Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Chapter 2 Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights ( Parliamentary Scrutiny ) Act 2011
Tax Laws Amendment ( Clean Building Managed Investment Trust ) Bill 2012
2.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights ( Parliamentary Scrutiny ) Act 2011 .
Overview
2.2 This Bill amends the Income Tax ( Managed Investment Trust Withholding Tax ) Act 2008 , the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 to provide a final withholding tax rate of 10 per cent on fund payments from eligible Clean Building Managed Investment Trusts (MITs) made to foreign residents in information exchange countries.
2.3 This Bill provides for a differentiated treatment of certain classes of taxpayers. Firstly, the Bill differentiates between residents and non-residents. Secondly, it differentiates between those non-residents who are from information exchange countries and those who are not.
Human rights implications
2.4 In the context of this Bill and international taxation practice more generally, this differentiation is considered reasonable and justified.
2.5 With respect to the differentiation between residents and non-residents, there is a well-established body of international law and practice recognising that taxation laws of a State can differentiate between the tax treatment of residents of that State and the tax treatment of non-residents. For example, treaties to prevent double taxation use residence status as a way to allocate taxing rights between States. At the same time, discrimination between residents of the same State on the basis of their nationality is prohibited.
2.6 The different treatment, implied in this measure, of taxpayers according to their residence status (as opposed to their nationality) is consistent with that body of international law and practice.
2.7 The differentiation between non-residents from information exchange countries and other non-residents is a feature of the existing MIT withholding regime. Allowing only those non-residents from information exchange countries to access the MIT withholding concessions, including the concession provided for in this Bill, is an integrity measure that is intended to provide a strong signal of Australia's non-tolerance of international tax evasion and avoidance.
2.8 In light of this, there is no basis to conclude that this different treatment amounts to discrimination on the basis of 'other status' under the international instruments listed in section 3 of the Human Rights ( Parliamentary Scrutiny ) Act 2011 .
Conclusion
2.9 This Bill is compatible with human rights as it does not raise any human rights issues.
Assistant Treasurer, the Hon David Bradbury