Outbound Infrastructure Investment : Key Issues in Structuring Outbound Investments


Australia’s infrastructure deficit, stable legal system and AAA credit rating has led to a focus on Australian infrastructure investment opportunities. This has naturally led to increasing competition for Australian assets and eye-watering multiples. In turn, this has encouraged Australian infrastructure investors to consider the merits of seeking higher returns from offshore infrastructure assets.

The question is whether the Australian tax system adequately facilitates investment in offshore infrastructure.

In his paper, presented at last year’s National Infrastructure Conference, Edward Consett, ATI, (EY) presented the paper ‘Outbound Infrastructure Investment – Key Issues in Structuring Outbound Investments’, where he looked at common offshore infrastructure investment structures and consequences for Australian investors. His paper is excerpted in this post.

Speaking to us before the Conference, Edward said “In theory, investing offshore from Australia should be relatively straightforward. However, our mismatch of historic and recent legislative regimes, overlayed with existing case law and ATO practice, means that unexpected tax risks can hide within otherwise straightforward investment structures.”

In his introduction, Edward stated that his paper seeks to:
  • contextualise Australia’s tax regime relevant to offshore infrastructure investments; 
  • provide an overview of the key aspects of Australia’s tax regime that are relevant to investing in offshore infrastructure; and 
  • summarise the key decisions for choosing an Australian aggregation vehicle for outbound infrastructure investments. 
The presentation of Edward’s paper involves a demonstration of these principles in practice, as well a description of practical issues that may be faced by Australian investors seeking exposure to foreign infrastructure assets.


It looks at the features of Australia’s international tax regime that commonly apply to outbound infrastructure investments, including:
  • Part X of the 1936 Act – Attribution of Income in respect of controlled foreign companies; 
  • Division 770 – Foreign income tax offsets; 
  • Division 820 – Thin capitalisation; and 
  • Division 830 – Foreign hybrids. 
It also covers the following corporate tax entity and company regimes:
  • Subdivision 768-A – Returns on foreign investment; 
  • Section 23AH of the 1936 Act – Foreign branch income of Australian companies not assessable; 
  • Subdivision 768-G - Reduction in capital gains and losses arising from CGT events in relation to certain voting interests in active foreign companies; and 
  • Division 802 – Conduit foreign income.
For each, Edward takes a ‘what?, why? and but?’ approach to summarise the issues and complexities involved. He notes that his approach is to highlight the key aspects of each of these regimes as they apply to outbound infrastructure investments.

His paper concludes by looking at some ‘puzzling pieces’, with a table attempting to summarise the key decisions for choosing an Australian aggregation vehicle for outbound infrastructure investments.

The paper can be accessed here.

Edward Consett, ATI, is a Director in the Melbourne office of EY. He advises on the tax issues for medium to large-scale infrastructure transactions, including privatisations, PPP, renewable energy and secondary market transactions.

A member of The Tax Institute, and of Chartered Accountants Australia & New Zealand, he is also a Solicitor of the Supreme Court of Victoria and a lecturer at the University of Melbourne.

Don’t miss this year’s National Infrastructure Conference, taking place in Melbourne in May, which features a special Investor Panel Session. The session will provide perspectives on the competitiveness of foreign investors in Australian infrastructure post the staples and other income tax reforms, which may impact both foreign investors and local investors who co-invest with foreigners.

Hear from a global panel of tax experts on how the reforms have changed the investment landscape in Australia, the benefit of the transitional provisions and how they are looking at the future, including Larissa Davis, FTI, (Morrison & Co), Kelly Heezen (AMP Capital Investors), Gina Maio (Australian Super), Ruth Woolmer (GIC (SNG), facilitated by Hugh Funder (Austrade).

This year’s program also looks at staples reform legislation, renewable energy, PPPs and trends in tax litigation, features keynotes from Citi’s Nick Forster and Rebecca Saint of the Australian Taxation Office. With increasing demand from the overseas market, we are delighted to have Justin Davis and Landon McGrew from KPMG (US) presenting on US tax reforms and BEPS measures, as well as Ruth Woolmer of GIC in Singapore, in the Investor Panel Session.

Find out more about these sessions and the rest of the program on our website.

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