Resident status in respect of persons other than individuals determined solely by reference to place of effective management. 2.229 The definition of royalties in this Article reflects most elements of the definition in Australias domestic income tax law. In most cases involving the supply of know-how, there would generally be very little more which needs to be done by the supplier under the contract other than to supply existing information or reproduce existing material. [Article 18, paragraph 1]. 2.398 The term revenue claim is defined for the purposes of this Article to mean an amount owed in respect of taxes of every kind and description under New Zealands tax laws, or any Australian federal tax administered by the Commissioner, but only insofar as the imposition of such taxes is not contrary to the Convention or any other instrument in force between Australia and New Zealand. 2.184 Dividends which are beneficially owned by a State, or political subdivision or a local authority (including a government investment fund) will be exempt from tax in the source country if they hold no more than 10percent of the voting power in the company paying the dividends. 2.128 An enterprise of one country is deemed to have a permanent establishment in the other country if a person acts on its behalf in that other country where that person has and habitually exercises an authority to conclude contracts on behalf of the enterprise. This is, in the case of Australia, the federal income tax. This exemption in both countries, however, does not apply to payments of portable New Zealand superannuation, portable veterans pensions or equivalent portable payments arising in New Zealand. Cases arising under paragraph 3 of this Article, for example, a case involving a general difficulty in interpreting or applying the Convention raised by a competent authority, are not eligible to be resolved through this arbitration mechanism. 5.54 The arbitration provision gives taxpayers access to arbitration where issues of fact in relation to taxation not in accordance with the Convention are not resolved by the Australian and New Zealand tax authorities within two years. Under section 104-160 of the ITAA1997, a person who ceases to be a resident of Australia will generally trigger a tax liability on unrealised gains from assets held, other than taxable Australian property (as defined in section 855-15 of the ITAA 1997). This provision is designed to overcome that practical difficulty. [Article 30, paragraph 2]. 2.95 For these purposes, unitholders that are residents of Australia for treaty purposes and are liable to tax in Australia on income received by a MIT would be regarded as residents of Australia that are owners of the beneficial interests in the MIT. 2.290 Portable New Zealand superannuation or portable veterans pension are exempt from tax under New Zealands domestic legislation in order to ensure that the country of residence has sole taxation rights to a persons pension income. 2.329 The inclusion of the further clarification in particular with respect to residence makes clear that the residence of the taxpayer is one of the factors that are relevant in determining whether taxpayers are placed in similar circumstances. It follows that, where the income comprises dividends, interest or royalties arising in New Zealand, New Zealand will not be limited by Articles 10, 11 and12 of the Convention. 4.33 A payment for maintenance or training would not be expected to exceed the level of expenses likely to be incurred to ensure the apprentices maintenance and training (that is, a subsistence payment). 2.174 The Article does not impose a time limit on conclusion of the audit into the profits of the enterprise. Professional services provided by an individual who is present in the other country for a period or periods exceeding in the aggregate 183 days in any 12-month period may be taxed in that country. The scope of the Article is not confined to such items of income arising in one of the countries it extends also to income from sources in a third country. Each countrys domestic law treatment of foreign pension payments means cross-border pension payments are often taxed more heavily than if the payment was received by a resident recipient. [Article 13, paragraph 1]. Such treatment applies whether the real property is held directly or indirectly through a chain of interposed entities. 2.278 This Article relates to remuneration received by a resident of one country in the persons capacity as a member of a board of directors of a company which is a resident of the other country. The provisions of the law of Australia and New Zealand which are not restricted in the application by this Article are those that: prevent the avoidance or evasion of taxes; defer tax where an asset is transferred out of the jurisdiction; provide for consolidation of group entities; provide for the transfer of losses within company groups; do not allow tax rebates, credits or exemptions in relation to dividends paid by a company; provide for deductions for research and development expenditure; or. 2.158 The Convention specifies a time limit for the adjustment of profits attributable to a permanent establishment of the enterprise. The arbitration provision also provides businesses with a mechanism for the timely resolution of disputes regarding the application of the tax treaty to issues of fact. Similar reductions have generally been agreed in Australias subsequent tax treaties. However, arbitration is not available in respect of cases that were brought to the competent authorities under paragraph 1 of the existing New Zealand Agreement.

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