Source: Taxation In Australia Journal Article
Published Date: 1 Aug 2014
This is one of a series of articles that will consider the tax issues associated with infrastructure ownership. We will suggest reforms that governments should consider to realise maximum value for these assets, without compromising future revenue through creating tax loopholes or providing overly generous tax concessions. This article discusses the application of Div 6C of Pt III of the Income Tax Assessment Act 1936 to infrastructure projects. Division 6C is concerned with income of certain trading trusts, and is an anti-avoidance measure, the purpose of which is to limit the forms of income that can benefit from “flow-through” taxation.
The article argues that the application of Div 6C to infrastructure assets introduces complexity, uncertainty and undue administration. These risks and costs necessarily translate into lower prices for infrastructure assets. The article contends that, if Australian taxpayers wish to maximise the value that they receive for privatised infrastructure assets, Div 6C needs to be reformed.
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