• Service: Tax, Corporate Tax, Superannuation & Pension Funds, Topics, Infrastructure
  • Industry: Financial Services, Superannuation
  • Type: Regulatory update
  • Date: 31/10/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Sheena Kay

Sheena Kay
Partner, Tax

+61 3 9288 6684

Infrastructure – some tax deterrents for superannuation entities 

by Sheena Kay, Financial Services Specialist

Infrastructure has been identified as a key priority for the Coalition Government. Indeed, Tony Abbott is quoted as saying he wants to be known as the 'Infrastructure Prime Minister'. While much has been discussed about the mechanics of investments by Australian superannuation entities, including their preference for Brownfield rather than Greenfield investments, little public attention has been given to the tax deterrents to investments for superannuation funds.

The principle tax deterrent is the timing disadvantage to superannuation funds of any significant investment in infrastructure potentially being subject to the Public Trading Trust rules. For the purposes of these provisions, superannuation entities are treated in the same way as exempt entities.


These provisions date back to a time before superannuation entities were subject to income tax. The effect of these provisions leads to the set up of costly structures to ensure that any potential timing differences are minimised to the extent allowed by law.


The legislative change to these provisions was announced by the previous government to apply from 1 July 2014. However, this was caught up in the re-write of Division 6C, which was deferred. It is not clear whether the current government will proceed to remove this tax deterrent. It would be encouraging for investment by superannuation funds if the government provided certainty on this as soon as possible.


Superannuation funds also need to ensure that they do not fall foul of the non-arm’s length income tests in Division 295 (the so-called 'special income' rules) to ensure that they maintain their concessionary tax rate.


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