Edited version of private ruling

Authorisation Number: 1011718433485

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Ruling

Subject: Assessability of interest and dividends

Question 1

Pursuant to Schedule 4 to the International Tax Agreements Act 1953 (New Zealand Convention) is the Fund subject to Australian tax in respect of its share of interest paid by an Australian company (A Co), and derived by the Fund via the New Zealand Limited Partnership (NZLP)?

Answer

No.

Question 2

Pursuant to the New Zealand Convention, is the Fund subject to Australian tax in respect of its share of interest paid by an Australian company, derived via an Australian unit trust (Trust) and finally derived by the Fund via the NZLP?

Answer

No.

Question 3

Pursuant to the New Zealand Convention is the Fund subject to Australian tax at the rate of 5% in respect of its share of unfranked dividends paid by an Australian company (B Co), and derived by the Fund via the NZLP?

Answer

No.

This ruling applies for the following period:

1 July 2010 - 30 June 2013

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The Fund was established under the New Zealand legislation (NZ Act) and accumulates and invests contributions .

The Fund is managed and administered by a separate entity (Separate Entity).

Pursuant to the NZ Act, the Fund is a body corporate for New Zealand tax purposes.

The Fund is prohibited from controlling any entity, including any wholly owned special purpose subsidiaries. Separate Entity, however, is permitted to own subsidiary entities.

One of these entities is Subsidiary Co. The principal activity of Subsidiary Co (and all other subsidiaries) is to act as a nominee company holding assets and liabilities on behalf of the Fund. These assets and liabilities are recognised in the financial statements of the Fund and accordingly, are not presented in the financial statements of the Separate Entity.

Subsidiary Co (as a Limited Partner and as a nominee of Separate Entity) is a partner of a New Zealand Limited Partnership (NZLP) formed under the New Zealand Limited Partnership Act 2008 (Partnership Act). NZLP is a separate legal person pursuant to section 11 of Partnership Act.

Both the Fund and Subsidiary Co are residents of New Zealand for the purposes of New Zealand's tax law and the New Zealand Convention and non-residents, as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936), for the purposes of Australian income tax law.

The NZLP is a transparent entity for New Zealand tax purposes. That is, the income paid to the NZLP is attributed to its partners in proportion to their interest in the partnership.

For the purposes of New Zealand's tax law, income paid to NZLP is attributed to its limited partners (including Subsidiary Co) in proportion to their interest in the partnership.

The Fund is subject to income tax on any income derived from the Fund's investments and that income is to be treated as income of the Fund under the Income Tax Act (NZ) 2007. Therefore in the case of income attributed to Subsidiary Co (as a limited partner and nominee), tax is payable by the Fund.

The Fund is a government investment fund for the purposes of Article 11(3)(a) of the New Zealand Convention.

The NZLP either already has or will:

· lend funds to A Co at interest;

· acquire 49% of the Trust which will derive Australian sourced interest income from an Australian company, the appropriate share of which will be distributed to NZLP. The beneficiaries/unit holders in the Trust will be presently entitled to their share of income from the Trust in respect of each year; and

· acquire 49% of B Co, which may pay unfranked dividends.

As such, NZLP is or will be registered as the owner of 49 per cent of the shares in B Co, a company that is a resident of Australia for the purposes of Australia's tax law and the New Zealand Convention.

Voting power in B Co is attached to the shares in B Co and accordingly, NZLP's shares in B Co carry the right to exercise 49 per cent of the voting power in B Co.

All interest income is paid by a person resident for tax purposes in Australia and otherwise meets the requirements of Article 11(7) of the New Zealand Convention such that the interest shall be deemed to arise in Australia.

Assumptions

1. The Trust is treated as a flow through for Australian tax purposes and in particular, is not treated as a company under Division 6C of the ITAA 1936.

2. NZLP will be treated as a corporate limited partnership for Australian tax purposes under Division 5A of the ITAA 1936 and effectively treated as though it is a company for Australian tax purposes.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 193, Division 5A

Income Tax Assessment Act 1936 Division 6C

Income Tax Assessment Act 1936 subsection 128B

Income Tax Assessment Act 1936 subsection 128B(2)

Income Tax Assessment Act 1936 subsection 128B(5)

Income Tax (Dividends, Interest and Royalties Withholding Tax) Act 1974 section 7

International Tax Agreements Act 1953 schedule 4 Article 1.2

International Tax Agreements Act 1953 schedule 4 Article 3. 3

International Tax Agreements Act 1953 schedule 4 Article 10

International Tax Agreements Act 1953 schedule 4 Article 10.2(a)

International Tax Agreements Act 1953, schedule 4 Article 11

International Tax Agreements Act 1953 schedule 4 Article 11.3(a)

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Question 1

Article 11(1) of the New Zealand Convention provides that interest income arising in a Contracting State (in this case, Australia) and beneficially owned by a resident of the other Contracting State may be taxed in the other State (i.e. in this case in New Zealand).

Article 11(2) of the New Zealand Convention further provides that any such interest income may also be taxed in Australia but 'the tax so charged shall not exceed 10 per cent of the gross amount of the interest'. However, interest income arising in Australia will not be taxed in Australia if Article 11(3)(a) of the New Zealand Convention is satisfied. Article 11(3)(a) of the New Zealand Convention states:

3. Notwithstanding paragraph 2, interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may not be taxed in the first-mentioned State if:

a) the interest is derived by a Contracting State or by a political sub-division or a local authority thereof (including a government investment fund), or by a bank performing central banking functions in a Contracting State; or….(emphasis added)

Accordingly, the Fund will not be required to pay tax in respect of interest arising in Australia and paid by A Co to the NZLP if the following requirements of Article 11(3)(a) of the New Zealand Convention are satisfied.

Interest arising in a Contracting State

Interest paid directly by A Co to the NZLP is considered to be interest arising in Australia (interest arising in a Contracting State) for the purposes of Article 11(3)(a) of the New Zealand Convention, as it meets the requirements of Article 11(7) of the New Zealand Convention.

Is the interest income arising in Australia and paid by A Co to the NZLP beneficially owned by the Fund?

Subject to certain exceptions, interest withholding tax is payable under subsection 128B(5) of the ITAA 1936 on interest derived by non-residents that falls within subsection 128B(2) of the ITAA 1936. Section 7 of the Income Tax (Dividends, Interest and Royalties Withholding Tax) Act 1974 (Withholding Tax Act) sets the rate of withholding tax on such interest at 10 per cent.

In the present case, liability to Australian withholding tax is subject to the provisions of the New Zealand Convention.

Article 11 of the New Zealand Convention relates to interest. Relevantly, Article 11(3)(a) of the New Zealand Convention provides that interest arising in Australia and 'beneficially owned' by a resident of New Zealand may not be taxed in Australia in certain circumstances.

Therefore, it is necessary to determine whether the Funds' share of the interest income paid to NZLP is 'beneficially owned' by the Fund for the purposes of Article 11(3)(a) of the New Zealand Convention.

Beneficial ownership

The term 'beneficially owned' is not defined in the New Zealand Convention. Article 3(3) of the New Zealand Convention relevantly provides that any term not defined in the New Zealand Convention shall take its meaning under the domestic laws of the country applying the treaty, unless the context otherwise requires. Relevant context for the purposes of interpreting an Australian tax treaty includes the OECD Commentaries (OECD Commentary) on the OECD Model Tax Convention on Income and on Capital (OECD Model Tax Convention). Paragraph 104 of Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements states that the OECD Commentary provides important guidance on interpretation and application of the OECD Model Tax Convention and will often need to be considered as a matter of practice, in interpreting tax treaties, at least where the wording is ambiguous.

Paragraph 9 of the 2010 OECD Commentary on Article 11 of the OECD Model Tax Convention states:

… The term 'beneficial owner' is not used in a narrow technical sense, rather, it should be understood in its context and in light of the object and purposes of the Convention, including avoiding double taxation and the prevention of fiscal evasion and avoidance.

In the wider tax treaty context, the report titled The Application of the OECD Model Tax Convention on Partnerships (OECD Partnership Report) provides further guidance on the meaning of 'beneficial ownership' in relation to fiscally transparent partnerships.

Paragraph 61 of the OECD Partnership Report states that where partners of a partnership are liable to tax in the country of residence on items of income, that income should be considered to be paid to the partners 'who should also be considered to be the beneficial owners of such income as these are the persons liable to tax on such income' in the country of residence. This approach 'is more likely to ensure that the benefits of the Convention accrue to the persons who are liable to tax on the income' and is consistent with the general object and purposes of the Convention of avoiding double taxation and preventing fiscal evasion and avoidance.

In the case of the New Zealand Convention, the conclusion that the partners of a fiscally transparent partnership should be regarded as the 'beneficial owners' of items of income on which they are liable to tax is further reinforced by the inclusion of Article 1(2) of the New Zealand Convention which provides:

In the case of an item of income (including profits or gains) derived by or through a person that is fiscally transparent with respect to that item of income under the laws of either State, such item shall be considered to be derived by a resident of a State to the extent that the item is treated for the purposes of the taxation law of such State as the income of a resident.

Paragraph 2.9 of the Explanatory Memorandum to the International Tax Agreements Amendment Bill (No.2) of 2009 (Cth) (EM) provides that:

…. The intention of paragraph 2 is to ensure that treaty benefits are available to residents who are participants in these entities where income derived through such entities is allocated to those members for tax purposes.

It would be inconsistent with this purpose to adopt an interpretation of 'beneficial ownership' that denies treaty benefits to the partners of a fiscally transparent partnership.

For the purposes of the tax law of New Zealand in the present circumstances, a share of the interest paid to NZLP is allocated to Subsidiary Co (as nominee for the Fund) in proportion to its interest in the partnership and the Fund is taxed on that income.

Accordingly, for the purposes of Article 11(3)(a) of the New Zealand Convention, the Fund is the beneficial owner of its share of the interest that is paid to NZLP on which it is liable to tax in New Zealand.

Is the Fund a resident of New Zealand (the other Contracting State)?

The Fund and Subsidiary Co are both residents of New Zealand for the purposes of New Zealand tax laws and the New Zealand Convention

Is the interest income paid by the Australian company, A Co, derived by the Fund?

It is necessary to determine whether the interest is 'derived' by the Fund for the purposes of Article 11(3)(a) of the New Zealand Convention.

The interest income that is paid to NZLP is allocated to the limited partners in proportion to their interest in the partnership, and is taxed in New Zealand as the income of the limited partners (rather than as the income of NZLP).

In this regard, Article 1(2) of the New Zealand Convention is relevant. It states:

In the case of an item of income (including profits or gains) derived by or through a person that is fiscally transparent with respect to that item of income under the laws of either State, such item shall be considered to be derived by a resident of a State to the extent that the item is treated for the purposes of the taxation law of such State as the income of a resident.

Therefore, in order to determine whether Article 1(2) of the New Zealand Convention applies, it is necessary to establish whether NZLP is 'fiscally transparent' under the laws of New Zealand with respect to the relevant interest income, given that the taxpayer is a New Zealand resident for the purposes of the New Zealand Convention. The EM provides that, for the purposes of applying Article 1(2) of the New Zealand Convention, it is irrelevant whether the source country (in this case Australia) also views NZLP as fiscally transparent.

The phrase 'fiscally transparent' is not defined for the purposes of the New Zealand Convention. However the phrase is used in the OECD Commentary to the OECD Model Tax Convention to include partnerships that are 'ignored for tax purposes and the individual partners are taxed on their respective share of the partnership's income' (see paragraph 3 of the 2010 OECD Commentary on Article 1).

The EM also provides guidance in relation to the phrase 'fiscally transparent' that is consistent with the OECD Commentary, and elaborates on what Article 1(2) of the New Zealand Convention is intended to achieve. It relevantly provides that:

2.8 Paragraph 2 addresses special issues arising in relation to income that is derived by or through entities, such as certain partnerships and trusts, that are fiscally transparent with respect to that income; that is, where the participants in the entity are liable to tax on the income, rather than the entity itself. The provision is intended to apply where one or more fiscally transparent entities is interposed between the income and the participant who is ultimately liable to tax on the income.

2.9 … The intention of paragraph 2 is to ensure that treaty benefits are available to residents who are participants in these entities where income derived through such entities is allocated to those members for tax purposes…

Therefore, it is clear from the paragraphs quoted above that, in respect of interest income, NZLP is a fiscally transparent entity under the laws of New Zealand. That is, the income 'flows through' to the limited partners in proportion to their partnership interest and they are liable to tax in New Zealand on that income.

Paragraph 2.16 of the EM confirms that, in this situation, where income is derived from sources in Australia through an entity organised and treated as fiscally transparent in New Zealand:

… treaty residents who participate in the [fiscally transparent entity] will be eligible for treaty benefits in respect of items of income (including profits or gains) derived from the source country through that entity, to the extent that the other country treats the income as 'flowed-through' to those participants. Resident participants in the entity will be treated as having derived the income directly and may be entitled to treaty benefits…

Accordingly, as the Fund, via Subsidiary Co, is a limited partner in NZLP and is ultimately liable to tax in New Zealand on its share of the relevant interest that is paid to NZLP, Article 1(2) of the New Zealand Convention applies to treat the Fund as having derived that income for the purposes of Article 11(3)(a) of the New Zealand Convention. This ensures that the benefit under Article 11(3)(a) of the New Zealand Convention is available to the Fund in relation to its share of the interest even though NZLP is interposed between the Fund and the source of the interest.

As the above requirements of Article 11(3)(a) of the New Zealand Convention are satisfied, the Fund will not be required to pay tax in Australia in respect of the interest income paid to NZLP by A Co, as the interest arises in a Contracting State (Australia), is beneficially owned by a resident of the other Contracting State (the Fund as a resident of New Zealand) and is derived by the Fund, which is an entity that satisfies Article 11(3)(a) of the New Zealand Convention...

Question 2

Article 11(1) of the New Zealand Convention provides that interest income arising in a contracting State (in this case, Australia) and beneficially owned by a resident of the other Contracting State (in this case, the Fund in New Zealand) may be taxed in the other State (i.e. in New Zealand).

Article 11(2) of the New Zealand Convention further provides that any such interest income may also be taxed in Australia but "the tax so charged shall not exceed 10 per cent of the gross amount of the interest". However, interest income arising in Australia will not be taxed in Australia if Article 11(3)(a) of the New Zealand Convention is satisfied. Article 11(3)(a) states:

3. Notwithstanding paragraph 2, interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may not be taxed in the first-mentioned State if:

a) the interest is derived by a Contracting State or by a political sub-division or a local authority thereof (including a government investment fund), or by a bank performing central banking functions in a Contracting State; or….

Accordingly, the Fund will not be required to pay tax in respect of interest arising in Australia and distributed by the Trust to the NZLP if the following requirements of Article 11(3)(a) of the New Zealand Convention are satisfied.

Interest arising in a Contracting State

The Trust is not treated as a company pursuant to Division 6C of the ITAA 1936. As a result, consistent with section 128A(3) of the ITAA 1936, the distribution from the Trust of the Australian sourced interest income will be taken to retain its character as interest. This interest is considered to be interest arising in Australia (interest arising in a Contracting State) for the purposes of Article 11(3)(a) of the New Zealand Convention, as it meets the requirements of Article 11(7) of the New Zealand Convention.

Is the interest income arising in Australia and paid by the Trust to NZLP, beneficially owned by the Fund?

For the reasons provided in question 1 above, the Fund is the beneficial owner of its share of the interest that is paid to NZLP on which it is liable to tax in New Zealand.

Is the Fund a resident of New Zealand (the other Contracting State)?

The Fund and Subsidiary Co are both residents of New Zealand for the purposes of New Zealand tax laws and the New Zealand Convention.

Is the interest income paid by the Trust derived by the Fund?

For the reasons provided in question 1 above, Article 1 of the New Zealand Convention applies to treat the Fund as having derived that income for the purposes of Article 11(3)(a) of the New Zealand Convention.

As the above requirements of Article 11(3)(a) of the New Zealand Convention are satisfied, the Fund will not be required to pay tax in Australia in respect of the interest income paid to NZLP by the Trust, as the interest arises in a Contracting State (Australia), is beneficially owned by a resident of the other Contracting State (the Fund as a resident of New Zealand) and is derived by the Fund, which is an entity that satisfies Article 11(3)(a) of the New Zealand Convention.

Question 3

Subject to certain exceptions, withholding tax is payable under section 128B of the ITAA 1936 on dividends paid by an Australian resident company and derived by a non-resident. Section 7 of the Withholding Tax Act sets the rate of withholding tax on such dividends at 30 per cent.

In the present case, liability to Australian withholding tax is subject to the provisions of the New Zealand Convention contained in Schedule 4 to the Agreements Act.

Article 10(2)(a) of the New Zealand Convention provides for present purposes that dividends paid by an Australian resident company, being dividends beneficially owned by a New Zealand resident, may be taxed in Australia according to the laws of Australia. However, the tax so charged shall not exceed 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'.

As the Fund beneficially owns a proportion of the dividends paid by B Co, an Australian resident company (refer to reasoning on beneficial ownership in question 1), it is necessary to determine whether it is a company and it 'holds directly at least 10 per cent of the voting power' in B Co.

Is the Fund a company?

Pursuant to the NZ Act the Fund is treated as if it were a body corporate for NZ tax purposes. ATO Interpretative Decision ATO ID 2010/81 provides that the question of whether a dividend recipient is treated as a body corporate for tax purposes must be made by reference to the tax laws of the Contracting State in which it is organised and not the state of source.

The term 'company' is defined in the New Zealand Convention as 'any body corporate or any entity which is treated as a company or a body corporate for tax purposes'. Therefore the Fund is considered to be a company for the purposes of the New Zealand Convention.

Holds directly

The phrase 'holds directly' is not defined in the New Zealand Convention. Article 3(3) of the New Zealand Convention relevantly provides that any term not defined in the New Zealand Convention shall take its meaning under the domestic laws concerning the taxes to which the Convention applies of the country applying the treaty, unless the context otherwise requires. For Australia, the domestic law meaning may be the statute-defined meaning or, where there is no relevant statutory definition, the common law meaning of the term (see Taxation Ruling TR 2001/13, paragraphs 63 to 71).

There are no relevant statutory definitions of the phrase 'holds directly'. It is therefore necessary to consider the meaning of the phrase under the common law. Consistent with the decision in Dalgety Downs Pastoral Co Pty Ltd v Federal Commissioner of Taxation (1952) 86 CLR 335; (1952) 10 ATD 55; (1952) 5 AITR 386 (Dalgety Downs), where the High Court considered the phrase 'beneficially held', the proper construction of the phrase 'holds directly' involves a consideration of the meaning of each of the component words in that phrase.

In the present case, the voting power in B Co is attached to the shares in B Co. Therefore, in order to determine whether the Fund 'holds' the requisite voting power it is necessary to determine whether the Fund holds the shares in B Co.

A number of judicial decisions support the view that the use of the word 'holds' in connection with shares refers to legal ownership according to the share register. In Dalgety Downs, the High Court considered the word 'holds' in the context of legislation requiring that shares in a company be 'beneficially held'. In the course of their judgment Webb, Fullagar and Kitto JJ stated (at CLR 341-342):

Indeed it is not too much to say that the verb "hold" and its variants, when used in relation to shares in companies, normally refers to the legal ownership of the shares according to the register of members. … Before a different meaning is accepted, some justification must be found in the context, or the subject-matter. No such justification is provided by the fact that "held" is modified by the adverb "beneficially". This word serves more naturally the purpose of excluding the case of a holding for the benefit of others than the purpose of so broadening the meaning of the word "held" beyond the particular significance which it normally has in relation to shares as to make it equivalent to "owned" in the most general sense of that word.

The Court in Dalgety Downs relied partly on the earlier decision in Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353; 23 ALJ 322, where Dixon J stated (at CLR 364) in relation to a provision requiring that certain shares of a company carrying voting power be 'beneficially held':

[The provision] is concerned with voting. Its purpose is both to exclude nominees from the enumeration of voting power and to take in those who are members of the company and vote independently of control. There is therefore every reason to treat the provision as using the terminology of company law with the meaning attached to it in company law.

More recently, the majority of the High Court in Federal Commissioner of Taxation v. Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592; [2005] HCA 20; 2005 ATC 4255; (2005) 59 ATR 177 held that '[w]hen used in relation to companies, 'hold' normally refers to legal ownership established by reference to the register of members' (at CLR 604).

Accordingly, for the purposes of Australian tax law, in order to hold shares in a company an entity must be the legal owner of those shares as established by reference to the register of members.

Article 10(2)(a) of the New Zealand Convention requires that the requisite percentage of voting power be held 'directly'. The term 'directly' is not subject to any relevant Australian judicial consideration and therefore the term takes its ordinary meaning.

Based on the Macquarie Dictionary (2009, 5^th edition), the ordinary meaning of 'directly' relevantly includes 'in a direct line, way, or manner …'. The word 'direct' in turn includes the meaning '… without intervening agency …'.

Therefore in the context of Article 10(2)(a) of the New Zealand Convention the adverb 'directly' confirms that the word 'holds' should not be given a broader meaning than it has under the Australian law in relation to shares. The word 'directly' excludes cases where the requisite voting power is held indirectly through an interposed entity. Accordingly, the composite phrase 'holds directly' in Article 10(2)(a) of the New Zealand Convention means legally owns without intervening agency.

For an entity to 'hold directly' the voting power that is attached to shares in a company paying dividends for the purposes of Article 10(2)(a) of the New Zealand Convention, it must be the legal owner of the shares with no intervening agency or interposed entity between the entity and the shares carrying the voting power. That is, Article 10(2)(a) of the New Zealand Convention does not permit voting power to be traced through an interposed entity.

Moreover, this conclusion is reinforced by paragraph 10 of the OECD Commentary to Article 10 (Dividends) of the OECD Model Tax Convention which states that, for the purposes of Article 10(2) of the New Zealand Convention, a company must 'own directly' the relevant holding in the other company. This is consistent with the Australian tax law meaning of 'hold' that requires legal ownership of shares as established by reference to the register of members.

In the present case, NZLP is a separate legal person that is registered as the owner of 49 per cent of the shares in B Co that carry the right to exercise 49 per cent of the voting power in B Co. Therefore, it is NZLP that 'holds directly' that voting power in B Co. The Fund does not legally own the shares carrying the voting power in B Co and, as a result, it does not 'hold directly' any voting power in B Co, regardless of its 77 per cent interest in NZLP as a limited partner via Subsidiary Co as nominee.

Accordingly, the Fund is not a company that 'holds directly at least 10 per cent of the voting power' in B Co for the purposes of Article 10(2)(a) of the New Zealand Convention and accordingly the Fund is not subject to tax at the rate of 5% in respect of its share of unfranked dividends paid by B Co and derived by the Fund via the NZLP.

Note: Application of Article 10(4) of the New Zealand Convention

Article 10(4) of the New Zealand Convention provides that, notwithstanding the provisions of Article 10(2) of the New Zealand Convention, dividends shall not be taxed in the Contracting State in which the company paying the dividends is a resident (in this case, Australia) if the beneficial owner holds directly no more than 10 per cent of the voting power and is a Contracting State, or political subdivision or local authority thereof (including a government investment fund).

The Fund cannot 'hold directly' the voting power in the Australian company paying the dividends as the voting power, in accordance with the analysis and conclusion immediately above, is attached to shares that are held directly by the NZLP. Therefore, the Fund satisfies the first requirement in Article 10(4) of the New Zealand Convention because it does not hold directly any of the voting power (which is therefore 'no more than 10 per cent').

The Fund also satisfies the second requirement of Article 10(4) of the New Zealand Convention requiring that the Fund be either a 'Contracting State, or political subdivision or local authority thereof (including a government investment fund)'.

Therefore although the dividends paid to the NZLP that are beneficially owned by the Fund will not satisfy the requirements of Article 10(2)(a) of the New Zealand Convention, the dividends will instead meet the requirements of Article 10(4) of the New Zealand Convention, and therefore cannot be taxed in Australia at all.