The way that the Australian tax system taxes infrastructure projects means that the tax losses that are created from the early stage expenses in a project are not used by the project sponsor until some time in the future. That means that the net present value of those losses is less than the rate of tax paid on the project income when it commences, and that increases the cost of funding these types of projects. The market has developed several ways for overcoming this loss in value but these are complex and expensive. The Australian Government has announced that it may fix the problem. This paper offers five alternate ways that the Government should consider, including copying that which is done in Canada, as a mean of fixing the problem.
Date of this Version
Gordon D Mackenzie, "Tax Efficient Infrastructure Financing: Reducing Funding Costs" (September 2010). University of New South Wales Faculty of Law Research Series 2010. Working Paper 36.