This bill became law on Nov 23rd, 2022.
Budget, tax & economy
Australian customers no longer trigger Australian tax on some payments to Indian tax residents for remote services covered by the Australia-India tax deal, when those payments are not otherwise taxable here.
A side letterA written add-on to the trade deal where Australia and India agreed to fix the tax treatment problem this bill implements. to the Australia-India trade deal exposed a problem where Australia could tax some remote service payments to Indian residents under the existing tax agreement. This bill fixes that by stopping Australian tax on those payments in specified cases and starting the change when the trade agreement takes effect for Australia.
Before this bill, Australia’s tax treaty settings could still tax some payments from Australian customers to Indian tax residents for remote technical services, even as Australia and India struck their interim trade deal and a side letterA written add-on to the trade deal where Australia and India agreed to fix the tax treatment problem this bill implements. on 2 April 2022. The bill responded by changing Australian law so those covered payments would not be taxed here in specified cases once the trade agreement took effect for Australia, and Parliament completed that change in November 2022 with Royal AssentThe final step that turns a bill passed by Parliament into an Act of Parliament. the next day.
The main criticism was not about the tax fix itself but about tying an Australia-India trade bill to a partner accused of human rights abuses without stronger public accountability. That concern was raised narrowly by the Greens through a defeated second-reading amendment, while no party represented in the debate opposed the bill itself.
Stephen Jones MP introduced this bill. It passed on the voices.
Did it become law?
Yes
Became law 23 Nov 2022
Final passage
Passed without a counted vote
1 recorded amendment or procedural vote was found, but no counted vote on the bill itself was recorded.
Passage speed
56 days
From introduction to the latest recorded parliamentary step
Meaning
Australian customers no longer trigger Australian tax on some payments to Indian tax residents for remote services covered by the Australia-India tax deal, when those payments are not otherwise taxable here.
The change covers remote technical services from India that give the Australian customer technical knowledge, skills, know-how, processes, or a technical plan or design.
Payments that count as royaltiesA payment that still stays taxable in Australia under this bill if it counts as a royalty under Australian tax law, even if it also involves technical services. under Australian tax law still stay taxable in Australia, even if they also fall within the India agreement's technical services rule.
The new tax treatment only starts once the trade agreement is in force for Australia, and it applies from income years that begin on or after that start date.
The Bill amends the Agreements Act to stop Australian taxation on certain payments or credits made to entities that are Indian residents for tax purposes. These are payments or credits made for services provided remotely (not through a permanent establishment in Australia) to Australian customers that are covered by Article 12(3)(g) of the Indian agreement, that is a not a royalty within the meaning of the ITAA 1936, and that is only taxable in Australia because of the operation of Article 12(3)(g) and Article 23 of the Indian agreement, as given effect by the Agreements Act.Treasury Laws Amendment (Australia-India Economic Cooperation and Trade Agreement Implementation) explanatory memorandum
Firstly, the payments or credits have to be made or credited to an Indian resident as consideration for a service covered by Article 12(3)(g). Article 12(3)(g) covers services (including those of technical or other personnel) which make available technical knowledge, experience, skill, know‑how or processes or consists of the development and transfer of a technical plan or design.Treasury Laws Amendment (Australia-India Economic Cooperation and Trade Agreement Implementation) explanatory memorandum
Secondly, these payments or credits are not royalties within the meaning of the ITAA 1936. The effect is that an amount that is a royalty under the ITAA 1936 is not affected by the amendments and therefore continues to be subject to taxation in Australia. The definition of “royalties” contained in Article 12(3)(g) is different from the definition in Australia’s domestic income tax law and other tax treaties in that it includes payments or credits for certain technical and consultancy services. If an amount paid or credited is covered by Article 12(3)(g) and is also considered a ‘royalty’ under the ITAA 1936, then the amendment will not apply and the amount paid or credited will continue to be subject to Australian tax.[Schedule 1, item 3, subsection 11J(b) of the International Tax Agreements Act 1953]Treasury Laws Amendment (Australia-India Economic Cooperation and Trade Agreement Implementation) explanatory memorandum
In accordance with the trade agreement's side letters on taxation, this measure will commence on the latter of the day of royal assent and the day the trade agreement enters into force. It will apply to assessments for income years starting on or after the commencement of this amendment. It does not commence at all if the trade agreement never enters into force.Minister's second reading speech
Context
Before this bill, Australia’s tax treaty settings could still tax some payments from Australian customers to Indian tax residents for remote technical services, even as Australia and India struck their interim trade deal and a side letterA written add-on to the trade deal where Australia and India agreed to fix the tax treatment problem this bill implements. on 2 April 2022. The bill responded by changing Australian law so those covered payments would not be taxed here in specified cases once the trade agreement took effect for Australia, and Parliament completed that change in November 2022 with Royal AssentThe final step that turns a bill passed by Parliament into an Act of Parliament. the next day.
Australia and India reach the interim trade deal and side letterA written add-on to the trade deal where Australia and India agreed to fix the tax treatment problem this bill implements.
The agreement reached as part of the Australia-India Economic Cooperation and Trade AgreementThe trade deal between Australia and India that this bill helps put into effect, including the tax changes linked to the side letter. included the side letterA written add-on to the trade deal where Australia and India agreed to fix the tax treatment problem this bill implements. that exposed the tax treatment problem this bill was designed to fix.
Hansard ↗Trade deal is publicly framed as a breakthrough after years of stop-start talks
The Australian Financial Review reported the interim deal had been signed after years of on-again, off-again negotiations, showing the wider push to get the agreement operating quickly.
Australian Financial Review ↗Government introduces the bill to implement the tax change
The Assistant Treasurer said the bill would amend the International Tax Agreements Act 1953The law this bill changes so Australian tax rules line up with the Australia-India tax agreement for these remote service payments. to implement the agreement reached with India as part of the trade deal.
Hansard ↗Parliament passes the bill
Both houses passed the bill in the same form, clearing the last parliamentary step needed to lock in the treaty-related tax amendment.
Parliamentary timeline ↗Royal AssentThe final step that turns a bill passed by Parliament into an Act of Parliament. makes the bill law
Royal AssentThe final step that turns a bill passed by Parliament into an Act of Parliament. turned the bill into an Act so the new treatment could commence when the Australia-India trade agreement entered into force for Australia.
Parliamentary timeline ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
Both houses passed the bill in the same form, completing parliamentary passage.
Finally passed both Houses
The Governor-General gave Royal AssentThe final step that turns a bill passed by Parliament into an Act of Parliament., turning the bill into an Act.
Key criticism
The main criticism was not about the tax fix itself but about tying an Australia-India trade bill to a partner accused of human rights abuses without stronger public accountability. That concern was raised narrowly by the Greens through a defeated second-reading amendment, while no party represented in the debate opposed the bill itself.
No significant broader case against the bill itself is recorded beyond the Greens' human rights reservation.
Human rights concerns about the wider trade deal
The strongest recorded criticism was that Australia should not deepen trade ties with India without openly addressing reported human rights abuses and pressing trade partners to meet human rights standards. This was a concern about the broader agreement and accountability around it, rather than a technical objection to the bill's tax amendments.
Further sources
Votes
The bill passed both chambers on the voices. The counted divisions below were about amendments or procedure, not final passage.
House agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Senate agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Recorded amendment and procedural votes grouped by chamber. Expand a vote to see the party breakdown.
Senate
Defeated 14 to 31. Support came from Greens and Jacqui Lambie Network. Opposition came from Labor, Liberal Party, Nationals, and One Nation. Minor-party and independent votes were split.
The amendment failed, so the Senate agreed to the original second reading without adding that criticism to the bill's passage. It was a position-taking vote about the India trade package, not a change to the tax law itself.
These are amendment votes, not the final passage vote on the bill itself. The bill passed both chambers on the voices.
Parliamentary debate
Start here — lead voices
Stephen Jones supports the bill because it implements the Australia-India trade agreement by updating tax rules for Indian residents providing technical services remotely to Australian customers and aligning their treatment with residents from other countries.
Read in Hansard ↗Birmingham supports the bill and says it will help implement the Australia-India trade agreement, including tax changes and tariff cuts that will expand exports and strengthen economic ties with India.
Read in Hansard ↗Wilson supports the bill because he says the India trade agreement will eliminate tariffs on most Australian goods, open new opportunities for services and professionals, and strengthen trade diversification.
Read in Hansard ↗Cox says the Greens will support the India trade implementation bill, but only while pressing for a second reading amendmentA proposed change to the bill debate stage, used here by the Greens to raise human rights concerns about the wider India trade deal. that flags human rights abuses in India and says Australia must ensure trade partners uphold human rights.
Read in Hansard ↗All speeches by bloc
6 speakers · 5 support · 1 unclear
“This agreement eliminates tariffs on over 90 per cent of Australian goods exports by value to India. It provides new opportunities for Australian services, companies and professionals who seek to access the Indian market. It has already shown the way towards a more ambitious agreement between Australia and India in the form of the comprehensive economic cooperation agreement, which we hope will continue to advance towards completion.”Read the full speech in Hansard ↗
“The bill will amend the international tax agreements act 1953 to implement the agreement reached between Australia and India on 2 April 2022, as part of the Australia-India Economic Cooperation and Trade Agreement.”Read the full speech in Hansard ↗
“India is, of course, a very, very important partner for Australia as we look ahead to the future. The India-Australia Economic Co-operation and Trade Agreement will be a very important driver of deepening that relationship. It will secure Australia's foothold in the world's fastest-growing major economy and, again, represents significant new trade diversification opportunities.”Read the full speech in Hansard ↗
“I am very pleased to rise to speak on the enabling legislation for these two agreements, the Customs Amendment (India-Australia Economic Cooperation and Trade Agreement Implementation) Bill 2022 and related bills.”Read the full speech in Hansard ↗
“The Australia-India Economic Cooperation and Trade Agreement secures Australia's access to the fastest growing Indian market, a market of 1.4 billion people, and provides a solid basis to negotiate a further comprehensive economic cooperation agreement. The agreement will deliver many benefits to Australian producers and service suppliers. These include eliminating tariffs on 90 per cent of Australia's current goods and exports to India by value and locking in access to many sectors in Australia's third-largest services export market. A trade agreement with India will give Australian exporters a competitive advantage in the Indian market and opportunities for very important trade diversification.”Read the full speech in Hansard ↗
“The bill will amend the International Tax Agreements Act 1953 to implement the agreement reached between Australia and India on 2 April 2022 as part of the Australia-India Economic Cooperation and Trade Agreement.”Read the full speech in Hansard ↗
4 speakers · 4 support
“Under the Australia-India Economic Cooperation and Trade Agreement we, again, see significant benefits. There are important steps, in relation to the treatment of income, through the definition of 'royalties' under the double taxation avoidance agreement and how the amendments to that will bring the tax treatment of Indian residents into line with Australia's approach, but this is also a boundless opportunity in terms of India. In 2020, when I led the last major trade delegation to India, our two-way trade was valued at $24.3 billion and India was Australia's 7th largest partner at that time. The aspiration with this agreement is to take that even further.”Read the full speech in Hansard ↗
“The opportunities and potential of this agreement are enormous. It sits in the background of what we've been able to achieve with India through the Quad, and it now backs that up with a strengthening of the economic relationship. I can't wait for the day that this agreement goes through the parliament and enters into force because it will tick the box on something that Australia has been trying to achieve with India for over a decade.”Read the full speech in Hansard ↗
“As I said, we have been completely bipartisan in supporting the government on these bills; however, why the government has been so haphazard and slow in the implementation of this agreement is absolutely baffling. It shows they have little or no idea on how to govern. Obviously, we support these bills and therefore call on the government to stop the delay. Let's get these agreements implemented as quickly as possible so that Australian exporters can start to reap the benefit of the coalition's hard work.”Read the full speech in Hansard ↗
“We hope these bills go through very quickly and successfully. We'll be supporting them. I commend this bill to the house.”Read the full speech in Hansard ↗
1 speaker · 1 support
“I'll continue to advocate that human rights are non-negotiable and that, in negotiating trade agreements, Australia has a responsibility to ensure that human rights are upheld by all parties that we may trade with. We hope that this is a common-sense statement that the Senate agrees with and that all members of this place will vote to show their support for human rights and for the Australian government to ensure those we trade with also uphold these.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
Senate · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Senate · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Parliament · Finally passed both Houses
Passed both houses
Both houses passed the bill in the same form, completing parliamentary passage.
Assent · Assent
Assent
The Governor-General gave Royal AssentThe final step that turns a bill passed by Parliament into an Act of Parliament., turning the bill into an Act.
