Australian Taxation Office denies interest withholding tax exemption to US financial institution

The Australian Taxation Office issued its Interpretative Decision ID 2006/133 in which it states that payments made by an Australian resident to a US financial institution will be subject to Australian interest withholding tax on the basis that the payments are referenced to the profits of the Australian resident.
Art. 11(3)(b) of the Australia-US tax treaty (the tax treaty) exempts interest derived by a financial institution from interest withholding tax. However, Art.…