Published on 01 Nov 09
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
Capital allowance deductions for the assets used in PPP infrastructure projects can be denied to the private sector participant in the project where government retains the economic ownership of the asset. Two sets of rules that attempted to characterise PPP arrangements where government retained economic ownership had led to taxpayer uncertainty and delays in projects. The Ralph Review of Business taxation recommended that these rules be replaced with ones that would create more certainty for private sector participants in PPP projects. The rules that have now been inserted, after an aborted attempt at using banking type concepts of risk allocation as a measure of economic ownership, use concepts of control of use and predominant economic ownership to identify transactions where capital allowance deductions are denied. That, together with more generous safe harbours, specific exclusions and better clarification of control, seems to have achieved the desirable outcome of private sector participants being able to consider the application of these rules to a project with reasonable certainty.
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