Executive summary
This report contains the Joint Standing Committee on Treaties’ review of the following major treaty actions:
- Convention between Australia and Iceland for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance and its Protocol (Reykjavík, 12 October 2022) (Tax Convention)
- Convention on the Protection of the Underwater Cultural Heritage (Paris, 2November 2001) (UCH Convention).
Tax Convention
The Tax Convention is a double taxation agreement that would establish a framework for the taxation of cross-border transactions between Australia and Iceland. This would be the 46th double taxation agreement to which Australia is party.
As with other double taxation agreements to which Australia is party, the provisions in the Tax Convention closely follow the Organisation for Economic Co-operation and Development Model Tax Convention on Income and on Capital. Its six chapters deal with the persons and taxes to which the Tax Convention would apply, establishes where various types of income would be taxed, and specifies how relief from double taxation would be provided. It contains special provisions dealing with the principle of non-discrimination, provides for arbitration in certain circumstances as part of a mutual agreement procedure for dispute resolution, would facilitate the exchange of information, obligates parties to assist each other in the collection of taxes under certain circumstances, and establishes the grounds on which the benefits of the Tax Convention might be refused.
Though Australia’s two-way trade with Iceland is modest, the Committee is of the view the Tax Convention would provide a foundation for such activities to expand. The Committee notes, in particular, provisions that would exempt Australian superannuation funds from the application of withholding taxes on investments they make in Iceland.
During the course of the Committee’s inquiry, evidence was presented as to the constitutionality of the legislation that would provide for the obligation to assist Iceland in the collection of taxes. The Committee notes the Treasury’s contending views on the matter of constitutionality and observes it is an issue that, were it to be pursued, could only ultimately be resolved by the High Court.
The Committee is of the view ratification of the Tax Convention would be in the national interest and recommends accordingly.
UCH Convention
The UCH Convention, the first comprehensive treaty on underwater cultural heritage (UCH), was adopted on 2 November 2001 and entered into force on 2 January 2009.
Key elements of the UCH Convention include the protection and preservation of UCH that has been underwater continuously or periodically for at least 100 years, preferably in situ (in the original place) including through the cooperation between States Parties. The UCH Convention encourages States Parties to sign up to bilateral, regional, or multilateral agreements on UCH and adopt rules and regulations to ensure its protection.
The UCH Convention contains further provisions relating to public awareness of UCH, education, research, training in underwater archaeology and the exchange of technology. Further, the UCH Convention contains an Annex of Rules concerning activities directed at UCH. The specific measures for the protection of UCH in the UCH Convention vary depending on the maritime delimitation zone of the UCH.
Australia’s UCH is jointly managed by the Commonwealth, states, and Northern Territory. The Underwater Cultural Heritage Act 2018 (Cth) contains the framework for the protection and management of Australia’s UCH and is generally aligned with the UCH Convention. The Australian Underwater Cultural Heritage Intergovernmental Agreement 2010 commits states and the Northern Territory to ensuring that their legislation is compatible with amended Commonwealth legislation on UCH.
In terms of implementation, the UCH Convention provides for the establishment or reinforcement of competent authorities with a focus on UCH. Australia intends to make a declaration limiting the geographical scope of the UCH Convention to allow states and the Northern Territory to amend their respective legislation to be in alignment with the UCH Convention. The Committee encourages the Australian Government to work with their state and territory counterparts on legislative alignment so the declaration can be withdrawn in a timely manner should ratification occur.
Key issues relating to the UCH Convention that were examined as part of the inquiry were the value of the Convention for the protection and preservation of Aboriginal and Torres Strait Islander UCH, and the importance of the Convention in terms of regional engagement on UCH considering the comparatively low representation of States Parties in the Asia-Pacific region.
While the UCH Convention does not specifically refer to Indigenous UCH, the Committee is satisfied Aboriginal and Torres Strait Islander UCH would be protected through the Convention’s general application.
The Committee heard from a range of stakeholders during the inquiry, and there was broad support for ratification, including from government, non-government organisations, academics and other specialists in the field. The Committee has formed the view that it is in Australia’s national interest to proceed with ratification and recommends accordingly.