28 June 2018
Media Release - #2018066, 2018

Ensuring foreign investors pay Australian tax – integrity measures paper released on stapled structures

The Turnbull Government is continuing to protect the integrity of Australia's corporate tax system to ensure foreign investors pay their fair share of tax, with the closure of a former Labor government loophole that gave foreign investors a discounted tax rate that cannot be accessed by Australian investors.

In March, I announced a package of measures to reform the tax treatment of stapled structures and similar arrangements. The package ensures trading income for foreign investors is taxed at the corporate tax rate, and limits access to broader concessions for passive income utilised by foreign governments and foreign pension funds.

Today I am releasing a paper for public consultation outlining the conditions stapled entities must comply with to access the proposed infrastructure concession and transitional arrangements.

These conditions were flagged in the Government’s announcement earlier this year addressing the tax integrity risks posed by stapled structures, and provides a further safeguard against aggressive cross‑staple pricing arrangements during these transition and concession periods.

The conditions include:

  • The extension of existing integrity rules that apply to Managed Investment Trusts (MITs) to ensure that all staples are required to set their rent at market prices; and
  • The introduction of statutory caps on the amount of cross-staple rent that is able to access the concessional rate of withholding tax (available under the MIT regime) for new and existing infrastructure projects during the transition or concession period.

Treasury is currently preparing exposure draft legislation on the proposed rules outlined in the paper.

The proposal paper is available on the Treasury website. The Government encourages all interested parties to make a submission, with draft legislation will be released shortly. Submissions close on 12 July 2018.