The Government has released for comment draft legislation and explanatory material for the tax treatment of water infrastructure improvement payments. In February 2011, the Government had announced that it would eliminate the timing difference between when payments are taxed and when deductions are available for water efficiency investment grants under the Sustainable Rural Water Use and Infrastructure Program (SRWUIP).
Key arrangements proposed in the draft legislation include:
- making qualifying water infrastructure improvement payments free from income tax and exempt from CGT;
- denying deductions for expenditures to the extent that they are funded by such payments;
- specifying when a payment received by a taxpayer will be a qualifying payment.
The changes are proposed to apply to payments made by the Commonwealth from 1 April 2010.
A list of programs for which the Government has decided the special taxation arrangements will apply, along with others currently under consideration and likely to be added has also been released by the Government. The Assistant Treasurer added the draft legislation contains provisions that also enable other Program initiatives to be added from time to time as they are approved and announced.
The draft legislation, explanatory material, and related consultation materials, are available on the Treasury website.
COMMENTS are due by 13 August 2012.
Source: Assistant Treasurer’s media release No 073, 13 July 2012
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