Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)Chapter 5 Exemption for Global Infrastructure Hub Ltd
Outline of chapter
5.1 Schedule 5 to the Bill amends the ITAA 1997 to continue to provide the GI Hub with an exemption from the liability to pay income tax on its ordinary and statutory income.
Context of amendments
5.2 The GI Hub was established by G20 Leaders at the 2014 Brisbane Summit. It was initially given a four-year mandate to December 2018 to advance international efforts to lift infrastructure investment. In July 2018, the G20 Finance Ministers agreed to extend the mandate GI Hub for an additional four years through to December 2022.
5.3 The GI Hub is funded by contributions from the Australian Government and other G20 members. To avoid these payments being subject to income tax, the GI Hub was granted tax exempt status under Division 50 of the ITAA 1997. The current exemption expires on 30 June 2023.
5.4 In October 2021, the G20 decided to extend the GI Hub's mandate for a further period to 2024. The GI Hub will receive financial contributions from G20 members in this period. As a result, the GI Hub's tax-exempt status under Division 50 of the ITAA 1997 will be continued for a further year.
Detailed explanation of new law
5.5 Schedule 5 to the Bill amends Division 50 of the ITAA 1997 to extend the GI Hub's exemption from income tax for a defined period.
5.6 The GI Hub will continue to be listed as an income tax exempt entity, meaning that any payments made to it by the Australian Government, foreign governments, non-government organisations and other contributors will not be subject to income tax.
5.7 The exemption currently applies from 24 December 2014 until 30 June 2023. The amendments apply to the income year starting on 1 July 2023, extending the current exemption until 30 June 2024. This will ensure that all contributions and other income of the GI Hub received during the period from 24 December 2014 until 30 June 2024 will be exempt from tax. [Schedule 5, item 1, table item 8.4 of section 50-40 of the ITAA 1997]
Commencement, application, and transitional provisions
5.8 The amendments commence on the first 1 January, 1 April, 1 July or 1 October after the day the Act receives the Royal Assent.
5.9 The amendments apply to contributions and income of the GI Hub made in the income year commencing on 1 July 2023. This includes any contributions or income received on or after 1 July 2023 and before the amendments commence.