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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Australia: Residence

The table summarises the provisions of the treaty as they relate to income beneficially owned by UK residents. The rate shown is the ‘treaty rate’ and does not reflect taxes chargeable under domestic law before relief is given under the provisions of the treaty. The ‘treaty rate’ is the maximum rate at which Australia is permitted to tax income in the relevant categories under the treaty. Rates chargeable under domestic law may be higher or lower.

In all cases other conditions for relief (e.g. beneficial ownership) will have to be met before relief is due under the treaty. The text of the treaty itself should be consulted for the full details. The text of the treaty can be found on gov.uk.

Portfolio dividends 15% Article 10
     
Dividends on direct investments 5% (note 1) Article 10
Conditions for lower rate on dividends on direct investments The beneficial owner must be a company which holds directly at least 10% of the voting power of the payer Article 10
Property income dividends 15% Article 10
Interest 10% (note 2) Article 11
Royalties 5% (note 3) Article 12
Government pensions Taxable only in the UK Article 17
Other pensions Taxable only in the UK Article 17
Arbitration No Article 26

 

Note 1: Dividends are exempt from tax in Australia where the beneficial owner is a company resident in the UK that has owned shares representing more than 80% of the voting power of the company paying the dividends for more than 12 months before the dividend was declared provided that:

a) the principal class of shares of the beneficial owner is listed on a recognised stock exchange as specified in paragraph 1 of Article 3 and regularly traded on one or more such exchanges; or

b) the beneficial owner is owned directly or indirectly by one or more companies who come within a); or

c) although it does not come within a) or b), the competent authority of Australia determines that the establishment, acquisition or maintenance of the beneficial owner, and the conduct of its operations, did not have as one of its principal purposes the obtaining of benefits under the Convention.

See also the notes on dividends on page 4

Note 2: Interest is taxable only in the UK where such interest is paid:

  • To the UK or a UK political or administrative sub-division, a local authority, any other body exercising governmental functions in the UK or the Bank of England
  • a financial institution unrelated to and dealing wholly independently with the payer. There is a definition of financial institution: broadly a bank or similar enterprise. In cases of doubt, consult the wording of paragraph 3 of Article 11.

Note 3: The definition of royalties does not follow the standard OECD definition. In any case of doubt, the exact wording must be consulted.