Tax Treaty Case Law around the Globe 2022

32.1. Introduction

Australian governments have never been comfortable about the inclusion of a non-discrimination article (NDA) in its tax treaties. Until 2003 it was the only OECD country which did not include an NDA in its taxation treaties. This reluctance is based upon the perceived need to protect Australia’s source country taxing rights. It has resulted in major delays in the process of negotiation and drafting Australian tax treaties. For example, the inclusion of an NDA was a dominant reason why the Australia-United States Income Tax Treaty (1982) process of negotiation and drafting took 12 years. This reluctance has continued, even after Australia finally agreed to the inclusion of a binding NDA (article 23) in the Australia-United States Income Tax Treaty (1982). Even this acceptance was conditional on the basis that the NDA would not be given the force of law in Australia. Further, during this negotiation period Australia also lodged a general reservation in respect of article 24 of the OECD Model with the OECD in 1977.

This reluctance has continued to this day, despite changes to Australia’s treaty practice in the early 2000s which resulted in NDAs, broadly consistent...