On 1 April 2016 Treasury released an exposure draft of the legislation that would give legislative effect to the new double tax agreement (DTA) between Germany and Australia, which they signed on 12 November 2015. This treaty replaces a previous double taxation agreement between Australia and Germany signed in 1972.
The new provisions/amendments include measures to reduce tax impediments to increased bilateral trade and investment and improve the integrity of the tax system. Importantly, it gives effect to the OECD/G20 Base Erosion and Profit Shifting (BEPS) recommendations, which are the latest measures to tackle international tax avoidance practices.
The draft legislation is fairly technical but at its heart it updates the definition of ‘German Agreement’ in s3AAA(1) of the International Agreements Act 1953 to refer to the new 2015 agreement, and makes other changes to preserve the effect of the old 1972 agreement for income not covered by the new agreement.
The draft legislation, once finalised, will give the new treaty the force of law in Australia. The released documents are the draft bill and the draft explanatory memorandum (EM).
The treaty will enter into force after both countries have completed their respective domestic requirements and instruments of ratification have been exchanged.