Time To Review Asset Financing Arrangements

Entities undertaking social infrastructure projects such as hospitals, schools, water treatment and sewerage plants should now be reviewing their traditional approach to asset financing arrangements, especially their debt funding structures, following the introduction of long-awaited changes to the tax laws.

The Tax Laws Amendment (2007 Measures No. 5) Bill 2007, which was introduced into Parliament yesterday, will introduce proposed new rules relating to asset financing arrangements involving tax preferred entities into Division 250 of the Income Tax Assessment Act 2007. Subject to certain transitional rules, they will replace section 51AD and Division 16D of the Income Tax Assessment Act 1936 with effect from 1 July 2007.