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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:

Hayden SCOTT
Hayden is a Director of Greenwoods & Freehills Pty Limited. He advises listed entities in the energy & resources and financial services industries on income tax issues raised in M&A, funding, special project and general corporate tax matters. His areas of interest and expertise include the taxation of financial arrangements (all four tranches) and tax consolidation. Hayden is a member of the NTLG Finance & Investment Subcommittee and it’s TOFA Working Party. He also chairs the Taxation Institute’s Education Committee (Victoria). Hayden frequently presents and is regularly published on corporate income tax matters.
Current at 9 February 2009 Current at 14 May 2009 Click here to expand/collapse more articles by Hayden SCOTT.
Stuart Landsberg
Current at 13 July 2014 Click here to expand/collapse more articles by Stuart Landsberg.

Jack Reid
Jack is a Consultant with PricewaterhouseCoopers.
Current at 1 November 2014 Current at 04 November 2014


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