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27 Jan 099 Cross-border prepaid forward purchase agreements - TA 2009/2

On 22 January 2009, the ATO issued Taxpayer Alert TA 2009/2 entitled "Certain cross-border Prepaid Forward Purchase Agreements". The Taxpayer Alert describes an arrangement using a Prepaid Forward Purchase Agreement which attempts to reduce the assessable income of an Australian resident taxpayer. Specifically, these arrangements attempt to convert a loan from a resident company to a foreign subsidiary into a future equity investment in the subsidiary, in order to decrease their Australian tax liability.

In a media report issued the same day, the ATO warned that these arrangements may not be effective under Australian tax law or anti-avoidance legislation.

For a copy of TA 2009/2, go here.

For a copy of the ATO media release, No 2009/04, 22 January 2009, go here.

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