resource rent tax;


(b) in the case of Austria:


(i) the income tax (die Einkommensteuer);

(ii) the corporation tax (die Körperschaftsteuer);

(iii) the tax on interest yields (die Zinsertragsteuer);

(iv) the directors tax (die Aufsichtsratsabgabe); and

(v) the tax on commercial and industrial enterprises, including the tax levied on the sum of wages (die Gewerbesteuer einschliesslich der Lohnsummensteuer).

(2)  
This Agreement shall also apply to any identical or substantially similar taxes which are imposed under the federal law of the Commonwealth of Australia or the law of the Republic of Austria after the date of signature of this Agreement in addition to, or in place of, the existing taxes. As soon as possible after the end of each calendar year, the competent authority of each Contracting State shall notify the competent authority of the other Contracting State of any substantial changes which have been made in the laws of his State relating to the taxes to which this Agreement applies.

CHAPTER II - DEFINITIONS  

ARTICLE 3   General Definitions  

(1)  
In this Agreement, unless the context otherwise requires:


(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 and McDonald Islands; and

(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia (including the territories specified in subparagraphs (i) to (vi) inclusive) 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 sea-bed and subsoil of the continental shelf;


(b) the term "Austria" means the Republic of Austria;


(c) the terms "Contracting State", "one of the Contracting States" and "other Contracting State" mean Australia or Austria, as the context requires;


(d) the term "person" includes an individual, a company and any other body of persons;


(e) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;


(f) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean an enterprise carried on by a resident of Australia or an enterprise carried on by a resident of Austria, as the context requires;


(g) the term "tax" means Australian tax or Austrian tax, as the context requires;


(h) the term "Australian tax" means tax imposed by Australia, being tax to which this Agreement applies by virtue of Article 2;


(i) the term "Austrian tax" means tax imposed by Austria, being tax to which this Agreement applies by virtue of Article 2;


(j) the term "competent authority" means, in the case of Australia, the Commissioner of Taxation or his authorized representative and, in the case of Austria, the Federal Minister of Finance.

(2)  
In this Agreement, the terms "Australian tax" and "Austrian tax" do not include any penalty or interest imposed under the law of either Contracting State relating to the taxes to which this Agreement applies by virtue of Article 2.

(3)  
In the application of this Agreement by a Contracting State, any term not defined in this Agreement shall, unless the context otherwise requires, have the meaning which it has under the laws of that State from time to time in force relating to the taxes to which this Agreement applies.

ARTICLE 4   Residence  

(1)  
For the purposes of this Agreement, a person is a resident of one of the Contracting States:


(a) in the case of Australia, if the person is a resident of Australia for the purposes of Australian tax; and


(b) in the case of Austria, if the person is subject to unlimited tax liability under Austrian law.

(2)  
A person is not a resident of a Contracting State for the purposes of this Agreement if he is liable to tax in that State in respect only of income from sources in that State.

(3)  
Where by reason of the preceding provisions of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:


(a) he shall be deemed to be a resident solely of the Contracting State in which he has a permanent home available to him;


(b) if he has a permanent home available to him in both Contracting States, or if he does not have a permanent home available to him in either of them, he shall be deemed to be a resident solely of the Contracting State with which his personal and economic relations are the closer.

(4)  
Where by reason of the provisions of paragraph (1), a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the Contracting State in which its place of effective management is situated.

ARTICLE 5   Permanent Establishment  

(1)  
For the purposes of this Agreement, the term "permanent establishment", in relation to an enterprise, means a fixed place of business through which the business of the enterprise is wholly or partly carried on.

(2)  
The term "permanent establishment" shall include especially:


(a) a place of management;


(b) a branch;


(c) an office;


(d) a factory;


(e) a workshop;


(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;


(g) an agricultural, pastoral or forestry property;


(h) a building site or construction, installation or assembly project, or supervisory activities in connection with such a site or project, where that site or project exists, or those activities are carried on, for more than twelve months.

(3)  
An enterprise shall not be deemed to have a permanent establishment merely by reason of:


(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;


(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;


(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;


(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;


(e) the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising or scientific research.

(4)  
A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph (5) applies - shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if:


(a) he has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or


(b) in so acting, he manufactures or substantially processes in that State for the enterprise goods or merchandise belonging to the enterprise, provided that the provisions of this subparagraph shall apply only in relation to the goods or merchandise so manufactured or processed.

(5)  
An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where that person is acting in the ordinary course of his business as such a broker or agent.

(6)  
The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other.

(7)  
The principles set forth in the preceding paragraphs of this Article shall be applied in determining for the purposes of this Agreement whether there is a permanent establishment outside both Contracting States, and whether an enterprise, not being an enterprise of one of the Contracting States, has a permanent establishment in one of the Contracting States.

CHAPTER III - TAXATION OF INCOME  

ARTICLE 6   Income from Real Property  

(1)  
Income from real property, including royalties and other payments in respect of the operation of mines or quarries or of the exploitation of any natural resource, may be taxed in the Contracting State in which the real property, mines, quarries or natural resources are situated.

(2)  
Income from a lease of land and income from any other direct interest in or over land, whether or not improved, shall be regarded as income from real property situated where the land to which the lease or other direct interest relates is situated.

(3)  
The provisions of paragraphs (1) and (2) shall also apply to the income from real property of an enterprise and to income from real property used for the performance of professional services.

ARTICLE 7   Business Profits  

(1)  
The profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

(2)  
Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.

(3)  
In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere.

(4)  
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(5)  
Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment, provided that that law shall be applied, so far as the information available to the competent authority permits, consistently with the principles of this Article.

(6)  
Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

(7)  
Nothing in this Article shall affect the operation of any law of a Contracting State relating to tax imposed on profits from insurance with non-residents provided that if the relevant law in force in either Contracting State at the date of signature of this Agreement is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

(8)  
The provisions of this Article shall also apply to income derived by a sleeping partner from participation in a sleeping partnership (stille Gesellschaft) created under Austrian law.

(9)  
Where:


(a) a resident of Austria is beneficially entitled, whether directly or through one or more interposed trust estates, to a share of the business profits of an enterprise carried on in Australia by the trustee of a trust estate other than a corporate unit trust; and


(b) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in Australia,

the enterprise carried on by the trustee shall be deemed to be a business carried on in Australia by that resident through a permanent establishment situated therein and that share of business profits shall be attributed to that permanent establishment.

ARTICLE 8   Ships and Aircraft  

(1)  
Profits from the operation of ships or aircraft derived by a resident of one of the Contracting States shall be taxable only in that State.

(2)  
Notwithstanding the provisions of paragraph (1), such profits may be taxed in the other Contracting State where they are profits from operations of ships or aircraft confined solely to places in that other State.

(3)  
The provisions of paragraphs (1) and (2) shall apply in relation to the share of the profits from the operation of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organization or in an international operating agency.

(4)  
For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in one of the Contracting States for discharge at another place in that State shall be treated as profits from operations of ships or aircraft confined solely to places in that State.

(5)  
Income derived by an enterprise of one of the Contracting States from the alienation of ships or aircraft operated in international traffic while owned by that enterprise or of personal property pertaining to the operation of those ships or aircraft shall be taxable only in that State.

ARTICLE 9   Associated Enterprises  

(1)  
Where:


(a) an enterprise of one of the Contracting States participates directly or indirectly in the management, controlor capital of an enterprise of the other Contracting State; or


(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State,

and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

(2)  
Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the income to be attributed to an enterprise, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles of this Article.

(3)  
Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1) or (2), in the profits of an enterprise of the other Contracting State and charged to tax in that other State, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-mentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the first-mentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Agreement and for this purpose the competent authorities of the Contracting States shall if necessary consult each other.

ARTICLE 10   Dividends  

(1)  
Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.

(3)  
The term "dividends" in this Article means income from shares and other income assimilated to income from shares by the law, relating to tax, of the Contracting State of which the company making the distribution is a resident for the purposes of its tax.

(4)  
The provisions of paragraph (2) shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In any such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

(5)  
Dividends paid by a company which is a resident of one of the Contracting States, being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled, shall be exempt from tax in that other State except insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or fixed base situated in that other State. Provided that this paragraph shall not apply in relation to dividends paid by any company which is a resident of Australia for the purposes of Australian tax and which is also a resident of Austria for the purposes of Austrian tax.

(6)  
Nothing in this Agreement shall be construed as preventing Australia from imposing, under a federal law, tax on the income of a company that is a resident of Austria in addition to the taxes referred to in Article 2 in relation to Australia which are payable by a company which is a resident of Australia, provided that any such additional tax shall not exceed 15 per cent of the amount by which the taxable income of the first-mentioned company of a year of income exceeds the tax payable on that taxable income to Australia. Any tax payable to Australia on the undistributed profits of a company which is a resident of Austria shall be calculated as if that company were not liable to the additional tax referred to in this paragraph and had paid dividends of such amount that tax equal to the amount of that additional tax would have been payable on the dividends in accordance with paragraph (2) of this Article.

ARTICLE 11   Interest  

(1)  
Interest arising in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such interest may be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

(3)  
The term "interest" in this Article includes interest from Government securities or from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and interest from any other form of indebtedness as well as all other income assimilated to income from money lent by the law, relating to tax, of the Contracting State in which the income arises.

(4)  
The provisions of paragraph (2) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, carries on business in the other Contracting State, in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the indebtedness in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

(5)  
Interest shall be deemed to arise in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether he is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

(6)  
Where, owing to a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the interest paid shall remain taxable according to the law, relating to tax, of each Contracting State, but subject to the other provisions of this Agreement.

ARTICLE 12   Royalties  

(1)  
Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such royalties may be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

(3)  
The term "royalties" in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right;


(b) the use of, or the right to use, any industrial, commercial or scientific equipment;


(c) the supply of scientific, technical, industrial or commercial knowledge or information;


(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such knowledge or information as is mentioned in subparagraph (c);


(e) the use of, or the right to use:


(i) motion picture films;

(ii) films or video tapes for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or


(f) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.

(4)  
The provisions of paragraph (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, carries on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the property or right in respect of which the royalties are paid or credited is effectively connected with such permanent establishment or fixedbase. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

(5)  
Royalties shall be deemed to arise in a Contracting State when the payer is that State itself or a political subdivision or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are borne by the permanent establishment or fixed base, then the royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

(6)  
Where, owing to a special relationship between the payer and the person beneficially entitled to the royalties, or between both of them and some other person, the amount of the royalties paid or credited, having regard to what they are paid or credited for, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the royalties paid or credited shall remain taxable according to the law, relating to tax, of each Contracting State, but subject to the other provisions of this Agreement.

ARTICLE 13   Alienation of Property  

(1)  
Income from the alienation of real property may be taxed in the Contracting State in which that property is situated.

(2)  
For the purposes of this Article:


(a) the term "real property" shall include:


(i) a lease of land or any other direct interest in or over land;

(ii) rights to exploit, or to explore for, natural resources; and

(iii) shares or comparable interests in a company, the assets of which consist wholly or principally of direct interests in or over land in one of the Contracting States or of rights to exploit, or to explore for, natural resources in one of the Contracting States;


(b) real property shall be deemed to be situated:


(i) where it consists of direct interests in or over land - in the Contracting State in which the land is situated;

(ii) where it consists of rights to exploit, or to explore for, natural resources - in the Contracting State in which the natural resources are situated or the exploration may take place; and

(iii) where it consists of shares or comparable interests in a company, the assets of which consist wholly or principally of direct interest in or over land in one of the Contracting States or of rights to exploit, or to explore for, natural resources in one of the Contracting States - in the Contracting State in which the assets or the principal assets of the company are situated.

ARTICLE 14   Independent Personal Services  

(1)  
Income derived by an individual who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to activities exercised from that fixed base.

(2)  
The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the exercise of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15   Dependent Personal Services  

(1)  
Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State.

(2)  
Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:


(a) the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days in the year of income or the taxable year, as the case may be, of that other State;


(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State;


(c) the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State; and


(d) the remuneration is, or upon the application of this Article will be, subject to tax in the first-mentioned State.

(3)  
Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States may be taxed in that State.

ARTICLE 16   Directors' Fees  
Directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17   Entertainers  

(1)  
Notwithstanding the provisions of Articles 14 and 15, income derived by entertainers (such as theatrical, motion picture, radio or television artistes and musicians and athletes) from their personal activities as such may be taxed in the Contracting State in which these activities are exercised.

(2)  
Where income in respect of the personal activities of an entertainer as such accrues not to that entertainer but to another person that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised.

ARTICLE 18   Pensions and Annuities  

(1)  
Subject to the provisions of paragraph (2) of Article 19, pensions and annuities paid to a resident of one of the Contracting States shall be taxable only in that State.

(2)  
The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

(3)  
Any alimony or other maintenance payment arising in one of the Contracting States and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State.

ARTICLE 19   Government Service  

(1)  
Remuneration, other than a pension or annuity, paid by one of the Contracting States or a political subdivision or local authority of that State to any individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that other State who:


(a) is a citizen or national of that State; or


(b) did not become a resident of that State solely for the purpose of performing the services.

(2)  

(a) Subject to the provisions of subparagraph (paragraph (b)), a pension paid by, or out of funds created by, one of the Contracting States or a political subdivision or a local authority of that State to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.


(b) A pension referred to in subparagraph (a) shall be taxable only in the other Contracting State if the individual is a resident of, and a citizen or national of, that State.

(3)  
The provisions of paragraph (1) shall also apply to remuneration paid out of public funds provided by Austria to any individual in respect of services rendered as a member of the Austrian permanent delegation of foreign commerce in Australia.

(4)  
The provisions of paragraph (1) shall not applyto remuneration in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a political subdivision or local authority of that State. In such a case, the provisions of Article 15 or Article 16, as the case may be, shall apply.

ARTICLE 20   Students  
Where a student, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State solely for the purpose of his education, receives payments from sources outside that other State for the purpose of his maintenance or education, those payments shall be exempt from tax in that other State.

ARTICLE 21   Income Not Expressly Mentioned  

(1)  
Items of income of a resident of one of the Contracting States which are not expressly mentioned in the foregoing Articles of this Agreement shall be taxable only in that State.

(2)  
However, any such income derived by a resident of one of the Contracting States from sources in the other Contracting State may also be taxed in that other State.

(3)  
The provisions of paragraph (1) shall not apply to income derived by a resident of one of the Contracting States where that income is effectively connected with a permanent establishment or fixed base situated in the other Contracting State. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

ARTICLE 22   Source of Income  

(1)  
Income derived by a resident of Austria which, under any one or more of Articles 6 to 8, Articles 10 to 19 and Article 21, may be taxed in Australia shall for the purposes of the law of Australia relating to Australian tax be deemed to be income from sources in Australia.

(2)  
Income derived by a resident of Australia which, under any one or more of Articles 6 to 8, Articles 10 to 19 and Article 21, may be taxed in Austria shall for the purposes of paragraph (1) of Article 23 and of the law of Australia relating to Australian tax be deemed to be income from sources in Austria.

CHAPTER IV - METHODS OF ELIMINATION OF DOUBLE TAXATION  

ARTICLE 23  

(1)  
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), Austrian tax paid under the law of Austria 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 Austria (not including, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income.

(2)  
For the purposes of paragraph (1), the term "Austrian tax" shall include the tax on commercial and industrial enterprises, referred to in subparagraph (b)(v) of paragraph (1) of Article 2, only where it is levied on a basis other than capital or the sum of wages.

(3)  
In the case of a resident of Austria double taxation shall be avoided as follows:


(a) Where a resident of Austria derives income which in accordance with the provisions of this Agreement may be taxed in Australia, Austria shall, subject to the provisions of subparagraphs (b) and (c), exempt such income from tax.


(b) Where a resident of Austria derives items of income which, in accordance with the provisions of paragraph (2) of Article 10, 11 or 12, paragraph (1) of Article 13 (in regard only to income from the alienation of real property as defined in subparagraph (2)(a)(iii) of that Article) or paragraph (2) of Article 21, may be taxed in Australia, Austria shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Australia. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived in Australia.


(c) Where in accordance with any provision of this Agreement income derived by a resident of Austria, is exempt from tax in Austria, may nevertheless, in calculating the amount of tax on the remaining income of that resident, take into account the exempted income.

(4)  
If, in an agreement for the avoidance of double taxation that is made, after the date of signature of this Agreement, between Australia and a third State, being a State that is a member of the Organization for Economic Co-operation and Development, Australia agrees to limit the rate of tax:


(a) on dividends paid by a company which is a resident of Australia for the purposes of Australian tax to which a company that is a resident of the third State is entitled, to a rate less than that provided in paragraph (2) of Article 10;


(b) on interest arising in Australia to which a resident of the third State is entitled, to a rate less than that provided in paragraph (2) of Article 11; or


(c) on royalties arising in Australia to which a resident of the third State is entitled, to a rate less than that provided in paragraph (2) of Article 12,

the Government of Australia shall immediately inform the Government of Austria in writing through the diplomatic channel and shall enter into negotiations with the Government of Austria to review the relevant provision or provisions in order to provide the same treatment for Austria as that provided for the third State.

CHAPTER V - SPECIAL PROVISIONS  

ARTICLE 24   Mutual Agreement Procedure  

(1)  
Where a resident of one of the Contracting States considers that the actions of the competent authority of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. The case must be presented within three years from the first notification of the action giving rise to taxation not in accordance with this Agreement.

(2)  
The competent authority shall endeavour, if the claim appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Agreement. The solution so reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States.

(3)  
The competent authorities of the Contracting States shall jointly endeavour to resolve any difficulties or doubts arising as to the application of this Agreement.

(4)  
The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Agreement.

ARTICLE 25   Exchange of Information  

(1)  
The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Agreement or of the domestic laws of the Contracting States concerning the taxes to which this Agreement applies insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Article 1. Any information received by the competent authority of a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes to which this Agreement applies and shall be used only for such purposes.

(2)  
In no case shall the provisions of paragraph (1) be construed so as to impose on the competent authority of a Contracting State the obligation:


(a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State;


(b) to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; or


(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or to supply information the disclosure of which would be contrary to public policy.

ARTICLE 26   Diplomatic and Consular Officials  
Nothing in this Agreement shall affect diplomatic or consular privileges under the general rules of international law or under the provisions of special international agreements.

CHAPTER VI - FINAL PROVISIONS  

ARTICLE 27   Entry into Force  
This Agreement shall enter into force[1]

The Agreement entered into force 1 September 1988.

on the first day of the third month next following that in which the Contracting States exchange notes through the diplomatic channel notifying each other that the last of such constitutional processes has been completed as are necessary to give this Agreement the force of law in Australia and in Austria, as the case may be, and thereupon this Agreement shall have effect:


(a) in Australia:


(i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the Agreement enters into force; and

(ii) in respect of other Australian tax, in relation to income of any year of income beginning on or after 1 July in the calendar year next following that in which the Agreement enters into force;


(b) in Austria:


(i) in respect of tax withheld at the source on amounts paid on or after 1 January in the calendar year next following that in which the Agreement enters into force; and

(ii) in respect of other Austrian tax for taxable years beginning on or after 1 January in the calendar year next following that in which the Agreement enters into force.

ARTICLE 28   Termination  
This Agreement shall continue in effect indefinitely, but either of the Contracting States may, on or before 30 June in any calendar year beginning after the expiration of 5 years from the date of its entry into force, give to the other Contracting State through the diplomatic channel written notice of termination and, in that event, this Agreement shall cease to be effective:


(a) in Australia:


(i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the notice of termination is given;

(ii) in respect of other Australian tax, in relation to income of any year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given;


(b) in Austria:


(i) in respect of tax withheld at the source on amounts paid on or after 1 January in the calendar year next following that in which the notice of termination is given; and

(ii) in respect of other Austrian tax for taxable years beginning on or after 1 January in the calendar year next following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Agreement.

DONE in duplicate in Vienna this eighth day of July One thousand nine hundred and eighty-six, in the English and German languages, both texts being equally authentic.


FOR AUSTRALIA: FOR THE REPUBLIC OF AUSTRIA:
J.R. Kelso Dr E. Bauer

Belgian Agreement  

AGREEMENT BETWEEN AUSTRALIA AND THE KINGDOM OF BELGIUM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

CHAPTER I - SCOPE OF THE AGREEMENT  

ARTICLE 1   Personal Scope  
This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2   Taxes Covered  

(1)  
The existing taxes to which this Agreement shall apply are-


(a) in Australia:
the Commonwealth income tax, including the additional tax upon the undistributed amount of the distributable income of a private company;


(b) in Belgium:
the individual income tax (impôt des personnes physiques - personenbelasting);
the corporate income tax (impôt des sociétes - vennootschapsbelasting);
the income tax on legal entities (impôt des personnes morales - rechtspersonenbelasting);
the income tax on non-residents (impôt des non-residents - belasting der niet- verblijfhouders);
including the prepayments, the surcharges on these taxes and prepayments, and the communal supplement to the individual income tax.

(2)  
This Agreement shall also apply to any identical or substantially similar taxes which are imposed by one of the Contracting States after the date of signature of this Agreement in addition to, or in place of, the existing taxes. At the end of each calendar year, the competent authority of each Contracting State shall notify the competent authority of the other Contracting State of any substantial changes which have been made in the laws of his State relating to the taxes to which this Agreement applies.

CHAPTER II - DEFINITIONS  

ARTICLE 3   General Definitions  

(1)  
In this Agreement, unless the context otherwise requires-


(a) the term "Australia" means the Commonwealth of Australia and, when used in a geographical sense, includes-


(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 Coral Sea Islands Territory; and

(vi) any area adjacent to the territorial limits of Australia or of the said Territories in respect of which there is for the time being in force, consistently with international law, a law of Australia or of a State or part of Australia or of a Territory aforesaid dealing with the exploitation of any of the natural resources of the seabed and subsoil of the continental shelf;


(b) the term "Belgium" means the Kingdom of Belgium and, when used in a geographical sense, means the territory of the Kingdom of Belgium and includes any territory outside the national sovereignty of Belgium which in accordance with international law has been or may hereafter be designated, under the laws of Belgium concerning the continental shelf, as an area within which the rights of Belgium with respect to the seabed and the subsoil and their natural resources may be exercised;


(c) the terms "Contracting State, one of the Contracting States" and "other Contracting State" mean Australia or Belgium, as the context requires;


(d) the term "person" means an individual, a company and any other body of persons;


(e) the term "company" means any body corporate or any entity which is assimilated to a body corporate for tax purposes in the Contracting State of which it is a resident;


(f) the term "tax" means Australian tax or Belgian tax, as the context requires;


(g) the term "Australian tax" means tax imposed by Australia, being tax to which this Agreement applies by virtue of Article 2;


(h) the term "Belgian tax" means tax imposed by Belgium, being tax to which this Agreement applies by virtue of Article 2;


(i) the term "competent authority" means, in the case of Australia, the Commissioner of Taxation or his authorized representative, and in the case of Belgium, the Minister of Finance or his authorized representative;


(j) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean an enterprise carried on by a resident of Australia or an enterprise carried on by a resident of Belgium, as the context requires;


(k) words in the singular include the plural and words in the plural include the singular.

(2)  
In this Agreement, the terms "Australian tax" and "Belgian tax" do not include any charge imposed as a penalty under the law of either Contracting State relating to the taxes to which this Agreement applies by virtue of Article 2.

(3)  
In the application of this Agreement by a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes to which this Agreement applies.

ARTICLE 4   Residence  

(1)  
For the purposes of this Agreement, a person is a resident of one of the Contracting States-


(a) in the case of Australia, subject to paragraph (2), if the person is a resident of Australia for the purposes of Australian tax; and


(b) in the case of Belgium, if the person is a resident of Belgium for the purposes of Belgian tax.

(2)  
In relation to income from sources in Belgium, a person who is subject to Australian tax on income which is from sources in Australia shall not be treated as a resident of Australia unless the income from sources in Belgium is subject to Australian tax or, if that income is exempt from Australian tax, it is so exempt solely because it is subject to Belgian tax.

(3)  
Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:


(a) he shall be deemed to be a resident solely of the Contracting State in which he has a permanent home available to him;


(b) if he has a permanent home available to him in both Contracting States, or if he does not have a permanent home available to him in either of them, he shall be deemed to be a resident solely of the Contracting State in which he has an habitual abode;


(c) if he has an habitual abode in both Contracting States, or if he does not have an habitual abode in either of them, he shall be deemed to be a resident solely of the Contracting State with which his personal and economic relations are the closer.

(4)  
Where by reason of the provisions of paragraph (1) a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the Contracting State in which its place of effective management is situated.

ARTICLE 5   Permanent Establishment  

(1)  
For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

(2)  
The term "permanent establishment" shall include especially-


(a) a place of management;


(b) a branch;


(c) an office;


(d) a factory;


(e) a workshop;


(f) a mine, quarry or other place of extraction of natural resources;


(g) an agricultural, pastoral or forestry property;


(h) a building site or construction, installation or assembly project which exists for more than twelve months.

(3)  
An enterprise shall not be deemed to have a permanent establishment merely by reason of-


(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;


(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;


(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;


(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;


(e) the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising, scientific research or the supply of information.

(4)  
An enterprise shall be deemed to have a permanent establishment in one of the Contracting States and to carry on business through that permanent establishment if-


(a) it carries on supervisory activities in that State for more than twelve months in connection with a building site, or a construction, installation or assembly project which is being undertaken in that State; or


(b) substantial equipment is being used in that State for more than twelve months by, for or under contract with the enterprise in exploration for, or the exploitation of, natural resources, or in activities connected with such exploration or exploitation.

(5)  
A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph (6) applies - shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if-


(a) he has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or


(b) in so acting he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise, provided that this provision shall apply only in relation to the goods or merchandise so manufactured or processed.

(6)  
An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where that person is acting in the ordinary course of his business as such a broker or agent.

(7)  
The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself make either company a permanent establishment of the other.

(8)  
The principles set forth in paragraphs (1) to (7) inclusive shall be applied in determining for the purposes of this Agreement whether there is a permanent establishment outside both Contracting States, and whether an enterprise, not being an enterprise of one of the Contracting States, has a permanent establishment in one of the Contracting States.

CHAPTER III - TAXATION OF INCOME  

ARTICLE 6   Income from Real Property  

(1)  
Income from real property, including royalties and other payments in respect of the operation of mines or quarries or the exploitation of any natural resource, may be taxed in the Contracting State in which the real property, mines, quarries, or natural resources are situated.

(2)  
Income from a lease of land and income from any other direct interest in or over land, whether or not improved, shall be regarded as income from real property situated in the Contracting State in which the land is situated.

(3)  
Ships, boats or aircraft shall not be regarded as real property.

(4)  
The provisions of paragraph (1) shall also apply to the income from real property of an enterprise and to the income from real property used for the performance of professional services.

ARTICLE 7   Business profits  

(1)  
The profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment.

(2)  
Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.

(3)  
In the determination of the profits of a permanent establishment, there shall be allowed as deductions, expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere.

(4)  
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(5)  
If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to the permanent establishment of an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person, provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article.

(6)  
For the purposes of this Article, except as provided in the Articles referred to in this paragraph, the profits of an enterprise do not include items of income dealt with in Articles 6, 8, 10, 11, 12, 14, 16 and 17 and in paragraph (1) of Article 13.

(7)  
Notwithstanding the provisions of this Article, profits of an enterprise of one of the Contracting States from carrying on a business of any form of insurance, other than life insurance, may be taxed in the other Contracting State according to the law of that State, provided that if the law in force at the date of signature of this Agreement is varied (otherwise than in minor respects so as not to affect its general character) the Contracting Governments shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

(8)  
(Deleted by the Belgian Protocol (No 1))

(9)  
(Deleted by the Belgian Protocol (No 1))

ARTICLE 8   Shipping and Air Transport  

(1)  
Profits from the operation of ships or aircraft derived by a resident of one of the Contracting States shall be taxable only in that State.

(2)  
Notwithstanding the provisions of paragraph (1), such profits may be taxed in the other Contracting State where they are profits from operations of ships or aircraft confined solely to places in that other State.

(3)  
The provisions of paragraphs (1) and (2) shall apply in relation to the share of the profits from the operation of ships or aircraft derived by a resident of a Contracting State through participation in a pool service, in a joint transport operating organization or in an international operating agency.

(4)  
For the purposes of this Article, profits derived from the carriage of passengers, livestock, mail, goods or merchandise shipped in a Contracting State for discharge at another place in that State shall be treated as profits from operations of ships or aircraft confined solely to the places in that State.

(5)  
The amount which shall be charged to tax in one of the Contracting States as profits from operations of ships or aircraft in respect of which a resident of the other Contracting State may be taxed in the first-mentioned State under paragraph (2) or (3) shall not exceed 5 per cent of the amount paid or payable (net of rebates) in respect of carriage in such operations.

(6)  
Paragraph (5) shall not apply to profits derived from the operation of ships or aircraft by a resident of one of the Contracting States whose principal place of business is in the other Contracting State, nor shall it apply to profits derived from the operation of ships or aircraft by a resident of a Contracting State if those profits are derived otherwise than from the carriage of passengers, livestock, mail, goods or merchandise.

ARTICLE 9   Associated Enterprise  

(1)  
Where-


(a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or


(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State,

and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

(2)  
If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person, provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of paragraph (1).

(3)  
Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1) or (2), in the profits of an enterprise of the other Contracting State and taxed accordingly, and the profits so included are profits which might have been expected to have accrued to the enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-mentioned State shall make such adjustment as it considers appropriate to the amount of tax charged on those profits in the first-mentioned State. In determining any adjustment, due regard shall be had to the other provisions of this Agreement, and for this purpose the competent authorities of the Contracting States shall if necessary consult each other.

(4)  
Notwithstanding the provisions of this Article, an enterprise of one of the Contracting States may be taxed by that State as if this Article had not come into effect but, so far as it is practicable to do so, in accordance with the principles of paragraph (1).

ARTICLE 10   Dividends  

(1)  
Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

(3)  
The term "dividends" in this Article means income from shares and other income assimilated to income from shares by the taxation law of the Contracting State of which the company making the distribution is a resident. In the case of Belgium, the term includes income, even when paid in the form of interest, which is taxable under the head of income from capital invested by the members of a company which is a resident of Belgium for the purposes of its tax and is not a company with share capital.

(4)  
The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, being the State of which the company paying the dividends is a resident, and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment. In such a case, the provisions of Article 7 shall apply.

(5)  
Dividends paid by a company which is a resident of Belgium, being dividends to which a person who is not a resident of Australia is beneficially entitled, shall be exempt from tax in Australia except insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in Australia. Provided that this paragraph shall not apply in relation to dividends paid by any company which is a resident of Belgium for the purposes of Belgian tax and which is also a resident of Australia for the purposes of Australian tax.

(6)  
Nothing in this Agreement shall be construed as preventing one of the Contracting States from imposing on the profits of a company which is a resident of the other Contracting State tax in addition to or at a higher rate than the tax which would be imposed on the profits of a company which is a resident of the first-mentioned State. However, if the provisions of the law in force in either Contracting State which relate to such additional tax or such higher rate are varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to such amendments to this Article as may be appropriate.

ARTICLE 11   Interest  

(1)  
Interest arising in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such interest may be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

(3)  
The term "interest" in this Article includes interest from Government securities or from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and interest from any other form of indebtedness as well as all other income assimilated to interest by the taxation law of the Contracting State in which the income arises. The term does not include income which is paid in the form of interest but which is, in accordance with paragraph (3) of Article 10, to be treated as dividends.

(4)  
The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, being the State in which the interest arises, and the indebtedness giving rise to the interest is effectively connected with that permanent establishment. In such a case, the provisions of Article 7 shall apply.

(5)  
Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political subdivision of that State or a local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however-


(a) the person paying the interest is a resident of one of the Contracting States and has in the other State or outside both States a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred and the interest is borne by the permanent establishment, then the interest shall be deemed to arise in the State where the permanent establishment is situated;


(b) the person paying the interest is not a resident of either of the Contracting States but has in one of the States a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred and the interest is borne by the permanent establishment, then the interest shall be deemed to arise in the State where the permanent establishment is situated.

(6)  
Where, owing to a special relationship between the payer and the person beneficially entitled to the interest or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the interest paid may be taxed in the Contracting State in which the interest arises according to the law of that State.

ARTICLE 12   Royalties  

(1)  
Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such royalties may be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

(3)  
The term "royalties" in this Article means payments (including credits), whether periodical or not, and however described or computed, to the extent to which they are made as consideration for the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trade-mark or other like property or right, or industrial, commercial or scientific equipment, or for the supply of scientific, technical, industrial or commercial knowledge or information, or for the supply of any assistance of an ancillary or subsidiary nature furnished as a means of enabling the application or enjoyment of such knowledge or information or any other property or right to which this Article applies, and includes any payments (including credits) to the extent to which they are made as consideration for the use of, or the right to use, motion picture films, films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, or for total or partial forbearance in respect of the use or supply of a property or right referred to in this paragraph.

(4)  
The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, being the State in which the royalties arise, and the asset giving rise to the royalties is effectively connected with that permanent establishment. In such a case, the provisions of Article 7 shall apply.

(5)  
Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political subdivision of that State or a local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however-


(a) the person paying the royalties is a resident of one of the Contracting States and has in the other State or outside both States a permanent establishment in connection with which the liability to pay the royalties was incurred and the royalties are borne by the permanent establishment, then the royalties shall be deemed to arise in the State where the permanent establishment is situated;


(b) the person paying the royalties is not a resident of either of the Contracting States but has in one of the States a permanent establishment in connection with which the liability to pay the royalties was incurred and the royalties are borne by the permanent establishment, then the royalties shall be deemed to arise in the State where the permanent establishment is situated.

(6)  
Where, owing to a special relationship between the payer and the person beneficially entitled to the royalties or between both of them and some other person, the amount of the royalties paid, having regard to what they are paid for, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the royalties paid may be taxed in the Contracting State in which the royalties arise according to the law of that State.

ARTICLE 13   Alienation of Property  

(1)  
Income from the alienation of real property may be taxed in the Contracting State in which that property is situated.

(2)  
For the purposes of this Article-


(a) the term "real property" shall include-


(i) a lease of land or any other direct interest in or over land;

(ii) rights to exploit, or to explore for, natural resources; and

(iii) shares or comparable interests in a company, the assets of which consist wholly or principally of direct interests in or over land in one of the Contracting States or of rights to exploit, or to explore for, natural resources in one of the Contracting States;


(b) real property shall be deemed to be situated-


(i) where it consists of direct interests in or over land - in the Contracting State in which the land is situated;

(ii) where it consists of rights to exploit, or to explore for, natural resources - in the Contracting State in which the natural resources are situated or the exploration may take place; and

(iii) where it consists of shares or comparable interests in a company, the assets of which consist wholly or principally of direct interests in or over land in one of the Contracting States or of rights to exploit, or to explore for, natural resources in one of the Contracting States - in the Contracting State in which the assets or the principal assets of the company are situated.

(3)  
Subject to the provisions of paragraph (1), income from the alienation of capital assets of an enterprise of a Contracting State shall be taxable only in that Contracting State, but, where those assets form part of the business property of a permanent establishment situated in the other Contracting State, such income may be taxed in that other State.

ARTICLE 14   Independent Personal Services  

(1)  
Income derived by an individual who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to activities exercised from that fixed base.

(2)  
The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the exercise of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15   Dependent Personal Services  

(1)  
Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, the remuneration derived from that exercise may be taxed in that other State.

(2)  
Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if-


(a) the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days in the year of income orin the taxable period, as the case may be, of that other State; and


(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and


(c) the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State.

(3)  
Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States may be taxed in that Contracting State.

ARTICLE 16   Directors' Fees  
Directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. In relation to remuneration of a director of a company derived from the company in respect of the discharge of day-to-day functions of a managerial or technical nature, the provisions of Article 15 shall apply as if the remuneration were remuneration of an employee in respect of an employment and as if references to "employer" were references to the company.

ARTICLE 17   Entertainers  

(1)  
Notwithstanding the provisions of Articles 14 and 15, income derived by entertainers (such as theatrical, motion picture, radio or television artistes, and musicians and athletes) from their personal activities as such may be taxed in the Contracting State in which these activities are exercised.

(2)  
Where income in respect of the personal activities of an entertainer as such accrues not to that entertainer but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised.

ARTICLE 18   Pensions and Annuities  

(1)  
Pensions, other than pensions to which Article 19 applies, and annuities paid to a resident of one of the Contracting States shall be taxable only in that State.

(2)  
The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

ARTICLE 19   Government Service  

(1)  
Remuneration, other than a pension, paid to an individual in respect of services rendered in the discharge of governmental functions to one of the Contracting States or to a political sub-division of one of the Contracting States or to a local authority of one of the Contracting States shall be taxable only in that State. Such remuneration shall, however, be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that State who-


(a) is a citizen or national of that State; or


(b) did not become a resident of that State solely for the purpose of performing the services.

(2)  
Any pension paid to an individual in respect of services rendered in the discharge of governmental functions to one of the Contracting States or to a political sub-division of one of the Contracting States or to a local authority of one of the Contracting States shall be taxable only in that State. Such pension shall, however, be taxable only in the other Contracting State if the recipient is a citizen or national of that State and a resident of that State.

(3)  
The provisions of Articles 15, 16 and 18 shall apply to remuneration, including pensions, paid in respect of services rendered in connection with any business carried on by one of the Contracting States or by a political sub-division of one of the Contracting States or by a local authority of one of the Contracting States.

ARTICLE 20   Professors and Teachers  

(1)  
Salaries, wages and other similar remuneration which a professor or teacher who is a resident of one of the Contracting States and who visits the other Contracting State for a period not exceeding two years for the purpose of teaching or carrying out advanced study or research at a university, college, school or other recognized educational institution, receives for those activities shall be taxable only in the first-mentioned State.

(2)  
This Article shall not apply to remuneration which a professor or teacher receives for conducting research, if the research is undertaken primarily for the private benefit of a specific person or persons.

ARTICLE 21   Students  
Where a student, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in the other State solely for the purpose of his education, receives payments from sources outside the other State for the purpose of his maintenance or education, those payments shall be exempt from tax in the other State.

ARTICLE 22   Income of Dual Resident  
Where a person, who by reason of the provisions of paragraph (1) of Article 4 is a resident of both Contracting States but by reason of the provisions of paragraph (3) or (4) of that Article is deemed for the purposes of this Agreement to be a resident solely of one of the Contracting States, derives income from sources in that Contracting State or from sources outside both Contracting States, that income shall be taxable only in that Contracting State.

ARTICLE 23   Source of Income  

(1)  
Income derived by a resident of Belgium which, under any one or more of Articles 6 to 8 and 10 to 17 may be taxed in Australia, shall for the purposes of the income tax law of Australia be deemed to be income from sources in Australia.

(2)  
Income derived by a resident of Australia which, under any one or more of Articles 6 to 8 and 10 to 17 may be taxed in Belgium, shall for the purposes of paragraph (1) of Article 24 and of the income tax law of Australia be deemed to be income from sources in Belgium.

CHAPTER IV - METHODS OF ELIMINATION OF DOUBLE TAXATION  

ARTICLE 24  

(1)  
In the case of Australia, double taxation shall be avoided as follows:


(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), Belgian tax paid, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Belgium (not including, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income.


(b) In the event that Australia should cease to allow a company which is a resident of Australia a rebate in its assessment at the average rate of tax payable by the company in respect of dividends derived from sources in Belgium and included in the taxable income of the company, the Contracting Governments will enter into negotiations in order to establish new provisions concerning the credit to be allowed by Australia against its tax on the dividends.

(2)  
In the case of Belgium, double taxation shall be avoided as follows:


(a) Where a resident of Belgium derives income which may be taxed in Australia in accordance with this Agreement and which is not subject to the provisions of subparagraph (b) or (c) below, Belgium shall exempt such income from tax but may, in calculating the amount of tax on the remaining income of that resident, apply the rate of tax which would have been applicable if such income had not been exempted.


(b) In the case of-


(i) dividends taxable in accordance with paragraph (2) of Article 10, and not exempt from Belgian tax according to subparagraph (c) below;

(ii) interest taxable in accordance with paragraph (2) or (6) of Article 11; and

(iii) royalties taxable in accordance with paragraph (2) or (6) of Article 12, there shall be allowed as a credit against Belgian tax relating to such income the fixed proportion in respect of foreign tax for which provision is made under Belgian law, under the conditions and at the rate fixed by such law, provided that this rate shall not be less than the rate of tax which may be levied in Australia in accordance with paragraph (2) of Article 10, paragraph (2) of Article 11 or paragraph (2) of Article 12.


(c) Where a company which is a resident of Belgium owns shares in a company with share capital which is a resident of Australia and which is subject to Australian tax on its profits, the dividends which are paid to it by the latter company and which may be taxed in Australia in accordance with paragraph (2) of Article 10 shall be exempt from the corporate income tax in Belgium to the extent that exemption would have been accorded if the two companies had been residents of Belgium.


(d) Where, in accordance with Belgian law, losses of an enterprise carried on by a resident of Belgium which are attributable to a permanent establishment situated in Australia have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided in subparagraph (a) of this paragraph shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been freed from tax in Australia by reason of a deduction for the said losses.

CHAPTER V - SPECIAL PROVISIONS  

ARTICLE 25   Mutual Agreement Procedure  

(1)  
Where a resident of a Contracting State considers that the actions of the competent authority of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. The case must be presented within three years from the first notification of the action giving rise to taxation not in accordance with this Agreement.

(2)  
The competent authority shall endeavour, if the taxpayer's claim appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Agreement.

(3)  
The competent authorities of the Contracting States shall jointly endeavour to resolve any difficulties or doubts arising as to the application of this Agreement.

(4)  
The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Agreement.

ARTICLE 26   Exchange of Information  

1.  
The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed by or on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2.  
Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.

3.  
In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:


(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;


(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;


(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

4.  
If information is requested by a Contracting State in accordance with the provisions of this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 of this Article but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5.  
In no case shall the provisions of paragraph 3 of this Article be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, trust, foundation, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. To the extent necessary to obtain such information, the tax administration of the requested Contracting State shall have the power to require the disclosure of information and to conduct investigations and hearings notwithstanding any contrary provisions in its domestic tax laws.

ARTICLE 27   Miscellaneous  

(1)  
With respect to a company which is a resident of Belgium for the purposes of Belgian tax, the provisions of this Agreement shall not limit the taxation of that company in accordance with the Belgian law in the event of the repurchase by the company of its own shares or in the event of the distribution of its assets.

(2)  
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special international Agreements.

CHAPTER VI - FINAL PROVISIONS  

ARTICLE 28   Entry into Force  
This Agreement shall come into force on the fifteenth day after the date on which the Government of Australia and the Government of the Kingdom of Belgium exchange notes through the diplomatic channel notifying each other that the last of such things has been done as is necessary to give this Agreement the force of law in Australia and in Belgium respectively, and thereupon this Agreement shall have effect-


(a) in Australia-


(i) with respect to withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year immediately following that in which the Agreement enters into force;

(ii) with respect to other Australian tax, in relation to income of any year of income beginning on or after 1 July in the calendar year immediately following that in which the Agreement enters into force;


(b) in Belgium-


(i) with respect to all tax due at source, on income credited or payable on or after 1 January in the calendar year immediately following that in which the Agreement enters into force;

(ii) with respect to all tax other than tax due at source, on income of any accounting period beginning on or after 1 January in the calendar year immediately following that in which the Agreement enters into force.

ARTICLE 29   Termination  
This Agreement shall continue in effect indefinitely, but the Government of Australia or the Government of the Kingdom of Belgium may, on or before 30 June in any calendar year beginning after the expiration of 5 years from the date of its entry into force, give to the other Government through the diplomatic channel written notice of termination and, in that event, this Agreement shall cease to be effective-


(a) in Australia-


(i) with respect to withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year immediately following that in which the notice of termination is given;

(ii) with respect to other Australian tax, in relation to income of any year of income beginning on or after 1 July in the calendar year immediately following that in which the notice of termination is given;


(b) in Belgium-


(i) with respect to all tax due at source, on income credited or payable on or after 1 January in the calendar year immediately following that in which the notice of termination is given;

(ii) with respect to all tax other than tax due at source, on income of any accounting period beginning on or after 1 January in the calendar year immediately following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement.

DONE in duplicate at Canberra this thirteenth day of October, One thousand nine hundred and seventy-seven in the English, French and Dutch languages, the three texts being equally authentic.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE KINGDOM OF BELGIUM:
Phillip R. Lynch Georges Barthelemy

PROTOCOL AMENDING THE AGREEMENT BETWEEN AUSTRALIA AND THE KINGDOM OF BELGIUM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED AT CANBERRA ON 13 OCTOBER 1977  

I   ARTICLE I  
Article 7 of the Agreement shall be amended by deleting paragraphs (8) and (9).

II   ARTICLE II  
Article 9 of the Agreement shall be amended by:


(a) deleting from paragraph (2) "of this Article" and substituting "of paragraph (1)"; and


(b) adding at the end thereof the following paragraph:


"(4) Notwithstanding the provisions of this Article, an enterprise of one of the Contracting States may be taxed by that State as if this Article had not come into effect but, so far as it is practicable to do so, in accordance with the principles of paragraph (1)."

III   ARTICLE III  
Article 10 of the Agreement shall be amended by adding at the end thereof the following paragraph:


"(6) Nothing in this Agreement shall be construed as preventing one of the Contracting States from imposing on the profits of a company which is a resident of the other Contracting State tax in addition to or at a higher rate than the tax which would be imposed on the profits of a company which is a resident of the first-mentioned State. However, if the provisions of the law in force in either Contracting State which relate to such additional tax or such higher rate are varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to such amendments to this Article as may be appropriate."

IV   ARTICLE IV  
Article 12 of the Agreement shall be amended by omitting paragraph (3) and substituting the following paragraph:


"(3) The term "royalties" in this Article means payments (including credits), whether periodical or not, and however described or computed, to the extent to which they are made as consideration for the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trade-mark or other like property or right, or industrial, commercial or scientific equipment, or for the supply of scientific, technical, industrial or commercial knowledge or information, or for the supply of any assistance of an ancillary or subsidiary nature furnished as a means of enabling the application or enjoyment of such knowledge or information or any other property or right to which this Article applies, and includes any payments (including credits) to the extent to which they are made as consideration for the use of, or the right to use, motion picture films, films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, or for total or partial forbearance in respect of the use or supply of a property or right referred to in this paragraph."

V   ARTICLE V  
This Protocol, which shall form an integral part of the Agreement, shall enter into force on the fifteenth day after the date 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 Belgium respectively, and thereupon this Protocol shall have effect:


(a) in Australia, in relation to income of any year of income beginning on or after 1 July in the calendar year immediately following that in which the Protocol enters into force;


(b) in Belgium, on income of any accounting period beginning on or after 1 January in the calendar year immediately following that in which the Protocol enters into force.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Protocol.

DONE in duplicate at Canberra this Twentieth day of March one thousand nine hundred and eighty-four in the English, French and Dutch languages, the three texts being equally authentic.


FOR AUSTRALIA: FOR THE KINGDOM OF BELGIUM:
Paul Keating A. Domus

SECOND PROTOCOL AMENDING THE AGREEMENT BETWEEN AUSTRALIA AND THE KINGDOM OF BELGIUM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED AT CANBERRA ON 13 OCTOBER 1977 AS AMENDED BY THE PROTOCOL SIGNED AT CANBERRA ON 20 MARCH 1984  

I   ARTICLE I  
The text of Article 26 of the Agreement is deleted and replaced by the following:


"1.
The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed by or on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.


2.
Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.


3.
In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:


(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;


(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;


(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).


4.
If information is requested by a Contracting State in accordance with the provisions of this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 of this Article but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.


5.
In no case shall the provisions of paragraph 3 of this Article be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, trust, foundation, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. To the extent necessary to obtain such information, the tax administration of the requested Contracting State shall have the power to require the disclosure of information and to conduct investigations and hearings notwithstanding any contrary provisions in its domestic tax laws."

II   ARTICLE II  

1.  
Each of the Contracting States shall notify the other Contracting State, through diplomatic channels, of the completion of the procedures required by its law for the bringing into force of this Protocol. The Protocol shall enter into force on the date of the later of these notifications and its provisions shall have effect:


a) with respect to taxes due at source on income credited or payable on or after 1 January 2010;


b) with respect to other taxes charged on income of taxable periods beginning on or after 1 January 2010;


c) with respect to any other taxes imposed by or on behalf of the Contracting States, on any other tax due in respect of taxable events taking place on or after 1 January 2010.

2.  
Notwithstanding paragraph 1, the provisions of Article 26 (Exchange of Information) shall have effect with respect to criminal tax matters from the date of entry into force of the Protocol, without regard to the taxable period to which the matter relates.

The term "criminal tax matters" means tax matters involving intentional conduct which is liable to prosecution under the criminal laws of the requesting State.

III   ARTICLE III  

This Protocol, which shall form an integral part of the Agreement, shall remain in force as long as the Agreement remains in force and shall apply as long as the Agreement itself is applicable.

IN WITNESS WHEREOF, the undersigned duly authorized thereto by their respective governments, have signed this Protocol.

DONE in duplicate at Paris, on this 24th day of June 2009 in the English language.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE KINGDOM OF BELGIUM:
The Hon Simon Crean
Minister for Trade
HE Didier Reynders
Minister for Finance

British Virgin Islands Agreement  

AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE BRITISH VIRGIN ISLANDS FOR THE ALLOCATION OF TAXING RIGHTS WITH RESPECT TO CERTAIN INCOME OF INDIVIDUALS  

ARTICLE 1   Persons Covered  
This Agreement shall apply to persons who are residents of one or both of the Contracting Parties.

ARTICLE 2   Taxes Covered  

1  
The existing taxes to which this Agreement shall apply are:


(a) in Australia, the income tax imposed under the federal law of Australia (hereinafter referred to as "Australian tax").


(b) in the British Virgin Islands, such taxes on income or profits as imposed by law (hereinafter referred to as "British Virgin Islands tax").

2  
This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting Parties shall notify each other within a reasonable period of time of any substantial changes to the taxation laws covered by this Agreement.

3  
This Agreement shall not apply to taxes imposed by states, municipalities, local authorities or other political subdivisions, or possessions of a Contracting Party.

ARTICLE 3   Definitions  

1  
For the purposes of this Agreement, unless the context otherwise requires:


(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; and

(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia (including only 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 exploration for or exploitation of any of the natural resources of the exclusive economic zone and the seabed and subsoil of the continental shelf;


(b) the term "British Virgin Islands" means the territory of the Virgin Islands as referred to in the Virgin Islands Constitution Order 2007;


(c) the term "competent authority" means in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner and, in the case of the British Virgin Islands, the Financial Secretary or a person or authority designated by the Financial Secretary in writing;


(d) the term "Contracting Party" means Australia or the British Virgin Islands, as the context requires;


(e) the term "national" means


(i) in relation to Australia, any person who is an Australian citizen;

(ii) in relation to the British Virgin Islands, any person who belongs to the British Virgin Islands or is a permanent resident of the British Virgin Islands;


(f) the term "person", wherever used, refers to an individual;


(g) the term "tax" means Australian tax or British Virgin Islands tax as the context requires.

2  
As regards the application of this Agreement at any time by a Contracting Party, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Contracting Party, for the purposes of the taxes to which this Agreement applies, with any meaning under the applicable tax laws of that Contracting Party prevailing over a meaning given to the term under other laws of that Contracting Party.

ARTICLE 4   Resident  

1  
For the purposes of this Agreement, the term "resident of a Contracting Party" means:


(a) in the case of Australia, a person who is a resident of Australia for the purposes of Australian tax; and


(b) in the case of the British Virgin Islands, a person who is liable to pay tax under British Virgin Islands law.

2  
A person is not a resident of a Contracting Party for the purposes of this Agreement if the person is liable to tax in that Contracting Party in respect only of income from sources in that Contracting Party.

3  
Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Contracting Parties, then the person's status shall be determined as follows:


(a) the individual shall be deemed to be a resident only of the Contracting Party in which a permanent home is available to that individual; if a permanent home is available in both Contracting Parties, or in neither of them, that individual shall be deemed to be a resident only of the Contracting Party with which the individual's personal and economic relations are closer (centre of vital interests);


(b) if the Contracting Party in which the individual has their centre of vital interests cannot be determined, the individual shall be deemed to be a resident only of the Contracting Party of which the individual is a national;


(c) if the individual is a national of both Contracting Parties or of neither of them, the competent authorities of the Contracting Parties shall endeavour to resolve the question by mutual agreement.

ARTICLE 5   Government Service  

1  

(a) Salaries, wages and other similar remuneration, other than a pension or retirement annuity, paid by a Contracting Party or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting Party or subdivision or authority shall be taxable only in that Contracting Party.


(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting Party if the services are rendered in that Contracting Party and the individual is a resident of that Contracting Party who:


(i) is a national of that Contracting Party; or

(ii) did not become a resident of that Contracting Party solely for the purpose of rendering the services.

2  
Notwithstanding the provisions of paragraph 1, salaries, wages and other similar remuneration in respect of services rendered in connection with any trade or business carried on by a Contracting Party or a political subdivision or a local authority thereof may be taxed in accordance with the laws of a Contracting Party.

ARTICLE 6   Students  
Payments which a student or business apprentice, who is or was immediately before visiting a Contracting Party a resident of the other Contracting Party and who is temporarily present in the first-mentioned Contracting Party solely for the purpose of their education or training, receives for the purpose of their maintenance, education or training shall not be taxed in that Contracting Party, provided such payments arise from sources outside that Contracting Party.

ARTICLE 7   Exchange of Information  
The competent authorities of the Contracting Parties shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement. Information may be exchanged by the competent authorities for the purposes of this Article in accordance with the provisions of the Agreement on the Exchange of Information Relating to Taxes concluded by the Contracting Parties (whether or not this Agreement, in whole or in part, forms part of the domestic law of either Contracting Party).

ARTICLE 8   Entry into Force  
The Contracting Parties shall notify each other, in writing, through the appropriate channel of the completion of their constitutional and legal procedures for the entry into force of this Agreement. This Agreement shall enter into force on the date of the last notification, and shall, provided an Agreement for the Exchange of Information Relating to Taxes is in force between the Contracting Parties, thereupon have effect:


(a) in respect of Australian tax, for any year of income beginning on or after 1 July in the calendar year next following the date on which this Agreement enters into force; and


(b) in respect of British Virgin Islands tax, for any year of income beginning on or after 1 January in the calendar year next following the date on which this Agreement enters into force.

ARTICLE 9   Termination  

1  
This Agreement shall continue in force indefinitely, but either of the Contracting Parties may, give to the other Contracting Party through the appropriate channel written notice of termination.

2  
Such termination shall become effective:


(a) in respect of Australian tax, in the year of income beginning on or after 1 July in the calendar year next following that in which the notice of termination is given;


(b) in respect of British Virgin Islands tax, for any year of income beginning on or after 1 January in the calendar year next following that in which the notice of termination is given.

3  
Notwithstanding the provisions of paragraph 1 or 2, this Agreement shall, on receipt through the appropriate channel of written notice of termination of the Agreement for the Exchange of Information Relating to Taxes between the Contracting Parties, terminate and cease to be effective on the first day of the month following the expiration of a period of six months after the date of receipt of such notice.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement.

DONE at London, this 27th day of October, 2008 in the English language.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
THE BRITISH VIRGIN ISLANDS:
HE John Cecil Dauth LVO
High Commissioner
The Hon Ralph T O'Neal
Premier

Canadian Convention  

CONVENTION BETWEEN AUSTRALIA AND CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

CHAPTER I - SCOPE OF THE CONVENTION  

ARTICLE 1   Personal Scope  
This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2   Taxes Covered  

(1)  
The existing taxes to which this Convention shall apply are-


(a) in the case of Australia:
the income tax, and the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of Australia;


(b) in the case of Canada:
the income taxes imposed by the Government of Canada under the Income Tax Act.

(2)  
This Convention shall apply also to any identical or substantially similar taxes which are imposed under the federal law of Australia or the law of Canada after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in the law of their respective States relating to the taxes to which this Convention applies within a reasonable period of time after those changes.

CHAPTER II - DEFINITIONS  

ARTICLE 3   General Definitions  

(1)  
In this Convention, unless the context otherwise requires-


(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 McDonalds Islands; and

(vi) the Coral Sea Islands Territory,
and 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 exploration for or the exploitation of any of the natural resources of the seabed and subsoil of the continental shelf;


(b) the term "Canada" used in a geographical sense, means the territory of Canada, including any area beyond the territorial waters of Canada which is an area where Canada may, in accordance with its national legislation and international law, exercise rights with respect to the seabed and sub-soil and their natural resources;


(c) the terms "Contracting State", "one of the Contracting States" and "other Contracting State" mean Australia or Canada, as the context requires;


(d) the term "person" includes an individual, an estate, a trust, a company and any other body of persons;


(e) the term "company" means any body corporate or any entity which is assimilated to a body corporate for tax purposes; in French, the term "société" also means a "corporation" within the meaning of Canadian Law;


(f) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of one of the Contracting States and an enterprise carried on by a resident of the other Contracting State;


(g) the term "tax" means Australian tax or Canadian tax, as the context requires;


(h) the term "Australian tax" means tax imposed by Australia, being tax to which this Convention applies by virtue of Article 2;


(i) the term "Canadian tax" means tax imposed by Canada, being tax to which this Convention applies by virtue of Article 2;


(j) the term "competent authority" means, in the case of Australia, the Commissioner of Taxation or his authorized representative, and in the case of Canada, the Minister of National Revenue or his authorized representative;


(k) the term "international traffic" means any voyage of a ship or aircraft operated by an enterprise of a Contracting State to transport passengers or property except where the principal purpose of the voyage is to transport passengers or property between places within the other Contracting State.

(2)  
In this Convention, the terms "Australian tax" and "Canadian tax" do not include any penalty or interest imposed under the law of either Contracting State relating to the taxes to which this Convention applies by virtue of Article 2.

(3)  
As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under the applicable tax law of that State prevailing over a meaning given to the term under other law of that State.

ARTICLE 4   Residence  

(1)  
Subject to paragraph (2), for the purposes of this Convention, a person is a resident of a Contracting State if that person is a resident of that State for the purposes of its tax. A Contracting State or any political subdivision or local authority thereof or any agency or instrumentality of any such State, subdivision or authority is also a resident of that State for the purposes of this Convention.

(2)  
A person is not a resident of a Contracting State for the purposes of this Convention if the person is liable to tax in that State in respect only of income from sources in that State.

(3)  
Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:


(a) he shall be deemed to be a resident solely of the Contracting State in which he has a permanent home available to him;


(b) if he has a permanent home available to him in both Contracting States, or if he does not have a permanent home available to him in either of them, he shall be deemed to be a resident solely of the Contracting State with which his personal and economic relations are the closer.

(4)  
Where by reason of the provisions of paragraph (1) a person other than an individual is a resident of both Contracting States, then the person's status shall be determined as follows:


(a) it shall be deemed to be a resident of the Contracting State in which it is incorporated or otherwise constituted;


(b) if it is not incorporated or otherwise constituted in either of the Contracting States, it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.

ARTICLE 5   Permanent Establishment  

(1)  
For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2)  
The term "permanent establishment" includes especially-


(a) a place of management;


(b) a branch;


(c) an office;


(d) a factory;


(e) a workshop;


(f) a mine, quarry or other place of extraction of natural resources;


(g) an agricultural, pastoral or forestry property;


(h) a building site or construction, installation or assembly project which exists for more than twelve months.

(3)  
An enterprise shall not be deemed to have a permanent establishment merely by reason of-


(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;


(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;


(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;


(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;


(e) the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising or scientific research.

(4)  
An enterprise shall be deemed to have a permanent establishment in one of the Contracting States and to carry on business through that permanent establishment if-


(a) it carries on supervisory activities in that State for more than twelve months in connection with a building site, or a construction, installation or assembly project which is being undertaken in that State; or


(b) substantial equipment is being used in that State by, for or under contract with the enterprise other than in connection with a building site or construction, installation or assembly project of the enterprise.

(5)  
A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph (6) applies - shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if-


(a) he has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or


(b) in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise.

(6)  
An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where that person is acting in the ordinary course of his business as such a broker or agent.

(7)  
The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself make either company a permanent establishment of the other.

(8)  
The principles set forth in paragraphs (1) to (7) inclusive shall be applied in determining for the purposes of this Convention whether there is a permanent establishment outside both Contracting States and whether an enterprise, not being an enterprise of one of the Contracting States, has a permanent establishment in one of the Contracting States.

CHAPTER III - TAXATION OF INCOME  

ARTICLE 6   Income from Real Property  

(1)  
Income from real property may be taxed in the Contracting State in which the real property is situated.

(2)  
For the purposes of this Convention, the term "real property" in relation to a Contracting State, shall have the meaning which it has under the law of that State and shall include:


(a) a lease of land and any other interest in or over land, whether improved or not, including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and


(b) a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources.

(3)  
Any interest or right referred to in paragraph (2) shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration may take place.

(4)  
The provisions of paragraphs (1) and (3) shall also apply to the income from real property of an enterprise and to income from real property used for the performance of independent personal services.

ARTICLE 7   Business Profits  

(1)  
The profits of an enterprise of one of the Contracting States shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment.

(2)  
Subject to the provisions of paragraph (3), where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.

(3)  
In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred) and which would be deductible if the permanent establishment were an independent entity which paid those expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere.

(4)  
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(5)  
If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to the permanent establishment of an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article.

(6)  
Where profits include items which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

(7)  
Nothing in this Article shall affect the operation of any law of a Contracting State relating specifically to taxation of any person who carries on a business of any form of insurance, provided that if the law in force in either Contracting State at the date of signature of this Convention is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

(8)  
Where:


(a) a resident of Canada is beneficially entitled, whether directly or through one or more interposed trusts, to a share of the business profits of an enterprise carried on in Australia by the trustee of a trust other than a trust which is treated as a company for tax purposes; and


(b) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in Australia,

the enterprise carried on by the trustee shall be deemed to be a business carried on in Australia by that resident through a permanent establishment situated in Australia and that share of business profits shall be attributable to that permanent establishment.

ARTICLE 8   Shipping and Air Transport  

(1)  
Profits from the operation of ships or aircraft derived by a resident of one of the Contracting States shall be taxable only in that State.

(2)  
Notwithstanding the provisions of paragraph (1), such profits may be taxed in the other Contracting State where they are profits from operations of ships or aircraft confined solely to places in that other State.

(3)  
The provisions of paragraphs (1) and (2) shall apply in relation to the share of the profits from the operation of ships or aircraft derived by a resident of one of the Contracting States through participation in a pool service, in a joint transport operating organization or in an international operating agency.

(4)  
For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise taken on board in a Contracting State for discharge at a place in that State shall be treated as profits from operations confined solely to places in that State.

ARTICLE 9   Associated Enterprises  

(1)  
Where-


(a) an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or


(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and an enterprise of the other Contracting State,

and in either case conditions operate between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate between independent enterprises dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

(2)  
If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person, provided that that law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article.

(3)  
Where profits on which an enterprise of one of the Contracting States has been charged to tax in that State are also included, by virtue of paragraph (1) or (2), in the profits of an enterprise of the other Contracting State and taxed accordingly, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-mentioned State shall, subject to paragraph (4), make an appropriate adjustment to the amount of tax charged on those profits in the first-mentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Convention in relation to the nature of the income, and for this purpose the competent authorities of the Contracting States shall if necessary consult each other.

(4)  
The provisions of paragraph (3) relating to an appropriate adjustment are not applicable after the expiration of six years from the end of the year of income or taxation year in respect of which a Contracting State has charged to tax the profits to which the adjustment would relate.

ARTICLE 10   Dividends  

(1)  
Dividends paid by a company which is a resident of one of the Contracting States for the purposes of its tax, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed:


(a)


(i) in the case of dividends paid by a company that is a resident of Australia for the purposes of its tax, 5 per cent of the gross amount of the dividends, to the extent to which the dividends have been fully franked in accordance with the law of Australia, if a company that holds directly at least 10 per cent of the voting power of the company paying the dividends is beneficially entitled to those dividends; and

(ii) in the case of dividends paid by a company that is a resident of Canada for the purposes of its tax, except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada for the purposes of its tax, 5 per cent of the gross amount of the dividends if a company that controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends is beneficially entitled to those dividends; and


(b) 15 per cent of the gross amount of the dividends in all other cases,

and if the relevant law of either Contracting State is varied in a manner that bears upon this provision, otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

(3)  
Dividends paid by a company which is a resident of one of the Contracting States, being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled, shall be exempt from tax in that other State except insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State. Provided that this paragraph shall not apply in relation to dividends paid by any company which is a resident of Australia for the purposes of Australian tax and which is also a resident of Canada for the purposes of Canadian tax.

(4)  
The term "dividends" as used in this Article means income from shares, as well as other amounts which are subjected to the same taxation treatment as income from shares by the law of the State of which the company making the distribution is a resident for the purposes of its tax.

(5)  
The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the dividends, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, or performs professional services from a fixed base situated in that other State, being the State of which the company paying the dividends is a resident and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment or fixed base. In such a case, the provisions of Article 7 or 14, as the case may be, shall apply.

(6)  
Canada may impose, on the earnings attributable to a permanent establishment in Canada of a company which is a resident of Australia or on the earnings of such company attributable to the alienation of real property situated in Canada where the company is carrying on a trade in real property, a tax (in this paragraph referred to as a "branch tax") in addition to the tax that would be chargeable on the earnings of a company that is a resident of Canada, except that any branch tax so imposed shall not exceed 5 per cent of the amount of such earnings that have not been subjected to such branch tax in previous taxation years. For the purposes of this provision, the term "earnings" means the earnings attributable to the alienation of such real property situated in Canada as may be taxed by Canada under the provisions of Article 6 or paragraph (1) of Article 13, and the profits, including any gains, attributable to a permanent establishment in Canada in a year and previous years after deducting therefrom all other taxes, other than the branch tax referred to herein, imposed on such profits in Canada.

(7)  
Australia may impose an income tax (in this paragraph called a "branch profits tax") on the reduced taxable income of a company that is a resident of Canada in addition to the income tax (in this paragraph called "the general income tax") payable by the company in respect of its taxable income; provided that any branch profits tax so imposed in respect of a year of income shall not exceed 5 per cent of the amount by which the reduced taxable income of that year of income exceeds the general income tax payable in respect of the reduced taxable income of that year of income.

ARTICLE 11   Interest  

(1)  
Interest arising in one of the Contracting States, being interest to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such interest may be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

(3)  
The term "interest" in this Article includes interest from Government securities or from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and interest from any other form of indebtedness as well as all other income assimilated to interest by the taxation law of the Contracting State in which the income arises.

(4)  
The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the interest, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, or performs professional services from a fixed base situated in that other State, being the State in which the interest arises, and the indebtedness giving rise to the interest is effectively connected with that permanent establishment or fixed base. In such a case, the provisions of Article 7 or 14, as the case may be, shall apply.

(5)  
Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political sub-division or a local authority thereof or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether he is a resident of one of the Contracting States or not, has in a State other than that of which he is a resident a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

(6)  
Where, owing to a special relationship between the payer and the person beneficially entitled to the interest or between both of them and some other person the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the interest paid shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention.

ARTICLE 12   Royalties  

(1)  
Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.

(2)  
Such royalties may be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

(3)  
The term "royalties" as used in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trade mark or other like property or right; or


(b) the use of, or the right to use, any industrial, commercial or scientific equipment; or


(c) the supply of scientific, technical, industrial or commercial knowledge or information; or


(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such knowledge or information as is mentioned in subparagraph (c); or


(e) the use of, or the right to use:


(i) motion picture films; or

(ii) films or videotapes or other means of reproduction for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or


(f) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.

(4)  
The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, carries on business through a permanent establishment situated in the other Contracting State, or performs professional services from a fixed base situated in that other State, being the State in which the royalties arise and the asset giving rise to the royalties is effectively connected with that permanent establishment or fixed base. In such a case, the provisions of Article 7 or 14, as the case may be, shall apply.

(5)  
Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political subdivision or a local authority thereof or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in a State other than that of which he is a resident a permanent establishment or a fixed base in connection with which the obligation to pay the royalties was incurred, and those royalties are borne by that permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

(6)  
Where, owing to a special relationship between the payer and the person beneficially entitled to the royalties or between both of them and some other person the amount of the royalties paid, having regard to what they are paid for, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the royalties paid shall remain taxable according to the law of each Contracting State, but subject to the other provisions of this Convention.

(7)  
Without prejudice to whether or not such payments would be dealt with as royalties under this Article in the absence of this paragraph, the term "royalties" as used in this Article shall not include payments or credits made as consideration for the supply of, or the right to use, source code in a computer software program, provided that the right to use the source code is limited to such use as is necessary to enable effective operation of the program by the user.

(8)  
Without prejudice to whether or not such payments would be dealt with as royalties under this Article in the absence of this paragraph, the term "royalties" as used in this Article shall include payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the reception of, or the right to receive, visual images or sounds, or both, that are transmitted to the public by satellite or by cable, optic fibre or similar technology; or


(b) the use of, or the right to use, in connection with television or radio broadcasting, visual images or sounds, or both, that are transmitted by satellite or by cable, optic fibre or similar technology; or


(c) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.

ARTICLE 13   Alienation of Property  

(1)  
Income, profits or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State.

(2)  
Income, profits or gains from the alienation of property, other than real property, that forms part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or pertains to a fixed base available in that other State to a resident of the first-mentioned State for the purpose of performing independent personal services, including income, profits or gains from the alienation of that permanent establishment (alone or with the whole enterprise) or of that fixed base, may be taxed in that other State.

(3)  
Income, profits or gains from the alienation of ships or aircraft operated in international traffic, or of property, other than real property, pertaining to the operation of those ships or aircraft, shall be taxable only in the Contracting State of which the enterprise alienating such ships, aircraft, or other property is a resident.

(4)  
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 is derived principally, whether directly or indirectly (including through one or more interposed entities, such as, for example, through a chain of companies), from real property situated in the other Contracting State, may be taxed in that other State.

(5)  
Nothing in this Convention shall affect the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply.

(6)  
Where an individual who ceases to be a resident of a Contracting State, and immediately thereafter becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, disposed of and re-acquired the property for an amount equal to its fair market value at that time.

ARTICLE 14   Independent Personal Services  

(1)  
Income derived by an individual who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to activities exercised from that fixed base.

(2)  
The term "professional services" includes services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as in the exercise of the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15   Dependent Personal Services 

(1)  
Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State.

(2)  
Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:


(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the year of income or taxation year of that other State; and


(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and


(c) the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State.

(3)  
Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States may be taxed in that State.

ARTICLE 16   Directors' Fees  
Directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17   Entertainers  

(1)  
Notwithstanding the provisions of Articles 14 and 15, income derived by entertainers (such as theatrical, motion picture, radio or television artistes and musicians and athletes) from their personal activities as such may be taxed in the Contracting State in which these activities are exercised.

(2)  
Where income in respect of the personal activities of an entertainer as such accrues not to the entertainer but to another person, that income may, notwithstanding the provisions of Articles 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised.

(3)  
The provisions of paragraph (2) shall not apply if it is established that neither the entertainer nor persons related to the entertainer, participate directly or indirectly in the profits of the other person referred to in that paragraph.

ARTICLE 18   Pensions and Annuities  

(1)  
Pensions and annuities arising in a Contracting State for the benefit of and paid to a resident of the other Contracting State may be taxed in that other State.

(2)  
Pensions and annuities arising in a Contracting State in a year of income or taxation year may be taxed in that State and according to the law of that State, but the tax so charged shall not exceed the lesser of-


(a) 15 per cent of the pension or annuity received in the year; and


(b) the tax that would be payable in respect of the pension or annuity received in the year if the recipient were a resident of the Contracting State in which the pension or annuity arises.

However, the limitation on the tax that may be charged in the Contracting State in which pensions and annuities arise does not apply to payments of any kind under an income-averaging annuity contract.

(3)  
Any alimony or other maintenance payment arising in a Contracting State and paid to a resident of the other Contracting State, shall be taxable only in the first-mentioned State.

ARTICLE 19   Government Service  

(1)  
Remuneration (other than a pension or annuity) paid by a Contracting State or a political sub-division or a local authority thereof to any individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that State who:


(a) is a citizen of that State; or


(b) did not become a resident of that State solely for the purpose of performing the services.

(2)  
The provisions of paragraph (1) shall not apply to remuneration in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a political sub-division or a local authority thereof. In such a case the provisions of Articles 15 and 16 shall apply.

ARTICLE 20   Students  
Where a student, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in the other State solely for the purpose of his education, receives payments from sources outside the other State for the purpose of his maintenance or education, those payments shall be exempt from tax in the other State.

ARTICLE 21   Income Not Expressly Mentioned  

(1)  
Subject to the provisions of paragraph (2), items of income of a resident of one of the Contracting States which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that Contracting State.

(2)  
However, if such income is derived by a resident of one of the Contracting States from sources in the other Contracting State, such income may also be taxed in the Contracting State in which it arises and, subject to paragraph (3), according to the law of that State.

(3)  
Where the income is income derived from an estate or trust resident in Canada by a resident of Australia the Canadian tax on that income shall not exceed 15 per cent of the gross amount of the income if it is subject to tax in Australia.

(4)  
The provisions of paragraph (3) shall not apply if the recipient of the income, being a resident of Australia, carries on in Canada a business through a permanent establishment situated therein, or performs in Canada professional services from a fixed base situated therein, and the right or interest in the estate or trust in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or 14, as the case may be, shall apply.

ARTICLE 22   Source of Income  

(1)  
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State, shall for the purposes of the law of that other Contracting State relating to its tax be deemed to be income from sources in that other Contracting State.

(2)  
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State, shall for the purposes of Article 23 and of the law of the first-mentioned Contracting State relating to its tax be deemed to be income from sources in the other Contracting State.

CHAPTER IV - METHODS OF PREVENTION OF DOUBLE TAXATION  

ARTICLE 23   Elimination of Double Taxation  

(1)  
In the case of Australia, double taxation shall be avoided as follows:


(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 of this Article), Canadian tax paid under the law of Canada 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 Canada shall be allowed as a credit against Australian tax payable in respect of that income;


(b) 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), where a company which is a resident of Canada 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 at least 10 per cent of the voting power of the first-mentioned company, the credit referred to in subparagraph (a) shall include the Canadian tax paid by that first-mentioned company in respect of that portion of its profits out of which the dividend is paid.

(2)  
In the case of Canada, double taxation shall be avoided as follows:


(a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Australia on profits, income or gains from sources in Australia shall be deducted from any Canadian tax payable in respect of such profits, income or gains;


(b) subject to the existing provisions of the law of Canada regarding the allowance as a credit against Canadian tax of tax payable in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) where a company which is a resident of Australia pays a dividend to a company which is a resident of Canada and which controls directly or indirectly at least 10 per cent of the voting power in the first-mentioned company, the credit shall take into account the tax payable in Australia by that first-mentioned company in respect of the profits out of which such dividend is paid; and


(c) where, in accordance with any provision of this Convention, income derived by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income, take into account the exempted income.

CHAPTER V - SPECIAL PROVISIONS  

ARTICLE 24   Mutual Agreement Procedure  

(1)  
Where a resident of a Contracting State considers that the actions of the competent authority of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, without prejudice to the remedies provided by the national laws of those States, present his case in writing to the competent authority of the Contracting State of which he is a resident.

(2)  
The competent authority shall endeavour, if the taxpayer's claim appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention.

(3)  
The competent authorities of the Contracting States shall jointly endeavour to resolve any difficulties or doubts arising as to the application of this Convention.

(4)  
The competent authorities of the Contracting States may consult together with respect to the elimination of double taxation in cases not provided for in the Convention.

(5)  
The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Convention.

(6)  
For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph (3) of this Article or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

ARTICLE 25   Exchange of Information  

(1)  
The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention or of the domestic laws of the Contracting States concerning the taxes to which this Convention applies insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Article 1. Any information received by the competent authority of a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment, collection or enforcement of the taxes to which this Convention applies, or with the determination of appeals in relation thereto, and shall be used only for such purposes.

(2)  
In no case shall the provisions of paragraph (1) be construed so as to impose on a Contracting State the obligation-


(a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State;


(b) to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;


(c)to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or to supply information the disclosure of which would be contrary to public policy.

ARTICLE 26   Diplomatic and Consular Officials  

(1)  
Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.

(2)  
This Convention shall not apply to International Organizations, to organs or officials thereof and to persons who are members of a diplomatic, consular or permanent mission of a third State, being present in a Contracting State and who are not liable in either Contracting State to the same obligations in relation to tax on their total world income as are residents thereof.

ARTICLE 26A   Various Interests of Canadian Residents  
Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada with respect to a partnership, trust, or controlled foreign affiliate, in which that resident has an interest.

CHAPTER VI - FINAL PROVISIONS  

ARTICLE 27   Entry into Force  

(1)  
This Convention shall come into force on the date on which the Government of Australia and the Government of Canada exchange notes through the diplomatic channel notifying each other that the last of such things has been done as is necessary to give this Convention the force of law in Australia and in Canada, as the case may be, and thereupon this Convention shall have effect-


(a) in Australia-


(i) in respect of withholding tax on income that is derived by a non-resident, in respect of income derived on or after 1 July 1975

(ii) in respect of other Australian tax, for any year of income beginning on or after 1 July 1975


(b) in Canada-


(i) in respect of tax withheld at the source on amounts paid or credited to non-residents on or after 1 January 1976

(ii) in respect of other Canadian tax, for taxation years beginning on or after 1 January 1976.

(2)  
Subject to paragraph (3) of this Article, the Agreement between the Government of the Commonwealth of Australia and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Mont Tremblant on 1 October 1957 (in this Article referred to as "the 1957 Agreement") shall cease to have effect in relation to any tax in respect of which this Convention comes into effect in accordance with paragraph (1) of this Article.

(3)  
Where any provision of the 1957 Agreement would have afforded any greater relief from tax in one of the Contracting States than is afforded by this Convention, any such provision shall continue to have effect in that Contracting State-


(a) in the case of Australia in respect of withholding tax on income that is derived by a non-resident, in respect of income derived during any financial year beginning before the date of signature of this Convention and, in respect of other Australian tax, for any year of income beginning before that date;


(b) in the case of Canada in respect of tax withheld at the source on amounts paid or credited to non-residents before 31 December in the calendar year during which this Convention was signed and, in respect of other Canadian tax for any taxation year beginning on or before that date.

(4)  
The 1957 Agreement shall terminate on the last date on which it has effect in accordance with the foregoing provisions of this Article.

ARTICLE 28   Termination  
This Convention shall continue in effect indefinitely, but the Government of Australia or the Government of Canada may, on or before 30 June in any calendar year after the year 1983, give to the other Government through the diplomatic channel written notice of termination and, in that event, this Convention shall cease to be effective-


(a) in Australia-


(i) in respect of withholding tax on income that is derived by a non-resident, in respect of income derived on or after 1 July in the calendar year next following that in which the notice of termination is given;

(ii) in respect of other Australian tax, for any year of income beginning on or after 1 July in the calendar year next following that in which thenotice of termination is given;


(b) in Canada-


(i) in respect of tax withheld at the source on amounts paid or credited to non-residents on or after 1 January in the second calendar year next following that in which the notice of termination is given;

(ii) in respect of other Canadian tax, for any taxation year beginning on or after 1 January in the second calendar year next following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Convention.

DONE in Canberra on the twenty-first day of May 1980 in the English and French languages, the two versions being equally authentic.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
CANADA:
John Howard Edward Lumley

PROTOCOL AMENDING THE CONVENTION BETWEEN AUSTRALIA AND CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

ARTICLE 1  
Article 2 of the Convention shall be deleted and replaced by the following:

"ARTICLE 2 Taxes Covered  


(1)
The existing taxes to which this Convention shall apply are:


(a) in the case of Australia:
the income tax, and the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of Australia;


(b) in the case of Canada:
the income taxes imposed by the Government of Canada under the Income Tax Act.


(2)
This Convention shall apply also to any identical or substantially similar taxes which are imposed under the federal law of Australia or the law of Canada after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in the law of their respective States relating to the taxes to which this Convention applies within a reasonable period of time after those changes.".

ARTICLE 2  

1.  
Subparagraphs (a) and (k) of paragraph (1) of Article 3 of the Convention shall be deleted and respectively replaced by the following:


"(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; and

(vi) the Coral Sea Islands Territory,
and 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 exploration for or the exploitation of any of the natural resources of the seabed and subsoil of the continental shelf;"

; and


"(k) the term "international traffic" means any voyage of a ship or aircraft operated by an enterprise of a Contracting State to transport passengers or property except where the principal purpose of the voyage is to transport passengers or property between places within the other Contracting State.".

2.  
Paragraph (3) of Article 3 of the Convention shall be deleted and replaced by the following:


"(3)
As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under the applicable tax law of that State prevailing over a meaning given to the term under other law of that State.".

ARTICLE 3  
Paragraphs (1) and (2) of Article 4 of the Convention shall be deleted and replaced by the following:


"(1)
Subject to paragraph (2), for the purposes of this Convention, a person is a resident of a Contracting State if that person is a resident of that State for the purposes of its tax. A Contracting State or any political subdivision or local authority thereof or any agency or instrumentality of any such State, subdivision or authority is also a resident of that State for the purposes of this Convention.


(2)
A person is not a resident of a Contracting State for the purposes of this Convention if the person is liable to tax in that State in respect only of income from sources in that State.".

ARTICLE 4 
Subparagraph (b) of paragraph (4) of Article 5 of the Convention shall be deleted and replaced by the following:


"(b) substantial equipment is being used in that State by, for or under contract with the enterprise other than in connection with a building site or construction, installation or assembly project of the enterprise.".

ARTICLE 5  
Article 6 of the Convention shall be deleted and replaced by the following:

"ARTICLE 6 Income from Real Property  


(1)
Income from real property may be taxed in the Contracting State in which the real property is situated.


(2)
For the purposes of this Convention, the term "real property" in relation to a Contracting State, shall have the meaning which it has under the law of that State and shall include:


(a) a lease of land and any other interest in or over land, whether improved or not, including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and


(b) a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources.


(3)
Any interest or right referred to in paragraph (2) shall be regarded as situated where the land, mineral, oil or gas deposits, quarries or natural resources, as the case may be, are situated or where the exploration may take place.


(4)
The provisions of paragraphs (1) and (3) shall also apply to the income from real property of an enterprise and to income from real property used for the performance of independent personal services.".

ARTICLE 6  

1.  
Paragraph (6) of Article 7 of the Convention shall be deleted and replaced by the following:


"(6)
Where profits include items which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.".

2.  
A new paragraph (8) shall be added to Article 7 of the Convention as follows:


"(8)
Where:


(a) a resident of Canada is beneficially entitled, whether directly or through one or more interposed trusts, to a share of the business profits of an enterprise carried on in Australia by the trustee of a trust other than a trust which is treated as a company for tax purposes; and


(b) in relation to that enterprise, that trustee would, in accordance with the principles of Article 5, have a permanent establishment in Australia,

the enterprise carried on by the trustee shall be deemed to be a business carried on in Australia by that resident through a permanent establishment situated in Australia and that share of business profits shall be attributable to that permanent establishment.".

ARTICLE 7  
Paragraph (4) of Article 8 of the Convention shall be deleted and replaced by the following:


"(4)
For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise taken on board in a Contracting State for discharge at a place in that State shall be treated as profits from operations confined solely to places in that State.".

ARTICLE 8  

1.  
Paragraphs (2), (4) and (6) of Article 10 of the Convention shall be deleted and respectively replaced by the following:


"(2)
However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax, and according to the law of that State, but the tax so charged shall not exceed:


(a)


(i) in the case of dividends paid by a company that is a resident of Australia for the purposes of its tax, 5 per cent of the gross amount of the dividends, to the extent to which the dividends have been fully franked in accordance with the law of Australia, if a company that holds directly at least 10 per cent of the voting power of the company paying the dividends is beneficially entitled to those dividends; and

(ii) in the case of dividends paid by a company that is a resident of Canada for the purposes of its tax, except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada for the purposes of its tax, 5 per cent of the gross amount of the dividends if a company that controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends is beneficially entitled to those dividends; and


(b) 15 per cent of the gross amount of the dividends in all other cases,

and if the relevant law of either Contracting State is varied in a manner that bears upon this provision, otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate.";


"(4)
The term "dividends" as used in this Article means income from shares, as well as other amounts whichare subjected to the same taxation treatment as income from shares by the law of the State of which the company making the distribution is a resident for the purposes of its tax."

; and


"(6)
Canada may impose, on the earnings attributable to a permanent establishment in Canada of a company which is a resident of Australia or on the earnings of such company attributable to the alienation of real property situated in Canada where the company is carrying on a trade in real property, a tax (in this paragraph referred to as a "branch tax") in addition to the tax that would be chargeable on the earnings of a company that is a resident of Canada, except that any branch tax so imposed shall not exceed 5 per cent of the amount of such earnings that have not been subjected to such branch tax in previous taxation years. For the purposes of this provision, the term "earnings" means the earnings attributable to the alienation of such real property situated in Canada as may be taxed by Canada under the provisions of Article 6 or paragraph (1) of Article 13, and the profits, including any gains, attributable to a permanent establishment in Canada in a year and previous years after deducting therefrom all other taxes, other than the branch tax referred to herein, imposed on such profits in Canada.".

2.  
The reference in paragraph (7) of Article 10 of the Convention to "15 per cent" shall be deleted and replaced by a reference to "5 per cent".

ARTICLE 9  
The reference in paragraph (2) of Article 11 of the Convention to "15 per cent" shall be deleted and replaced by a reference to "10 per cent".

ARTICLE 10  

1.  
Paragraph (3) of Article 12 of the Convention shall be deleted and replaced by the following:


"(3)
The term "royalties" as used in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trade mark or other like property or right; or


(b) the use of, or the right to use, any industrial, commercial or scientific equipment; or


(c) the supply of scientific, technical, industrial or commercial knowledge or information; or


(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such knowledge or information as is mentioned in subparagraph (c); or


(e) the use of, or the right to use:


(i) motion picture films; or

(ii) films or videotapes or other means of reproduction for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or


(f) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.".

2.  
A new paragraph (7) shall be added to Article 12 of the Convention as follows:


"(7)
Without prejudice to whether or not such payments would be dealt with as royalties under this Article in the absence of this paragraph, the term "royalties" as used in this Article shall not include payments or credits made as consideration for the supply of, or the right to use, source code in a computer software program, provided that the right to use the source code is limited to such use as is necessary to enable effective operation of the program by the user.".

3.  
A new paragraph (8) shall be added to Article 12 of the Convention as follows:


"(8)
Without prejudice to whether or not such payments would be dealt with as royalties under this Article in the absence of this paragraph, the term "royalties" as used in this Article shall include payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the reception of, or the right to receive, visual images or sounds, or both, that are transmitted to the public by satellite or by cable, optic fibre or similar technology; or


(b) the use of, or the right to use, in connection with television or radio broadcasting, visual images or sounds, or both, that are transmitted by satellite or by cable, optic fibre or similar technology; or


(c) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.".

ARTICLE 11  
Article 13 of the Convention shall be deleted and replaced by the following:

"ARTICLE 13 Alienation of Property  


(1)
Income, profits or gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State.


(2)
Income, profits or gains from the alienation of property, other than real property, that forms part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or pertains to a fixed base available in that other State to a resident of the first-mentioned State for the purpose of performing independent personal services, including income, profits or gains from the alienation of that permanent establishment (alone or with the whole enterprise) or of that fixed base, may be taxed in that other State.


(3)
Income, profits or gains from the alienation of ships or aircraft operated in international traffic, or of property, other than real property, pertaining to the operation of those ships or aircraft, shall be taxable only in the Contracting State of which the enterprise alienating such ships, aircraft, or other property is a resident.


(4)
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 is derived principally, whether directly or indirectly (including through one or more interposed entities, such as, for example, through a chain of companies), from real property situated in the other Contracting State, may be taxed in that other State.


(5)
Nothing in this Convention shall affect the application of a law of a Contracting State relating to the taxation of gains of a capital nature derived from the alienation of any property other than that to which any of the preceding paragraphs of this Article apply.


(6)
Where an individual who ceases to be a resident of a Contracting State, and immediately thereafter becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, disposed of and re-acquired the property for an amount equal to its fair market value at that time.".

ARTICLE 12  

1.  
Paragraphs (2) and (3) of Article 15 of the Convention shall be deleted and replaced by the following:


"(2)
Notwithstanding the provisions of paragraph (1), remuneration derived by an individual who is a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:


(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the year of income or taxation year of that other State; and


(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and


(c) the remuneration is not deductible in determining taxable profits of a permanent establishment or a fixed base which the employer has in that other State.".

2.  
Paragraph (4) of Article 15 of the Convention shall be renumbered as paragraph (3).

ARTICLE 13  
Article 22 of the Convention shall be deleted and replaced by the following:

"ARTICLE 22 Source of Income  


(1)
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State, shall for the purposes of the law of that other Contracting State relating to its tax be deemed to be income from sources in that other Contracting State.


(2)
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State, shall for the purposes of Article 23 and of the law of the first-mentioned Contracting State relating to its tax be deemed to be income from sources in the other Contracting State.".

ARTICLE 14  
Article 23 of the Convention shall be deleted and replaced by the following:

"ARTICLE 23 Elimination of Double Taxation  


(1)
In the case of Australia, double taxation shall be avoided as follows:


(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 of this Article), Canadian tax paid under the law of Canada 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 Canada shall be allowed as a credit against Australian tax payable in respect of that income;


(b) 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), where a company which is a resident of Canada 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 at least 10 per cent of the voting power of the first-mentioned company, the credit referred to in subparagraph (a) shall include the Canadian tax paid by that first-mentioned company in respect of that portion of its profits out of which the dividend is paid.


(2)
In the case of Canada, double taxation shall be avoided as follows:


(a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Australia on profits, income or gains from sources in Australia shall be deducted from any Canadian tax payable in respect of such profits, income or gains;


(b) subject to the existing provisions of the law of Canada regarding the allowance as a credit against Canadian tax of tax payable in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) where a company which is a resident of Australia pays a dividend to a company which is a resident of Canada and which controls directly or indirectly at least 10 per cent of the voting power in the first-mentioned company, the credit shall take into account the tax payable in Australia by that first-mentioned company in respect of the profits out of which such dividend is paid; and


(c) where, in accordance with any provision of this Convention, income derived by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income, take into account the exempted income.".

ARTICLE 15  
A new paragraph (6) shall be added to Article 24 of the Convention as follows:


"(6)
For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph (3) of this Article or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.".

ARTICLE 16  
A new Article 26A shall be added to the Convention immediately after Article 26 as follows:

"ARTICLE 26A Various Interests of Canadian Residents  
Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada with respect to a partnership, trust, or controlled foreign affiliate, in which that resident has an interest.".

ARTICLE 17  
The Government of Australia and the Government of Canada shall notify each other through the diplomatic channel of the completion of their respective internal procedures required for the bringing into force of this Protocol which shall form an integral part of the Convention. The Protocol shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect:


(a) in Australia:


(i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after 1 January in the calendar year next following that in which the Protocol enters into force; and

(ii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following that in which the Protocol enters into force;


(b) in Canada:


(i) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after 1 January in the calendar year next following that in which the Protocol enters into force; and

(ii) in respect of other Canadian tax, for taxation years beginning on or after 1 January in the calendar year next following that in which the Protocol enters into force.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Protocol.

DONE at Canberra, this twenty-third day of January 2002, in the English and French languages, the two versions being equally authentic.


FOR THE GOVERNMENT OF
AUSTRALIA:
FOR THE GOVERNMENT OF
CANADA:
Helen Lloyd Coonan Jean T. Fournier

Chilean Convention  

CONVENTION BETWEEN AUSTRALIA AND THE REPUBLIC OF CHILE FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND FRINGE BENEFITS AND THE PREVENTION OF FISCAL EVASION  

CHAPTER I - SCOPE OF THE CONVENTION  

ARTICLE 1   Persons Covered  
This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2   Taxes Covered  

1.  
The existing taxes to which the Convention shall apply are:


a) in Australia:


(i) the income tax, including the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources; and

(ii) the fringe benefits tax,

imposed under the federal law of Australia (hereinafter referred to as "Australian tax"); and


b) in Chile, the taxes imposed under the Income Tax Act, "Ley sobre Impuesto a la Renta", including the specific tax on mining activity (Impuesto Específico a la Actividad Minera), (hereinafter referred to as "Chilean tax").

2.  
The Convention shall apply also to any identical or substantially similar taxes that are imposed under the federal law of Australia or the law of Chile after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in the law of their respective States relating to the taxes to which the Convention applies within a reasonable period of time after those changes.

CHAPTER II - DEFINITIONS  

ARTICLE 3   General Definitions  

1.  
For the purposes of this Convention, unless the context otherwise requires:


a) the term

"Australia"
means the Commonwealth of Australia and, 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; and

(vi) the Coral Sea Islands Territory,
and 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 exploration for or exploitation of any of the natural resources of the exclusive economic zone or the seabed and subsoil of the continental shelf;


b) the term

"Chile"
means the Republic of Chile and, when used in a geographical sense, includes any area outside the territorial sea designated under the laws of the Republic of Chile and in accordance with international law as an area within which the Republic of Chile may exercise sovereign rights with regard to the seabed and subsoil and their natural resources;


c) the terms

"a Contracting State"
and "the other Contracting State"
mean, as the context requires, Australia or Chile respectively;


d) the term

"person"
includes an individual, a company and any other body of persons;


e) the term

"company"
means any body corporate or any entity that is treated as a company or body corporate for tax purposes;


f) the terms

"enterprise of a Contracting State"
and "enterprise of the other Contracting State"
mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;


g) the term

"international traffic"
means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when such transport is solely between places in the other Contracting State;


h) the term

"competent authority"
means:


(i) in Australia, the Commissioner of Taxation or an authorised representative of the Commissioner; and

(ii) in Chile, the Minister of Finance or an authorised representative of the Minister;


i) the term

"national"
in relation to a Contracting State, means:


(i) any individual possessing the nationality or citizenship of that Contracting State; and

(ii) any company deriving its status as such from the laws in force in that Contracting State;


j) the term

"tax"
means Australian tax or Chilean tax as the context requires, but does not include any penalty or interest imposed under the law of either Contracting State relating to its tax.

2.  
As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under the applicable tax law of that State prevailing over a meaning given to the term under other law of that State.

ARTICLE 4   Resident  

1.  
For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein as a resident of that State or by reason of domicile in that State, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2.  
Where by reason of the provisions of paragraph 1 a person, being an individual is a resident of both Contracting States, then the person's status shall be determined as follows:


a) the individual shall be deemed to be a resident only of the State in which a permanent home is available to that individual; but if a permanent home is available in both States or in neither of them, that individual shall be deemed to be a resident only of the State with which the individual's personal and economic relations are closer (centre of vital interests);


b) if the State in which the centre of vital interests is situated cannot be determined, the individual shall be deemed to be a resident only of the State of which that individual is a national.

3.  
Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the person shall not be entitled to any benefits provided by the Convention except that the provisions of Article 24 shall apply.

ARTICLE 5   Permanent Establishment  

1.  
For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2.  
The term "permanent establishment" includes especially:


a) a place of management;


b) a branch;


c) an office;


d) a factory;


e) a workshop;


f) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or the exploitation of natural resources; and


g) an agricultural, pastoral or forestry property.

3.  
A building site or construction or installation project constitutes a permanent establishment only if it lasts more than six months.

4.  
Notwithstanding the provisions of paragraphs 1, 2 and 3, where an enterprise of a Contracting State:


a) performs services (other than activities to which subparagraphs b) or c) apply) in the other Contracting State, for a period or periods exceeding in the aggregate 183 days in any twelve month period, and these services are performed through one or more individuals who are present and performing such services in that other State;


b) carries on activities (including the operation of substantial equipment) in the other State in the exploration for or exploitation of natural resources situated in that other State for a period or periods exceeding in the aggregate 90 days in any twelve month period; or


c) operates substantial equipment in the other State (including as provided in subparagraph b)) for a period or periods exceeding in the aggregate 183 days in any twelve month period,

such activities shall be deemed to be performed through a permanent establishment that the enterprise has in that other State, unless the activities are limited to those mentioned in paragraph 6 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

5.  

a) The duration of activities under paragraphs 3 and 4 will be determined by aggregating the periods during which activities are carried on in a Contracting State by associated enterprises provided that the activities of the enterprise in that State are substantially the same as the activities carried on in that State by its associate.


b) The period during which two or more associated enterprises are carrying on concurrent activities will be counted only once for the purpose of determining the duration of activities.


c) Under this Article, an enterprise shall be deemed to be associated with another enterprise if:


(i) one is controlled directly or indirectly by the other; or

(ii) both are controlled directly or indirectly by the same person or persons.

6.  
Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:


a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;


b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;


c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;


d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;


e) the maintenance of a fixed place of business solely for the purpose of advertising, supplying information or carrying out scientific research for the enterprise, or any other similar activity, if such activity is of a preparatory or auxiliary character.

7.  
Notwithstanding the provisions of paragraphs 1 and 2 where a person - other than an agent of an independent status to whom paragraph 8 applies - is acting on behalf of an enterprise and has and habitually exercises in a Contracting State an authority to conclude contracts on behalf of the enterprise or manufactures or processes in a Contracting State for the enterprise goods or merchandise belonging to the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 6 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

8.  
An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a person who is a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

9.  
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other.

CHAPTER III - TAXATION OF INCOME  

ARTICLE 6   Income from Immovable (Real) Property  

1.  
Income derived by a resident of a Contracting State from immovable (real) property (including income from agriculture or forestry) may be taxed in the Contracting State in which the immovable (real) property is situated.

2.  
For the purposes of this Convention, the term "immovable (real) property":


a) in the case of Australia, means real property according to the law of Australia, and shall also include:


(i) a lease of land and any other interest in or over land, whether improved or not, including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and

(ii) a right to receive variable or fixed payments either as consideration for or in respect of the exploitation of, or the right to explore for or exploit, mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources; and


b) in the case of Chile, means such property which, according to the law of Chile, is immovable property and shall in any case include:


(i) property accessory to immovable property;

(ii) livestock and equipment used in agriculture and forestry;

(iii) rights to which the provisions of the general law respecting land apply, including a lease of land and any other interest in or over land, whether improved or not, including a right to explore for mineral, oil or gas deposits or other natural resources, and a right to mine those deposits or resources; and

(iv) usufruct of immovable property and rights to variable or fixed payments either as consideration for or in respect of the exploitation of or the right to exploit mineral deposits, mineral sources and other natural resources.

Ships and aircraft shall not be regarded as immovable (real) property.

3.  
Any interest or right referred to in paragraph 2 shall be regarded as situated where the land, mineral, oil or gas deposits or sources, quarries or natural resources, as the case may be, are situated or where the exploration may take place.

4.  
The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable (real) property.

5.  
The provisions of paragraphs 1 and 4 shall also apply to profits from immovable (real) property of an enterprise or immovable (real) property used for the performance of independent personal services. Where such profits are attributable to a permanent establishment or a fixed base in the Contracting Statein which the immovable (real) property is situated, the profits shall be determined in accordance with principles of paragraphs 2 and 3 of Article 7.

ARTICLE 7   Business Profits  

1.  
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2.  
Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.

3.  
In determining the profits of a permanent establishment, there shall be allowed as deductions expenses of the enterprise, being expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred whether incurred in the State in which the permanent establishment is situated or elsewhere.

4.  
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5.  
Where profits include items of income or gains which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

6.  
Notwithstanding the preceding provisions of this Article, premiums in respect of insurance policies issued by an enterprise of a Contracting State may be taxed in the other State in accordance with its domestic law. However, except where the premium is attributable to a permanent establishment of the enterprise situated in that other State, the tax so charged shall not exceed:


a) 5 per cent of the gross amount of the premiums in the case of policies of reinsurance; and


b) 10 per cent of the gross amount of the premiums in the case of all other policies of insurance.

7.  
Where:


a) a resident of a Contracting State is beneficially entitled, whether directly or through one or more interposed trust estates, 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 would, in accordance with the principles of Article 5, have a permanent establishment in that other State,

the enterprise carried on by the trustee shall be deemed to be a business carried on in the other State by that resident through a permanent establishment situated therein and that share of business profits shall be attributed to that permanent establishment.

8.  
No adjustments to the profits attributable to a permanent establishment of an enterprise for a year of income shall be made by a Contracting State after the expiration of seven years from the date on which the enterprise has completed the tax filing requirements of that State for that year of income. The provisions of this paragraph shall not apply in the case of fraud, gross negligence or wilful default or where, within that period of seven years, an audit into the profits of the enterprise has been initiated by either State.

9.  
Nothing in this Convention shall affect the taxation in Chile of a resident of Australia in respect of profits attributable to a permanent establishment, or a fixed base, situated in Chile, under both the First Category Tax and the Additional Tax provided that the First Category Tax is fully creditable in computing the amount of the Additional Tax.

ARTICLE 8   Ships and Aircraft  

1.  
Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2.  
Notwithstanding the provisions of paragraph 1, profits of an enterprise of a Contracting State derived from the operation of ships or aircraft may be taxed in the other Contracting State to the extent that they are profits derived directly or indirectly from ship or aircraft operations confined solely to places in that other State.

3.  
The profits to which the provisions of paragraphs 1 and 2 apply include profits from the operation of ships or aircraft derived through participation in a pool service or other profit sharing arrangement.

4.  
For the purposes of this Article, profits derived from the carriage by ships or aircraft of passengers or cargo (including mail) which are taken on board in a Contracting State for discharge at a place in that State shall be treated as profits from ship or aircraft operations confined solely to places in that State.

ARTICLE 9   Associated Enterprises  

1.  
Where


a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or


b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions operate, or are made or imposed, between the two enterprises in their commercial or financial relations which differ from those which might be expected to operate or be made between independent enterprises, dealing wholly independently with one another then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2.  
Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which might have been expected to have accrued to the enterprise of the first-mentioned State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then that other State, if it agrees that the adjustment made by the first-mentioned State is justified both in principle and as regard the amount, shall make an appropriate adjustment to the amount of the taxes charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

3.  
No adjustments to the profits of an enterprise for a year of income shall be made by a Contracting State after the expiration of seven years from the date on which the enterprise has completed the tax filing requirements of that State for that year of income. The provisions of this paragraph shall not apply in the case of fraud, gross negligence or wilful default or where, within that period of seven years, an audit into the profits of the enterprise has been initiated by either State.

ARTICLE 10   Dividends  

1.  
Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2.  
However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:


a) 5 per cent of the gross amount of the dividends if the beneficial owner of those dividends is a company which holds directly at least 10 per cent of the voting power in the company paying the dividends; and


b) 15 per cent of the gross amount of the dividends in all other cases.

The provisions of this paragraph shall not limit the application of the Additional Tax payable in Chile provided that the First Category Tax is fully creditable in computing the amount of Additional Tax.

3.  
The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as other amounts which are subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4.  
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.  
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11   Interest  

1.  
Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2.  
However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed:


a) 5 per cent of the gross amount of interest derived by a financial institution which is unrelated to and dealing wholly independently with the payer. The term "financial institution" means a bank or other enterprise substantially deriving its profits by raising debt finance in the financial markets or by taking deposits at interest and using those funds in carrying on a business of providing finance; and


b) 10 per cent of the gross amount of interest in all other cases.

3.  
Notwithstanding paragraph 2, interest referred to in subparagraph a) of that paragraph may be taxed in the State in which it arises at a rate not exceeding 10 per cent of the gross amount of the interest if the interest is paid as part of an arrangement involving back-to-back loans or other arrangement that is economically equivalent and intended to have a similar effect to back-to-back loans.

4.  
Notwithstanding the rate limits specified in subparagraph 2 b) and paragraph 3, Chile may impose tax on interest arising in Chile to which those provisions apply at a rate not exceeding 15 per cent of the gross amount of the interest. However, if Chile agrees to limit the tax charged in Chile on interest arising in Chile to a rate less than 15 per cent in a tax treaty with any other State, the tax imposed in Chile on interest arising in Chile to which subparagraph 2 b) or paragraph 3 applies shall not exceed the rate provided in that treaty or 10 per cent, whichever is the greater, after the date of entry into force of that treaty.

5.  
The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and in particular, interest from government securities and interest from bonds or debentures. The term "interest" also includes income which is subjected to the same taxation treatment as income from money lent by the law of the Contracting State in which the income arises. The term "interest" shall not include any item which is treated as a dividend under the provisions of Article 10 of this Convention.

6.  
The provisions of paragraphs 1, 2, 3 and 4 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the indebtedness in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

7.  
Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

8.  
Where, by reason of a special relationship between the payer and the beneficial owner of the interest or between both of them and some other person, the amount of the interest exceeds, for whatever reason, the amount which might have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE 12   Royalties  

1.  
Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2.  
However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed:


a) 5 per cent of the gross amount of the royalties for the use of, or the right to use, any industrial, commercial or scientific equipment; and


b) 10 per cent of the gross amount of the royalties in all other cases.

3.  
The term "royalties" in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


a)


(i) the use of, or the right to use, any copyright, including motion picture films; and

(ii) the use of, or the right to use, in connection with television, radio or other broadcasting, films or audio or video tapes or disks, or any other means of image or sound reproduction or transmission;


b) the use of, or the right to use any patent, trade mark, design or model, plan, secret formula or process or other like property or right;


c) the use of, or the right to use, industrial, commercial or scientific equipment;


d) the supply of information concerning technical, industrial, commercial or scientific experience;


e) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph a), b) or c) or any such information as is mentioned in subparagraph d);


f) the use of, or the right to use, some or all of the part of the spectrum specified in a spectrum licence, being spectrum of a Contracting State where the payment or credit arises; or


g) total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph.

4.  
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid or credited is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.  
Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether a resident of a Contracting State or not, has in a Contracting State or outside both Contracting States a permanent establishment or a fixed base in connection with which the obligation to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

6.  
Where, by reason of a special relationship between the payer and the beneficial owner of the royalties or between both of them and some other person, the amount of the royalties paid or credited having regard to what they are paid or credited for, exceeds the amount which might have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments or credits shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE 13   Alienation of Property  

1.  
Income, profits or gains derived by a resident of a Contracting State from the alienation of immovable (real) property situated in the other Contracting State may be taxed in that other State.

2.  
Income, profits or gains from the alienation of property, other than immovable (real) property, forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of property, other than immovable (real) property, pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such income, profits or gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other State.

3.  
Income, profits or gains of an enterprise of a Contracting State from the alienation of ships or aircraft operated by that enterprise in international traffic, or of property (other than immovable (real) property) pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

4.  
Income, profits or gains derived by a resident of a Contracting State from the alienation of any shares, comparable interests or other rights deriving more than 50 per cent of their value directly or indirectly from immovable (real) property situated in the other Contracting State may be taxed in that other State.

5.  
Gains of a capital nature, other than gains to which paragraph 2 or 4 apply, derived by a resident of a Contracting State (other than a pension fund) from the alienation of shares or other rights, not being debts claims, participating in profits, representing the capital of a company that is a resident of the other Contracting State, may be taxed in that other State but the tax so charged shall not exceed 16 per cent of the amount of the gain. However, nothing in this Article shall affect the right of that other State to tax such gains, in accordance with its laws, if the alienator has at any time during the twelve month period preceding such alienation owned shares or other rights representing, directly or indirectly, 20 per cent or more of the capital of that company.

6.  
Gains of a capital nature from the alienation of any property, other than that referred to in the preceding paragraphs shall be taxable only in the Contracting State of which the alienator is a resident.

7.  
Where an individual who upon ceasing to be a resident of a Contracting State, is treated under the taxation law of that State as having alienated any property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxationin the other Contracting State as if the individual had, immediately before ceasing to be a resident of the first-mentioned State, alienated and reacquired the property for an amount equal to its fair market value at that time. However, the individual may not make the election in respect of property situated in either Contracting State.

ARTICLE 14   Independent Personal Services  

1.  
Profits derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State. However, such profits may also be taxed in the other Contracting State:


a) if the individual has a fixed base regularly available in the other Contracting State for purpose of performing the activities; in that case, only so much of the profits as are attributable to that fixed base may be taxed in that other State; or


b) if the individual is present in the other Contracting State for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve month period commencing or ending in the income year of that other State, the individual shall be deemed to have a fixed base regularly available in that State; in that case, only so much of the profits as are derived from the activities performed in that other State may be taxed in that State.

2.  
The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15   Income from Employment  

1.  
Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2.  
Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:


a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the income year of that other State, and


b) the remuneration is paid by, or on behalf of, a person being an employer who is not a resident of the other State, and


c) the remuneration is not borne by a permanent establishment or a fixed base which that employer has in the other State.

3.  
Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft operated in international traffic shall be taxable only in that State.

4.  
Where, except for the application of this paragraph, a fringe benefit is taxable in both Contracting States the benefit will be taxable only in the Contracting State that has the sole or primary taxing right in accordance with paragraphs 1, 2 or 3 of this Article in respect of salary or wages from the employment to which the benefit relates.

5.  
For the purposes of this Article:


a) "fringe benefit" includes a benefit provided to an employee or to an associate of an employee by:


(i) an employer;

(ii) an associate of an employer; or

(iii) a person under an arrangement between that person and the employer, associate of an employer or another person in respect of the employment of that employee,
and includes an accommodation allowance or housing benefit so provided but does not include a benefit arising from the acquisition of an option over shares under an employee share scheme;


b) a Contracting State has a "primary taxing right" to the extent that a taxing right in respect of salary or wages from the relevant employment is allocated to that State in accordance with paragraphs 1, 2 or 3 of this Article and the other Contracting State is required to provide relief for the tax imposed in respect of such remuneration by the first-mentioned State.

ARTICLE 16   Directors' Fees  
Directors' fees and other similar payments derived by a resident of a Contracting State in that person's capacity as a member of the board of directors or a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17   Artistes and Sportspersons  

1.  
Notwithstanding the provisions of Articles 7, 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person's personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2.  
Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person's capacity as such accrues not to that person but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

ARTICLE 18   Pensions  

1.  
Pensions, including retirement annuities, paid to an individual who is a resident of a Contracting State shall be taxable only in that State.

2.  
The term "retirement annuity" means a stated sum payable in respect of retirement and paid periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration from funds out of a retirement savings plan.

3.  
Alimony and other maintenance payments paid to a resident of a Contracting State shall be taxable only in that State. However, any alimony or other maintenance payments paid by a resident of a Contracting State to a resident of the other Contracting State, shall, to the extent it is not allowable as a relief to the payer, be taxable only in the first-mentioned State.

ARTICLE 19   Government Service  

1.  

a) Salaries, wages and other remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.


b) However, such salaries, wages and other remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:


(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2.  
The provisions of Articles 15, 16 and 17 shall apply to salaries, wages and other remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

ARTICLE 20   Students  
Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is temporarily present in the first-mentioned State solely for the purpose of their education or training receives for the purpose of their maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

ARTICLE 21   Other Income  

1.  
Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

2.  
The provisions of paragraph 1 shall not apply to income, other than income from immovable (real) property, derived by a resident of a Contracting State who carries on business in the other Contracting State through a permanent establishment or performs in that other State independent personal services from a fixed based situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3.  
Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of the Convention from sources in the other Contracting State may also be taxed in the other Contracting State.

ARTICLE 22   Source of Income  

1.  
Income, profits or gains derived by a resident of a Contracting State which, under any one or more of Articles 6 to 8 and 10 to 19, may be taxed in the other Contracting State shall for the purposes of the law of that other Contracting State relating to its tax be deemed to arise from sources in that other Contracting State.

2.  
For the purposes of determining where income arises under paragraph 7 of Article 11 or paragraph 5 of Article 12, an individual is a resident of a Contracting State, notwithstanding the provisions of paragraph 2 of Article 4, if that individual is a resident of that State in accordance with its domestic tax law.

CHAPTER IV - RELIEF FROM DOUBLE TAXATION  

ARTICLE 23   Relief of Double Taxation  

1.  
In Australia, double taxation shall be relieved as follows:


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 of this Article), Chilean tax paid under the law of Chile 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 shall be allowed as a credit against Australian tax payable in respect of that income; and


b) in the case of income referred to in Article 10, Chilean tax paid shall, for purposes of subparagraph a) of this paragraph, refer to the amount of the Additional Tax after the First Category Tax is deducted, or 15 per cent of the amount on which the Additional Tax is calculated, whichever is the lesser.

2.  
In Chile, double taxation shall be relieved as follows:

Residents in Chile, obtaining income which has, in accordance with the provisions of this Convention, been subject to taxation in Australia, may credit the tax so paid against any Chilean tax payable in respect of the same income, subject to the applicable provisions of the law of Chile (which shall not affect the general principle of this Article). This paragraph shall apply to all income referred to in this Convention.

3.  
Where, in accordance with any provision of the Convention, income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on other income, take into account the exempted income.

CHAPTER V - SPECIAL PROVISIONS  

ARTICLE 24   Non-discrimination  

1.  
Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to individuals who are not residents of one or both of the Contracting States.

2.  
The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in similar circumstances.

3.  
Nothing in this Article shall be construed as obliging a Contracting State to grant to individuals who are residents of the other Contracting State any of the personal allowances, reliefs and reductions for taxation purposes which it grants to its own residents.

4.  
Except where the provisions of paragraph 1 of Article 9, paragraph 8 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

5.  
Companies which are residents of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar companies which are residents of the first-mentioned State, in similar circumstances, are or may be subjected.

6.  
This Article shall not apply to any provision of the laws of a Contracting State which:


a) is designed to prevent the avoidance or evasion of taxes, including measures designed to address thin capitalisation or to ensure that taxes can be effectively collected or recovered;


b) provides tax incentives to eligible taxpayers for expenditure on research or development, provided that a company that is a resident of one Contracting State and is wholly or partly owned by residents of the other State can access such incentives on the same terms and conditions as any other company that is a resident of the first-mentioned State; or


c) is otherwise agreed to be unaffected by this Article in an Exchange of Notes between the Contracting States.

The competent authorities of the Contracting States shall notify each other of any changes to such laws, where those changes might, in the absence of this paragraph, be affected by the provisions of this Article.

7.  
The provisions of this Article shall apply to the taxes which are the subject of this Convention, as well as the Goods and Services Tax in the case of Australia and the Value Added Tax (Impuesto al Valor Agregado) in the case of Chile.

ARTICLE 25   Mutual Agreement Procedure  

1.  
Where a person considers that the actions of one or both of the Contracting States result or will result for the person in taxation not in accordance with the provisions of this Convention, the person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph 1 of Article 24, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the Convention.

2.  
The competent authority shall endeavour, if the complaint appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic laws of the Contracting States provided that, in the case of Chile, the case is presented under paragraph 1 within three years from the determination of the Chilean tax liability to which the case relates.

3.  
The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention.

4.  
The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

5.  
For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 3 of this Article or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

ARTICLE 26   Exchange of Information  

1.  
The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic law concerning taxes of every kind and description imposed by or on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.

2.  
Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

3.  
In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:


a) to carry out administrative measures at variance with the law and administrative practice of that or of the other Contracting State;


b) to supply information which is not obtainable under the law or in the normal course of the administration of that or of the other Contracting State;


c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy ("ordre public").

4.  
If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5.  
In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

ARTICLE 27   Limitations of Benefits  

1.  
The provisions of Articles 10, 11 and 12 shall not apply if it was the main purpose or one of the main purposes of any person concerned with the assignment of dividends, interest or royalties or with the creation or assignment of a right or debt-claim in respect of which dividends, interest or royalties are paid to take advantage of those Articles by means of that creation or assignment.

2.  
Considering that the main aim of the Convention is to avoid international double taxation, the Contracting States agree that, in the event the provisions of the Convention are used in such a manner as to provide benefits not contemplated or not intended, relevant authorities of the Contracting States shall consult in an expeditious manner with a view to recommending specific amendments to be made to the Convention.

3.  
Where under this Convention any income, profits or gains are relieved from tax in Chile and, under the law in force in Australia, an individual in respect of that income or those profits or gains is exempt from tax by virtue of being a temporary resident of Australia within the meaning of the applicable tax laws of Australia, then the relief to be allowed under this Convention in Chile shall not apply to the extent that that income or those profits or gains are exempt from tax in Australia.

ARTICLE 28   Members of Diplomatic Missions and Consular Posts  
Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special international agreements.

CHAPTER VI - FINAL PROVISIONS  

ARTICLE 29   Entry into Force  
The Contracting States shall notify each other through the diplomatic channel of the completion of their domestic requirements for the entry into force of this Convention. The Convention shall enter into force on the date of the last notification, and thereupon the provisions of this Convention shall have effect:


a) in Australia:


(i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after the first day of the second month next following the date on which the Convention enters into force;

(ii) in respect of fringe benefits tax, in relation to fringe benefits provided on or after 1 April next following the date on which the Convention enters into force;

(iii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July next following the date on which the Convention enters into force; and


b) in Chile: in respect of taxes on income obtained and amounts paid, credited to an account, put at the disposal or accounted as an expense, on or after 1 January next following the date on which the Convention enters into force.

ARTICLE 30   Termination  
This Convention shall continue in effect indefinitely, but either Contracting State may terminate the Convention by giving written notice of termination, through the diplomatic channel, to the other State at least six months before the end of any calendar year beginning after the expiration of five years from the date of its entry into force and, in that event, the Convention shall cease to be effective:


a) in Australia:


(i) in respect of withholding tax on income that is derived by a non-resident, in relation to income derived on or after the first day of the second month next following that in which the notice of termination is given;

(ii) in respect of fringe benefits tax, in relation to fringe benefits provided on or after 1 April next following the date on which notice of termination is given;

(iii) in respect of other Australian tax, in relation to income, profits or gains of any year of income beginning on or after 1 July next following that in which the notice of termination is given; and


b) in Chile: in respect of taxes on income obtained and amounts paid, credited to an account, put at the disposal or accounted as an expense, on or after 1 January next following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised, have signed this Convention.

DONE at Santiago, this tenth day of March 2010, in duplicate in the English and Spanish languages, both texts being equally authentic.


FOR AUSTRALIA: FOR THE REPUBLIC OF CHILE:
Virginia Grenville
Ambassador
Andrés Velasco Brañes
Minister for Finance

PROTOCOL TO THE CONVENTION BETWEEN AUSTRALIA AND THE REPUBLIC OF CHILE FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND FRINGE BENEFITS AND THE PREVENTION OF FISCAL EVASION  

1.  
In general,


a) If, after the date on which the Convention enters into force, either Contracting State introduces a tax on capital under its domestic law, the Contracting States will enter into negotiations with a view to concluding a Protocol to amend the Convention by extending its scope to include any tax on capital so introduced. The terms of any such Protocol shall have regard to any arrangements between either Contracting State and a third State for the relief of double taxation on capital.


b) With respect topooled investment accounts or funds (as for instance the existing Foreign Capital Investment Fund, Law N°18.657), that are subject to a remittance tax and are required to be administered by a resident in Chile, the provisions of this Convention shall not be interpreted to restrict imposition by Chile of the tax on remittances from such accounts or funds in respect of investment in assets situated in Chile.


c) Nothing in this Convention shall affect the application of the existing provisions of the Chilean legislation Decree Law No. 600 (Foreign Investment Statute) as they are in force at the time of signature of this Convention and as they may be amended from time to time without changing the general principle thereof.


d) A regulated pension fund which is established in a Contracting State primarily for the benefit of residents of that State shall be treated as a resident of that State and the beneficial owner of the income it receives. For the purposes of this Convention the term "regulated pension fund" means, in the case of Australia, an Australian Superannuation Fund, Approved Deposit Fund or Pooled Superannuation Trust within the meaning of the tax laws of Australia and, in the case of Chile, a pension fund established under the pension system of Decree Law No. 3500, and such other similar funds as may be agreed by the competent authorities of the Contracting States.

2.  
With reference to Article 5,


a) A person who substantially negotiates the essential parts of a contract on behalf of an enterprise will be regarded as exercising an authority to conclude contracts on behalf of that enterprise within the meaning of paragraph 7, even if the contract is subject to final approval or formal signature by another person.


b) A person will come within the scope of paragraph 8 of Article 5 only if that person is independent of the enterprise referred to in that paragraph, both legally and economically, and acts in the ordinary course of that person's business as such a broker or agent when acting on behalf of the enterprise.


c) The principles set forth in Article 5 also apply in determining, for the purposes of paragraph 7 of Article 11 and paragraph 5 of Article 12, whether there is a permanent establishment outside both Contracting States and whether an enterprise, not being an enterprise of a Contracting State, has a permanent establishment in a Contracting State.

3.  
With reference to Article 7,

When computing the taxable income of a permanent establishment situated in a Contracting State, the deductibility of expenses which are attributable to that permanent establishment shall be determined under the domestic law of that State.

4.  
With reference to Articles 7 and 9,

Nothing in Articles 7 and 9 shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to a permanent establishment or accruing to an enterprise as the case may be, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles applicable under Articles 7 and 9.

5.  
With reference to paragraph 2 of Article 10,

If,


a) Chile agrees in a tax treaty with any other State to limit the Additional Tax charged in Chile; or


b) in either Contracting State the tax imposed on dividends and on profits out of which such dividends are paid exceeds in the aggregate 42 per cent,

the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

6.  
With reference to paragraph 2 of Article 11,

If, in a tax treaty with any other State, Chile agrees to limit the tax charged in Chile on interest arising in Chile and derived by a financial institution to a rate lower than that specified in subparagraph 2 a), or derived by a government to a rate lower than that specified in subparagraph 2 b), Chile shall without delay enter into negotiations with Australia with a view to making a comparable adjustment.

7.  
With reference to paragraph 2 of Article 12,

If, in a tax treaty with any other State, Chile agrees that payments for industrial, commercial or scientific equipment will not be treated as royalties for the purposes of that treaty, or limits the tax charged in Chile on royalties arising in Chile to a rate below that provided for in paragraph 2 of Article 12 of this Convention, Chile shall without delay enter into negotiations with Australia with a view to providing the same treatment for Australia.

8.  
With reference to Article 17,

Income referred to in paragraph 1 of Article 17 shall include any income derived from any personal activity exercised in the other State related to performances or appearances in that State.

9.  
With reference to Article 26,

Notwithstanding Article 29 of this Convention, in the case of Chile, information to which paragraph 5 of Article 26 applies, to the extent that such information is covered by Article 1 of Decree Law No. 707 and Article 154 of Decree Law No. 3, will be available with respect to bank account transactions that take place on or after 1 January 2010. Nothing in the Convention shall prevent the application of Article 26 to the exchange of other information that existed prior to the date of entry into force of the Convention.

IN WITNESS WHEREOF the signatories, duly authorised to that effect, have signed this Protocol.

DONE at Santiago, this 10th day of March 2010, in duplicate in the English and Spanish languages, both texts being equally authentic.


FOR AUSTRALIA: FOR THE REPUBLIC OF CHILE:
HE Virginia Grenville
Ambassador
Andrés Velasco Brañes
Minister for Finance

Chinese Agreement  

AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

ARTICLE 1   Personal Scope  
This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2   Taxes Covered  

1.  
The existing taxes to which this Agreement shall apply are:


(a) in Australia:
the income tax, and the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources, imposed under the federal law of the Commonwealth of Australia;


(b) in China:
the income tax imposed under the laws of the People's Republic of China.

2.  
This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes.

ARTICLE 3   General Definitions  

1.  
In this Agreement, unless the context otherwise requires:


(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; and

(vi) the Coral Sea Islands Territory,
and 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;


(b) the term "China" means the People's Republic of China and, when used in a geographical sense, it means all the territory of the People's Republic of China, including its territorial sea, in which the laws relating to Chinese tax apply, and any area beyond its territorial sea, within which the People's Republic of China has sovereign rights of exploration for and exploitation of resources of the seabed and its subsoil and superjacent water resources in accordance with international law;


(c) the terms "a Contracting State" and "the other Contracting State" mean, as the context requires, Australia or China, the Governments of which have concluded this Agreement;


(d) the term "person" includes an individual, a company and any other body of persons;


(e) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;


(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State, as the context requires;


(g) the term "tax" means Australian tax or Chinese tax, as the context requires;


(h) the term "Australian tax" means tax imposed by Australia, being tax to which this Agreement applies by virtue of Article 2;


(i) the term "Chinese tax" means tax imposed by China, being tax to which this Agreement applies by virtue of Article 2;


(j) the term "competent authority" means, in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner and, in the case of China, the State Taxation Administration or its authorised representative.

2.  
In this Agreement, the terms "Australian tax" and "Chinese tax" do not include any penalty or interest imposed under the law of either Contracting State relating to the taxes to which this Agreement applies by virtue of Article 2.

3.  
In the application of this Agreement by a Contracting State, any term not defined in this Agreement shall, unless the context otherwise requires, have the meaning which it has under the laws of that State from time to time in force relating to the taxes to which this Agreement applies.

ARTICLE 4   Resident  

1.  
For the purpose of this Agreement, the term "resident", in relation to a Contracting State, means a person who is fully liable to tax therein by reason of being a resident of that State under the tax law of that State.

2.  
A person is not a resident of a Contracting State for the purposes of this Agreement if the person is liable to tax in that State in respect only of income from sources in that State.

3.  
Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Contracting States, then the status of the person shall be determined in accordance with the following rules:


(a) the person shall be deemed to be a resident solely of the Contracting State in which a permanent home is available to the person;


(b) if a permanent home is available to the person in both Contracting States, or in neither of them, the person shall be deemed to be a resident solely of the Contracting State with which the person's economic and personal relations are the closer.

4.  
Where by reason of the provisions of paragraph (1) a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the Contracting State in which its place of effective management or head office is situated. However, where such a person has its place of effective management in a Contracting State and its head office in the other Contracting State, the person shall be deemed to be a resident solely of that other State.

5.  
If a company has become a resident of a Contracting State for the principal purpose of enjoying benefits under this Agreement, that company shall not be entitled to any of the benefits of Articles 10, 11 and 12.

6.  
Where by reason of the provisions of paragraph (1) a company is a resident of Australia and, under a tax agreement between China and a third country, is also a resident of that third country, the company shall not be considered to be a resident of Australia for the purposes of enjoying benefits under this Agreement.

ARTICLE 5   Permanent Establishment  

1.  
For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2.  
The term "permanent establishment" includes especially:


(a) a place of management;


(b) a branch;


(c) an office;


(d) a factory;


(e) a workshop;


(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;


(g) a farm or forest.

3.  
The term "permanent establishment" likewise encompasses:


(a) a building site, a construction, assembly or installation project, or supervisory activities in connection therewith, but only where that site or project or those activities continue for a period of more than six months;


(b) the furnishing of services, including consultancy services, in a Contracting State by an enterprise of the other Contracting 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 first-mentioned Contracting State for a period or periods aggregating more than six months within any twelve-month period; and


(c) a structure, installation, drilling rig, ship or other equipment used for the exploration for or exploitation of natural resources, or in activities connected with that exploration or exploitation, but only if so used continuously, or those activities continue, for a period of more than three months.

4.  
An enterprise shall not be deemed to have a permanent establishment merely by reason of:


(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;


(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;


(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;


(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;


(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character, such as advertising or scientific research.

5.  
A person acting in a Contracting State on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph (6) applies - shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if:


(a) the person has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless the person's activities are limited to the purchase of goods or merchandise for the enterprise; or


(b) the person manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise.

6.  
An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, it will not be considered an agent of an independent status within the meaning of this paragraph.

7.  
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself make either company a permanent establishment of the other.

ARTICLE 6   Income from Real Property  

1.  
Income from real property may be taxed in the Contracting State in which the real property is situated.

2.  
In this Article, the term "real property":


(a) in the case of Australia, shall have the meaning which it has under the laws of Australia, and shall also include:


(i) a lease of land and any other interest in or over land;

(ii) 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;


(b) in the case of China, shall have the meaning which it has under the laws of China, and shall also include:


(i) property accessory to immovable property and livestock and equipment used in agriculture and forestry;

(ii) rights to which the provisions of the general law respecting landed property apply; and

(iii) usufruct of immovable property and rights to 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, sources and other natural resources; and


(c) shall not include ships or aircraft.

3.  
Any interest, right or property referred to in any of the subparagraphs of paragraph (2) shall be regarded as situated where the land, mineral deposits, oil or gas wells, quarries or natural resources, as the case may be, are situated.

4.  
The provisions of paragraph (1) shall apply to income from the direct use, letting or use in any other form of real property.

5.  
The provisions of paragraphs (1), (3) and (4) shall also apply to income from real property of an enterprise and to income from real property used for the performance of independent personal services.

ARTICLE 7   Business Profits  

1.  
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2.  
Subject to the provisions of paragraph (3), where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises with which it deals.

3.  
In the determination of the profits of a permanent establishment, there shall be allowed as deductions, in accordance with the law relating to tax in the Contracting State in which the permanent establishment is situated, expenses which are incurred for the purposes of the permanent establishment (including executive and general administrative expenses so incurred) whether in the State in which the permanent establishment is situated or elsewhere. No such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4.  
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5.  
For the purposes of paragraphs (1) to (4), the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

6.  
Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the profits to be attributed to a permanent establishment in cases where the information available to the competent authority of that State is inadequate to determine those profits, provided that that law shall be applied, so far as the information available to the competent authority permits, consistently with the principles of this Article.

7.  
Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

8.  
Nothing in this Article shall affect the operation of any law of a Contracting State relating to tax imposed on profits from insurance with non-residents provided that if the relevant law in force in either Contracting State at the date of signature of this Agreement is varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult with each other with a view to agreeing to any amendment of this paragraph that may be appropriate.

9.  
Where:


(a) a resident of a Contracting State 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 8   Shipping and Air Transport  

1.  
Profits from the operation of ships derived by a resident of a Contracting State shall be taxable only in that State.

2.  
Notwithstanding the provisions of paragraph (1), such profits may be taxed in the other Contracting State where they are profits from operations of ships confined solely to places in that other State.

3.  
The provisions of paragraphs (1) and (2) shall also apply to profits from participation in a pool, a joint business or an international operating agency.

4.  
For the purposes of this Article, profits derived from the carriage by ships of passengers, livestock, mail, goods or merchandise shipped in a Contracting State for discharge at another place in that State shall be treated as profits from operations of ships confined solely to places in that State.

5.  
Nothing in this Agreement shall affect the operation of the Agreement between the Government of Australia and the Government of the People's Republic of China for the Avoidance of Double Taxation of Income and Revenues Derived by Air Transport Enterprises from International Air Transport signed at Beijing on 22 November 1985.[1]

ATS 1986 No. 31 Act 1986 No. 46

ARTICLE 9   Associated Enterprises  

1.  
Where:


(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or


(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions apply between the two enterprises in their commercial or financial relations which differ from those which might be expected to apply between independent enterprises dealing wholly independently with each other, then any profits which, but for those conditions, might have been expected to accrue to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2.  
Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the profits to be attributed to an enterprise, including determinations in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributed to an enterprise, provided that that law shall be applied, so far as it is practicable to do so, consistently with the principles of this Article.

3.  
Where a Contracting State includes in the profits of an enterprise of that Contracting State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State, and the profits so included are profits which might have been expected to have accrued to the enterprise of the first-mentioned State if the conditions applying between the two enterprises had been those which might have been expected to apply between independent enterprises, then that other Contracting State shall make an appropriate adjustment to the amount of tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other for this purpose.

ARTICLE 10   Dividends  

1.  
Dividends which are paid by a company which is a resident of a Contracting State and which are beneficially owned by a resident of the other Contracting State may be taxed in that other State.

2.  
Such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3.  
The term "dividends" as used in this Article means income from shares or other rights participating in profits and not relating to debt-claims, as well as other income which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4.  
The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.  
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company, except insofar as such dividends are beneficially owned by a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or fixed base situated in that other State, nor subject the company's undistributed profits to tax even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.

ARTICLE 11   Interest  

1.  
Interest arising in a Contracting State, being interest of which a resident of the other Contracting State is the beneficial owner, may be taxed in that other State.

2.  
However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3.  
The term "interest" in this Article means interest from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular income from Government securities or from bonds or debentures, and all other income that is assimilated to income from money lent by the law, relating to tax, of the Contracting State in which the income arises.

4.  
The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the indebtedness in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.  
Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State, a political subdivision or a local authority of that State or a person who, by reason of the provisions of paragraph (1) of Article 4, is a resident of that State. Where, however, the person paying the interest, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the arrangement under which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

6.  
Where, by reason of a special relationship between the payer and the beneficial owner of the interest, or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the payments shall remain taxable according to the law, relating to tax, of each Contracting State, but subject to the other provisions of this Agreement.

ARTICLE 12   Royalties  

1.  
Royalties which arise in a Contracting State and which are beneficially owned by a resident of the other Contracting State may be taxed in that other State.

2.  
Such royalties may be taxed in the Contracting State in which they arise, and according to the laws of that Contracting State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3.  
The term "royalties" in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for:


(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right;


(b) the use of, or the right to use, any industrial, commercial or scientific equipment;


(c) the supply of scientific, technical, industrial or commercial know-how or information;


(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or any such know-how or information as is mentioned in subparagraph (c);


(e) the use of, or the right to use:


(i) motion picture films;

(ii) films or video tapes for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or


(f) giving up, wholly or partly, a right relating to the use or supply of any property or right referred to in this paragraph.

4.  
The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid or credited is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.  
Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State, a political subdivision or local authority of that State or a person who, by reason of the provisions of paragraph (1) of Article 4, is a resident of that State. Where, however, the person paying the royalties, whether the person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and the royalties are borne by that permanent establishment or fixed base, then the royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed based is situated.

6.  
Where, by reason of a special relationship between the payer and the beneficial owner of the royalties or between both of them and some other person, the amount of the royalties paid or credited, having regard to what they are paid or credited for, exceeds the amount which might have been expected to have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the amount of the royalties paid or credited shall remain taxable according to the law, relating to tax, of each Contracting State, but subject to the other provisions of this Agreement.

ARTICLE 13   Alienation of Property  

1.  
Income or gains derived by a resident of a Contracting State from the alienation of real property referred to in Article 6 and, as provided in that Article, situated in the other Contracting State may be taxed in that other State.

2.  
Income or gains from the alienation of property, other than real property referred to in Article 6, that forms part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or pertains to a fixed base available to a resident of the first-mentioned State in that other State for the purpose of performing independent personal services, including income or gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other State.

3.  
Income or gains from the alienation of ships or aircraft operated in international traffic, or of property other than real property referred to 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.

4.  
Income or gains derived by a resident of a Contracting Statefrom the alienation of shares or comparable interests in a company, the assets of which consist wholly or principally of real property in the other Contracting State of a kind referred to in Article 6, may be taxed in that other State.

5.  
Nothing in this Agreement affects the application of a law of a Contracting State relating to the taxation of 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 14   Independent Personal Services  

1.  
Income derived by an individual who is a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State except in one of the following circumstances, when the income may also be taxed in the other Contracting State:


(a) if the individual has a fixed base regularly available to him or her in the other Contracting State for the purpose of performing his or her activities; in such a case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or


(b) if the individual's stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days in any consecutive period of 12 months; in such a case, only so much of the income as is derived from his or her activities performed in that other State may be taxed in that other State.

2.  
The term "professional services" includes especially those performed in the exercise of independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15   Dependent Personal Services  

1.  
Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by an individual who is a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in that other State.

2.  
Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:


(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in any consecutive period of 12 months;


(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and


(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in that other State.

3.  
Notwithstanding the provisions of paragraphs (1) and (2), remuneration derived in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State in international traffic, shall be taxable only in the Contracting State of which the enterprise is a resident.

ARTICLE 16   Directors' Fees  
Directors' fees and similar payments derived by a person who is a resident of a Contracting State in the person's capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17   Artistes and Athletes  

1.  
Notwithstanding the provisions of Articles 14 and 15, income derived by residents of a Contracting State as entertainers (such as theatrical, motion picture, radio or television artistes and musicians and athletes) from their personal activities as such exercised in the other Contracting State may be taxed in that other State.

2.  
Where income in respect of the personal activities of an entertainer as such accrues not to that entertainer but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer are exercised.

3.  
Notwithstanding the provisions of paragraphs (1) and (2), income derived by entertainers who are residents of a Contracting State from their activities as such exercised in the other Contracting State under a plan of cultural exchange between the Governments of the Contracting States shall be exempt from tax in that other Contracting State.

ARTICLE 18   Pensions  
Subject to the provisions of paragraph (2) of Article 19, pensions paid to a resident of a Contracting State in consideration of past employment, and payments made to a resident of that State under the social security system of the other Contracting State, shall be taxable only in the first-mentioned State.

ARTICLE 19   Government Service  

1.  

(a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority of that State to an individual in respect of services rendered in the discharge of functions of a governmental nature shall be taxable only in that Contracting State.


(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that other State who:


(i) is a citizen or national of that other State; or

(ii) did not become a resident of that other State solely for the purpose of rendering the services.

2.  

(a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or local authority of that State to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.


(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a citizen or national of, that other State.

3.  
The provisions of paragraphs (1) and (2) shall not apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by a Contracting State or a political subdivision or local authority of that State. In such a case, the provisions of Articles 15, 16, 17 or 18, as the case may be, shall apply.

ARTICLE 20   Professors and Teachers  

1.  
Where a professor or teacher who is a resident of a Contracting State visits the other Contracting State for a period not exceeding two years for the purpose of teaching or carrying out advanced study or research at a university, college, school or other educational institution in that other State, any remuneration the person receives for such teaching, advanced study or research shall be exempt from tax in that other State to the extent to which that remuneration is, or upon the application of this Article will be, subject to tax in the first-mentioned State.

2.  
This Article shall not apply to remuneration which a professor or teacher receives for conducting research if the research is undertaken primarily for the private benefit of a specific person or persons.

ARTICLE 21   Students and Trainees  

1.  
Where a student or trainee, who is a resident of a Contracting State or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State solely for the purpose of his or her education or training, receives payments from sources outside that other State for the purpose of his or her maintenance, education or training, those payments shall be exempt from tax in that other State.

2.  
In respect of grants, scholarships and remuneration not covered by paragraph (1), a student or trainee described in paragraph (1) shall, in addition, be entitled during his or her education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the State which he or she is visiting.

ARTICLE 22   Other Income  

1.  
Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2.  
The provisions of paragraph (1) shall not apply to income other than income from real property as defined in paragraph (2) of Article 6, if the beneficial owner of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

3.  
Notwithstanding the provisions of paragraphs (1) and (2), items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Agreement and arising in the other Contracting State may be taxed in that other State.

ARTICLE 23   Methods of Elimination of Double Taxation  

1.  
In China, double taxation shall be eliminated as follows:


(a) Where a resident of China derives income from Australia, the amount of tax on that income payable in Australia in accordance with the provisions of this Agreement may be credited against the Chinese tax imposed on that resident. The amount of credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.


(b) Where the income derived from Australia is a dividend paid by a company which is a resident of Australia to a company which is a resident of China and which owns not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to Australia by the company paying the dividend in respect of its income.

2.  
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), Chinese tax paid under the law of China 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 China shall be allowed as a credit against Australian tax payable in respect of that income.

3.  
Where a company which is a resident of China 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 paragraph (2) shall include the Chinese tax paid by that first-mentioned company in respect of that portion of its profits out of which the dividend is paid.

4.  
For the purpose of paragraphs (2) and (3), Chinese tax paid shall include an amount equivalent to the amount of any Chinese tax forgone.

5.  
In paragraph (4), the term "Chinese tax forgone" means, subject to paragraph (6), an amount which, under the law of China relating to Chinese tax and in accordance with this Agreement, would have been payable as Chinese tax on income but for an exemption from, or reduction of, Chinese tax on that income in accordance with:


(a) Articles 5 and 6 of the Income Tax Law of the People's Republic of China concerning Joint Ventures with Chinese and Foreign Investment and Article 3 of the Detailed Rules and Regulations for the Implementation of the Income Tax Law of the People's Republic of China concerning Joint Ventures with Chinese and Foreign Investment;


(b) Articles 4 and 5 of the Income Tax Law of the People's Republic of China concerning Foreign Enterprises;


(c) Articles I, II, III, IV and X of Part I, Articles I, II, III and IV of Part II and Articles I, II and III of Part III of the interim provisions of the State Council of the People's Republic of China on reduction in or exemption from enterprise income tax and the consolidated industrial and commercial tax for special economic zones and fourteen coastal cities;


(d) Articles 12 and 19 of the State Council Regulations for the Encouragement of Investment in the Development of Hainan Island;


(e) Articles 8, 9 and 10 of the State Council Regulations concerning the Encouragement of Foreign Investment; and


(f) Articles 1, 2 and 3 of the interim provisions of the Ministry of Finance of the People's Republic of China regarding (reduction in or exemption from) enterprise income tax and industrial and commercial consolidated tax for encouraging foreign investment in the coastal open economic areas;

insofar as they were in force on, and have not been modified since, the date of signature of this Agreement, or have been modified only in minor respects so as not to affect their general character and any other provision which may subsequently be made granting an exemption from or reduction of tax which the Treasurer of Australia and the Commissioner of the State Taxation Administration of China agree from time to time in letters exchanged for this purpose to be of a substantially similar character, if that provision has not been modified thereafter or has been modified only in minor respects so as not to affect its general character.

6.  
In the application of paragraph (5) in relation to dividend, interest and royalty income to which Articles 10, 11 and 12 respectively apply, the amount of Chinese tax shall be deemed to be the amount equal to:


(a) in the case of dividends, 15 per cent of the gross amount of those dividends;


(b) in the case of interest, 10 per cent of the gross amount of that interest; and


(c) in the case of royalties, 15 per cent of the gross amount of those royalties, but only where the rate of tax levied under the law of China, other than a provision specified in paragraph (5), is not less than 15 per cent.

7.  
Paragraphs (4), (5) and (6) shall apply only in relation to income derived in any of the first ten years of income in relation to which this Agreement has effect by virtue of subparagraph (a)(ii) of Article 27 and in any later year of income that may be agreed by the Treasurer of Australia and the Commissioner of the State Taxation Administration of China in letters exchanged for this purpose.

8.  
For the purposes of this Article, profits, income or gains derived by a resident of a Contracting State which are taxed in the other Contracting State in accordance with this Agreement shall be deemed to be income arising from sources in that other State.

ARTICLE 24   Mutual Agreement Procedure  

1.  
Where a person considers that the actions of the competent authority of one or both of the Contracting States result or will r