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Edited version of your written advice
Authorisation Number: 1051204260045
Date of advice: 17 March 2017
Ruling
Subject: Withholding tax and the application of Australia's double tax agreements
Question 1
Are all payments received by ForeignCo from AusCo under the Facility Agreement characterized as interest or in the nature of interest for Australian income tax purposes?
Answer
No, only the payments made in accordance with Clause 9 of the Facility Agreement are 'interest' within the meaning of subsection 128A(1AB) of the ITAA 1936.
Question 2
Does ForeignCo have a permanent establishment in Australia as defined in Article 5 of the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of X for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income [1969] ATS 14, as amended by the Protocol amending the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of X for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income [1990] ATS 3 (together, the X DTA)?
Answer
No.
Question 3
Is the payment received by ForeignCo from AusCo under Clause 8 of the Facility Agreement for the Shared Proceeds Amount subject to withholding tax pursuant to Division 11A of the ITAA 1936?
Answer
No.
Question 4
Is the payment received by ForeignCo from AusCo under Clause 8 of the Facility Agreement for the Shared Proceeds open to Australian tax under Articles 9 or 16A of the X DTA?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 201X
Year ending 30 June 201X
Year ending 30 June 201X
The scheme commences on:
May 201X
Relevant legislative provisions
Income Tax Assessment Act 1936 (ITAA 1936) subsection 6(1)
ITAA 1936 Division 11A of Part III
ITAA 1936 subsection 128A(1AB)
ITAA 1936 subsection 128A(1AC)
ITAA 1936 subsection 128A(1AD)
ITAA 1936 section 128B
ITAA 1936 subsection 128B(2)
ITAA 1936 subparagraph 128B(3)(a)(ii)
ITAA 1936 subparagraph 128B(3)(h)(ii)
ITAA 1936 subsection 128B(5)
Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of X for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income [1969] ATS 14
Protocol amending the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of X for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income [1990] ATS 3