Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)General outline and financial impact
Mutual assistance in collection of tax debts
Schedule 1 to this Bill amends the Taxation Administration Act 1953 and the Income Tax Assessment Act 1997 to provide a framework to allow the Commissioner of Taxation to collect a taxation debt on behalf of a foreign taxation authority or to take conservancy measures to ensure the collection of that debt.
Date of effect : These amendments will apply to requests made under Assistance in Collection provisions in an international agreement from the day following Royal Assent, provided that the relevant provision in the international agreement has entered into effect.
Proposal announced : The new treaty obligations were announced at the signature of the New Zealand Protocol and in the Treasurer's Press Release No. 098 of 15 November 2005.
Financial impact : The Assistance in collection Article will have a positive impact on revenue collection by the Australian Taxation Office and will improve international tax compliance.
Compliance cost impact : This measure is not expected to impact significantly on compliance costs.
Exchange of information
Schedule 2 to this Bill amends the International Tax Agreements Act 1953 to provide the necessary framework to give effect to Australia's current and future treaty obligations to exchange information on tax matters with other revenue authorities.
Date of effect : These amendments will apply to requests for the exchange of information made from the day following Royal Assent, provided that the relevant international agreement under which the request has been made has entered into force.
Proposal announced : The new treaty obligations were announced at the signature of the New Zealand Protocol and in the Treasurer's Press Release No. 098 of 15 November 2005.
Financial impact : Nil.
Compliance cost impact : This measure is not expected to impact significantly on compliance costs.
The Protocol with New Zealand
Schedule 3 to this Bill amends the International Tax Agreements Act 1953 to give the force of law in Australia to a protocol amending the Agreement of 27 January 1995 between the Government of Australia and the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.
Date of effect : The provisions of the Protocol amending the Agreement between the Government of Australia and the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the Protocol) will have effect from the date of entry into force of the Protocol. However, Article 4 of the Protocol, which inserts a new Article 27 dealing with assistance in collection of taxes, will have effect only from the date agreed in a subsequent exchange of notes through the diplomatic channel.
Proposal announced : Signature of the Protocol was announced in the Treasurer's Press Release No. 098 of 15 November 2005.
Financial impact : The Protocol does not cover the allocation of taxing rights. It deals with issues that are administrative in nature. Hence, there will be no financial implications. However, the Assistance in collection Article will have a positive impact on revenue collection by the Australian Taxation Office and will improve international tax compliance.
Compliance cost impact : No significant additional compliance costs are expected to result from entry into force of the Protocol.