Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

I rise to speak on behalf of the coalition in relation to 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.

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 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 only taxable 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 ability for Australian taxpayers to use the Isle of Man as a tax haven. Similarly, 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. The coalition, as I said, considers that the provisions of this bill are sensible and have our support. I commend the bill to the Senate.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I thank Senator Coonan for her contribution and the opposition for their support. I also thank the chamber generally for facilitating the passage of the International Tax Agreements Amendment Bill (No. 1) 2009 during this period. The bill forms part of Australia’s continued contribution to a global crackdown on tax evasion to protect public finances and international standards. The G20 emphasised the importance of implementing international standards for information exchange at its summit in April 2009. At its finance ministers meeting in September 2009, it agreed to develop effective countermeasures for use against jurisdictions that fail to meet them.

Australia has a key role in this work as the recently elected chair of the OECD-sponsored global forum on transparency and exchange of information, the main international forum for the implementation of these standards by more than 80 countries. The forum was held in Mexico City between 1 and 2 September. Australia is actively pursuing the conclusion of tax information exchange agreements with low-tax jurisdictions, such as the two agreements with the British Virgin Islands and the Isle of Mann. The continued conclusion of bilateral agreements of this type will help Australia meet its international commitment to improve the transparency and integrity of the global financial system.

The bill will give the force of law to the taxation agreements between Australia and the British Virgin Islands and Australia and the Isle of Mann, which were signed in London on 27 October 2008 and 29 January 2009 respectively. The bill will insert the text of both agreements into the International Tax Agreements Act 1953 and give the agreements the force of law in Australia. The amendments will provide for the allocation of taxing rights between Australia and the British Virgin Islands and Australia and the Isle of Mann over certain income of individuals who are residents of Australia, the British Virgin Islands or the Isle of Mann, thereby helping to prevent double taxation. The Isle of Mann agreement will also provide an administrative mechanism to help resolve transfer pricing disputes that may arise between taxpayers and the revenue authorities of Australia or the Isle of Mann.

These agreements, which were signed in conjunction with bilateral tax information exchange agreements between Australia and the British Virgin Islands and Australia and the Isle of Mann, support Australia’s efforts to combat tax avoidance and evasion through enhanced international cooperation. The agreements with the British Virgin Islands and the Isle of Mann form part of Australia’s ongoing commitment to the work of the Organisation for Economic Cooperation and Development, commonly known as the OECD, on implementing tax transparency and information exchange standards endorsed by the United Nations and the G20. The bill represents Australia’s commitment to strengthen the global financial system. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.