Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)Chapter 4 - Income tax exemption for the Global Infrastructure Hub Ltd.
Outline of chapter
4.1 Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to provide an exemption from the liability to pay income tax on the ordinary and statutory income of the Global Infrastructure Hub Ltd. (Hub).
Context of amendments
Policy background
4.2 The Hub was established following a joint statement from the Prime Minister and the Treasurer at the G20 Leaders' Summit in November 2014.
4.3 The Hub will work internationally to lift the quality of public and private investment in infrastructure through information development, knowledge sharing, training and the implementation of leading practices.
4.4 The Australian government will contribute $30 million for the establishment and ongoing operation of the Hub until 2018. It is expected that financial contributions will be provided to the Hub by various other governments and the private sector.
Summary of new law
4.5 Listing the Hub in the ITAA 1997 as an income tax exempt entity provides the Hub with certainty on the tax treatment of contributions made to it; these contributions will be income tax free.
4.6 As the mandate for the Hub will cease in 2018, the exemption from income tax will apply to amounts that would be included in assessable income from 24 December 2014 to 30 June 2019.
Comparison of key features of new law and current law
| New law | Current law |
| The ordinary and statutory income of the Hub will be exempt from income tax. | Amounts paid to the Hub would be included in the assessable income of the Hub and be subject to income tax. |
Detailed explanation of new law
4.7 Schedule 4 to this Bill makes amendments to Division 50 of the ITAA 1997 to provide the Hub an exemption from income taxation for a defined period. [Schedule 4, item 1]
4.8 The Hub will be listed as an income tax exempt entity meaning that all payments made to it, by the Australia and other governments, non-government organisations and other contributors, will not be subject to income tax. This will enable the Hub to utilise the full amount of contributions toward its purposes.
4.9 The Hub will operate in its current form until the end of 2018. The exemption from income tax applies from 24 December 2014 to 30 June 2019 with all contributions and other income of the Hub being exempt from tax for that period. [Schedule 4, item 1]
4.10 Payments to the Hub will be exempt from income tax until 30 June 2019 to ensure that payments made in the 2018-2019 income year are exempt from income tax. [Schedule 4, item 1]
4.11 As the mandate for the Hub ends at the end of 2018, its exemption from income tax will expire on 1 July 2019. [Schedule 4, item 1]
Application and transitional provisions
4.12 The amendments apply from 24 December 2014 until 30 June 2019. [Schedule 4, item 1]
4.13 On 1 July 2021, the provision will self-repeal. [Schedule 4, item 2]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Income tax exemption for Global Infrastructure Hub Ltd
4.14 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
4.15 Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 to provide the Global Infrastructure Hub Ltd exemption from income tax liability.
4.16 These changes will ensure that payments made to the Global Infrastructure Hub Ltd, including from the Australian and foreign governments, are not subject to income taxation.
Human rights implications
4.17 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
4.18 This Schedule is compatible with human rights as it does not raise any human rights issues.