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Mutual agreement procedure

Requesting a mutual agreement procedure (MAP) to address potential taxation not in accordance with a tax treaty.

Last updated 13 October 2024

What is the mutual agreement procedure

Within the international tax system, the mutual agreement procedure (MAP) – in Australia’s tax treaties – supports a resilient global economy and facilitates economic growth. MAP can help:

  • relieve double taxation
  • resolve treaty-related tax disputes and issues in interpreting or applying a tax treaty.

MAP provides a bilateral mechanism for the Australian competent authority (CA) to engage with the CA of another jurisdiction.

You may request a MAP if you believe you are being taxed – or will be taxed – not in accordance with a tax treaty. Once you lodge your request, you do not take part in MAP negotiations. The CAs negotiate to resolve your request. They can also try to relieve double taxation in cases not covered by the tax treaty.

Seeking an advance pricing arrangement

You may seek an advance pricing arrangement to minimise the need for a MAP. This will reduce the risk of being subject to double taxation as a result of transfer pricing or profit reallocation adjustments in future years.

See our guidance in Law Administration Practice Statement PS LA 2015/4 Advance Pricing Arrangements.

Double taxation

In most instances, MAP cases involve cross-border double taxation. This can happen when the domestic taxation provisions of 2 jurisdictions overlap. The 2 types of double taxation are:

  • juridical double taxation – where the same taxpayer is taxed in 2 jurisdictions on the same income, profits or gains
  • economic double taxation – where 2 separate taxpayers are taxed on the same income, profits or gains in different jurisdictions.

In the present context, juridical double taxation may arise if:

  • each jurisdiction subjects the same taxpayer to tax on their world-wide income – for example, the taxpayer may be a resident of, and be taxed on the same income in both jurisdictions
  • a resident of one jurisdiction derives income in the other jurisdiction and both jurisdictions impose tax on that income or part of that income – for example, if the country of source imposes a withholding tax on a royalty payment, and the country of residence taxes the taxpayer on their world-wide income by assessment.

Economic double taxation may arise where a jurisdiction adjusts a resident taxpayer’s taxable income by applying the arm's length principle to transactions between it and an associated taxpayer in another jurisdiction (a primary transfer pricing adjustment).

This may result in double taxation because the taxpayer whose taxable income is increased will be liable to pay tax in one jurisdiction on an amount of profit the associated taxpayer will also be liable to pay tax on in the other jurisdiction.

Relieving juridical double taxation

Australia’s domestic law and tax treaties provide mechanisms to relieve juridical double taxation including:

  • an exemption for foreign source income or a foreign income tax offset under domestic law
  • credits (in the form of foreign income tax offsets domestically) for foreign tax paid being allowed against Australian tax payable under the relevant treaty.

Other mechanisms in Australia’s tax treaties can prevent juridical double taxation from occurring in the first place, for example:

  • residency tie-breaker rules
  • allocating exclusive taxing rights over certain types of income.

Most of Australia's tax treaties contain an article which eliminates double taxation by obliging the country of residence to provide relief from juridical double taxation.

Applying this article is subject to the provisions of Australia’s domestic law about the allowance of a tax offset against Australian tax for income tax paid in a foreign country (Division 770 of the ITAA 1997). The domestic provisions, however, cannot affect the general principle of this article to eliminate juridical double taxation.

Relieving economic double taxation

Economic double taxation can arise when a jurisdiction makes a primary transfer pricing adjustment consistent with the associated enterprises article in Australia’s tax treaties.

The other jurisdiction may then be required to make an appropriate adjustment to the amount of tax charged on the profits of the associated enterprise in that jurisdiction in order to relieve economic double taxation (a correlative adjustment). A correlative adjustment may not resolve all double taxation.

When another jurisdiction makes the primary transfer pricing adjustment, the Australian competent authority (CA) can provide unilateral relief under section 24 of the International Tax Agreements Act 1953 (the Agreements Act 1953); however, usually CAs of both jurisdictions will consult with each other.

Section 24 of the Agreements Act 1953 allows for adjustments to taxable income or to a tax loss. Your tax losses may increase when we apply this section.

Conditions for requesting a MAP

You may request a MAP when you consider the actions of one or both jurisdictions results (or will result) in taxation not in accordance with a tax treaty. The risk of such taxation must be probable (not merely possible). This can arise from a variety of actions by a jurisdiction, including:

  • a notice of assessment or amended assessment
  • a statement of audit position
  • a private ruling
  • a certificate of withholding.

Also, you may request a MAP when you have initiated an adjustment in good faith. For example, if you lodge a self-amendment request or a request under the domestic laws of a treaty partner country to amend a tax return to adjust the price of your related party transactions, or the profits attributable to a permanent establishment, to reflect arm's length conditions.

We will consider your self-initiated adjustment to be made in good faith if:

  • it reflects a good faith effort on your part to ensure that you are reporting your income or profits correctly
  • you have fulfilled properly and in a timely manner all your taxation obligations related to the income or profits under the domestic tax laws of both jurisdictions.

Find out how to determine if your case is justified.

Time limit for requesting a MAP

Most of Australia’s tax treaties require you to request your case be reviewed in a MAP within 3 years of you first being advised that you are to be (or likely to be) taxed not in accordance with a treaty. However, the time limit specified in the article dealing with MAP in each of Australia’s tax treaties varies.

We will apply this limit in a way that is most favourable to you. The time limit for submitting a MAP request will usually start from the day the notice of assessment or amended assessment issues.

We cannot accept your MAP request after the time limit expires.

If you want to pursue domestic remedies in either jurisdiction but are concerned about exceeding the time limits for presenting a case, you can lodge a protective MAP request.

Taxes covered by MAP

The 'taxes covered' article outlines the taxes that a particular tax treaty covers. For Australia, this may include:

  • income tax
  • fringe benefit tax
  • resource rent tax.

Penalties and interest imposed under taxation laws are not considered taxes for the purposes of a treaty.

MAP and the general anti-avoidance rules

You are able to request MAP for tax that results from the application of the general anti-avoidance rules in Part IVA of the ITAA 1936.

This includes the multinational anti-avoidance law and the diverted profits tax rules both of which are a part of Part IVA.

Importantly, however, Part IVA is not restricted by the application of Australia’s tax treaties (see subsection 177B(1) of the ITAA 1936 and subsection 4(2) of the Agreements Act 1953) and therefore it prevails regardless of whether the resultant tax is contrary to the provisions of a treaty. As a result, we cannot resolve a case under MAP to the extent that it involves the application of Part IVA.

MAP and settlements

You are able to request MAP for matters which are the subject of a settlement agreement with the ATO. However, settlement agreements are intended to resolve the matters in dispute for both parties and there may be consequences under the settlement deed for continuing the dispute through the MAP process. We recommend you consider possible double taxation, and whether you intend to request MAP, prior to entering into a settlement agreement.

MAP requests involving multiple jurisdictions

The MAP article in Australia’s comprehensive tax treaties typically allows CAs to resolve by mutual agreement, difficulties in the interpretation and application of the convention. In doing so, they can consult on cases not provided for in the convention including, for example, details of a transaction in a third jurisdiction.

CAs of each jurisdiction can be part of multilateral MAP consultations when all jurisdictions have a tax treaty containing the necessary MAP and EOI articles with each of the other jurisdictions. Typically, we don't enter into single multilateral agreements, rather, we resolve these cases through a series of bilateral agreements. CAs can discuss the suitability of a multilateral MAP negotiation as part of the case.

In some of Australia’s tax treaties, the MAP article doesn't contain the express provision to consult together on cases not provided for in the convention. In these cases, effective exchange of information may still be possible with the third jurisdiction. The ability to consult or mutually agree on a multilateral basis may be limited.

How to request a MAP

You must submit your request for MAP to the competent authority (CA) of your country of residence or nationality, or the CA of either country, depending on the wording in the MAP article of the relevant tax treaty.

If you submit your request to the incorrect CA this may delay your request or result in your request being rejected.

Information to submit with your request

For the Australian CA to be able to accept your MAP request, it must contain sufficient information for us to determine if your case is justified.

You must provide the following information and documentation as part of your request:

  • identity of the taxpayers covered in the request including  
    • name
    • address
    • taxpayer identification number or date of birth
    • contact details
    • where applicable, the relationship between the taxpayers covered in the request
  • basis for the request, specifying the articles of the relevant treaty you consider one or both jurisdictions are not applying correctly and the jurisdiction applying the treaty
  • all relevant facts of the case and any documentation supporting those facts, including  
    • income years or other periods – taxpayers may request multi-year resolution of recurring issues
    • amounts involved with details of what is to be adjusted and the basis of the calculation
  • analysis of the issues you want resolved under the MAP, including how you think the specific treaty provisions should be interpreted to support your claim that one or both jurisdictions have not applied the treaty correctly – you should support your analysis with relevant documentation, such as  
    • transfer pricing documentation required under legislation or in accordance with published guidance
    • copies of tax assessments, audit or other tax administration documentation reflecting what you consider to be the incorrect application of the relevant treaty provisions
    • copies of briefs or objections submitted by you in response to the tax administration's action
  • if you have submitted the MAP request to the other jurisdiction's CA, provide  
    • the date the request was submitted
    • the name and designation of the person, or the office, to which the MAP request was submitted
    • a copy of the request including all documentation filed with it, unless the content of both MAP requests are identical
  • whether the issues involved have been dealt with previously, for example, in a ruling, advance pricing arrangement, settlement agreement, or tribunal or court decision – you should provide a copy of any such ruling, agreement or decision
  • a statement confirming all information and documentation provided in the MAP request is accurate and that you will help the CA to resolve the issues by providing any other information or documentation requested by the specified dates.

If a related taxpayer submits a MAP request to another CA regarding taxation not in accordance with a treaty involving Australia, you should also provide a copy of the MAP request to us. This helps us to do preliminary analysis – potentially reducing the time taken to resolve the MAP.

We may reject your request if you do not provide the listed information and documentation . See Time limit for requesting a MAP.

Address to submit MAP requests

To submit a MAP request to the Australian competent authority, email it and any other correspondence relating to a MAP to internationalsgatekeeper@ato.gov.au

Alternatively, our postal address for submitting MAP requests is:

MAP Program Management Unit
Public Groups and International
Australian Taxation Office
PO Box 9977 
Brisbane QLD 4001
Australia

Who is involved in the MAP process

A number of ATO staff can be part of the MAP process.

The MAP Program Management Unit

The ATO MAP program management unit (PMU) is responsible for the general administration of the MAP process. The PMU:

  • receives your MAP request and acts as your initial point of contact
  • reviews your MAP request to ensure it has been lodged within time and with the correct jurisdiction
  • assigns a CA to your case and helps the CA to manage it.

The competent authority

The competent authority (CA) in consultation with the PMU:

  • provides assistance to people who believe the actions of Australia or a treaty partner either result, or may result, in taxation that is not in accordance with a particular tax treaty
  • reviews your MAP request to determine if it is justified
  • determines whether we will relieve double taxation, or whether we can otherwise resolve your case, unilaterally
  • tries to resolve your MAP case in line with the relevant tax treaty
  • communicates directly with the other jurisdiction's CA involved in your MAP case.

In trying to resolve your MAP case, the CA may get specialist advice or input from other ATO staff.

Other ATO staff

Other ATO staff may provide:

  • administrative support
  • information and help if they have a history of engagement with you or with your industry
  • specialist advice – for example economists who may provide further economic analysis on the adjustment made or proposed by us or help to evaluate the adjustment made by the other jurisdiction.

These staff may communicate directly with you to request further information or to keep you updated with developments. They do not communicate with the other jurisdiction's CA.

ATO staff involved in the original action or adjustment will only be present at CA negotiations in order to provide factual information or background analysis that would help the CA deliberations. This is to preserve the independence of the CA and the MAP process.

You, the taxpayer

While you initiate the MAP process by making a request to a CA and we advise you of progress, you are not permitted to attend MAP negotiations.

If the CAs in both jurisdictions agree, you may present arguments in support of your case to both jointly. If they do not agree, the Australian CA will give you an opportunity to present your arguments to the Australian CA.

The MAP process

There are the 3 stages involved in the MAP process:

  • Stage 1 – submitting your request for CA consideration and determination
  • Stage 2 – negotiating with the CA
  • Stage 3 – implementation of the mutual agreement.

Stage 1 – Submitting your request

The first stage in the MAP process contains the following 3 steps:

  • Step 1 – submit your request to the MAP program management unit at internationalsgatekeeper@ato.gov.au
  • Step 2 – the CA considers whether your request is justified
  • Step 3 – if your request is justified, the CA determines if we can provide unilateral relief.

Step 1: Submitting your request to the MAP PMU

When we receive your completed MAP request, we will confirm whether you submitted it in time and to the correct CA.

We will not accept a MAP request received out of time as there is no mechanism in Australia’s tax treaties for the CA to extend the time allowed to submit a MAP request.

If you want to pursue domestic remedies in either jurisdiction but are concerned about exceeding the time limits for presenting a case, you can lodge a protective MAP request.

Step 2: Determining if your case is justified

A CA will determine your case is justified if:

  • you have provided a sufficient factual and legal basis for your case
  • your MAP request demonstrates that  
    • the actions forming the basis of the request results or will result for you in taxation not in accordance with a tax treaty
    • the risk of such taxation is at least probable, not just possible.

The CA will accept that the risk of taxation not in accordance with a treaty is probable if you have received written notification from us or the tax administration of a treaty partner country of an actual or proposed action. The notification should include details of what is to be adjusted, the amounts and the basis of calculation.

After the CA determines the MAP request is justified, they will let you know your case has been accepted and placed into our MAP program.

Actions that do not justify a MAP request include:

  • an audit or examination of your affairs or those of an associated foreign entity prior to the issue of a statement of audit position or equivalent position paper from another jurisdiction
  • exchange of information requests about dealings between you and an associated foreign entity
  • discussions between you (or an associated foreign entity) and us (or a foreign tax jurisdiction) about your tax affairs
  • public advice and guidance of a general nature, even if you believe it could apply to you and, if applied, may result in taxation not in accordance with the treaty.

If the CA considers that your case is not justified, then we will advise you that we will take no further action in relation to your request.

Step 3: Unilateral relief

We will decide whether we can reach an appropriate solution ourselves. If this is not possible, such as when the taxation not in accordance with the tax treaty is due wholly or in part to an action taken in the other jurisdiction, we will try to resolve your case by mutual agreement with the CA of that jurisdiction (Stage 2).

Stage 2 – Negotiating with the CA

In this stage, we negotiate with the CA of the other jurisdiction. Both CAs will do their best to resolve your case. However, this does not mean that the CAs will resolve every case or necessarily relieve all taxation not in line with the treaty.

In all instances and as part of the negotiations, the CAs will seek to establish a mutual understanding of the relevant principles embodied in the treaty, the facts of your case and how those principles are to be applied so as to relieve any taxation not in accordance with the treaty.

For example, if we make the primary transfer pricing or profit reallocation adjustment, the Australian CA will try to demonstrate to the other CA that:

  • the adjustment results in tax in accordance with the treaty
  • the treaty partner country should relieve any resultant double tax.

We will also seek to comprehend fully the other CA’s position and explore opportunities to reach agreement.

How competent authorities communicate with each other

CAs usually provide their positions to each other by exchanging position papers. If the CAs do not reach agreement after exchanging MAP position papers, they may discuss the matter with each other directly.

In preparing our MAP position paper, we may take into account relevant information you provide (including information about your foreign associates) and information gained from any prior compliance activity.

Stage 3 – Implementation of mutual agreement

When a mutual agreement is finalised between the CAs, we will notify you of the decision and provide an explanation of the result. If you accept the agreement, both tax administrations will be notified and you will be provided a letter confirming this agreement. The agreed adjustments will then be processed by the tax administrations to provide you the relief for double taxation.

An appropriate solution arrived at by both CAs may result in us:

  • restoring your original tax position by withdrawing the adjustment which led to your MAP request
  • making a correlative adjustment or providing a tax offset or credit to relieve any double taxation
  • amending your tax assessment or tax payable if you agree with the MAP outcome.

You may proceed with your domestic objection, review or appeal rights in relation to the assessment (or amended assessment) arising from issues that are outside the scope of the MAP or otherwise left unresolved.

What happens if you disagree with the MAP outcome

If you do not agree with the MAP outcome agreed by the CAs, you can seek tax relief under your domestic objection, review and appeal rights. In this case, the CAs will finalise your MAP case without implementing the agreement reached. Refer to Dispute or object to an ATO decision.

Timeframes for resolving a MAP case

The ATO has committed to the OECD’s recommended average timeframe of 2 years to resolve MAP cases. However, we will try to resolve your case as quickly as possible. In the meantime, we will communicate with you and with the other jurisdiction on a timely basis and keep you informed of the progress of your case.

Some of Australia's tax treaties give you the right to seek arbitration if the MAP case is not resolved within the time frame specified in the relevant tax treaty. Refer to Arbitration.

Time limits on implementing the MAP outcome

Most of Australia’s tax treaties state that any MAP agreement will be implemented despite any domestic time limits.

If a treaty does not include this, time limits under domestic law apply.

Domestic time frames for amending your income tax assessment are set out in particular parts of the income tax law, for example, in section 170 of the ITAA 1936 and section 815-150 of the ITAA 1997.These time frames can be extended in some circumstances.

For more information see:

Interaction of other dispute resolution processes with the MAP process

The MAP provides an additional dispute resolution process to those available under the domestic legislation of Australia and other jurisdictions. You can request MAP regardless of the remedies provided by domestic law. If you are pursuing domestic law remedies, we will try to progress your MAP case as much as is possible, depending on the circumstances of your case. Refer to Pursuing Australian domestic remedies.

Protective MAP request

If you want to pursue domestic remedies in either jurisdiction but are concerned about exceeding the time limits for presenting a MAP case, you can lodge a protective MAP request.

If the request meets the requirements of MAP, we will:

  • accept the MAP request
  • advise the other jurisdiction of the request
  • defer CA negotiations until you inform us you would like the case to progress.

Pursuing domestic remedies in the other jurisdiction

Whether a MAP can progress while your objection, review and appeal rights are ongoing in the other jurisdiction depends on whether the CA in that jurisdiction is prepared to proceed with MAP negotiations concurrently.

We will defer issuing any amended assessment, which can include a foreign income tax offset, until such time as the review and appeal rights in the tax treaty partner country have lapsed or are rescinded or exhausted.

Pursuing Australian domestic remedies

Where your matter is subject to administrative or judicial review, we may defer progressing your MAP request until the tribunal or court has made its determination.

Where you seek internal independent review after receiving a statement of audit position from us, we will conduct the independent review concurrently with progressing your MAP request.

Objections

Objection undecided when CAs reach agreement

Three scenarios can occur when the CAs reach agreement on your MAP request and you have an undecided objection. These are set out below:

  • Scenario 1 – If the CAs agree to restore you to your original tax position, we will finalise your MAP case. You will need to withdraw your objection in writing.
  • Scenario 2 – If both CAs resolve your MAP request whereby the adjustment is wholly or partly maintained and you agree with the agreement reached by the CAs, then you will need to withdraw your objection in writing.
  • Scenario 3 – If you are dissatisfied with the CA’s agreement, you can continue to pursue your domestic objection and review or appeal rights. The CAs will finalise your MAP case without implementing the agreement reached.
Objection finalised before CAs reach agreement

If we allow an objection in full and there is no longer any taxation that is not in line with the provisions of the tax treaty, we will finalise the MAP case. If all, or some, of the MAP issues remain unresolved following an objection decision, the MAP will continue in an attempt to resolve the case.

If the CAs have not agreed on an appropriate solution by the time we decide to disallow, or allow in part, your objection, you have the right to apply to the Administrative Review Tribunal (ART) for a review of the objection decision or appeal to the Federal Court against the objection decision. Whether or not we continue the MAP during the review and appeal stages will be considered on a case-by-case basis.

Court or tribunal decisions

Once the ART has made a decision or the Federal Court has made an order, the Australian CA will abide by that decision or order.

When such a decision or order has been made, the Australian CA will seek to demonstrate to the other jurisdiction’s CA that the adjustment, consistent with the decision or order, is in line with the relevant tax treaty and that the other country should relieve the applicable double tax.

Seeking arbitration to resolve a MAP case

If the CAs involved in your case have not reached agreement within 2 years (3 years for certain tax treaties) and the relevant tax treaty provides for arbitration, you can request that the CAs submit any unresolved issues to arbitration. 

The Treasury Laws Amendment (OECD Multilateral Instrument) Act 2018 gives the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) the force of law in Australia. The MLI will modify some of Australia’s tax treaties to provide for mandatory binding arbitration. The date of effect and the availability of mandatory binding arbitration will vary between each tax treaty.

For more information, see Timeframes for resolving a MAP case and Arbitration.

Penalties, interest and debt recovery under MAP

Our tax treaties exclude penalties and interest imposed under the law of either jurisdiction from being ‘tax’ for the purposes of the particular tax treaty. Therefore you cannot seek relief under a MAP for any penalties or interest.

Interest paid by us on overpayments of tax resulting from MAP

If we relieve taxation not in line with the tax treaty that results in an overpayment of tax and the interest on overpayment rules apply, we may pay you interest on that overpaid amount.

If the overpayment of tax has arisen from the provision of correlative relief for juridical or economic double taxation, the interest we pay is limited to the lesser of the amount of the:

  • interest payable under the Taxation (Interest on Overpayments and Early Payments) Act 1983 (Overpayments Act)
  • interest charged by the other jurisdiction making the transfer pricing or profit reallocation adjustment
  • relief being provided under the MAP agreement.

This limitation applies to any year where correlative relief is provided by either amending the assessment of a year of income or by applying a credit for foreign taxes.

Interest on overpayments arising from the provision of correlative relief will not be paid if the:

  • other jurisdiction does not require payment of interest on their primary adjustment that gave rise to the double taxation
  • interest required to be paid on that primary adjustment has not been paid by the time we provide relief from double taxation.

If we were to pay interest in these circumstances, it would provide you with a windfall gain.

Paying tax during the MAP process and deferral of debt recovery

Requiring you to pay the tax that is the subject of your MAP request may result in double taxation until the case is resolved.

For example, if we make a transfer pricing or profit reallocation adjustment, the same profits may become subject to tax in both jurisdictions. Also, if you are a dual resident, both jurisdictions may impose tax on the same income until the CAs in the MAP process resolve which jurisdiction is your country of residence for the purpose of the relevant tax treaty.

If collecting tax during the MAP process may result in double taxation, we will defer legal action for recovery of those amounts, including any general interest charges (GIC), until an agreed future date (usually the date that the MAP is concluded), unless:

  • there is a risk to revenue
  • you have other liabilities unpaid after the due date, or
  • you have failed to meet other tax obligations when required.

For more detailed information see our Help with paying for support measures to help you stay on track. To find out more about our Practice Statement Law Administration you can read:

Remission of GIC on tax which is part of a MAP and unpaid

You can make a written request to have us remit GIC accrued for unpaid tax.

For example, we can consider remitting some or all GIC if we are satisfied that either:

  • you did not cause the delay in payment and you have taken reasonable steps to mitigate that delay
  • there are special circumstances making it fair and reasonable to remit all or part of the GIC or it is appropriate to do so.

If we have deferred recovery of your tax debt until the MAP is completed, we can consider remitting the GIC accrued during the MAP in respect of the tax actually paid in the other jurisdiction (on the profits that both countries claim to tax), provided you do not get a windfall gain from this.

For example, remitting GIC arising from non-payment of tax in Australia from a transfer pricing or profit reallocation adjustment in Australia would result in a windfall gain for you or your economic group where the other jurisdiction pays interest on overpayment after granting correlative relief.

We may also consider remitting GIC if either jurisdiction has caused unreasonable delays in the CAs resolving the MAP. This recognises the potential financial disadvantage you may otherwise suffer when subject to MAP.

For more information, see PS LA 2011/12 Remission of General Interest Charge.

Arbitration

Independent and binding arbitration, for issues that remain unresolved under the Mutual Agreement Procedure (MAP), is provided for in some of Australia’s tax treaties. This is because the relevant tax treaty either:

You may request (in writing) arbitration if an issue of your MAP case remains unresolved by the competent authorities (CAs) within the time period specified in the relevant tax treaty (generally 2 years).

The MLI and arbitration

Australia has adopted mandatory binding arbitration under Part VI of the Multilateral Instrument (MLI) subject to all the following conditions:

  • disputes which have been the subject of a decision by a court or administrative tribunal will not be eligible for arbitration, or will cause an existing arbitration to terminate
  • breaches of confidentiality by taxpayers or their advisors will terminate the arbitration process
  • disputes involving the application of either Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) or section 67 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) will be excluded from the scope of arbitration
  • any treaty partners’ specific reservations made under Article 28(2)(a) of the MLI on the scope of issues eligible for arbitration.

The extent of availability of arbitration in Australia’s tax treaties modified by the MLI will depend on the finalised Part VI adoption positions taken by Australia and its treaty partner. Based on other jurisdictions’ known adoption positions, it is expected that 17 of Australia’s tax treaties will eventually be modified by the MLI to provide for mandatory binding arbitration.

Australia’s current tax treaties with Germany, Iceland and Switzerland also provide for arbitration.

Arbitration in Australia’s tax treaties

The table below lists the tax treaties which have, or are expected to have, arbitration provisions. You can click through to the bilateral Memorandum of Understanding (MoU) with each treaty partner in the table below, as they become available.

Table: Memorandum of understanding with treaty partners

Jurisdiction

Eligibility period (years)

Arbitration provision takes effect for MAP cases presented on or after

Arbitration available for cases presented for MAP prior to arbitration provisions taking effect

Belgium

2

01/10/2019

Yes

Canada

2

01/12/2019

Yes

Denmark

2

01/01/2020

Yes

Fiji

2

TBC
(Note 3)

TBC
(Note 3)

Finland

2

01/06/2019

Yes

France

3

01/01/2019

No

Germany (non-MLI)

2

07/12/2016
(Note 1)

No

Hungary

2

01/07/2021

No

Iceland
(non-MLI)

2

06/11/2023
(Note 4)

No

Ireland

2

01/05/2019

No

Italy

2

TBC
(Note 3)

TBC
(Note 3)

Japan

2

01/01/2019

Yes

Malta

2

01/04/2019

No

Netherlands

2

01/07/2019

Yes

New Zealand

2

01/01/2019

Yes

Papua New Guinea

2

01/12/2023

Yes

Singapore

2

01/04/2019

No

Spain

2

01/01/2022

No

Switzerland (non-MLI)

3

14/10/2014
(Note 2)

No

United Kingdom

2

01/01/2019

Yes

Note 1: Arbitration may be available for unresolved issues in MAP cases concerning income derived on or after 1 July 2017 or in respect of withholding tax on income derived on or after 1 January 2017.

Note 2: Arbitration may be available for unresolved issues in MAP cases concerning income derived on or after 1 July 2015 or in respect of withholding tax on income derived on or after 1 January 2015.

Note 3: Treaties for which the date of effect of the arbitration provisions are not yet known are those where the treaty partner has yet to action its ratification, acceptance or approval of the MLI and notify the OECD.

Note 4: Arbitration may be available for unresolved issues in MAP cases concerning income derived on or after 1 July 2024 or in respect of withholding tax on income derived on or after 1 January 2024.

Your MAP case’s eligibility for arbitration

Your MAP case is eligible to be submitted for arbitration if it meets all the following criteria:

  • Your case was presented for MAP under the treaty equivalent of Article 25(1) of the OECD Model Tax Convention.
  • The arbitration provisions have effect on your MAP case (refer to relevant date in table above).
  • The CAs involved in your case have not reached an agreement on all the issues within 2 years (or 3 years under certain tax treaties).
  • The unresolved issues are not excluded from the scope of arbitration due to reservations made by Australia (or treaty partner) under the MLI, or exclusions specified in the tax treaty.

MAP cases presented before arbitration provisions take effect

MLI Arbitration

Arbitration is potentially available to MAP cases presented prior to the arbitration provisions taking effect. This will depend on the reservations adopted by Australia's treaty partners. Jurisdictions can reserve the right for cases presented for MAP prior to the later entry into force dates to be eligible for arbitration only if the CA of both jurisdictions agree that the case can be submitted for arbitration. You will be notified of this decision if the CAs of Australia and the relevant treaty partner agreed for your MAP case to be submitted for arbitration.

Additionally, under Article 28(2)(a) of the MLI, jurisdictions may limit the scope of MAP cases eligible for arbitration.

Arbitration in other treaties

Arbitration is not available to MAP cases with issues concerning years or dates prior to the entry into force date of the tax treaty with arbitration provisions.

Memorandum of Understanding

The CAs of Australia and the relevant treaty partner are required to bilaterally conclude a Memorandum of Understanding (MoU) on the mode of application of the arbitration process for the arbitration provisions in the tax treaty to operate.

In general, the MoU will cover:

  • details regarding how a taxpayer makes a request for submission of a case to arbitration
  • the minimum information necessary for a case to be considered for arbitration
  • terms of reference
  • appointment of arbitrators
  • arbitration process
  • communication of information and confidentiality
  • operating procedures
  • costs, including fees paid to arbitrators and the chair
  • failure by the chair to communicate the decision, within the required period
  • final decision, including implementation
  • entry into effect of arbitration provisions, including for MAP cases entered into prior to entry into force of the MLI
  • types of MAP cases not eligible for arbitration.

Arbitration process

Part VI of the MLI contains the operative provisions of the arbitration process for tax treaties that are modified by the MLI to provide for arbitration. The process is dependent on the position and reservations of Australia and its treaty partner. The specific rules and timeframes agreed between the CAs are contained in the relevant MoU.

For tax treaties that provide for arbitration and are not modified by the MLI, the arbitration process is contained in the MoU.

Broadly, for MLI and non-MLI arbitration, jurisdictions can adopt one of 2 types of arbitration process:

  • Final offer – an independent arbitration panel considers the proposed resolutions submitted by the CAs and chooses, by vote of simple majority, one of the proposed resolutions as the final arbitration decision.
  • Independent opinion – an independent arbitration panel considers the position papers (including relevant information) submitted by the CAs, the applicable provisions of the relevant tax treaty and domestic provisions of both jurisdictions to reach the final arbitration decision.

Australia has adopted the final offer arbitration process under the MLI. As such, the majority of tax treaties modified by the MLI to provide for arbitration will follow this process. An exception is where Australia’s treaty partner has adopted independent opinion (for example, Japan and Malta). In this case, independent opinion will be the relevant process for the arbitration proceedings with that treaty partner.

When you can request arbitration

You can request for any unresolved issues under your MAP case to be submitted to arbitration if the relevant tax treaty provides for arbitration and your case satisfies the eligibility criteria.

How to request arbitration

You must submit your request for arbitration in writing to either or both of the CAs.

In your request for arbitration, you must provide sufficient information to identify your MAP case.

Address to submit arbitration requests

To submit a request for arbitration to the Australian CA, email it and any other correspondence relating to your MAP case to internationalsgatekeeper@ato.gov.au

Alternatively, our postal address for submitting an arbitration request is:

MAP Program Management Unit
Public Groups and International
Australian Taxation Office
PO Box 9977
Brisbane QLD 4001
Australia

Requesting a competent authority determination

How to request a competent authority (CA) determination under Limitation on Benefits provisions in UK and USA conventions.

Minimum level of supporting information

This list outlines the information to send with your request for a determination from an Australian CA under:

  • Article 10(3)(c) of the tax treaty between Australia and the United Kingdom (Convention between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double Taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains)
  • Article 16(5) of the tax treaty between Australia and the United States (Convention between the Government of Australia and the Government of the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income)
  • similar provisions in other tax treaties. However, separate guidance is available for non-individuals seeking dual residency CA determinations under Article 4(1) of the Multilateral Instrument.

The following is not a complete list. The information required will depend on the circumstances of the applicant. Sending this information with your initial request will help achieve a quicker outcome. You may need:

  • a copy of the global corporate structure, in particular from the Australian payer company to ultimate parent
  • a description of activities undertaken by each company interposed between the Australian payer and ultimate parent including functions performed and employee numbers
  • a broad description of the business carried on by each company in the relevant treaty country, including functions performed and employee numbers (this will help establish relevance of the treaty country operations to the group wide business)
  • a history of companies from (and including) the Australian payer to ultimate parent including  
    • dates the companies were established
    • details of any  
      • disposals or acquisitions
      • corporate restructures and liquidations
      • change of corporate residence
    • any proposed changes and the commercial reason for the respective changes
  • an explanation of any tax consolidated/multiple entry consolidated group changes or proposed changes
  • details of the capital structure of all companies in the chain from Australian payer to ultimate parent, including  
    • each class of shares and whether any are listed and traded regularly in a recognised stock exchange, and associated rights (for example, voting, conversion and dividend rights)
    • nature of any changes to the capital structures in last 3 years
  • any of the following  
    • confirmation that all companies in the chain beneficially own all dividends received
    • details of any company that is a nominee, agent or conduit
    • confirmation that the company does not have a legal or equitable obligation to surrender the dividends to another party
  • details of any beneficial ownership of dividends as the applicant, including commercial reasons of any  
    • corporate restructure
    • new incorporation
    • interposition
    • acquisition
    • change of residency
    • other changes
  • a history of dividends confirming the amounts and use of funds  
    • paid by the Australian company
    • received by the applicant (including from other companies)
    • paid by the applicant up the corporate chain
    • include each period of time the recipient of the dividend beneficially owned the dividend
  • the company's / group of companies' details of either  
    • capital management policy
    • dividend policy
  • a copy of the financial statements for the current and prior three years for both the  
    • Australian company
    • applicant
  • an explanation of the source of the income generating the unfranked dividend, including details of when the Australian payer receives from its subsidiaries either by  
    • a return of capital
    • other distributions
  • confirmation of the residency of the applicant issued by the revenue authority of the treaty country
  • confirmation that the applicant does not carry on a business through a permanent establishment in Australia
  • an explanation of the tax treatment of dividend flows from Australian payer to ultimate parent
  • an explanation as to why the applicant does not satisfy the treaty conditions for relief under Article 10(3)(a) or (b) and needs to seek the determination from the CA
  • details of the commercial purpose for a creation or assignment of the shares or other rights for which the dividend is paid including details of any tax benefit or tax saving that arises as a result.

Submitting your request for a determination

You can either:

  • mail your application to

    MAP Program Management Unit
    Public Groups and International
    Australian Taxation Office
    GPO Box 9977
    BRISBANE QLD 4001
  • send us your application or ask for help by emailing internationalsgatekeeper@ato.gov.au

Note: The internet is not a secure environment. We don't control the path of inbound and outbound emails, so the privacy of personal information sent by email can't be guaranteed. You should be aware of this risk if you choose email to communicate with the ATO and those communications include your personal details.

Requesting dual residency competent authority determinations

Apply for a competent authority (CA) determination under Article 4(1) of the Multilateral Instrument.

Dual residency competent authority determinations under Article 4(1) of the Multilateral Instrument

The tax treaties listed below are modified by Article 4(1) of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, also known as the Multilateral Instrument (MLI).

Non-individual taxpayers who are dual residents under a tax treaty listed below will need to apply to either CA for a determination of their residency for the purposes of the relevant treaty.

Australia’s tax treaties that are modified by Article 4 (1) of the MLI as at September 2023, by jurisdiction

  • Canada
  • China
  • Denmark
  • India
  • Indonesia
  • Japan
  • Mexico
  • The Netherlands
  • New Zealand
  • Norway
  • Papua New Guinea
  • Poland
  • Romania
  • Russia
  • The Slovak Republic
  • South Africa
  • United Kingdom

For information regarding the date of effect of Article 4(1) of the MLI for the listed tax treaties, see Multilateral Instrument.

Dual residency competent authority determinations with New Zealand

In recognition of the Single Economic Market agenda between Australia and New Zealand, which seeks to create a seamless trans-Tasman business environment, and the fact that our respective tax systems and administrations are comparable and both countries are committed to adopting measures to address BEPS risks, a joint administrative approach is available for certain taxpayers that satisfy a set of eligibility criteria.

An eligible Australia/New Zealand taxpayer will not be required to provide the above information to either CA under the administrative approach. For more information see MLI Article 4(1) administrative approach.

At this stage, the administrative approach will only be implemented between Australia and New Zealand. The approach does not apply to Australia’s other tax treaties modified by Article 4(1) of the MLI.

You must lodge the taxpayer’s request with the minimum level of supporting information and documentation that supports the taxpayer’s proposed position. This level of supporting information and documentation helps to ensure timely consideration of the application.

There is no restriction on the level of supporting information that a taxpayer can provide beyond the minimum level as part of their initial notification.

If either CA requires additional information or documentation to complete their evaluation of the taxpayer’s application, they may request it. All information received by a CA will be provided to the other CA.

You can lodge an application for a determination via the MAP Program Management Unit.

Minimum level of supporting information

Companies

The minimum level of supporting information for companies includes:

  • a submission on the entity’s jurisdiction of residence for treaty purposes, including the commencement date of such self-determination
  • confirmation of the entity’s incorporation details, including  
    • any relevant registration numbers
    • its principal place of business
    • its registered office addresses (including any overseas addresses)
  • the entity’s constitution or equivalent (for example, memorandum and articles of association)
  • an organisational chart, including reporting lines and where key senior executives are located
  • a brief description of the business carried on by the entity, including details such as  
    • functions performed and where they are performed
    • number of employees and where they are located
  • a brief description of the reasons why the entity has been established as a dual resident
  • a description of the role and responsibility of each board member or senior executive who in substance is tasked with making key management and commercial decisions necessary for the conduct of the business as a whole, including details such as  
    • their level of authority
    • formal powers (including any delegation powers)
    • where they reside and their tax residency
  • details of any other persons or entities (for example, shareholders, parent entities, advisors) that have the power to materially influence the entity’s key management and commercial decisions
  • confirmation of where the following types of documents are prepared, located and physically maintained  
    • accounting records
    • company bank accounts
    • board minutes or equivalent documents recording high-level strategic decisions
  • copies of the minutes of the last three board meetings.

Deceased estates and testamentary trusts

The minimum level of supporting information for deceased estates and testamentary trusts includes:

  • a submission on the deceased estate's or trust's jurisdiction of tax residency for treaty purposes, including the commencement date of that treaty residency
  • copy of the will or other creation document, court order or similar
  • copy of appointment of trustee(s) if not covered in the will or creation document
  • name and tax residency of each trustee (if any trustee(s) is a company, the place of incorporation)
  • a brief description of any business carried on by the deceased estate or trust
  • a description of the role and responsibility of each trustee who, in practise, makes key management and commercial decisions necessary for the conduct of the estate or trust
  • confirmation on whether any trustee takes a lead role in the management of the estate or trust
  • if decisions concerning the estate or trust are not taken by unanimous agreement, a description of how they are made
  • confirmation on whether the trustees rely totally on advice provided by advisor(s)
  • confirmation on whether anyone other than the trustee(s) is involved in making key management and commercial decisions in relation to the deceased estate or trust and if so their name, location and tax residency and their involvement in making those key decisions
  • a brief description of significant assets of the deceased estate or trust located in each country
  • confirmation on whether the trustees meet to discuss the estate or trust and if so where or how such meetings take place.

Lodging your application

You can either:

  • mail your application to

    MAP Program Management Unit
    Public Groups and International
    Australian Taxation Office
    GPO Box 9977
    BRISBANE QLD 4001
  • send us your application or ask for help by emailing internationalsgatekeeper@ato.gov.au

Note: The internet is not a secure environment. We don't control the path of inbound and outbound emails, so the privacy of personal information sent by email can't be guaranteed. You should be aware of this risk if you choose email to communicate with the ATO and those communications include your personal details.

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