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Capital management


Capital management, including raising and returning capital, carries with it a range of taxation implications, some of which exhibit a degree of uncertainty. Much of that uncertainty arises from the practice of the ATO and the discretions afforded the Commissioner of Taxation under a number of specific integrity measures. This article is intended to provide an update on the key Australian income tax issues, ATO administrative practice, and current tax reviews for corporates and their shareholders, in relation to undertaking capital management initiatives.

The article is, broadly, in two parts. The first part considers capital raisings by non-financial corporates through the use of hybrid securities and rights issues that use so-called retail premiums. The second part deals with returning capital to shareholders, including share buy-backs, returns of capital, and tainting of the share capital account.

Author profiles

Cameron Blackwood ATI
Cameron brings more than a decade of transactional tax expertise to his role as Director in Greenwoods & Herbert Smith Freehills’ Sydney office. He specialises in advising clients on the tax complexities of mergers, acquisitions and restructures, including cross-border issues and all aspects of employee share schemes, and regularly works in close collaboration with Herbert Smith Freehills. After joining Greenwoods & Herbert Smith Freehills as a graduate in 2004, Cameron built his corporate experience advising companies on a wide range of advisory and compliance matters, including a secondment to BHP Billiton. His industry knowledge is broad and includes the mining, real estate and financial services sectors. Cameron is a member of The Tax Institute’s Large Business and International Committee and the NSW Technical Committee. He holds a Bachelor of Business (Hons) and Bachelor of Laws (Hons) from the University of Technology Sydney, and a Master of Taxation from the University of Sydney. Cameron is admitted as a solicitor in New South Wales. - Current at 30 November 2020
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Richard Hendriks CTA
Richard Hendriks, Richard is Head of Mergers and Acquisitions (M&A) at Greenwoods & Herbert Smith Freehills. He has broad experience in corporate tax matters, with a particular focus on listed-company M&A transactions, including demergers. A Director since 1998, he specialises in M&A and demergers, capital management and corporate restructures, including equity and debt raisings. Richard has in-depth knowledge of tax consolidation, executive share and option plans, and international tax matters. After eight years with several international professional services firms in Australia and the UK, he joined Greenwoods in 1993. - Current at 12 February 2019
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