• Service: Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/23/2014

Australia - Review of tax treaty network; construction service levies 

July 23: The KPMG member firm in Australia prepared reports on the following developments (read the reports by clicking on the hyperlinks provided below).
  • Tax treaties in Australia’s treaty network with Asian trading partners - Treasury has requested input into Australia’s tax treaty program, with submissions due by 8 August 2014. Against this background, it is observed that several tax treaties with Asian trading-partners may be “dated”—for example, the existing treaty with China was executed in 1988, whereas the treaty with Japan reflects a “modern” Australian tax treaty—such as those agreed to with the United States, the UK and New Zealand (e.g., treaties providing for 0% withholding tax on interest derived by financial institutions).

    Read a July 2014 report.

  • Retirement products - With the average life expectancy increasing by one to two years each decade, the recently released Financial Systems Inquiry interim report devoted an entire chapter to retirement income. Currently, the vast majority of pension assets are account-based pensions, which have the flexibility of withdrawals and lump-sum payments but expose retirees to longevity, inflation, and investment risks. By contrast, annuities provide a guaranteed regular income stream either over a fixed term or over the remainder of life, but no residual balance at death. The strong preference in the Australian market towards account-based pensions means the Australian government, through the aged pension, bears much of the risk of retirees outliving their savings.

    Read a July 2014 report.

  • Portable long service leave levies - A resources company in the process of developing a new mine got a “surprise” recently when it was advised that it was liable for Queensland levies on construction work undertaken as part of the development. Each Australian state and territory has its own—and slightly different—regimes. In broad terms, the regimes provide long service leave entitlements to building and construction workers based on their service to the industry. Workers must register in each state/territory that they work in, and entities must pay the levies in the state/territory in which the work is conducted.

    Read a July 2014 report.

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