Australia: Stapled structures

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Australia: Stapled structures

intl-updates-small.jpg

The Australian government is reviewing the tax policy applicable to stapled structures, which are commonly used in the real estate, infrastructure and related sectors following the issue of Australian Taxation Office (ATO) Taxpayer Alert 2017/1 and a Treasury consultation paper earlier in 2017.

Many traditional, critical infrastructure assets, including roads, rail, ports, certain utilities, electricity generation, transmission and distribution assets and related infrastructure are commonly held in stapled structures (i.e. stapled companies and trusts, the latter being a 'flow through' vehicle).

The ATO, treasury and government have been concerned about the significantly expanded use of stapled structures in recent years, including both listed and unlisted trusts, including managed investment trusts. Foreign investors currently secure concessional withholding tax (15%) on distributions of net income (essentially rental income and capital gains) by qualifying managed investment trusts.

The government review has attracted much interest from a broad range of foreign investors in Australian real estate, infrastructure and related assets, including foreign-based multinational corporations, foreign pension funds, sovereign wealth funds and other institutional investors. The review is expected to be progressed and recommendations made for potential changes in the tax policy applicable to stapled structures later in 2017/early 2018.

It is noteworthy that several of the recently privatised infrastructure assets – electricity distribution and transmission and ports – in New South Wales have been structured by way of stapled structures.

Whistleblower initiative

Separately, Kelly O'Dwyer, minister for revenue and financial services, recently established an expert advisory panel to advise the government on proposed whistleblower initiatives and related legislative reform.

The government is committed to meaningful protection for individuals who report corporate fraud or serious misconduct, tax evasion or avoidance and has mandated the expert panel to develop a strong legal framework to enable regulators and law enforcement agencies to quickly and decisively act on whistleblower information and reports.

Affordable housing managed investment trusts

Finally, the government has recently issued exposure draft legislation to enable managed investment trusts (MITs) to invest in affordable housing (for low income groups) and thereby access, amongst other things, the concessional MIT withholding tax rate of 15% for eligible foreign residents.

This initiative is strongly targeted at attracting foreign investors into this market segment in Australia that is expected to significantly develop in the coming years. There are strict qualifying criteria and it is expected that the draft legislation will progress into law in the short term, as it is meant to be applicable from July 1 2017.

McCormack

Jock McCormack

Jock McCormack (jock.mccormack@dlapiper.com)

DLA Piper Australia

Tel: +61 2 9286 8253

Fax: +61 2 9286 8007

Website: www.dlapiper.com

more across site & shared bottom lb ros

More from across our site

APAs should provide a pragmatic means to agree to an arm's-length outcome for an Australian entity and for the ATO, the tax authority said
Overall revenues and average profit per partner also increased in the UK, the ‘big four’ firm revealed
Increasingly complex reporting requirements contributed towards the firm’s growth in tax, it said
Sector-specific business taxes, private equity tax treatment reform and changes to the taxation of non-residents are all on the cards for the UK, authors from Herbert Smith Freehills Kramer predict
The UK’s Labour government has an unpopular prime minister, an unpopular chancellor and not a lot of good options as it prepares to deliver its autumn Budget
Awards
The firms picked up five major awards between them at a gala ceremony held at New York’s prestigious Metropolitan Club
The streaming company’s operating income was $400m below expectations following the dispute; in other news, the OECD has released updates for 25 TP country profiles
Software company Oracle has won the right to have its A$250m dispute with the ATO stayed, paving the way for a mutual agreement procedure
If the US doesn't participate in pillar two then global consensus on the project can’t be a reality, tax academic René Matteotti also suggests
If it gets pillar two right, India may be the ideal country that finds a balance between its global commitments and its national interests, Sameer Sharma argues
Gift this article