Document ID: chunk:federal_register_of_legislation:C2008A00102:schedule:6:p34
Version: federal_register_of_legislation:C2008A00102
Segment Type: schedule
Provision Reference: sch 6 (pt 34/39)
Character Range: 85415–88319

equipment or the role of equipment in income producing activities are relevant in determining whether the equipment is substantial on the basis of the facts and circumstances of each particular case.

c)  It is understood that the term "substantial equipment" may include:

(i) industrial earthmoving equipment or construction equipment used in road building, dam building or powerhouse construction;

(ii) manufacturing or processing equipment used in a factory; and

(iii) oil or drilling rigs, platforms and other structures used in the petroleum or mining industry.

6.  With reference to paragraph 7 of Article 5 (Permanent Establishment) of the Convention:

It is understood that the term "substantially negotiate" is included in order to remove any doubt as to the existence of a permanent establishment where contracts that have been negotiated by an agent in a Contracting State are formally concluded in the other Contracting State.

7.  With reference to Articles 6 (Income from Real Property), 7 (Business Profits), 21 (Other Income) and 22 (Source of Income) of the Convention:

It is understood that nothing in these Articles shall prevent a Contracting State from applying its domestic tax law in the case where income is derived by a resident of that Contracting State from real property situated in that Contracting State, even where such a resident carries on business in the other Contracting State through a permanent establishment situated therein and the real property is effectively connected with such permanent establishment.  In this case, such income shall not be deemed to arise from sources in that other Contracting State for the purposes of applying the domestic tax law of the first‑mentioned Contracting State.

8.  With reference to subparagraph f) of paragraph 2 of Article 6 (Income from Real Property) of the Convention:

It is understood that the rights referred to in that subparagraph principally cover:

a)  rights to receive payments where the person receiving the payments grants rights to explore for or exploit natural resources; and

b)  rights to receive payments which arise or are quantified by reference to the exploitation of, or exploration for, natural resources in circumstances where the person receiving the payments may not have an interest in the natural resources or rights over the extraction of, or exploration for, natural resources.

9.  With reference to Articles 7 (Business Profits) and 13 (Alienation of Property) of the Convention:

It is understood that, where an enterprise of a Contracting State which has carried on business in the other Contracting State through a permanent establishment situated therein, receives, after the enterprise has ceased to carry on business as aforesaid, income, profits or gains attributable to the permanent establishment, such income, profits or gains may be taxed in that other Contracting State in