GENERAL EFFECTIVE DATE UNDER ARTICLE 28: 1 ... - IRS tax …

1 DOUBLE TAXATION TAXES ON INCOMECONVENTION BETWEEN THE UNITED STATES OF AMERICA AND AUSTRALIAC onvention signed at Sydney August 6, 1982;Transmitted by the President of the United States of America to the Senate September 14, 1982( treaty Doc. , 97th Cong., 2d Sess.);Reported favorably by the Senate Committee on Foreign Relations July 11, 1983 (S. Ex. , 98th Cong., 1st Sess.);Advice and consent to ratification by the Senate July 27, 1983;Ratified by the President August 23, 1983;Ratified by Australia October 19, 1983;Ratifications exchanged at Washington October 31, 1983;Proclaimed by the President December 5, 1983;Entered into force October 31, EFFECTIVE DATE UNDER ARTICLE 28: 1 DECEMBER 1983 TABLE OF ARTICLESA rticle 1---------------------------------Person al ScopeArticle 2 --------------------------------Taxes CoveredArticle 3 -------------------------------- GENERAL DefinitionsArticle 4 --------------------------------Residenc eArticle 5 --------------------------------Permanen t EstablishmentArticle 6 --------------------------------Income from Real PropertyArticle 7 --------------------------------Business ProfitsArticle 8 --------------------------------Shipping and Air TransportArticle 9 --------------------------------Associat ed EnterprisesArticle 10 -------------------------------Dividends ARTICLE 11 -------------------------------InterestA rticle 12 -------------------------------Royalties ARTICLE 13 -------------------------------Alienatio n of PropertyArticle 14 -------------------------------Independe nt Personal ServicesArticle 15

2 -------------------------------Dependent Personal ServicesArticle 16 -------------------------------Limitatio n on BenefitsArticle 17 -------------------------------Entertain ersArticle 18 -------------------------------Pensions, Annuities, Alimony and Child SupportArticle 19 ------------------- -----------Governmental RemunerationArticle 20 -------------------------------StudentsA rticle 21 -------------------------------Income Not Expressly MentionedArticle 22 -------------------------------Relief from Double TaxationArticle 23 -------------------------------Non-Discr iminationArticle 24 -------------------------------Mutual Agreement ProcedureArticle 25 -------------------------------Exchange of InformationArticle 26 -------------------------------Diplomati c and Consular PrivilegesArticle 27 -------------------------------Miscellan eousArticle 28 -------------------------------Entry into ForceArticle 29 -------------------------------Terminati onLetter of Submittal---------------------of 17 August, 1982 Letter of Transmittal-------------------of 14 September.

3 1982 The Saving Clause -------------------Paragraph 3 of ARTICLE 1 TAX convention WITH AUSTRALIAMESSAGEFROMTHE PRESIDENT OF THE UNITED STATESTRANSMITTINGTHE convention BETWEEN THE GOVERNMENT OF THEUNITED STATES OF AMERICA AND THE GOVERNMENT OFAUSTRALIA FOR THE AVOIDANCE OF DOUBLE TAXATION ANDTHE PREVENTION OF FISCAL EVASION WITH RESPECT TOTAXES ON INCOME, SIGNED AT SYDNEY ON AUGUST 6, 1982 LETTER OF SUBMITTALDEPARTMENT OF STATE,Washington, August 17, PRESIDENT,The White House. THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to the Senatefor advice and consent to ratification, the convention between the Government of the United States ofAmerica and the Government of Australia for the Avoidance of Double Taxation and the Prevention ofFiscal Evasion with Respect to Taxes on Income, signed at Sydney on August 6, 1982. The convention is based to a large extent on the United States draft model income tax conventionpublished by the Department of the Treasury in June 1981 and the OECD model published in January1977.

4 It takes into account changes in the income tax laws and tax treaty policies of the two countries. With respect to taxes on investment income, the convention provides that the tax at source may notexceed 15 percent on dividends and 10 percent on interest and royalties. At the request of the United States, the convention includes a provision permitting eitherContracting State to tax gains derived by a resident of the other State on the disposition of an interest inreal property located in the first State. In addition, the convention allows the taxation of business profits in certain cases beyond thosecovered in the United States model by providing a somewhat broader definition of the term "permanentestablishment." For example, a building site becomes a permanent establishment if it exists for more than9 months (rather than the 12 months stipulated in the United States model ) and supervisory activitiescarried on in connection with a building site for more than 9 out of 24 months constitute a permanentestablishment.

5 The use of a rig or ship for 6 out of 24 months in connection with the exploration orextraction of natural resources also constitutes a permanent establishment. The rules governing the taxation of remuneration for personal services are similar to those of otherUnited States tax treaties. The convention introduces a new ARTICLE on nondiscrimination not found in the existing ARTICLE , by its terms, will not apply to income tax laws reasonably designed to prevent the avoidanceor evasion of taxes, or to tax provisions which are in force on the date of signature of the convention (or subsequently enacted, but substantially similar in GENERAL purpose or intent to those already in force).Except for provisions in force on the date of signature, the nondiscrimination ARTICLE will apply even tothe above types of tax provisions, however, where such provisions (other than ones in internationalagreements) discriminate between citizens or residents of the other Contracting State and those of anythird State.

6 If either country considers that taxation measures adopted by the other country infringe uponthese principles, the competent authorities of the two countries will endeavor to resolve the issue. The convention will enter into force upon the exchange of instruments of ratification and itsprovisions will take effect as of the first day of the second month following that date. The 1953convention will cease to apply when the new convention takes effect. A technical memorandum explaining in detail the provisions of the convention is being prepared bythe Department of the Treasury and will be submitted to the Senate Committee on Foreign Relations. The Department of the Treasury, with the cooperation of the Department of State, was primarilyresponsible for the negotiation of the convention . It has the approval of both Departments. Respectfully submitted,GEORGE P. OF TRANSMITTALTHE WHITE HOUSE, September 14, the Senate o/ the United States: I transmit herewith, for Senate advice and consent to ratification, the convention between theGovernment of the United States of America and the Government of Australia for the Avoidance ofDouble Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed atSydney on August 6, 1982.

7 I also transmit the report of the Department of State on the convention . The convention , based on the OECD and draft United States model income tax conventions, takesinto account changes in the income tax laws and tax treaty policies of the two countries. It provideslimits on the tax at source with respect to taxes on investment income and provides rules for the taxationof capital gains, business profits, personal service income and other income. It also specifies the methodused to avoid double taxation and provides for administrative cooperation between the tax officials ofthe two countries to avoid double taxation and prevent fiscal evasion. I recommend that the Senate give early and favorable consideration to the convention and giveadvice and consent to its THE PRESIDENT OF THE UNITED STATES OF AMERICAA PROCLAMATION CONSIDERING THAT: The convention between the Government of the United States of America and the Government ofAustralia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect toTaxes on Income was signed at Sydney on August 6, 1982, the text of which is hereto annexed; The Senate of the United States of America by its resolution of July 27, 1983, two-thirds of theSenators present concurring therein, gave its advice and consent to ratification of the convention ; The convention was ratified by the President of the United States of America on August 23, 1983,in pursuance of the advice and consent of the Senate, and was ratified on the part of Australia.

8 The instruments of ratification of the convention were exchanged at Washington on October 31,1983, and accordingly the convention entered into force on October 31, 1983, its provisions to haveeffect as specified in ARTICLE 28; NOW, THEREFORE, I, Ronald Reagan, President of the United States of America, proclaim andmake public the convention to the end that it be observed and fulfilled with good faith on and afterOctober 31, 1983, by the United States of America and by the citizens of the United States of Americaand all other persons subject to the jurisdiction thereof. IN TESTIMONY WHEREOF, I have signed this proclamation and caused the Seal of the UnitedStates of America to be affixed. DONE at the city of Washington this fifth day of December in the year of our Lord one thousandnine hundred eighty-three and of the Independence of the United States of America the two hundredeighth.

9 By the President:RONALD REAGANGEORGE P. SHULTZS ecretary of StateCONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICAAND THE GOVERNMENT OF AUSTRALIA FOR THE AVOIDANCE OFDOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASIONWITH RESPECT TO TAXES ON INCOME The Government of the United States of America and the Government of Australia. Desiring to conclude a convention for the Avoidance of Double Taxation and the Prevention ofFiscal Evasion with Respect to Taxes on Income, Have agreed as follows: ARTICLE 1 Personal Scope (1) Except as otherwise provided in this convention , this convention shall apply to persons who areresidents of one or both of the Contracting States. (2) This convention shall not restrict in any manner any exclusion, exemption, deduction, rebate,credit or other allowance accorded from time to time:(a) by the laws of either Contracting State; or(b) by any other agreement between the Contracting States.

10 (3) Notwithstanding any provision of this convention , except paragraph (4) of this ARTICLE , aContracting State may tax its residents (as determined UNDER ARTICLE 4 (Residence)) and individualselecting UNDER its domestic law to be taxed as residents of that state, and by reason of citizenship maytax its citizens, as if this convention had not entered into force. For this purpose, the term "citizen" shall,with respect to United States source income according to United States law relating to United Statestax, include a former citizen whose loss of citizenship had as one of its principal purposes the avoidanceof tax, but only for a period of 10 years following such loss. (4) The provisions of paragraph (3) shall not affect:(a) the benefits conferred by a Contracting State UNDER paragraph (2) of ARTICLE 9(Associated Enterprises), paragraph (2) or (6) of ARTICLE 18 (Pensions, Annuities, Alimony andChild Support), ARTICLE 22 (Relief from Double Taxation), 23 (Non-Discrimination), 24 (MutualAgreement Procedure) or paragraph (1) of ARTICLE 27 (Miscellaneous); or(b) the benefits conferred by a Contracting State UNDER ARTICLE 19 (GovernmentalRemuneration), 20 (Students) or 26 (Diplomatic and Consular Privileges) upon individuals whoare neither citizens of, nor have immigrant status in, that State (in the case of benefits conferredby the United States), or who are not ordinarily resident in that State (in the case of benefitsconferred by Australia).