Australian Tax Treaties
Israeli Convention
CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE STATE OF ISRAEL FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF TAX EVASION AND AVOIDANCE
CHAPTER III
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TAXATION OF INCOME
ARTICLE 10
Dividends
1.
Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2.
However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a Real Estate Investment Fund which is a resident of Israel) which holds directly at least 10 per cent of the voting power in the company paying the dividends throughout a 365 day period that includes the day of payment of the dividend (for the purposes of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend);
b) 15 per cent of the gross amount of the dividends in all other cases.
3.
Distributions made by an Israeli REIT to a resident of Australia may be taxed in Australia. However, such distributions may also be taxed in Israel and according to the laws of Israel, but if the beneficial owner of these distributions is a resident of Australia and holds directly less than 10 per cent of the capital of that Israeli REIT the tax so charged shall not exceed 15 per cent of the gross amount of the distributions.
4.
Notwithstanding the provisions of subparagraph b) of paragraph 2, dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends holds directly less than 10 per cent of the voting power in the company paying the dividends, and the beneficial owner is:
a) a Contracting State, or political subdivision or a local authority thereof (including a government investment fund);
b) the Reserve Bank of Australia or the Bank of Israel;
c) in the case of Australia, a recognised pension fund of Australia, or a resident of Australia, deriving such dividends from the carrying on of complying superannuation activities; or
d) in the case of Israel, a recognised pension fund of Israel whose income is exempt from Israeli tax or a resident of Israel deriving such dividends in respect of a pension plan that has been approved in accordance with the provisions of the Control of Financial Services Act (Provident Funds) 2005 as a pension Provident Fund and those dividends, in effect, are not taxed in Israel.
5.
The term " dividends " as used in this Article means income from shares, mining shares, founders ' shares, or other rights, not being debt-claims, participating in profits, as well as other amounts which are subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident for the purposes of its tax.
6.
The provisions of paragraphs 1, 2, 3 and 4 shall not apply if the beneficial owner of the dividends or of the distributions by an Israeli REIT, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends or the Israeli REIT making the distributions is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends or distributions are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business Profits) shall apply.
7.
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company - being dividends beneficially owned by a person who is not a resident of the other Contracting State - except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company ' s undistributed profits to a tax on the company ' s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
8.
Notwithstanding paragraph 7, dividends paid by a company that is deemed to be a resident only of one Contracting State pursuant to paragraph 3 of Article 4 (Resident) may be taxed in the other Contracting State, but only to the extent that the dividends are paid out of profits arising in that other Contracting State. Where such dividends are beneficially owned by a resident of the first-mentioned State, paragraph 2 of this Article shall apply as if the company paying the dividends were a resident only of the other State.
Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2.
However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a Real Estate Investment Fund which is a resident of Israel) which holds directly at least 10 per cent of the voting power in the company paying the dividends throughout a 365 day period that includes the day of payment of the dividend (for the purposes of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend);
b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3.
Distributions made by an Israeli REIT to a resident of Australia may be taxed in Australia. However, such distributions may also be taxed in Israel and according to the laws of Israel, but if the beneficial owner of these distributions is a resident of Australia and holds directly less than 10 per cent of the capital of that Israeli REIT the tax so charged shall not exceed 15 per cent of the gross amount of the distributions.
This paragraph shall not affect the taxation of the Israeli REIT in respect of the profits out of which the distributions are made.
4.
Notwithstanding the provisions of subparagraph b) of paragraph 2, dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends holds directly less than 10 per cent of the voting power in the company paying the dividends, and the beneficial owner is:
a) a Contracting State, or political subdivision or a local authority thereof (including a government investment fund);
b) the Reserve Bank of Australia or the Bank of Israel;
c) in the case of Australia, a recognised pension fund of Australia, or a resident of Australia, deriving such dividends from the carrying on of complying superannuation activities; or
d) in the case of Israel, a recognised pension fund of Israel whose income is exempt from Israeli tax or a resident of Israel deriving such dividends in respect of a pension plan that has been approved in accordance with the provisions of the Control of Financial Services Act (Provident Funds) 2005 as a pension Provident Fund and those dividends, in effect, are not taxed in Israel.
5.
The term " dividends " as used in this Article means income from shares, mining shares, founders ' shares, or other rights, not being debt-claims, participating in profits, as well as other amounts which are subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident for the purposes of its tax.
6.
The provisions of paragraphs 1, 2, 3 and 4 shall not apply if the beneficial owner of the dividends or of the distributions by an Israeli REIT, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends or the Israeli REIT making the distributions is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends or distributions are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business Profits) shall apply.
7.
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company - being dividends beneficially owned by a person who is not a resident of the other Contracting State - except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company ' s undistributed profits to a tax on the company ' s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
This paragraph shall apply also to distributions made by an Israeli REIT.
8.
Notwithstanding paragraph 7, dividends paid by a company that is deemed to be a resident only of one Contracting State pursuant to paragraph 3 of Article 4 (Resident) may be taxed in the other Contracting State, but only to the extent that the dividends are paid out of profits arising in that other Contracting State. Where such dividends are beneficially owned by a resident of the first-mentioned State, paragraph 2 of this Article shall apply as if the company paying the dividends were a resident only of the other State.
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