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ATO confirms it wants part of your retail premium.

Publication date: 18 Feb 11 | Source: CCH TAX WEEK

Issue: Issue 5 Feb 2011

Pages: pp. 1-3


A new draft taxation ruling (TR 2010/D8) on the income tax treatment of excess bookbuild proceeds in accelerated renounceable entitlement offers (or “retail premiums”) has been released for public comment. The Tax Office controversially concludes that it will treat retail premiums as unfrankable dividends or (in the alternative) ordinary income, rather than a capital gain. 

While the Tax Office takes this view in relation to retail premiums, there are a number of analogous structures which lead to different tax outcomes. Issuers will need to be mindful of these issues when preparing entitlement offers which are renounceable.

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Author profile

Sue Williamson CTA-Life
Sue is a partner at EY specialising in tax controversy. Sue has worked in tax for more than 25 years, including roles in major law firms and executive roles within the firms in which she has been a partner. Sue was the President of The Tax Institute in 2008, has been a member of several advisory boards, has participated in many consultative forums and lectures in the University of Melbourne Masters of Law program. Sue was a member of the instructing solicitor team working on the Placer Dome litigation. - Current at 26 June 2019
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