Withholding tax breakthrough
Richard Gilbert
The Investment and Financial Services Association (IFSA) has welcomed the signing of a new tax treaty between Australia and Japan — something it said will boost the potential for financial services exports.
The new tax treaty, signed on Friday, sees a reduction in the withholding tax on dividend, interest and royalty payments. The chief executive of IFSA, Richard Gilbert, said this would make Australia a more attractive financial services centre.
“It is particularly good news for the Australian real estate investment trust sector, which will now have a rate of 15 per cent tax on distributions, a rate that brings us closer to the rates levied by other countries in the region.”
The new tax treaty goes some way towards meeting calls made in the latest IFSA pre-Budget submission, which reinforced its push for key changes to the tax regime to enhance financial services exports at the same time as calling for an extension to the tax deductibility of personal contributions in super.
The submission argued that the Australian funds management industry was continuing to encounter difficulty in exporting its services “due to the inadvertent application of withholding taxes on profits and gains from foreign sources which are treated as Australian source income”.
Gilbert said the industry looked forward to further discussions with the Government regarding the introduction of a flat and final rate of withholding tax of 15 per cent across the board on distributions to non-resident investors from Australian fund managers.
AUTHOR
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