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Australia Tax Treaties Guide

Australian double tax treaties. The guide covers: the Australian tax treaties (the 'DTAs') — Australia has the 'double tax agreements (the 'DTAs')' with 45+ countries (the 'comprehensive DTAs') and the 'limited treaties' (the 'Exchange of Information Agreements' and the 'Tax Information Exchange Agreements — the 'TIEAs'); the 'DTAs' follow the 'OECD Model Tax Convention' and 'allocate the taxing rights' between Australia and the 'treaty partner country' for the 'income types' (the 'business profits', the 'dividends', the 'interest', the 'royalties', the 'capital gains', the 'employment income', the 'pensions'); the treaty withholding rates — the 'DTAs' 'reduce the Australian withholding tax rates' for the 'payments to the treaty country residents': (i) the 'dividend withholding tax' — the 'standard rate is 30%' but the 'treaties reduce the rate to 0%, 5%, 10%, or 15%' depending on the 'treaty' and the 'shareholding percentage'; (ii) the 'interest withholding tax' — the 'standard rate is 10%' but the 'treaties reduce the rate to 0% or 10%' (the 'interest exemption' for the 'financial institutions' and the 'government entities'); (iii) the 'royalty withholding tax' — the 'standard rate is 30%' but the 'treaties reduce the rate to 5%, 10%, or 15%'; the 'specific treaty rates' include: the 'US treaty' — the 'dividends at 5% (the 80%+ shareholding) or 15%', the 'interest at 10%', the 'royalties at 5% for the film and 10% for the other'; the 'UK treaty' — the 'dividends at 0% (the 80%+ shareholding) or 15%', the 'interest at 10%', the 'royalties at 5%'; the 'Japan treaty' — the 'dividends at 0% (the 80%+ shareholding) or 10%', the 'interest at 0% (the financial institutions) or 10%', the 'royalties at 5%'; the 'Singapore treaty' — the 'dividends at 0% (the 80%+ shareholding) or 10%', the 'interest at 0% (the financial institutions) or 10%', the 'royalties at 10%'; the 'New Zealand treaty' — the 'dividends at 0% (the 80%+ shareholding) or 15%', the 'interest at 10%', the 'royalties at 5%'; the 'China treaty' — the 'dividends at 5% (the 25%+ shareholding) or 15%', the 'interest at 10%', the 'royalties at 10%'; the treaty benefits for the foreign residents — the 'treaty benefits' allow the 'foreign residents' to 'reduce the Australian withholding tax' by 'claiming the treaty benefits' through the 'ATO' (the 'treaty benefit application' or the 'self-assessment of the treaty benefits'); the 'foreign resident' must provide the 'treaty residence certificate' (the 'certificate of residence' from the 'tax authority of the treaty country') to 'claim the reduced withholding tax rate'; the 'treaty benefits' also 'protect the foreign company from the PE in Australia' if the 'activities in Australia are limited to the 'preparatory and auxiliary activities''.

Treaty Withholding Rates

  • Dividends: The 'standard rate is 30%'. The 'treaty rates' are 0% to 15% (the '0% for the 80%+ shareholding under the UK, the Japan, the Singapore, and the NZ treaties').
  • Interest: The 'standard rate is 10%'. The 'treaty rates' are 0% (the 'financial institutions' under the 'Japan, the Singapore, the UK treaties') or 10%.
  • Royalties: The 'standard rate is 30%'. The 'treaty rates' are 5% to 15% (the '5% under the UK, the Japan, the NZ treaties').

For the cross-border tax and the foreign resident taxation, see our Cross-Border Tax Guide →.

Treaty Benefits

  • Residence certificate: The 'foreign resident' must provide the 'certificate of residence' from the 'treaty country tax authority' to claim the 'treaty benefits'.
  • PE protection: The 'treaties' 'protect the foreign company from the Australian PE' if the 'activities are limited to the 'preparatory and auxiliary activities' (the 'storage, the display, the delivery, the purchasing').
  • Exchange of Information (EOI): The 'tax treaties' include the 'exchange of information provisions' (the 'Article 26 of the OECD Model') for the 'tax transparency and the cooperation'.

For the PE risks and the branch taxation, see our Permanent Establishment Guide →.

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