ARTICLE · 29 JUNE 2011

GST risk for infrastructure/PPP projects

DLA Piper Australia

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In a recent Decision Impact Statement, the ATO has suggested that significant GST liabilities may arise for certain types of infrastructure/PPP projects.

AustraliaTax

Jonathan Ackerman

In a recent Decision Impact Statement, the ATO has suggested that significant GST liabilities may arise for certain types of infrastructure/PPP projects. These GST liabilities need to be carefully managed by the parties, including through the use of private GST rulings.

GST is payable on both monetary payments, as well as non-monetary consideration (ie a barter transaction). Where there is non-monetary consideration, the market value of both sides of a transaction needs to be determined and may be subject to GST on that value. In infrastructure/PPP projects where the government grants a concession to the project entity in return for that entity building and operating a facility, a question arises as to whether these 'in-kind' obligations of the parties constitute non-monetary consideration for GST purposes. An example of such an arrangement is a state government granting a 30 year concession over a tollway to a consortium in return for the consortium building and

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