The Australian Taxation Office (ATO) has announced the introduction of a New Investment Engagement Service for businesses planning significant new investments in Australia.
New Investment Engagement Service
We have introduced a New Investment Engagement Service (NIES) for businesses planning significant new investments in Australia.
Starting 1 July 2021, the NIES offers investors an opportunity to engage with our specialists prior to the execution of significant commercial transactions.
The purpose of the NIES is for us to further support business by providing tailored guidance on specific tax issues within a short timeframe.
We aim to provide a voluntary opt-in tailored service according to the investor's needs. The type of service offered extends from informative guidance (i.e. an understanding of existing ATO services and programs), to guidance in respect of compliance, expedited rulings or advance pricing agreements and assistance in the Foreign Investment Review Board (FIRB) process.
Where we provide guidance about an investor's transaction, we will provide them with a report setting out the ATO's views. The NIES report will provide details of the transaction, our views and how the investor can prepare for any potential future reviews.
The NIES is part of the 2021 Budget initiatives to encourage global businesses to invest in and relocate to Australia.
Who can use the NIES
The NIES will be made available to:
- all foreign businesses that come through the Global Business and Talent Attraction Taskforce
- other Australian and foreign businesses making new investments into Australia in the vicinity of $250 million or more.
How it works
The NIES is an investor-initiated engagement for proposed transactions and investments under consideration.
The service allows investors to engage with us to seek objective information, obtain confidence and understand potential tax risks arising from their proposed investment structures prior to the execution. Investors can then make objective, informed and confident decisions about the tax implications of their investment.
Investors can contact a dedicated team to discuss their proposed transactions and what assistance they require from us. The process commences with an initial engagement discussion, where investors can present:
- the proposed transaction
- key tax issues requiring our guidance (if any)
- whether a FIRB application will be lodged; and
- time and commercial sensitivities.
Before progressing further, both parties agree on what guidance and assistance will be provided based on the commercial timeframes of the investment.
If we identify other material risks, we will also communicate these to the investor in the report. If concerns are identified, we will also identify the steps that the investor can take to mitigate these concerns.
In instances where time does not permit a complete engagement or where expectations regarding confidence cannot be agreed the NIES team will assist and direct the investor to alternate services/programs.
Once the investor has completed the initial engagement stage and if your investment meets the eligibility threshold, the NIES team will endeavour to streamline the investor's interaction with our other areas, to facilitate the successful implementation of the investment. The NIES will work alongside the Tax Consult group of the FIRB approval process (if applicable), to streamline aspects of the FIRB process (for example, eliminating duplicate information requests).
The NIES does not replace existing products such as private rulings and Advance Pricing Agreements. If the investor is seeking something of this nature, the NIES team will work with the investor and the relevant team to ensure outcomes are delivered in the shortest time possible.
Information that will be required
The information required will depend on the guidance and assistance the investor requires.
We will discuss with you the information they require at the initial engagement meeting.
We will provide guidance on the information provided by the investor. It is a condition of entry into the NIES that you provide full and true disclosure of all material facts. The investor will need to notify us if the facts change, as this may impact the guidance we have provided to the investor. We will not verify the facts at the time of giving advice but may review these as part of our compliance programs.
Generally, we will need information such as:
- the name, address and country of tax residence of the ultimate controlling entity(s)
- the Foreign Investment Application Number (if any)
- the nature and size of the proposed investment
- the commercial rationale for the proposed investment
- the proposed transaction structure, including
- the identity and tax residency of relevant entities involved
- the transaction steps proposed to be implemented and associated timeframes
- the source and nature of funding for the proposed investment
- the existing group structure, including tax residency of entities and details of any transactions/restructures that are relevant to the proposed investment that have been implemented or are planned in the near future
- the key tax implications of the proposed investment, including any specific analysis of tax issues anticipated – If the investor already has tax and or legal advice in relation to the proposed transaction, providing a copy of this to us as this may assist with a faster response.
The NIES team recognises that the NIES will be occurring in conjunction with the finalisation of the transaction and accept that components of the transaction may be subject to change. The NIES team requests that investors notify the NIES team where there are any changes that will impact the tax implications.
We will endeavour to tailor the timeframes of the service to meet transaction timeframes.
Although we aim to meet the investor's needs, we need sufficient time to properly consider your proposed arrangements. Therefore, we encourage interested parties to contact us early to maximise the benefits of our assistance.
Where we provide guidance about your transaction, we will provide you with a report setting out our views.
The report will include details such as:
- the proposed transaction, as described, including the commercial rationale, the nature and size of the transaction, structure and funding of the proposed transaction and taxes involved
- our agreed expectations with you as to what guidance and assistance were to be provided and timeframes for delivery and information relied upon by the NIES team
- overview and chronology of engagement with the NIES team
- the issues addressed and resulting guidance, any further information required, steps that can be taken to mitigate any concerns identified and how businesses should prepare for post implementation review (if subject to existing compliance programs). If we identify other material tax risks, we will also communicate these to you in the report and steps you may wish to take to mitigate these concerns.
Contact the NIES
If you are interested in using the NIES, contact us at NIES@ato.gov.au.
We will then contact you within two business days to discuss your circumstances and, if you are eligible for the service, we will organise an initial engagement discussion.