Super tax hurdles scrapped but policy is key

Last night Swan announced some tax impediments that discourage superannuation funds from investing in infrastructure projects would be scrapped.IPA chief executive Brendan Lyon said the reforms were needed but there was still plenty of heavy lifting to be done.“The government will have to make capital available for the big projects sitting on Infrastructure Australia’s shelf, if we are going to complete ring roads and public transport networks in Australia’s major cities and deal with key export constraints,” Lyon said.“For a range of reasons, most large infrastructure projects are delivered through structures that are disadvantaged by the tax system.“Under existing arrangements, the significant tax losses suffered in the early phase of a project’s life are extinguished when a substantial change in ownership occurs, such as the sale of a project to a superannuation fund.”Lyon said the new arrangements proposed by the Gillard government would protect and conserve the value of losses, creating better incentives to engage superannuation funds in building Australia’s backlog of projects.Lyon sees the superannuation funds as an untapped resource that could provide the capital needed to fund Australia’s mega infrastructure projects where the federal government cannot.“The tax reforms outlined tonight do not solve the entire problem of trapped tax losses, but they are a major step forward and a welcome acceptance of the issue,” he said. “Even if we see substantial increases in the infrastructure investment of the Commonwealth and states in the future, there remains a huge gap that needs to be filled by the private sector and superannuation funds.“Getting superannuation engaged and investing in infrastructure is a key policy outcome and this is an area where much remains to be done.”

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