Josh Wilson (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Joint Standing Committee on Treaties, I present the committee's report entitled Report 207: Australia-Iceland Double Taxation and Underwater Cultural Heritage.

Ordered that the report be made a parliamentary paper.

by leave—I am glad to make a short statement on the Joint Standing Committee on Treaties's report into the convention between Australia and Iceland for the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance and its protocol, and the convention on the protection of underwater cultural heritage—so two separate agreements.

First, the tax convention treaty is a double-taxation agreement that would establish a framework for governing cross-border transactions between Australia and Iceland. This will be the 46th double-taxation agreement to which Australia is party.

Based as it is on the OECD's Model Tax Convention on Income and on Capital, the tax convention draws on best-practice principles to avoid double taxation—that is, the potential for entities or activities to be taxed in each jurisdiction, rather in the most appropriate jurisdiction—whilst also preventing base erosion and profit shifting and treaty shopping, all of which are bad things.

The tax convention identifies the persons and taxes to which the convention would apply and establishes where various types of income would be taxed, and it specifies how relief from double taxation will be provided. It contains special provisions dealing with the principle of non-discrimination, provides for arbitration in certain circumstances, facilitates the exchange of information, requires parties to assist each other in the collection of taxes under certain circumstances, and establishes the grounds on which the benefits of the tax convention might be refused.

During the course of the committee's inquiry, evidence was presented in relation to the constitutionality of the legislation, specifically with regard to the powers to be used in meeting the obligation under the convention to collect tax due to another country. The committee noted, however, the Treasury's substantially different views on this matter and, ultimately, such constitutional questions can only be resolved by the High Court, should that be required.

Though Australia's two-way trade with Iceland is of modest scope, the committee is of the view the tax convention will provide a foundation for such activities to expand. The committee notes, in particular, the provisions that would exempt Australian superannuation funds from the application of withholding taxes on investments they make in Iceland. On that basis, the committee supports the tax convention and recommended binding treaty action be taken.

The second convention is the underwater cultural heritage convention. It's the first comprehensive treaty on this important matter that clearly transcends national borders, including with respect to our significant military heritage. Australia was actively engaged in the drafting of this convention for more than 20 years, and it's no surprise that there's broad support from those with relevant expertise and experience in the field in relation to this convention.

The committee heard from a range of stakeholders during the inquiry, including from government, non-government organisations, academics and other specialists. All supported ratification, many with considerable enthusiasm.

The ratification of the convention is a positive development in the protection of traces of underwater human existence, including those that have national and international significance, such as Aboriginal and Torres Strait Islander underwater cultural heritage.

Ratification will also serve to ensure that Australia is able to continue its leadership on underwater cultural heritage issues in the Asia-Pacific and more widely.

Key elements of the convention include the protection and preservation of underwater cultural heritage that has been underwater continuously or periodically for at least 100 years, preferably in its original place.

The convention obviously encourages states parties to sign up to bilateral, regional, or multilateral agreements on underwater cultural heritage and adopt rules and regulations to ensure its protection.

The convention provides for other protections of underwater cultural heritage, including raising public awareness, education, research, training in underwater archaeology and the exchange of technology.

Some of the key issues that the inquiry considered were the value of the convention for the protection and preservation of Aboriginal and Torres Strait Islander underwater cultural heritage, and the importance of the convention in terms of supporting its ratification and related work by nations in the Pacific. It's not a convention that's been ratified by many of our Pacific island neighbours. There's no doubt that, with respect to First Nations heritage, Australia does have an opportunity, as in lots of other areas of life, to do more. It's an area that's been identified for some time as being rich in underrecognised and underprotected cultural value.

As always, I thank the secretariat for all their work; all those who made submissions and appeared before the committee; the deputy chair; and my fellow committee members. We support both of these conventions, but latterly the underwater cultural heritage convention.

On that basis, I commend this report to the House.

Phillip Thompson (Herbert, Liberal National Party, Shadow Assistant Minister for Defence) Share this | Link to this | Hansard source

by leave—Thank you for the opportunity to make a short statement on this report. It deals with two important issues which were set in motion by the former coalition government. The first is the Australia-Iceland double taxation agreement, which will help avoid double taxation while preventing base erosion, profit shifting and treaty shopping. This is a positive step as part of the then Treasurer's announcement in September 2021 that the government would expand the tax treaty network to cover around 80 per cent of foreign investment in Australia and about $6.3 trillion of Australia's two-way trade and investment. This will enable Australian businesses to take advantage of the opportunities that will emerge in the coming years. We know that tax treaties improve tax system integrity through the establishment of a bilateral framework of cooperation on the prevention of tax evasion, the collection of tax debts and rules to address tax avoidance. This provides businesses with greater tax certainty, which will encourage increased economic integration through foreign investment and trade.

The treaty with Iceland is one of those important steps, despite trade in goods and services between the two countries being fairly modest. But, as the national interest analysis stated, the tax convention would promote closer economic cooperation between Australia and Iceland by reducing tax barriers to investment and decreasing the cost of Australian businesses accessing Icelandic capital and technology. The committee welcomes the exemption allowing the treaty partner to exempt income earned by eligible Australian superannuation funds from taxation, only the third such agreement. Overall, we support the ratification of this treaty.

The second matter dealt with in this report is the Convention on the Protection of the Underwater Cultural Heritage, or UCH. UCH in Australia is derived from Aboriginal and Torres Strait Islander peoples, as well as our military and colonial history, including shipwrecks, sunken aircraft and so on. These sites are important to our national identity, our history and the education of future generations.

Australia has already been a world leader in this area, with the Underwater Cultural Heritage Act 2018, implemented by the previous government. Submitters noted that Australia is one of few countries in the world that actively manage artefacts in public possession that were removed from shipwreck sites prior to that protection.

It is important to note that the convention will respect human remains in maritime waters, particularly in cases like World War II shipwrecks in the South China Sea, where ships contain the remains of around 4,500 Australian, British, American, Dutch and Japanese servicemen. These sites will eventually fall under the protections of the convention.

Ratification of this treaty will allow us to be a regional leader, with the Asia-Pacific being the least represented region out of the 72 states parties to the convention. It has also been noted that it would, potentially, provide greater protection for Aboriginal and Torres Strait Islander UCH, as the state legislation will need to be harmonised through the implementation process. This is a positive move, and we are happy to support the binding treaty action being taken.

Thank you to those who made submissions and gave evidence, and to committee members, including the chair and the secretariat, for their work on this report, which I commend to the House.