Proposed CGT changes: What's at stake for renewables
What’s happening
The Australian Government has proposed legislating a 30% Capital Gains Tax (CGT) rate on exit for foreign investment in renewable energy projects. The proposal expands the definition of taxable Australian real property to capture wind and solar assets, introduces a transitionary 50% discount for renewables through to June 2030, and critically, applies retrospectively to transactions dating back to 2006. IGCC lodged a submission on the draft legislation in April. Since then, we have worked with Mandala to model the impacts of different proposed scenarios on economic growth, tax revenue, energy prices and the renewables rollout.
Why it matters
Australia’s renewable energy build-out depends on a steady flow of global capital into the development of long-term projects, but the government’s proposal carries serious risks for the energy transition. The proposed changes, particularly the retrospective element, add uncertainty, instability and additional costs at a time when the rollout of renewable energy is already falling short of the level required to meet the government’s 82% renewables target by 2030 and 2035 emissions reduction target. In an already inflationary cost environment, investors will price that risk into future decisions, making projects harder to get off the ground, raising the cost of the transition, and potentially prompting early exits from assets already in the market.
Representing institutional investors with long investment horizons, IGCC continues to call for a fair and appropriate rate of CGT for all investors and settings to create the stable, predictable conditions that attract global capital and keep Australia competitive.
In this session, we’ll cover
- An overview of the proposed CGT changes and their economic implications
- IGCC’s position and the industry response to date, including our submission and government engagement
- The implications for foreign and domestic investors in Australian renewable energy projects, and what industry is calling for
- A look ahead at what we expect to see going forward on this issue
This is a member-only event. Register to attend below: