The Singapore-Australia Double Tax Treaty

This guide provides an overview of the comprehensive bilateral tax treaty between Singapore and Australia in order to prevent the double taxation of income. The latest protocol was signed on 8 September 2009 entered into force on 22 December 2010 and effective from 22 December 2010.

Singapore-Australia Double Taxation Agreement (DTA)

An overview

Tabulated below is an at-a-glance summary of the key features of the Singapore-Australia DTA.

Topic Treaty provisions
Scope of DTA Singapore tax residents and Australia tax residents.
Taxes covered by the DTA Income tax and petroleum resource rent tax in respect of offshore projects.
Real Estate Income Taxed in the country in which the property is located.
Business Profits Taxed in the country in which the enterprise is present.
Airline/Shipping Profits Taxed in the operator’s country of residence.
Dividends – Australian tax on dividends received by Singapore-resident shareholders from an Australian company: 15% on gross dividend income.
– Singapore tax exemption for dividends received by Australian-resident shareholders from a Singapore company.
Interest Taxed at a reduced rate of 10% in the country in which the interest income arises.
Royalties Taxed at a reduced rate of 10% in the country in which the royalty income arises.
Personal/Professional Services Income Taxed in the country in which services are performed. Tax exemptions apply under certain conditions (see below).
Pension & Annuity Taxed in the recipient’s country of residence.
Government Payments Remuneration of government officials is taxed by the relevant government unless the official is a permanent resident or citizen of the country in which the services are performed.
Student Trainee payments Overseas payments made to visiting students for their education, training or maintenance are exempt from tax in the country in which they are pursuing their education.

Scope of the DTA

  • The DTA applies to tax residents of Singapore and Australia.

Taxes Covered by the DTA

  • In Singapore: Income tax.
  • In Australia: Income tax + petroleum resource rent tax in respect of offshore projects.

Defining the Concept of Permanent Establishment

  • A permanent establishment (PE) is defined as a fixed place of business through which the business of an enterprise is wholly or partly carried on, and normally includes a place of management, a branch, an office, a factory, a workshop and a place of extraction of natural resources, etc.

Real Estate Income

  • Income from real-estate property is taxable in the country in which the property is located. Real estate property includes
    • A lease of land;
    • Any other interest in land including a right to explore for or exploit mineral, oil or gas deposits or other natural resources; and a right to receive variable or fixed payments either as consideration for the exploitation of or right to exploit mineral, oil or gas deposits, quarries or other places of extraction or exploitation of natural resources;
    • Income from real estate property that is owned by an enterprise; and
    • Income from real estate property that is used for performing professional services.

Business Profits

  • The profits of an enterprise are taxable only in the country in which the enterprise is resident. If the enterprise carries out business in the contracting country through a permanent establishment situated in the contracting country, the enterprise is liable to tax in the contracting country as well. However, note that the tax liability is the contracting country is limited to the permanent establishment’s profits derived from the contracting country only.

Airline or Shipping Profits

  • Profits from the operation of ships or aircraft derived by a resident of one of the contracting countries is liable to tax in that country only (i.e the country of residence of the operator).
  • Notwithstanding the above principle, profits derived from the operation of ships or aircraft confined solely to places in the other contracting country is liable to tax in that country (i.e. the source country).
  • Airline or shipping profits includes:
    • Income derived through participation in a pool service, in a joint transport operating organization or in an international operating agency.
    • Interest earned on funds held in one of the contracting countries by a resident of the other contracting country in connection with the operation of ships or aircraft, other than operations confined solely to places in the first-mentioned country.
    • Income derived from the carriage by ships or aircraft of passengers, livestock, mail, goods or merchandise shipped in one of the contracting countries for discharge at another place in that contracting country, or at one or more structures used in connection with the exploration for or exploitation of natural resources situated in waters adjacent to the territorial waters of that contracting country, shall be treated as profits from operations of ships or aircraft confined solely to places in that country.

Dividends

  • Singapore-resident shareholders who receive dividends from an Australian-resident company are liable to Australian tax at a reduced rate of 15% on the gross amount of dividend income.
  • Australian-resident shareholders who derive dividends from a Singapore-resident company or a Malaysian-resident company that has a source of profit in Singapore, are exempt from Singapore tax on the dividend income.
  • Note that the above reduced tax rate or tax exemption will not apply if the recipient of the dividend income has a permanent establishment in the country in which the company paying the dividend is resident and that the holding giving rise to the dividends is effectively connected with a trade or business carried on through that permanent establishment. In such cases the dividend will be treated as income of the permanent establishment.

Interest

  • Interest income is taxed at a reduced rate in the country in which the interest income arises i.e the source country.
    Australian residents who derive interest income from Singapore will be liable to Singapore tax at a reduced rate of 10% on the gross amount of interest. Similarly, Singapore residents who derive income from Australia will be subject to tax in Australia at the rate of 10% on the gross amount of interest.
  • Note that the above tax rate on interest does not apply if the resident of one of the contracting countries who is beneficially entitled to the interest has a permanent establishment in the other contracting country and the indebtedness giving rise to the interest is effectively connected with a trade or business carried on through that permanent establishment. In such cases where the interest income arises in connection with the permanent establishment, it will be considered as business profits arising from the permanent establishment and will be taxed accordingly.
  • If due to a special relationship that exists between the borrower and lender, the interest paid exceeds an amount which both the parties might have agreed upon in the absence of such a relationship, the above tax rate will apply only to this agreed upon amount and not the excess amount paid.
  • Interest income refers to interest earned on bonds, securities, debentures or on any other form of indebtedness.

Royalties

  • Royalty income is taxed at a reduced rate in the country in which the royalty income arises i.e the source country.
  • Australian residents who derive royalty income from Singapore will be liable to Singapore tax at a reduced rate of 10% on the gross amount of royalties. Similarly, Singapore residents who derive income from Australia will be subject to tax in Australia at the rate of 10% on the gross amount of royalties.
  • Note that the above tax rate on royalty income does not apply if the resident of one of the contracting countries who is beneficially entitled to the royalty income has a permanent establishment in the other contracting country and the information, right or property giving rise to the royalties is effectively connected with a trade or business carried on through that permanent establishment. In such cases where the royalty income arises in connection with the permanent establishment, it will be considered as business profits arising from the permanent establishment and will be taxed accordingly.
  • If due to a special relationship that exists between the payer and the recipient of the royalties, the amount of royalties paid exceeds an amount which both the parties might have agreed upon in the absence of such a relationship, the above tax rate will apply only to this agreed upon amount and not the excess amount paid.
  • Royalty income refers to payments received in connection with the:
    • Use of or right to use any copyright (other than a literary, dramatic, musical or artistic copyright), patent, design or model, plan, secret formula or process, trademark, or other like property or right; or industrial, commercial or scientific equipment; or
    • Supply of information concerning industrial, commercial or scientific experience.
  • Royalty income does not include payments in relation to the operation of mines or quarries or exploitation of natural resources or payments in relation to the use of, or the right to use, motion picture films, tapes for use in connection with radio broadcasting or films or video tapes for use in connection with television.

Personal or Professional Services Income

  • Income derived in relation to personal or professional services is subject to tax in the country in which the services are performed. Such income will be exempt from tax under the following circumstances:
  • The individual spends 183 days or less in the country in which (s)he is performing the services.
  • The employer is a resident of the other contracting country and not the country in which the services are being performed.
  • The individual’s remuneration is not borne by a permanent establishment (in the country in which the services are performed) of an enterprise of the contracting country.
  • Note that the above exemptions do not apply to the remuneration or other income derived by public entertainers (such as stage, motion picture, radio or television artistes, musicians and athletes).
  • Directors’ fees will be subject to tax in the country in which the company paying the fees is resident.
  • An individual who is a resident of one of the contracting countries will not be taxed in the other contracting country on income from an employment exercised on ships or aircraft in international traffic.

Pension and Annuity

  • Pension and annuity is taxed in the recipient’s country of residence. Note that this rule does not apply to a pension paid to an individual by either the Government of Australia or Government of Singapore in respect of services rendered in the discharge of Governmental functions.

Government Payments

  • Remuneration (other than pensions) paid by the Government of Australia to any individual for services rendered on behalf of the Australian Government is exempt Singapore tax, except in cases where the individual is resident in Singapore and is not an Australian citizen.
  • Remuneration (other than pensions) paid by the Government of Singapore to any individual for services rendered on behalf of the Singapore Government is exempt from tax in Australia, except in cases where the individual is resident in Australia and is not a Singapore citizen.
  • Note that the above rules do not apply to income from services rendered in connection with a Government business enterprise (i.e. a trade or business carried on by a Government for purposes of profit).

Payments Made to Student Trainees

  • Students who are residents of one contracting country and are presently visiting the other contracting country solely for education or training will not be taxed in this other contracting country on payments received from overseas for their maintenance, education, or training.

Exchange of Information

  • The tax authorities of the contracting countries shall exchange tax information as and when necessary.
  • The information exchanged will remain confidential and will only be disclosed to persons (including a court or tribunal) concerned with the assessment, collection,e enforcement or prosecution in respect of the taxes covered by the DTA.
  • There will be no disclosure of any trade, business, industrial or professional secret or trade process.

For more details on the specific provisions covered under the tax treaty between Singapore and Australia, please refer to IRAS Website.

For general information on Singapore DTAs, refer to Singapore Double Taxation Agreements (DTA) Guide.

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