Brett Mason (Queensland, Liberal Party, Shadow Parliamentary Secretary for Education) Share this | Hansard source

I rise today to indicate that the International Tax Agreements Amendment Bill (No. 1) 2008 will receive the full support of the coalition. The bill primarily gives effect to a new tax treaty with Japan and replaces the previous double taxation agreement that Australia signed with Japan way back in 1969. Like a number of tax bills this year, this bill had its origins last year under the coalition government but lapsed because of the federal election held in October last year.

Japan is Australia’s largest trading partner, which sometimes we forget, and thus it is very important that we build upon this very strong economic relationship. In light of the fact that the original treaty was 38 years old, the coalition government last year began negotiations with the Japanese government to update the tax treaty. The coalition, who were serious about attracting foreign investment into Australia, sought to negotiate an agreement that was based on the OECD model tax convention—consistent with other tax treaties that have been concluded with Australia, such as the agreement that we have with the United States. The new treaty was agreed to in principle by the Japanese Minister of Finance, Koji Omi, and the then Australian Treasurer, the member for Higgins, Mr Peter Costello, on 3 August 2007.

Specifically, this new agreement will reduce withholding tax on dividends, interest and royalty payments. It will improve tax integrity measures and will put in place new rules for real property which bring the capital gains tax treatment into line with that of the OECD. It also facilitates increased cooperation between Australian and Japanese authorities to reduce fiscal evasion.

The coalition parties are the parties of lower taxes, and we support moves that will help to reduce the administrative burdens of tax compliance. When we were in government we moved to lower the corporate tax rate to encourage investment in Australia. This bill is a logical extension as it helps to facilitate investment and trade between Australia and Japan, to the benefit of the people of both countries. I commend this bill to the Senate and urge all senators to support it.