Infrastructure – Australian federal tax framework

This information is the first of two parts. The next part will cover privatisations and other related matters; we will consult with stakeholders on the content of that part shortly. This information is also intended to be updated when necessary to cover new scenarios, issues or changes in applicable laws.

Statement of intent

The Australian Taxation Office (ATO) recognises the importance of infrastructure and privatisation to Australia.

We play an integral role in facilitating the continuation and expansion of this essential part of the economy.

For this reason, it is our intention to work collaboratively with industry and state government to:

• maximise certainty about the way we administer the law
• ensure that the tax system is administered in a sensible and pragmatic way (to the extent the law allows)
• provide assurance to the federal government that an appropriate amount of tax is collected from these transactions
• minimise the compliance costs of bidders, operators and state governments.

We see this Infrastructure – Australian federal tax framework as forming part of our implementation of this statement of intent.

Introduction

What is this framework about?

This framework sets out our overall position on standard-form infrastructure and privatisation transactions. It outlines what we see as the most common infrastructure and privatisation transactions, and considers how we see the Australian tax system applying to them.

It is not meant to provide the answer to all your questions, or explain the tax treatment of every type of transaction you might enter into. Rather, it is a guide on how the tax law will apply to standard-form transactions.

This framework is also intended to be a living document. As new transactions emerge, the framework may have to be updated to reflect them. The same can be said about changes to tax laws that may impact upon the analysis.

How is this framework different to other ATO guidance products?

This framework does not bind us to a particular view of the law. Only taxation rulings, taxation determinations or private rulings can do that.

However, if you have transactions that are similar to the transactions outlined in this framework, our officers would be expected to follow the overall views set out here. This includes officers that issue rulings as well as those conducting compliance activities.

This framework will link to various binding publications that we have issued and consider relevant to the issue being discussed.

Contents of the framework

This framework outlines:

• The tax implications of the construction of social infrastructure using the 'securitised licence' Public Private Partnership (PPP) model.
• How the investors into PPPs will themselves be taxed, including what happens when an investor exits.
• The tax implications of the privatisation of Government related entity (government) assets using a long-term lease.
• How the investors into infrastructure and privatisation will themselves be taxed, including what happens when an investor exits.