Explanatory Memorandum
(Circulated by the Treasurer, the Rt. Hon. William McMahon).AGREEMENT WITH FRANCE
Introductory Note.
This agreement is limited to the taxation of profits of airlines in international traffic. It will reserve the right to tax such profits solely to the country in which the operator is resident. This will mean that an Australian resident airline will be exempt from French tax on profits derived in France from international traffic to or through that country. The converse will apply in relation to a French resident airline.
Notes on Articles
Article 1: Taxes subject to the agreement.
The taxes subject to the agreement are the existing income taxes of the Commonwealth of Australia and the French Republic (including those imposed on behalf of the French Overseas Territories). The agreement will also apply in respect of any substantially similar taxes subsequently imposed by either Government.
This article defines terms used in the agreement. The more important are explained hereunder -
- 'Australia' For the agreement, Australia includes its external territories, except Papua and New Guinea. As the agreement is, by later definitions, confined to profits from international traffic, the definition of Australia will ensure that flights solely between places in Australia or between places in Australia and its external territories are not treated as international traffic. (By virtue of article 3(3.), flights solely from Australia to Papua or New Guinea will also be excluded from international traffic.)
- 'France' For the agreement, France includes its external territories, with corresponding effects as outlined for the definition of Australia.
- 'Income from the operation of aircraft in international traffic' This term defines the income which, for a resident of one country, is to be exempt in the other country. In broad terms, the income to be exempt is income from the carriage of passengers, cargo or mail other than between places in Australia or France (as those terms are defined), as the case may be. Exempt income will include income from sale of tickets for international flights. A further effect of the definition is that flights solely between Australia and places on the continental shelf are not to be regarded as international flights.
Article 3: Relief from double taxation.
This is the operative provision conferring the reciprocal exemptions from tax on the bases already described.
Article 4: Commencement and termination.
This article contains provisions relating to the coming into operation of the agreement and to its termination.
Paragraph (1) provides that each country is to advise the other when it has completed all action necessary to give the agreement the force of law in its territory. In Australia the necessary action will be complete when the present Bill receives the Royal Assent. The agreement will enter into force when both countries have advised the other that the necessary action has been completed, as from the date on which the later of these advices is received.
On coming into force the agreement will have effect as specified in the paragraph. In Australia it will have effect in respect of the 1966-67 and subsequent income years, while in France it will have effect in respect of the 1967 calendar year or accounting period ending in 1967, and subsequent years.
Paragraph (2) states that the agreement shall continue in effect indefinitely but either country may terminate the agreement by giving notice, on or after 1 January 1972, to the other country. In that event the agreement shall cease to be effective as specified in the paragraph.