This, together with the widespread use of trust structures, suggests that this industry is fairly tax aggressive. However, the effective tax rates of its sub-industry as a whole are well below the statutory tax rate, as well as the estimated average effective tax rate of 22% for all ASX200 companies over the past decade. In comparison to all other firms in the real estate management and development sub-industry, known as A-REITs, the Westfield Group consistently rates in the mid-range of tax aggressiveness. Unit trusts stapled to company structures are common in Australia.
One of the key tax benefits arising for the investor from a trust structure is that distributions from the trust retain their tax attributes (‘flow through’ entity), making an investment via a fixed trust generally comparable in most respects to a direct interest in the real estate. Other large A-REITs in the publicly listed real estate sector include Stockland, Goodman and GPT Group.Īccording to the European Public Real Estate Association’s Global REIT survey 2013: In Australia, Westfield Group and Westfield Retail Trust are the largest in what is called A-REITS. REITs allow investors, known as unit holders, to hold unit interests in global property portfolios, with attractive yields and tax considerations (as I’ll discuss further down). This is due to extensive use by the both the Westfield Group and Westfield Retail Trust of trust structures known as Real Estate Investment Trusts (REITs), which it has combined with stapled securities. Reports of the Westfield Group’s attempts to push through a A$15 billion restructure - complete with a boisterous showdown last Thursday - have mostly concentrated around the effect of the deal on its investors, led mainly by major shareholder, Uni Super.īut the controversial demerger also puts on show the ability of large property landlords like Westfield to legally employ aggressive tax planning to significantly minimise tax, at a time when the federal government has announced that a budget “crisis” requires significant expenditure cuts and the raising of taxes.Īs we wrote prior to last week’s vote, our report, commissioned by union United Voice suggests the Westfield Group effectively paid just 8% tax in the seven years to 2013, and its property arm, Westfield Retail Trust (WRT), no tax at all.
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