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Threat to tax loss recoupment for project finance.

Publication date: 09 Dec 05 | Source: WEEKLY TAX BULLETIN

Issue: No 51 2005

Pages: pp.1914-1915

Companies using project finance to develop new ventures usually generate early year losses, thanks mainly to deductions for interest (including during construction) and capital allowances. In order for a company to recoup its tax losses from what would otherwise be taxable profits in later years, it must satisfy the continuity of ownership test (COT) or, failing that, the same business test (SBT).

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Author profiles

Martin Fry FTI
Martin has been a Partner in the Allens Tax Group for over fifteen years, and has focused on resource companies, banks and infrastructure projects. He has extensive experience advising on the tax aspects of capital management transactions for ASX-listed companies, most recently in relation to Rio Tinto's 2015 off-market tender share buyback and on-market share buyback. He has also advised APRA-regulated banks on the tax aspects of hybrid equity and subordinated debt instruments. He advises consortia and financiers on the tax aspects of project finance for major infrastructure projects including M2, M5 and M7 motorways, among others. He is a Senior Fellow of the Law Faculty of the University of Melbourne. - Current at 12 February 2016
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