Adesso Consulting is concerned about the confusion to the law posed by the Commissioner's arguments in the ACN 154 Case. The decision in Benidorm Case is welcomed and the Court of Appeal congratulated by distinguising law from lore.
The Full Federal Court in two unamimous judgements determined the term arm's length must be understood from both a risk adjusted basis and a net present value basis. Both these cases will be welcomed by all international investors in infrastructure.
The changes proposed by the Treasurer will not result in any major investment by non residents. The proposals ignore Division 415 and assume green field projects are revenue positive from the first year of operation. If the losses are indexed it is likely that the project will become tax positive towards the end of the 15 year period. Further the proposals will result in debates between the Commissioner and the taxpayer over what is a land asset. Adesso Consulting's proposals will limit the cost to the revenue by firstly increasing the tax rate to 20% and disallowing all related party debt. Further compliance will be minimised by ensuring that the new rate applies to all income. Finally by treating the vehicle as tax transparent Australian super funds will also benefit.
The High Court has disallowed expenditure incurred by a taxpayer to acquire a 10 year gaming license under both Section 8-1 and Section 48-880. In particular the valuation methodology, the meaning of goodwill for tax purposes, the operation of the black hole deduction provisions needs to be reinterpreted by investors, valuers and those involved with greenfield infrastructure investment.
The OECD is proposing to significantly increase tax on industries that produce green house emissions and at the same time subsidise low income citizens with part of the additional revenue collected.