Investor Presentaiton
INFRASTRUCTURE FOR THE FUTURE
TAX LITIGATION AND EFFECTIVE TAX RATE
Federal court judgement was that gifted assets and cash contributions should be treated as assessable income
Context
In February 2019, the Federal Court handed down its judgement with effect that assets transferred to VPN from customers (i.e. gifted assets) should be treated
as assessable income to VPN; and for assets constructed by VPN whereby the customer contributes to the cost of construction of such assets, the cash
contribution should be treated as assessable income
VPN subsequently appealed both matters to the Full Federal Court, with the appeal heard on 21 August 2020. The timing of when a decision will be handed
down is unknown but is estimated to be late 2020
The impact to Spark Infrastructure was recognition of a $68.8m tax liability in respect of 2015-18, this
amount was paid in full in two tranches in 2019 and 2020. The below table sets out the tax liabilities
for the whole Spark Infrastructure group to date along with the timing of payment of liabilities:
Spark Infrastructure Impact
Tax Liability - payable
Tax Paid
cash flow
Normalised Tax
2019 Tax Liability
2018 Tax Liability
1HY
2HY
Total
19.0
19.0
37.9
8.5
8.5
16.9
2015
14.8
2016
17.4
2017
2018
2019 HY2020
Total
19.7
16.9
37.9
6.1
113.0
38.7
74.3
113.0
Spark Infrastructure Underlying Tax Paid per Cash Flow
Reconciliation
Total Tax Paid per Statutory Cash Flow
74.3
Less Historical Tax Paid (2015-18)
(34.4)
Less Tax Instalments Paid in Relation to 2020
(6.1)
Add 2019 Tax Liability Paid in 2019
4.2
(19.0)
Underlying 6 Months Tax Paid in relation to 2019
19.0
Should decision be upheld by Full Federal Court, Spark Infrastructure will continue to be a
taxpayer on a go forward basis
Effective cash tax rate approximately 14% of distributions from 2020
Future distributions will contain franking credits to the maximum extent possible, expected from
March 2021 Distribution onwards. Spark Infrastructure has paid tax to date of $113.0m
Should VPN be successful on either or both matters:
Less H2 2019 Tax Liability
Effective cash tax rate on a go forward basis expected to reduce by approximately 6% in the short term until reinstated tax losses are recouped
If successful on both matters, circa $87m of prior year tax payments re SAPN/SIH2 are expected to be recovered (subject to any appeal to the High Court)
Other impacts not expected to be material: if tax deferred at VPN level (expected but short-term timing only), Spark Infrastructure will pay tax on
incremental unfranked dividends received
Spark Infrastructure I Investor Presentation | August 2020
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