Key Points:
The Commonwealth Government, as part of its 2011-12 Budget,
announced its intention to "introduce a new tax incentive
designed to remove impediments in the tax system that discourage
private investment in infrastructure projects."
Background
Partnerships between the government and the private sector are a
well recognised option for infrastructure projects in Australia.
However, in some respects the tax treatment of infrastructure
projects has become a disincentive to private investment. The
proposed changes are intended to eliminate particular concerns
regarding the ability of investors to obtain the full benefit of
early stage tax deductions.
Infrastructure projects involve significant up-front costs
(generally during the construction phase) which give rise to early
stage tax deductions and carried forward tax losses. Currently, the
value of such tax losses to private investors is limited as:
