Solar PV Facility Project Financing & Contracting

pwc Home Solar industry snapshot How to use this guide Project Alternative structure project structure Contract documents R&D Due tax diligence Key issues Contact Alternative Project structure < > • The preferred project structure will depend on the ultimate investor profile. The project structure opposite is flexible enough to facilitate foreign or domestic investors. • Provides the ability for income to flow through to investors (giving investors immediate access to funds) and be taxed at the investor level (subject to investor profile) • • Able to distribute tax deferred amounts (which could be attributable to non-cash tax deductions such as depreciation). Tax deferred distributions will result in a reduction in the tax cost base of the investors' units. Foreign investors may get access to reduced withholding tax (15% compared with 30%), particularly on Prop Trust 1 side. • Fin Co 1 should be tax neutral due to back to back debt arrangements. • Banks are familiar with this structure and can access pre-tax cash flows from the trusts (provided trusts are not "public trading trusts"). • Nature of investors, assets, operations, and cross staple pricing of the entities need to be carefully managed. • The ATO has issued a taxpayer alert in relation to stapled structures. Further, Treasury is separately undertaking a consultation process in relation to the current use of stapled structures and potential options for policy change. Accordingly, investors need to be conscious of potential ATO scrutiny or law change that may impact the structure (although at this stage there is no certainty regarding the timing or nature of such changes and how they could impact the structure). The level of risk is likely to vary depending on the investor. For example, foreign investors that benefit from reduced withholding tax rates through this structure may be subject to closer scrutiny by the ATO. Investors Sponsor Owners Rent Rent Ор Trust 1 Sub-sub Lease Prop Trust 1 Sub Lease Hold Trust Head Lease/ Land Owner/ Access Payments Lessor Business Contracts/ Land/Fixed Items Chattels Debt Fin Co 1 Project debt Access/ Lease Option

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