by Cheryl Goh, FTI *
The first ATO Taxpayer Alert
for the year has packed a punch for Australia’s infrastructure sector.
Following the controversial release of Taxpayer Alert TA 2017/1 and the hotly
anticipated draft of the Australian Tax Framework, stapled structures are now,
more than ever, on the ATO watch list. How will TA 2017/1 impact stapled groups
and their investors? Amidst the uncertainty, advisers are left to fill in the
blanks once more. Industry leaders and
senior members of the ATO will converge in May at The Tax Institute’s National Infrastructure Conference 2017 to shed some light on the tax treatment of
stapled structures.
The first ATO Taxpayer Alert
for the year has packed a punch for Australia’s infrastructure sector.
Following the controversial release of Taxpayer Alert TA 2017/1 and the hotly
anticipated draft of the Australian Tax Framework, stapled structures are now,
more than ever, on the ATO watch list. How will TA 2017/1 impact stapled groups
and their investors? Amidst the uncertainty, advisers are left to fill in the
blanks once more. Industry leaders and
senior members of the ATO will converge in May at The Tax Institute’s National Infrastructure Conference 2017 to shed some light on the tax treatment of
stapled structures.
ATO’s approach to stapled structures
Investment in infrastructure
is critical for the Australian economy and governments are increasingly looking
to the private sector to develop essential infrastructure assets to attract
sufficient capital investment and boost economic growth. Stapled structures
play an important part in this.
is critical for the Australian economy and governments are increasingly looking
to the private sector to develop essential infrastructure assets to attract
sufficient capital investment and boost economic growth. Stapled structures
play an important part in this.
Stapled structures have been
around for the last 30 years and it is no secret that the use of these
structures offers tax advantages to certain investors when compared with the
use of a company structure for the same type of investment. The ATO, however,
are not after traditional stapled structures. What they are coming for are arrangements that are entered into for the
dominant purpose of obtaining a tax benefit.
around for the last 30 years and it is no secret that the use of these
structures offers tax advantages to certain investors when compared with the
use of a company structure for the same type of investment. The ATO, however,
are not after traditional stapled structures. What they are coming for are arrangements that are entered into for the
dominant purpose of obtaining a tax benefit.
In light of this, Deputy
Commissioner Jeremy Hirschhorn, CTA (ATO)
will deliver his keynote address on the ATO’s current approach in managing
infrastructure and privatisation transactions. His session will focus on the
ATO’s approach to stapled structures, the draft Australian Tax Framework (the
Framework) and negative control in the context of Division 6C.
In his keynote session, Darren Anderson (BIS Oxford Economics)
will speak on the challenges of long-term economic forecasting in
infrastructure transactions. He will consider the requirements of debt and
equity participants and sector-specific variations.
will speak on the challenges of long-term economic forecasting in
infrastructure transactions. He will consider the requirements of debt and
equity participants and sector-specific variations.
Bumpy road ahead for infrastructure groups
TA 2017/1 is a loud warning to
stapled infrastructure groups and their investors who attempt to
re-characterise trading income into passive income to attract concessional tax
treatment. The recently released Framework reinforces this by highlighting the
ATO’s concern with investors endeavouring to exploit the tax benefits of stapled
structures inappropriately.
stapled infrastructure groups and their investors who attempt to
re-characterise trading income into passive income to attract concessional tax
treatment. The recently released Framework reinforces this by highlighting the
ATO’s concern with investors endeavouring to exploit the tax benefits of stapled
structures inappropriately.
While the Framework provides
broad guidance on the indicia of structures which may attract the
Commissioner’s attention, there is little detailed explanation of ‘tax
benefits’ and what makes them inappropriate in a Part IVA context. In their
session, Stuart Dall (Pitcher
Partners) and Peter Walmsley (ATO)
will examine how Part IVA might apply to stapled structures. The relevance of
other integrity measures such as Division 6C and the NALI rule will also be
considered.
broad guidance on the indicia of structures which may attract the
Commissioner’s attention, there is little detailed explanation of ‘tax
benefits’ and what makes them inappropriate in a Part IVA context. In their
session, Stuart Dall (Pitcher
Partners) and Peter Walmsley (ATO)
will examine how Part IVA might apply to stapled structures. The relevance of
other integrity measures such as Division 6C and the NALI rule will also be
considered.
FIRB and privatisation: join the debate
The Institute’s conference
program is tailored to address all the topical issues that affect the
infrastructure industry. Privatisation issues, debt/equity rules, the Division
855 and Division 6C interaction and Part IVA are just a few of the topics that
presenters will speak on.
program is tailored to address all the topical issues that affect the
infrastructure industry. Privatisation issues, debt/equity rules, the Division
855 and Division 6C interaction and Part IVA are just a few of the topics that
presenters will speak on.
This year, panel discussions
on privatisation and FIRB are sure to be highlights. With speakers representing
the ATO as well as industry, these sessions will no doubt spark plenty of
robust debate.
on privatisation and FIRB are sure to be highlights. With speakers representing
the ATO as well as industry, these sessions will no doubt spark plenty of
robust debate.
Facilitated by Steven Economides, CTA (KPMG), the
privatisation panel session will be a discussion between the ATO and two equity
investors focusing on the interaction with the FIRB, value allocation, gearing
across the staple and margins on cross staple loans and their interaction with
the AMIT rules.
privatisation panel session will be a discussion between the ATO and two equity
investors focusing on the interaction with the FIRB, value allocation, gearing
across the staple and margins on cross staple loans and their interaction with
the AMIT rules.
The FIRB panel session,
facilitated by Wendy Rae (Allens),
highlights the process by which FIRB decisions are made and will explore the
key areas of focus from the ATO’s perspective, the impact of TA2017/1 on FIRB
applications and the ATO and FIRB interaction.
facilitated by Wendy Rae (Allens),
highlights the process by which FIRB decisions are made and will explore the
key areas of focus from the ATO’s perspective, the impact of TA2017/1 on FIRB
applications and the ATO and FIRB interaction.
Join us
The Tax Institute’s NationalInfrastructure Conference is the only conference in Australia focused
entirely on tax issues affecting infrastructure. It’s a pertinent time to
register for our conference given the uproar that was TA 2017/1 and the
uncertainty it has caused for the tax treatment of stapled structures.
entirely on tax issues affecting infrastructure. It’s a pertinent time to
register for our conference given the uproar that was TA 2017/1 and the
uncertainty it has caused for the tax treatment of stapled structures.
Find out more about what’s on
offer in the program (PDF) and join us at the Sheraton, Melbourne, 25-26 May 2017. We
look forward to seeing you there.
offer in the program (PDF) and join us at the Sheraton, Melbourne, 25-26 May 2017. We
look forward to seeing you there.
* Cheryl Goh, FTI, is The Tax Institute's Tax Content Consultant
