Australia: ATO guidance on treaty shopping arrangements
Guidance on treaty shopping arrangements used to obtain reduced withholding tax rate benefits
Guidance on treaty shopping arrangements to obtain reduced withholding tax rate benefits
The Australian Taxation Office (ATO) on 20 July 2022 released its latest advice and guidance that includes a taxpayer alert on treaty shopping arrangements used to obtain reduced withholding tax rate benefits.
The guidance—TA 2022/2 (Treaty shopping arrangements to obtain reduced withholding tax rates)—expresses the ATO’s concerns relating to treaty shopping arrangements designed to obtain the benefit of a reduced withholding tax rate under an income tax treaty. The concern of the tax authority was that some taxpayers have entered into, or are considering implementing, arrangements that typically involve the interposition of related entities in treaty jurisdictions to obtain a more favourable tax outcome.
The guidance is not intended to cover the field of treaty shopping arrangements and is limited to arrangements that inappropriately access treaty benefits under an income tax treaty in relation to Australian royalty or dividend payments.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.