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17 May 2018

Australian Government releases Draft Law on taxation of stapled structures including measures targeting foreign investment beyond staples

On 17 May 2018, the Australian Government released exposure draft (ED) legislation and explanatory material for public consultation on the taxation of stapled structures and other foreign investor integrity measures. This follows the policy package of measures released 27 March 2018.1 The measures covered in the ED are:

  • Taxing trading income that is converted to passive income at the corporate tax rate
  • Amending the thin capitalization rules to prevent foreign investors from using multiple layers of flow-through entities to "double gear" their investments
  • Limiting the foreign pension fund withholding tax exemption for interest and dividends to portfolio investments only
  • Creating a legislative framework for the existing tax exemption for foreign governments (including sovereign wealth funds), and limiting the exemption to passive income from portfolio investments

Announced measures preventing foreign investors from accessing Managed Investment Trust concessions on rent and capital gains tax from agricultural land is not included in this ED nor are the stapled infrastructure concession and transitional arrangements.

The consultation closes 31 May 2018.

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ENDNOTE

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Australia), Energy and Infrastructure, Sydney

  • Richard Lambkin
    richard.lambkin@au.ey.com

Ernst & Young (Australia), Energy and Infrastructure, Brisbane

  • Paul Laxon
    paul.laxon@au.ey.com

Ernst & Young (Australia), Transaction Tax, Melbourne

  • Richard Buchanan
    richard.buchanan@au.ey.com

Ernst & Young (Australia), Financial Services, Sydney

  • Daryl M Choo
    daryl.choo@au.ey.com

Ernst & Young (Australia), Real Estate, Sydney

  • George Stamoulos
    george.stamoulos@au.ey.com
  • Stephen J Chubb
    stephen.chubb@au.ey.com

Ernst & Young LLP, Australian Tax Desk, New York

  • David Burns
    david.burns1@ey.com

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ATTACHMENT

PDF version of this Tax Alert

Document ID: 2018-5663

 
 

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