Capital gains tax changes will reduce renewables, warns clean energy industry | The Business
Clean energy groups are warning power prices could go up under proposed changes to Australia’s taxes on foreign investment. Under draft new laws, the federal government is proposing to close a loophole that enabled foreign investors to avoid paying capital gains tax on assets that sat on Australian land, as opposed to just the land itself. The reform is designed to clarify a longstanding grey area over fixtures and assets on Australian land such as mining equipment, ports and electricity infrastructure, including renewable energy assets, like wind and solar farms. Capital gains tax is typically paid at the time investors sell an asset, and is calculated based on the increase in the value of the investment since it was purchased. Under the proposal, foreign investors would be subject to 30 per cent capital gains tax when they sell their assets. Clean Energy Investors Group chief executive Richie Merzian says the proposal will increase the cost of renewables for companies and their investors. He argues this will inevitably be passed on to consumers in the form of higher energy prices over the life of the asset. Renewable energy in Australia is heavily backed by foreign investment. Australian National University’s Tax and Transfer Policy Institute director Robert Breunig says the government is trying to make sure capital gains tax is applied equally. A spokesperson for Treasurer Jim Chalmers said the reforms were about ensuring foreign residents paid a fair share of tax in Australia and the government has other support to boost clean energy.
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