International Tax Agreements Amendment Bill 2016

International Tax Agreements Amendment Bill 2016

31 Second, it is also important to examine how international tax legislation overlaps with Australian tax legislation. With the development and expansion of international tax legislation, it is becoming increasingly important to be aware of jurisprudence and learning in international tax law and to rely on this jurisprudence for assistance and advice. In any event, relevant international jurisprudence and learning can be instructive and, in some cases, very influential in resolving tax results. It is therefore reasonable for the courts to also expect to be informed not only of the applicable principles in this area, but also of any comparative foreign jurisprudence. Income tax commitments are primarily governed by the Income Tax Assessment Act 1936 (Cth) and the Income Assessment Act (Cth) 1997. These laws unite and provide for situations in which international tax transactions take place, including foreign residents with Australian-sourced income, Australian residents with foreign-source income, transfer pricing and anti-capitalization measures. Despite the step towards globally harmonized international tax legislation, tax results can vary from country to country when a country implements a unilateral international tax measure, and a lack of cohesion in tax treatment by sovereign states is an inevitable consequence of purely national considerations that influence tax measures. Although international tax legislation is moving towards a more uniform approach, each country defines, by its own tax laws, how and to what extent these international tax laws work. 30 First, tax legislation based on international standards is not new, but the interpretation and application of provisions based on international tax standards should not be seen as a purely mechanical task of the legal structure.

It is important to understand the principles underlying the international standards and practices that underlie many of Australia`s tax measures and to see how international tax reform has marked many of these legislations. Understanding the underlying policy framework will be an essential first step in the interpretation and application of these new measures, and it is reasonable for the courts to expect appropriate support in this task by providing the Court with all the relevant elements. Such a material will be useful, not necessarily to control importance, but as a construction aid, providing a relevant context for the consideration of design arguments. 13 Third, the introduction of tax treaties has the additional problem of language. Double taxation conventions often use words that differ from the terms of national legislation or that do not have a clear or specific meaning in domestic law. For example, the construction issues in Thiel dealt with the interpretation of the terms “profits of a business from a contracting state” to Article 7 of the Australian Double Taxation Convention,[28] for which the terms “business” and “profits” had no particular or established meaning under Australian income tax legislation.


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