← Guides / Australia

Australia Infrastructure Investing Guide

the infrastructure investing in Australia. The guide covers: the infrastructure asset classes (the "core infrastructure sectors") — (a) the "transport infrastructure" — the "toll roads" (the "Transurban — the TCL"), the "airports" (the "Sydney Airport, the Melbourne Airport, the Brisbane Airport"), the "ports" (the "Port of Newcastle, the Port of Brisbane"), (b) the "energy infrastructure" — the "electricity transmission and the distribution" (the "AusNet Services — the AST", the "Spark Infrastructure — the SKI"), the "gas pipelines" (the "APA Group — the APA", the "Jemena"), (c) the "renewable energy infrastructure" — the "wind farms, the solar farms, the battery storage" (the "Infigen Energy, the Tilt Renewables"), (d) the "social infrastructure" — the "hospitals, the schools, the prisons, the public transport" (the "public-private partnerships — the PPPs"), (e) the "digital infrastructure" — the "data centres" (the "NextDC — the NXT", the "Equinix"), the "telecommunications towers", the "fibre optic networks"; the infrastructure investment characteristics (the "why investors choose the infrastructure") — the infrastructure assets provide: (a) the "stable and the predictable cash flows" (the "long-term contracts, the regulated revenue streams, the monopoly or the near-monopoly positions"), (b) the "inflation linkage" (the "CPI-indexed revenue" — the "toll increases, the regulated price adjustments"), (c) the "low correlation with the equity markets" (the "defensive characteristics in the market downturns"), (d) the "long-term capital growth" (the "asset appreciation and the development pipeline"); the listed infrastructure investment options (the "ASX infrastructure") — (a) the "individual infrastructure stocks" (the "Transurban, the APA Group, the AusNet Services, the NextDC"), (b) the "infrastructure funds" (the "listed infrastructure funds" — the "MA Financial — the MAF"), (c) the "infrastructure ETFs" (the "ASX-listed infrastructure ETFs" — the "Global X Physical Gold", the "Vanguard Global Infrastructure Index ETF — the VBLD").

Infrastructure Investment Structures

  • Listed infrastructure: The "listed infrastructure" (the "ASX-listed infrastructure companies and the trusts") — the investor buys the "shares or the units" on the ASX through the "brokerage account". The listed infrastructure provides the "ASX liquidity" and the "transparent pricing". The "distributions" from the infrastructure trusts are the "assessable income" — the "franking credits" may be attached.
  • Unlisted infrastructure funds: The "unlisted infrastructure funds" (the "IFM Investors, the AustralianSuper, the HESTA") — the "institutional-grade infrastructure" with the "minimum investment of $50,000 to $500,000" through the "wholesale funds". The unlisted funds provide the "access to the large-scale assets" (the "ports, the airports, the energy grids") with the "lower liquidity" (the "quarterly or the annual withdrawals").
  • Infrastructure debt: The "infrastructure debt" — the "loans to the infrastructure projects" (the "senior debt, the mezzanine debt, the subordinated debt") — the "fixed income return" with the "infrastructure project security". The infrastructure debt funds include the "Challenger Infrastructure Debt Fund" and the "IFM Infrastructure Debt Fund".

For the energy and the renewable energy investments, see our Renewable Energy Guide →.

Tax Treatment of Infrastructure Investments

  • Distributions: The infrastructure trust distributions (the "income from the toll roads, the pipelines, the airports") are the "assessable income" in the hands of the unitholder. The distributions may include the "tax-deferred component" (the "return of the capital" — the "reduces the cost base of the units" for the "CGT purposes") due to the "depreciation and the amortisation allowances".
  • CGT on the infrastructure units: The "capital gain" on the sale of the infrastructure units or the shares is subject to the "CGT". The "50% CGT discount" applies to the "individual holding for more than 12 months". The "cost base" may be reduced by the "tax-deferred distributions" received during the holding period.
  • Foreign infrastructure: The "global infrastructure funds" (the "VBLD, the GLIN") invest in the "international infrastructure assets". The foreign distributions may be subject to the "foreign withholding tax" (the "15% to 30% in the source country"). The "foreign tax offset" is available to the Australian resident for the foreign tax paid.

For the CGT on the investments and the cost base adjustments, see our Capital Gains Tax Guide →.