Yearning for earnout certainty
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Abstract: 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.
Author
profile:
Chris
EVANS
Chris is a Professor of Taxation in the Australian School of Taxation (Atax) at UNSW, and was until recently the Director of Atax. He specialises in CGT, tax policy and tax administration. He joined Atax in 1992, and before that was variously a Principal Inspector of Taxes in the UK, an Associate Director of the largest independent tax consultancy in London, and a tax academic at the University of North London. Chris has published a number of works on Australian taxation and is an active researcher in many areas of taxation. He is a member of the Standing Advisory Committee of the Board of Taxation, and serves on a number of other governmental and professional taxation committees and working groups
Current at June 2008
