CA ANZ has provided comments for consideration during Treasury’s tax treaty negotiations with Brazil, New Zealand, South Korea, Sweden and Ukraine as part of its expansion of Australia’s tax treaty network. Member feedback was received in respect of the tax treaties for New Zealand and Brazil.

Regarding New Zealand, our members have called for a more streamlined approach to determining residency for dual residents under the ‘Definition of resident’ in Article 4 rather than relying on the mutual agreement process administered by the Australian Taxation Office and the New Zealand Inland Revenue.

Regarding Brazil, should negotiations turn to whether a non-discrimination article should be included in the tax treaty, Treasury should bear in mind the impact on working holiday makers. Furthermore, Article 8, dealing with shipping and aircraft profits, should be included in the tax treaty and the article should limit the taxing right to the Contracting State of the enterprise. We understand there has been a lack of clarity regarding taxing rights over airline profits in Brazil for many years and it has been submitted from those in the airline industry that consideration be given to the retrospective application of Article 8.

We also note the application of non-discrimination articles and property taxes and fees in Australia, as well as the recent enactment of Treasury Laws Amendment (Foreign Investment) Bill 2024. It would be preferable if such clauses are made clear in relation to the taxes to which it applies, rather than they extend to ‘taxes of every kind and description’. This should ensure that there is no potential inconsistency in respect of the interaction with taxes that are not covered taxes under the treaty, such as Commonwealth foreign investment fees and state and territory property taxes.