An update on capital management issues

Published on 01 Aug 15 by "THE TAX SPECIALIST" JOURNAL ARTICLE

Any capital management strategy carries a number of taxation implications which should be carefully considered before implementation of the strategy. This article considers some current key tax issues associated with common and topical capital management strategies, including the tax treatment of returns on certain funding instruments following the Mills case, share buy-backs, including the implications of the decision in the Consolidated Media Holdings case and the status of proposed reforms, debt buy-backs, and certain debt/equity issues.

The article discusses common capital management tax issues for general corporate taxpayers. There are specific tax issues that can arise for authorised deposit-taking institutions, that is, banks and other financial institutions, which are outside the scope of the article. The author concludes with a recommendation that tax teams ensure that time for obtaining advice around the issues (including ATO rulings where appropriate) is factored into the timetable for execution of capital management strategies.

Author profile

Simon Jenner CTA

Simon is a Partner in the Financial Services Tax practice at EY, specialising in banking and capital markets. Simon has over 24 years’ experience advising large corporates on a variety of tax issues, including capital management, capital raisings, mergers, acquisitions, disposals and the application of the tax consolidation regime. He has also advised extensively on the application of the taxation of financial arrangements rules. - Current at 11 February 2021

More by Simon JENNER

• Current issues in M&A and capital management paper - 11-March-2020
• The digital tax function paper - 08-February-2017
• Thin capitalisation and debt financing - The state of play paper - 17-October-2013
• An update on capital management issues including debt/equity: recent developments paper - 20-June-2013
• Tax consolidation changes past, present and future paper - 15-February-2012
• Current strategies for capital management paper - 19-October-2011
• Technical tax update - TOFA and tax consolidation paper - 03-June-2010
• An introduction to the TOFA regime paper - 18-May-2010
• TOFA - Will it apply to you? Can it apply to you? When will it apply to you paper? - 09-February-2010
• Managing capital structure paper - 07-November-2008
• Capital management developments paper - 28-May-2008

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