Australia Tax Treaties with other countries

Australia Tax Treaties with other countries

Australia has signed Double Taxation Agreements (DTA) with over 40 countries.

Australia’s tax treaties operate to include the following:

  1. Reduce or eliminate double taxation caused by overlapping tax jurisdictions.
  2. Allocating the taxing rights between the jurisdictions over different categories of income.
  3. Provide exchanges of information between the respective taxation authorities.
  4. Allows general foreign tax credit against its own tax if the income has been taxed in the jurisdiction of the source.

Australia Tax Treaties with Taiwan 

Australia Tax Treaties with China 

Email: mel4ww@evershinecpa.com

Australia CA Lily Yan, speak both English and Chinese
2/172-176 Rowe St Eastwood, NSW 2122, Australia

We set up below judgment criteria on Treaty application:

Scenario :
If you are not an Australian legal resident, and if your resident country has DTA with Australia, and if you are without PE (Permanent Establishment), please go to Section A.
If you are not an Australian legal resident, and if your resident country has DTA with Australia, and if you are with PE (Permanent Establishment) please go to Section B.
If you are not an Australian legal resident, and if your resident country has no DTA with Australia, please go to Section C.

Section A:
Scenario: If you are not an Australian legal resident, and if your resident country has DTA with Australia, and if you are without PE (Permanent Establishment), it will be redeemed as “non-Australia Domestic Sourced Income”.
That means Australia will levy zero-tax.
However, you still need to send zero-tax application to Australia Tax Bureau for being approved.

Below, we will let you understand through Q&A

DTA-Q-10:
澳洲的哪些外國法律居民公司可以依DTA申請沒有常設機構(PE)下零稅率?
In Australia, which foreign legal resident company can apply for zero tax rate without PE under DTA?

DTA-A-10:
Australia has signed DTAs with the following 45 countries:

Argentina Hungary Netherlands Sri Lanka
Austria India New Zealand Sweden
Belgium Indonesia Norway Switzerland
Canada Ireland Papua New Guinea Taiwan
Chile Israel Philippines Thailand
China Italy Poland Turkey
Czech Republic Japan Romania United Kingdom
Denmark Kiribati Russia United States of America
Fiji Korea Singapore Vietnam
Finland Malaysia Slovakia
France Malta South Africa
Germany Mexico Spain

DTA-Q-20:
為什麼在DTA下該國外資沒有常設機構 (PE)之外資所得,可以享受零稅率?
Why does the Country’s foreign capital without a permanent establishment (PE) in Australia, under the DTA enjoy zero tax rate?

DTA-A-20:
It follows Article 5 and Articles 7 in the DTA Treaty. The article defines if the foreign entity has PE in Australia. Article 7 regulates if no PE, non-Australia domestic sourced income will not be levied tax in Australia.

DTA-Q-30:
哪些情況被視為沒有PE,外資在該國設立子公司會被視為外資的在該國的子公司嗎? Under what circumstances are deemed to have no PE, and will the establishment of a foreign-funded subsidiary in Australia be regarded as a foreign-funded subsidiary in Australia?

DTA-A-30:
According to DTA Article 5 item 7, A Wholly Foreign Owned subsidiary in Australia will not be treated as PE because it is a separate legal entity.
That means if an Australian Subsidiary pay a service fee to a non-Australia Parent Company through a service contract signed between the subsidiary and non-Australia Parent company
as an investor, a non-Australia Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by Australia Tax Bureau.
Please see the Australia Transfer Pricing webpage

DTA-Q-40:
外資在澳洲設立分公司或辦事處,可否適用沒有PE下的零稅率?
If a foreign company establishes a branch or office in Australia, can the zero-tax rate without PE be applied?

DTA-A-40:
According to DTA Article 5 item 2, If a foreign company sets up a branch or office in Australia, then will be considered as Australia’s domestic Income.
But According to DTA Article 5 item 4, if an Office is only doing a preparatory or auxiliary activity, will apply zero-tax rate.

DTA-Q-50:
澳洲依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for Australia to apply for zero tax rate under DTA without PE?

DTA-A-50:
In Australia, specific exemption provisions apply.
All requests for an exemption must be submitted in writing stating the reasons why you should be granted an exemption.
Send the requests for exemption to:
Foreign resident withholding – exemptions
Australian Taxation Office
GPO Box 9977
Sydney NSW 2001
AUSTRALIA

Below includes the documents required:

*A No PE declaration letter
*Certificate of residence (COR) issued by the competent authority of the beneficial owner’s country of residence.
Refer to the below link for more information:
https://www.ato.gov.au/Forms/PAYG-foreign-resident-withholding-variation/?page=2#Exemption_from_foreign_resident_withholding

Section B:

Scenario:
If you are not an Australian legal resident, and if your resident country has DTA with Australia, and if you are with PE (Permanent Establishment), your income will be considered as Australia domestic sourced income.
As for levying Tax Rate, please be aware:
if Australia Tax rate > DTA Rate, adopt DTA Rate; if Australia Tax rate < DTA Rate, adopt Australia Rate.

Below, we will let you understand through Q&A

DTA-Q-60:
被視為澳洲來源所得的判定要素?
What are the factors that are deemed to be the country’s domestic source income?

DTA-A-60:
Australian-sourced income is not defined in the Income Tax Assessment Act. However, the courts have determined source rules for specific types of income as follows:

*Income from personal services where the services are rendered, the contract is negotiated, and payment is made.

*Business income where trading activities take place, the contract is negotiated, and payment is made.

*Rental income or sale of real property where the property is located.

*Interest income where the loan contract is negotiated and made, where the loan funds are advanced, where repayments are made, where the debts is secured.

*Dividend income where the company paying is located. For an investment company, the source is located at the place where the company is centrally managed and controlled and where the decisions were made.

*Royalty income where the know-how is located. Income derived by a non-resident consisting of a royalty paid to the non-resident by a resident is deemed as having a source in Australia.

DTA-Q-70:
DTA第五條及第七條優先於澳洲來源所得的判定要素?
Do Article 5 and Article 7 in the DTA take precedence over the Australia determination factors on Australia domestic sourced income?

DTA-A-70:
When DTA is applied, in the event of a different PE definition between Australia’s domestic tax laws and Article 5 in the DTA, the definition under the DTA shall prevail over the domestic regulations.
When DTA is applied, if a foreign company is defined as without PE (Permanent Establishment) in Australia, then will be considered non-Australia domestic sourced income, in the event business profit is relevant to this issue, the clause in Article 7 in the DTA zero-rate tax can be applied accordingly.

In this scenario, please see section A.

DTA-Q-80:
當非澳洲稅務居民有澳洲來源所得,不考慮DTA 情況下,澳洲稅法扣繳稅率多少?
When non-tax residents of Australia have Australian domestic sourced income, what is the withholding tax rate according to Australia tax regulations excluding DTA?

DTA-A-80:
Generally, the withholding tax rates under domestic law are:
Business Profits – 30%
Dividend – 0%/30%
Interest (General loan) – 10%
Royalties fee – 30%
Technical services – 30%
Professional services – 30%

DTA-Q-90:
If DTA Tax Rate is higher than the Australian tax rate, apply which tax rate?

DTA-A-90
As for levying Tax Rate, please be aware:
if Australia Tax rate > DTA Rate, adopt DTA Rate; if Australia Tax rate < DTA Rate, adopt Australia Rate.

DTA-Q-A0:
當非澳洲稅務居民有澳洲來源所得,依DTA優惠稅率申請的程序為何?
When non-tax residents of Australia have Australia’s domestic sourced income, what is Australia’s application procedure based on the DTA preferential tax rate?

DTA-A-A0:
Below includes the documents required:
*Certificate of residence (COR) issued by the competent authority of the beneficial owner’s country of residence.
Refer to the below link for more information:
https://www.ato.gov.au/Forms/PAYG-foreign-resident-withholding-variation/?page=2#Exemption_from_foreign_resident_withholding

Section C:

DTA-Q-B0:
As an investor, if your country has not signed DTA with Australia, what kinds tax rates when you have Australia relevant income?

DTA-A-B0:

If you are not an Australian legal resident, and if your resident country has not DTA with Australia,
Whatever you are with PE or without PE, all kinds of income will be levied according to Australia’s domestic sourced income.
Besides, it will be levied by Australia Tax Rates.
Generally, the withholding tax rates under domestic law are:
Business Profits – 30%
Dividend – 0%/30%
Interest (General loan) – 10%
Royalties fee – 30%
Technical services – 30%
Professional services – 30%
 

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Melbourne Evershine BPO Service Limited Corp.
E-mail: mel4ww@evershinecpa.com
Australia CA Lily Yan, speak both English and Chinese
2/172-176 Rowe St Eastwood, NSW 2122, Australia

or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System, please send an email to HQ4mel@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
Linkedin address: Dale Chen

Additional Information

Evershine CPAs Firm Headquarter
6th Floor 378 Chang Chun Rd., Taipei City, Taiwan ROC
Partner Kerry Chen,  USA Graduate School and a well-English speaker
Tel No.: +886-2-27170515 ext. 105
Mobile: +886-939357000
Email: kerrychen@evershinecpa.com
Skype: oklahomekerry

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(version: 2022/03)

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