House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)

D. THE STRUCTURE OF THE BILL

In what way does the Bill change the Act?

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The Bill will make the following changes to the Income Tax (International Agreements) Act 1953:

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it will insert in subsection 3(1) definitions of "the Hungarian agreement" and "the Kiribati agreement" and insert new sections 11X and 11Y which will give the force of law in Australia to those agreements.

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it will add the text of each agreement as Schedules 33 and 34 respectively.

When will these changes take place?

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each DTA will enter into force on the date of exchange of diplomatic notes between Australia and the respective treaty partner country. Such diplomatic notes will formally advise that all the requirements necessary to give the DTAs the force of law in each country have been finalised.

When the agreements enter into force from what date will they have effect?

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The DTA with Hungary will have effect:

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in Australia, for withholding tax purposes, in respect of income derived on or after 1 July in the calendar year next following the calendar year during which the agreement enters into force; and for other Australian taxes in respect of income, profits or gains of any year of income beginning on or after 1 July in the calendar year next following the calendar year in which the agreement enters into force.

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in Hungary, for all Hungarian taxes (including tax withheld at source) in respect of income, profits or gains of taxable years beginning on or after January in the calendar year following the year in which the agreement enters into force.

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The DTA with Kiribati will have effect:

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in Australia, for withholding tax purposes, in respect of income derived on or after 1 July next following the date on which the agreement enters into force; and for other Australian taxes, in respect of income, profits or gains of any year of income beginning on or after 1 July next following that in which the agreement enters into force.

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in Kiribati, for all Kiribati taxes in respect of income, profits or gains of any tax year beginning on or after 1 January next following the date in which the agreement enters into force.