Australia-NZ tax treaty - administrative approach to Article 4(1) of the MLI

The Australian Tax Office and New Zealand Inland Revenue are in the process of formalising a practical administrative approach for non-individual dual residents affected by Article 4(1) of the Multilateral Convention (MLI).

Under Article 4(1) of the MLI, which is designed to address tax avoidance arrangements, non-individual taxpayers that are dual residents need to apply to either Competent Authority for a determination of their residency for tax treaty purposes.

The administrative approach will seek to provide certainty and minimise compliance costs for non-individual dual residents that meet certain eligibility criteria.

We will publish the administrative approach once it is finalised, including eligibility criteria and any additional guidance.

For more information see the note on Competent Authority determination under Article 4(1) of the MLI.

Competent Authority determination under Article 4(1) of the Multilateral Convention (the MLI)

New Zealand’s tax treaty with Australia

In recognition of the Single Economic Market (SEM) agenda between Australia and New Zealand, which seeks to create a seamless trans-Tasman business environment, and the fact that our respective tax systems and administrations are comparable and both are committed to adopting measures to address BEPS risks, the Australian Tax Office (ATO) and New Zealand Inland Revenue are in the process of formalising a practical administrative approach for Australia/New Zealand non-individual dual residents impacted by Article 4(1) of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI).

This administrative approach will apply to non-individual dual residents that meet certain eligibility criteria. It will include appropriate carve outs and integrity rules to ensure it does not apply to arrangements involving tax avoidance. It represents a measured risk-based approach that seeks to provide certainty and minimise compliance costs for taxpayers. It will also enable each of the tax administrations to focus their resources on addressing tax avoidance arrangements that MLI Article 4(1) is designed to counter.

It is envisaged that, at this stage, this practical administrative process will only be implemented between Australia and New Zealand. The process will not apply to New Zealand’s other tax treaties modified by Article 4(1) of the MLI (refer below).

Once finalised the eligibility criteria and further guidance will be published on this webpage.

New Zealand’s other tax treaties

Non-individual taxpayers that are dual residents under New Zealand’s other tax treaties which are modified by Article 4(1) of the MLI (excluding New Zealand’s treaty with Australia) will need to apply to either Competent Authority for a determination of their residency for the purposes of the treaty.

Links to additional information:

New Zealand Inland Revenue - Tax Policy: Multilateral Instrument.
OECD: Multilateral Instrument.