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Discussion Paper - Capital Gains Tax Treatment of Earnout Arrangements


Wednesday, 12 May 2010

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On 12 May 2010, the Assistant Treasurer announced further details of the 2010-11 Budget measure to apply look-through capital gains tax treatment for qualifying earnout arrangements.

This discussion paper outlines proposals to implement look-through treatment for earnout arrangements. Broadly, the Government will legislate to treat additional payments made under a 'standard' earnout arrangement as related to the original asset for the seller and adding to the cost base for the buyer. It will treat payments made under a 'reverse' earnout arrangement as effectively a repayment of part of the capital proceeds.

Making a submission

Interested parties are invited to comment on the paper. While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.

All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment. Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.

Closing date for submissions: Friday, 11 June 2010

Address written submissions to:
General Manager
Business Tax Division
The Treasury
Langton Crescent

Fax: (02) 6263 4466

Email: earnout_arrangements@treasury.gov.au

For enquiries, please call Mr Nicholas Backhouse on (02) 6263 3241.

Documents Available:

Acrobat (PDF) documents

 Acrobat (PDF)

Discussion Paper  191.29kb

Microsoft Word (RTF) documents

 Microsoft Word (RTF)

Discussion Paper  5,828.99kb

Related Items:

Submissions: Discussion Paper - Capital Gains Tax Treatment of Earnout Arrangements - 2/07/2010

Treasury has received five submissions in response to its discussion paper - Capital Gains Tax Treatment of Earnout Arrangements. There were four public submissions, and one confidential submission. The public submissions are listed below and are accessible by selecting the author.

The opinions expressed in the submissions are those of the authors and do not necessarily reflect the views of the Government or the Treasury.

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