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Negative control


Equity investors in Australian infrastructure commonly seek protection of their investments by obtaining some certainty over the investment vehicle’s governance and its operations, through entering agreements covering these areas. The ATO has expressed the view that the protections employed by minority equity investors may confer on individual investors the control (“negative control”) of the vehicle and its operations. This article explores the ATO’s views and considers whether an alternative view is open, one which would provide greater certainty, and which would not have an unreasonably adverse impact on infrastructure investment.

The article considers the ATO’s views on the concept of control in the context of the public trading trust regime, and the thin capitalisation regime. The authors then provide a deeper analysis, and conclude with a discussion of possible ways to undo or mitigate the uncertainty caused by the ATO’s position.

Author profiles:

Jack Reid
Jack is a Consultant with PricewaterhouseCoopers.
Current at 1 November 2014

Hayden Scott FTI
Hayden, FTI, is a Partner at PwC in their Tax & Legal practice. He has over twenty years of experience in the tax environments of the Big 4, top-tier law firms, and Government (both Treasury and ATO). Hayden extensively advises clients in the financial services and infrastructure industries, as well as extensively advising outside those industries on finance tax matters. Additionally, Hayden is a contributor to the broader tax policy and reform conversation, having been a member of the (now defunct) National Tax Liaison Group Finance and Investment Subcommittee, and, more recently, an expert panellist on the Board of Taxation’s review of the debt-equity rules. Current at 17 March 2016 Click here to expand/collapse more articles by Hayden SCOTT.

Stuart Landsberg FTI
Stuart is a partner specialising in international tax and the energy and resources industry. He has over 10 years experience focusing on the resources industry, including three years in PwC’s Sydney office advising clients on the tax implications of inbound and outbound investment. Stuart is a member of the firm’s Australian international tax and energy and resources focus groups and regularly contributes to the firm’s thought leadership in both areas. Current at 11 April 2016 Click here to expand/collapse more articles by Stuart Landsberg.
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