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HMRC internal manual

International Manual

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HM Revenue & Customs
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DT Agreements: Australia - Income from a UK source paid to a resident of Australia

UK interest paid to a resident of Australia

From 1 July 2004: Article 11 of the 2003 Convention

UK interest paid after 1 July 2004 to a resident of Australia who is the beneficial ownerof the interest is taxable in the UK at 10%.

But if the beneficial owner resident in Australia is either agovernmental or central banking body of Australia, or is a financial institution unrelatedto the payer, the interest may be paid without deduction of UK income tax. Theclaim/application form includes questions the answers to which should tell you if thisapplies.

Article 11.3(a) and 3(b) of the 2003 convention give a full definition of both types ofbody. But you should note that the term “financial institution” does notinclude a corporate treasury, or a member of a group performing financingservices for the group.

Before 1 July 2004: Article 9 of the 1968 Agreement

UK interest paid before 1 July 2004 to a resident of Australia who is the beneficial ownerof the interest is taxable in the UK at 10%, provided that:

  • the interest is subject to tax in Australia, and
  • the securities giving rise to the interest are not sold within 3 months of acquisition.