In the course of negotiations, the two delegations noted: It is understood that the term technical, industrial, commercial or scientific experience includes knowledge or information of such kind., 2.230 The definition also includes payments for the use of intellectual property stored on various media and used in connection with television, radio or other broadcasting (for example, satellite, cable and Internet broadcasting). 4.22 A person is not a resident of a country, for the purposes of the Jersey Agreement, if that person is liable to tax in that country in respect only of income from sources in that country. Kylie later sells the house for $400,000 while a resident of NewZealand. [Article 25, paragraph 5]. 2.299 The exemption from tax provided by the visited country extends to maintenance payments received by the student or apprentice that are made for maintenance of dependent family members who have accompanied the student or apprentice to the visited country. Where units in one MIT are held by another MIT (investor MIT), the investor MIT will be regarded as an Australian resident that is the owner of the beneficial interests in the first MIT where the investor MIT satisfies the requirements of paragraph 7 to be treated as an individual resident in Australia with respect to all the income it receives. For example, where the matter subject to interpretation is an income tax matter, but definitions exist in either the ITAA 1936 or the Income Tax Assessment Act 1997 (ITAA 1997) and the A New Tax System (Goods and Services Tax) Act 1999, the income tax definition would be the relevant definition to be applied. 2.315 Accordingly, effect is to be given to the tax credit relief obligation imposed on Australia by paragraph 1 of this Article by application of the general foreign income tax offset provisions (Division770 of the ITAA 1997). Australia is NewZealands principal trading partner, providing 20.8 per cent of its merchandise imports and taking 22 per cent of its merchandise exports. Therefore a number of ATO information products will need to be updated. 2.202 This Article provides for interest income to be taxed by both countries but requires the country in which the interest arises to generally limit its tax to 10 per cent of the gross amount of the interest where a resident of the other country is the beneficial owner of the interest. If the trustee is a resident of Australia, it is entitled to treaty benefits in relation to the income in respect of which the trustee is liable to tax under section 99A of the ITAA 1936 as a resident of Australia. 2.304 This Article provides rules for the allocation between the two countries of taxing rights with respect to items of income not dealt with in the preceding Articles of the Convention. In the case of payments arising in Australia a retirement benefit scheme includes a superannuation fund and a retirement savings account and in the case of New Zealand includes any superannuation scheme. limitations to ensure that the competent authorities do not exceed domestic laws and normal administrative procedures in the course of obtaining and supplying information. Includes specific rules for determining treaty residence of dual listed companies. The definition more specific to the type of tax should be applied in such cases. 2.112 For these purposes, an enterprise performs services mainly through the activities of the entrepreneur or persons who are in a paid employment relationship with the enterprise (personnel). 5.102 The Jersey Agreement has also been considered by the Commonwealth Joint Standing Committee on Treaties, which provides for public consultation in its hearings. This pension provision, unlike the provision in the existing treaty, removes impediments to working and accumulating superannuation benefits in both countries. The similar treatment in the Convention aligns treatment, where possible, with Australias recent tax treaties, maintains the integrity of Australias treaty network and discourages treaty shopping (and the consequent degradation of the tax base of countries where the costs of capital and intellectual property are higher under their treaties as a result of the higher withholding tax rates). 2.122 This provision is an anti-avoidance measure aimed at counteracting contract splitting for the purposes of avoiding the application of the permanent establishment rules. For other Australian taxes, on income, profits or gains: of any year of income beginning on or after 1July next following the date on which the Convention enters into force. These are, in the case of Australia, the Australian income tax, the petroleum resource rent tax and the fringe benefits tax. 2.108 However, under the Convention, profits from agriculture, forestry or fishing are dealt with under Article 6 (Income from Real Property). 2.169 The broad scheme of the Australias domestic law provisions relating to international profit shifting arrangements under which profits are shifted out of Australia, whether by transfer pricing or other means, is to impose arms length standards in relation to international dealings. [Article 2, subparagraph 1(b)], 4.9 The application of the Jersey Agreement will be automatically extended to any identical or substantially similar taxes which are subsequently imposed by either country in addition to, or in place of, the existing taxes. The definition more specific to the type of tax should be applied in such cases. Similarly, New Zealand is not required to provide assistance in collection in respect of an Australian revenue claim that is not enforceable in Australia. Webthe AustralianNew Zealand Double Tax Agreement (AusNZ DTA) deals with this subject. In the course of negotiations, the two delegations noted: With respect to taxation of income from insurance, it is understood that the term insurance includes reinsurance., 2.156 The principles of this Article will apply to profits which are derived by a resident of one of the countries (directly or through one or more interposed trusts) as a beneficiary of a trust, except where the trust is treated as a company for tax purposes. 2.401 Paragraph 3 of this Article regulates the way in which the revenue claim of the requesting country is to be collected by the requestedcountry. [Article8, paragraph 4], 2.163 The definition of international traffic refers only to transport and accordingly limits the scope of paragraph 1 of Article 8 to transport activities. In this case, an entity which is treated for tax purposes in New Zealand as a resident company, derives royalty income from Australia. 2.254 This provision ensures that capital gains on a foreign residents indirect, as well as direct, interests in certain targeted assets are taxable by Australia. Paragraph 1 does not, however, extend to residents of either country who are not nationals (as defined in subparagraph i) of paragraph 1 of Article3 (General Definitions)) of either country. In this case, NewZealand would not be required to extend source tax reductions on the interest income under Article 11 (Interest) of the Convention. On 27 May 2019, the Australian Taxation Office (ATO) and the New Zealand (NZ) Inland Revenue (IR) released their joint administrative approach to interpreting the dual resident provisions in the Multilateral Instrument. Residence status is a criterion for determining each countrys taxing rights and is a necessary condition for the provision of relief under the Jersey Agreement. The information allowed to be exchanged does not have to concern a resident of either Australia or NewZealand. In the course of negotiations, the delegations noted: It is understood that paragraph g) of paragraph 5 of Article 24 (NonDiscrimination) applies to existing and future provisions of the laws of a Contracting State.. This means that an enterprise that merely leases substantial equipment to another person for that other persons own use in a country, would not be deemed to have a permanent establishment in that country under these provisions. The Commissioner would apply the arms length principle when reviewing business transactions in the context of Division 13 of Part III of the ITAA 1936. This is designed to address arrangements along the lines of those contained in Aktiebolaget Volvo v Federal Commissioner of Taxation (1978) 8 ATR 747; 78 ATC 4316, where instead of amounts being payable for the exclusive right to use the property they were made for the undertaking that the right to use the property will not be granted to anyone else. The new double tax agreement between New Zealand and Australia has come into force, bringing in lower withholding tax rates on certain dividend, interest and As the Australian beneficiaries are only entitled to half of the income, only the half of that royalty income attributable to the Australian resident beneficiaries would be eligible for the benefits of the Convention. [Article 5, subparagraph 4b)], 2.116 If an enterprise operates substantial equipment in a country for one or more periods which exceed, in the aggregate, 183 days in any 12month period, the activity will be deemed to be performed through a permanent establishment (unless the activities are of a type described in paragraph 7 of this Article and are of a preparatory or auxiliary nature). This is the only trip to NewZealand that Bruce makes. This will mean that New Zealand is precluded from taxing Kylie on the gain that accrued on the house during the period of Kylies residence in Australia. 2.263 The conditions for this exemption are that: the period of the visit or visits does not exceed, in the aggregate, 183 days in any 12-month period commencing or ending in the year of income of the visited country; the remuneration is paid by, or on behalf of, an employer who is not a resident of the visited country, or is borne by or deductible in determining the profits attributable to a permanent establishment which the employer has in the home country; and. However, as their provisions are consistent with the Governments general tax treaty policy, and are based on broad and generally accepted taxation principles, the impact of such a loss of flexibility would be minimal. 5.36 Withholding tax reductions below the rates reflected in the existing New Zealand tax treaty were first included in the 2001 Protocol amending the Convention with the United States of America (US). 5.43 As is the case in Australias other recent tax treaties, the Convention includes an exemption for interest derived by the Governments of either country (including their political subdivisions, local authorities and government investment funds), and the countries central banks. It allows New Zealand to tax the Australian residents income in the reverse situation. [Article 14, paragraph 2], 2.265 This Article differs from those in Australias recent treaties by extending the short-term visit exemption to cases where the remuneration is borne or deductible in determining the profits attributable to a permanent establishment which the employer has in that country. The delegations also agreed that this would include dividends and interest paid to, in the case of NewZealand, the NewZealand Superannuation Fund, the Government Superannuation Fund, and in the case of Australia, the Future Fund, the Building Australia Fund, the Education Fund and the Health and Hospital Fund, as well as any similar fund the purpose of which is to pre-fund future government liabilities., 2.185 This Article allows both Australia and NewZealand to tax other dividends flowing between them but limits the rate of tax that the country of source may impose on dividends paid by companies that are resident of that country under its domestic law to companies resident in the other country who are the beneficial owners of the dividends.