Tax framework on infrastructure and privatisation transactions

Tax framework on infrastructure and privatisation

The Australian Taxation Office (ATO) has developed an Australian tax framework which sets out the ATO’s overall position on standard-form infrastructure and privatisation transactions. However, as has been the experience on recent privatisations KPMG has been involved in, there is nothing ‘standard-form’ when it comes to tax structuring for large scale infrastructure privatisations.

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KPMG Australia

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Building framework

On 30 October 2015, the ATO released the first half of the Framework setting out it’s views on the income tax law and the Goods and Services Tax (GST) applicable to a ‘social’ Public Private Partnerships (PPPs) projects and the tax implications for the equity investors into social PPPs.

The second half of the Framework is intended to cover privatisations and other related matters. Although the ATO has consulted with stakeholders, including KPMG on the contents of the second half of the Framework since March 2016, this part of the Framework has still not been finalised by the ATO.

KPMG has released The Australian Tax Framework: What are the ATO’s concerns on privatisation and PPP projects?

In this edition

This newsletter outlines:

  • how the Framework works
  • the PPP Framework and what is the ATO’s concerns in relation to PPPs?
  • privatisation and infrastructure and what is the ATO’s concerns in relation to privatisations and infrastructure?
  • the rent charged under the sublease between Asset Trust and Operating Entity
  • interest on a loan from Asset Trust to Operating Entity
  • unequal gearing between Asset Trust and Operating Entity
  • the allocation of the purchase price between Asset Trust and Operating Entity on a privatisation.

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