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Buy-backs of shares and non-share equity interests.

Publication date: 30 Jan 12 | Source: CCH TAX WEEK

Issue: Issue 3 19 Jan 2012

Pages: pp. 1-4


A purchase by a company of a share or non-equity interest in itself is subject to specific tax rules. The tax consequences depend on whether the purchase is an off-market or on market buy-back. These rules apply to determine the consideration received by the shareholder for the buy-back, the capital and dividend components of the buy-back price, franking consequences and implications associated with the buy back consideration.Exposure draft legislation and explanatory material to rewrite1 and reform the rules relating to a buy-back of shares and non-share equity interests was released by the Australian Treasury on 20 October 2011 for public comment — Exposure Draft Tax Laws Amendment (2011 Measures No 9) Bill 20112 (Exposure Draft Legislation). These reforms implement the recommendations of the Board of Taxation in its June 2008 report Review of the taxation treatment of off-market share buy-backs (the Buy Back Report). Submissions on the Exposure Draft Legislation closed on 2 December 2011.

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Author profile

Karen Payne CTA
Karen, CTA, was appointed as the inaugural Chief Executive Officer of the Board of Taxation, effective 31 March 2016. She is also a Member of the Board of Taxation, appointed in May 2015. She chaired the Board’s working group that advised on the implementation of the OECD hybrid mismatch rules – both generally and specifically in relation to regulatory capital. Karen was a member of the Board of Taxation advisory panel and assisted with the reviews of tax arrangements for managed investment trusts, venture capital limited partnerships, collective investment vehicles , the investment manager regime and the arm’s-length debt test. Karen was previously a Partner at Minter Ellison focusing on international and corporate taxes for the financial services industry, and mining, energy and utilities sectors. Karen has assisted domestic and international corporates and funds (equity, infrastructure, property, private equity and venture capital) with advice on structure, M&A and taxation due diligence. - Current at 09 December 2017
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