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Thursday, 25 February 2010
Page: 1200


Senator JOYCE (Leader of the Nationals in the Senate) (1:00 PM) —I rise once again to speak on the International Tax Agreements Amendment Bill (No. 1) 2009. This bill was introduced on 18 March 2009 and amends the International Tax Agreements Act 1953 to incorporate into Australian law the two separate tax agreements signed with the British Virgin Islands and the Isle of Man. The agreement with the British Virgin Islands was signed in London on 27 October 2008 and the agreement with the Isle of Man was signed in London on 29 January 2009. The provisions in these agreements are consistent with other bilateral tax treaties that Australia has signed with other countries.

I would like to say at the outset that the coalition will be supporting the passage of this bill through the Senate. The agreement with the British Virgin Islands provides for a complete exchange of tax information between the two countries in both criminal and civil tax matters. This will remove the ability for Australian taxpayers to use the British Virgin Islands as a tax haven. This expands the existing relationship, where both countries only share tax information for criminal matters. In addition to the exchange of tax information provisions, this agreement also ensures that certain income is not subject to double taxation.

Specifically, this applies to ensure that those employed by governments are not subject to double taxation. Under this agreement any income received from government service is taxable only by the country to which the services were provided. Currently, such income would be taxed in Australia and by the British Virgin Islands. This provision does not apply to those earning income from private business or commerce.

This agreement also ensures that education related payments received by students are exempt from taxable income. It also ensures that students from Australia or the British Virgin Islands do not have to pay income tax on any payments made from their resident country for the purpose of education and maintenance.

The agreement with the Isle of Man provides for a complete exchange of tax information between the two countries in both criminal and civil tax matters. This will remove the ability for Australian taxpayers to use the Isle of Man as a tax haven. Currently both countries only share tax information for criminal matters. This agreement also commits the revenue agencies in each country to assist taxpayers in resolving any disputes relating to transfer pricing.

In addition to the exchange of tax information provisions, this agreement also ensures that certain income is not subject to double taxation. It ensures that income received from pensions and retirement annuities will only be taxed in the individual’s country of residence. Currently, income received from a pension or retirement annuity may be taxed in the country of residence and in the country where the income is sourced.

As in the agreement with the British Virgin Islands, this agreement also ensures that those employed by governments are not subject to double taxation. Currently, such income would be taxed in Australia and by the Isle of Man. Again, as in the agreement with the British Virgin Islands, this provision does not apply to those earning income from private business or commerce. This agreement also contains the same exemption provisions relating to education purpose payments as the agreement with the British Virgin Islands. I commend the bill to the Senate.