Miscellaneous 2008

Yearning for earnout certainty

Source: The Tax Specialist Journal Article

Published Date: 1 Jun 2008

This paper considers draft Taxation Ruling TR 2007/D10 which indicates the ATO’s current view of the CGT implications for vendors and purchasers in earnouts and reverse earnouts. It compares the current ATO approach with that taken in previous rulings, and also considers and compares the tax treatment of such earnouts in comparable overseas jurisdictions. It concludes that the current approach is not always defensible by reference to statute or case law, and that it leaves practitioners and their clients in a state of considerable uncertainty. The paper suggests potential solutions to these problems, and argues that the final ruling will have to adopt a significantly different position in order to remove this uncertainty.

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Miscellaneous 2008

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