Tax Incentive For Major Australian Infrastructure Projects
Friday, April 19, 2013
The Australian Government is consulting on draft legislation for the introduction
of a new tax loss incentive for major infrastructure projects.
The consultation document sets out the impetus for reform: "Infrastructure
projects often experience long leads between incurring deductible expenditure
in the construction phase and earning assessable income in the operational phase.
Tax losses are therefore accumulated and carried forward to later years awaiting
the receipt of income. As such, the real value of losses may be eroded over
time, disadvantaging infrastructure investment compared to other types of investment."
Under the proposed changes, projects will be designated as eligible by the
Infrastructure Coordinator, and will need to be included on Infrastructure Australia's
Infrastructure Priority List and assessed as "Ready to Proceed." At
least a part of the project must be privately owned or financed, and construction
of the project can not have commenced. The value of carry forward tax losses
will be uplifted by the 10-year Government bond rate. Company losses will be
exempt from the continuity of ownership test and the same business test, while
fixed trusts will be exempt from the trust loss and bad debt deduction tests.
Announcing the consultation, Assistant Treasurer David Bradbury said: "We
are removing tax disincentives to encourage more private sector investment in
infrastructure projects. The measure will support up to AUD25bn (USD25.9bn)
in new private sector infrastructure spending, including major transport projects
that will help transform our cities and make our international gateways more
The consultation is open until April 30.