BABCOCK & BROWN

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7. Tax Letter If you are considering applying for BBSN, it is important for you to understand the taxation consequences of investing in BBSN. You should read this Section before deciding whether to invest and discuss the taxation consequences with your tax advisor, accountant or other financial advisor. 60 BABCOCK & BROWN SUBORDINATED NOTES
9 November 2005 The Directors Babcock & Brown Limited Level 39 Chifley Tower 2 Chifley Square SYDNEY NSW 2000 Dear Directors Babcock & Brown Subordinated Notes (BBSN) Taxation implications for Holders We have been requested by Babcock & Brown Limited (Babcock & Brown) to prepare a taxation report for inclusion in the prospectus dated 9 November 2005 (Prospectus) in relation to the issue of BBSN. The information contained in this report is of a general nature only. It does not constitute tax advice and should not be relied upon as such. This report outlines the general Australian taxation implications for Australian residents and non-Australian residents who successfully subscribe for BBSN (each a Holder and non-resident Holder respectively) and who hold BBSN on capital account. We have not addressed the tax treatment for Holders and non-resident Holders who hold BBSN on revenue account or as trading stock. As the tax consequences to Holders will depend on their own facts, Holders should seek independent advice in relation to their particular circumstances. This report is based on the Australian income tax law in force and the practices of the Australian Taxation Office (ATO) applicable as at the date of this letter. Unless otherwise indicated, references to legislative provisions are to the Income Tax Assessment Act 1936 (Cth). We are not licensed to provide financial product advice under the Corporations Act 2001 (Cth). Taxation is only one of the matters that must be considered when making a decision on a financial product. Any investor should, before acting on this material, consider taking advice from a person who is licensed to provide financial product advice under the Corporations Act 2001 (Cth). Capitalised terms not elsewhere defined refer to terms in the Prospectus. All references to the Issuer are to Babcock & Brown. 1 Australian residents 1.1 Treatment of Interest Payments on the BBSN Interest Payments on the BBSN will constitute assessable income to Holders. Broadly speaking, Holders will be assessable on an Interest Payment in the income year in which it is received. MLC Centre Martin Place Sydney NSW 2000 Australia Telephone +61 2 9225 5955 Facsimile +61 2 9221 6516 GPO Box 4982 Sydney NSW 1044 Australia www.gf.com.au Offices in SYDNEY MELBOURNE Greenwoods & Freehills Pty Limited ABN 60 003 146 852 Liability limited by a scheme approved under Professional Standards Legislation BABCOCK & BROWN SUBORDINATED NOTES 61
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BABCOCK & BROWN Sydney Melbourne Br
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Prospectus & supplementary prospect
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SUPPLEMENTARY PROSPECTUS Issuer Bab
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Key DAtes Key dates for the Offer D
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Guarantee: BBSN have the benefit of
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HoW to APPLy for BBsN Read Consider
Page 13 and 14: 1. Key terms of BBSN BABCOCK & BROW
Page 15 and 16: Interest Payments (continued) Defer
Page 17 and 18: Babcock & Brown’s transaction rig
Page 19 and 20: 2. answers to key questions BABCOCK
Page 21 and 22: Topic Summary More information BBSN
Page 23 and 24: Topic Summary More information Inte
Page 25 and 26: Topic Summary More information Exch
Page 27 and 28: Topic Summary More information Repa
Page 29 and 30: Topic Summary More information Guar
Page 31 and 32: 3. Details of the Offer BABCOCK & B
Page 33 and 34: 3.2.1 Source of Interest Payments B
Page 35 and 36: 3.8 How do you complete Application
Page 37 and 38: 4. information about babcock & brow
Page 39 and 40: 4.2.1 Real Estate The Real Estate g
Page 41 and 42: distribution, bulk terminal and pow
Page 43 and 44: an economist with the Australian Tr
Page 45 and 46: 5. summary financial information BA
Page 47 and 48: can be obtained free of charge by a
Page 49 and 50: Consolidated balance sheet (continu
Page 51 and 52: • performance fees earned from BJ
Page 53 and 54: 6. risk factors BABCOCK & BROWN SUB
Page 55 and 56: HISTORICAL BANK BILL SWAP RATE 8.0%
Page 57 and 58: Group. The interests of these Emplo
Page 59 and 60: terrorist attack, major plant break
Page 61 and 62: 6.3 General economic factors that m
Page 63: 7. Tax Letter BABCOCK & BROWN SUBOR
Page 67 and 68: To the extent that a capital loss w
Page 69 and 70: 8. Additional information BABCOCK &
Page 71 and 72: • Subordination. A claim by the T
Page 73 and 74: may be invested or otherwise made u
Page 75 and 76: 8.6.1 Classes of shares The A Class
Page 77 and 78: Agreement. Under the agreement, the
Page 79 and 80: This right is independent of Babcoc
Page 81 and 82: 8.10 Summary of the Arrangement Dee
Page 83 and 84: Greenwoods & Freehills has acted as
Page 85 and 86: 8.20 Foreign acquisitions and takeo
Page 87 and 88: APPENDIX A - Glossary BABCOCK & BRO
Page 89 and 90: BBEM BBGP BBI Babcock & Brown Elect
Page 91 and 92: Guarantee Guarantor the unsecured a
Page 93 and 94: Security Trust Deed means the deed
Page 95 and 96: APPENDIX B - Terms of Issue BABCOCK
Page 97 and 98: (c) For the purposes of clause 2.1(
Page 99 and 100: 2.11 Method of payment Any amount w
Page 101 and 102: 4.4 Exit Notices (a) Once given by
Page 103 and 104: (2) (in the case of an entitlement
Page 105 and 106: (b) it shall have been indemnified
Page 107 and 108: 13 Amendments to these Terms of Iss
Page 109 and 110: Change in Control Event means each
Page 111 and 112: Issuer’s Group means the Issuer a
Page 113 and 114: APPENDIX C - arranger’s financial
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From time to time BBAH may act unde
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Pin cheque(s) here (do not staple)
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Pin cheque(s) here (do not staple)
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CORPORATE DIRECTORY Issuer Babcock
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BABCOCK & BROWN

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