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The Protocol scheduled to this Order makes certain alterations to the Agreement with Australia signed on 7 December 1967.
The major alteration follows from the introduction of the new United Kingdom corporation tax system which, so far as it relates to the tax treatment of dividends paid by a United Kingdom company to an overseas shareholder, came into operation on 6 April 1973. The Protocol provides that where a United Kingdom company pays a dividend to an Australian resident individual, the recipient is, subject to certain conditions, to receive the tax credit to which an individual resident in the United Kingdom and in receipt of such a dividend would be entitled less income tax at a rate not exceeding 15 per cent on the aggregate of the dividend and the tax credit.
The Protocol also changes the tax treatment in Australia of remuneration which is reduced in charging it to tax in the United Kingdom in consequence of periods of absence from the United Kingdom, or of the place where the employment is exercised, or of the domicile of the recipient. This has the effect of restricting the exemption in Australia of the remuneration of visiting teachers provided by Article 16 of the 1967 Agreement in circumstances where tax is not charged on the full amount of the remuneration in the United Kingdom.
The Protocol is expressed to take effect in relation to dividends paid on or after 6 April 1977. The change in the treatment of remuneration has effect, in Australia, for any year of income beginning on or after 1 July 1980.
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