4.3 The stated political objective of tax treaties is to avoid double taxation and prevent tax evasion with regard to income tax, but their broader function is to facilitate investment, trade, technological transport and the transport of people between countries. They are often used to develop and strengthen bilateral relations between countries, particularly in trade zones. Tax treaties also provide security and protection for the level of taxation of foreign investments that can be assessed, for example, by companies when deciding on the location of a regional headquarters. The Mexican Agreement (and Protocol) as Calendar 47 [Schedule 2, Point 3]; 4.57 In addition, the ATO and the Ministry of Finance face „maintenance costs“ related to tax treaties related to the handling of investigations, mutual agreement procedures (including advance price agreements) and OECD representation. However, these costs also apply to the existing tax treaty. The fundamental coherence of the UK tax treaty with current treaty practice will reduce these costs over time, as the existing tax treaty has many unusual and difficult aspects, as many of its characteristics stem from the traditional practice of the UK tax treaty and not from modern OECD or UN models. 1.61 In accordance with paragraph 3, point b), a business is considered a stable establishment if it has significant equipment in a country for more than 12 months for rental or other purposes, unless the equipment is leased under a „lease-sale contract.“ Under Australian law, the tenant is treated tax-ed as the owner of the rental property under a rental agreement (a lease agreement with certain options or rights to purchase the buyer). 1.233 Dividends and profits generated in the United Kingdom by an Australian-based company exempt from Australian tax as part of measures relating to income from foreign sources (e.g. B sections 23AH or 23AJ of ITAA 1936) will continue to benefit from an Australian tax exemption. Since there is no double taxation in these cases, the form of credit for decongestion is irrelevant. The Mexican agreement will also support bilateral relations by expanding the existing network of trade agreements between the two countries. Replace a new paragraph (a) in the definition of the relevant provision of subsection 170(14) of ITAA 1936 and neglect the definition of the United Kingdom Agreement of the same subsection; The Mexican agreement contained in this bill is generally consistent with Australia`s other modern global tax treaties and is not expected to have a significant impact on revenues.
Although the costs of this measure cannot be accurately defined, it is estimated that they will amount to approximately AUD 2 million per year over the forecast period. In other words, 4.89 The ATO entails „maintenance costs“ related to tax treaties with respect to the processing of applications, mutual agreement procedures and advance price agreements, as well as OECD representation.