2015

All You Need To Know Earn-Outs Exposure Draft

Source: QLD

Published Date: 18 May 2015

 
The long awaited exposure draft on the tax treatment of earn-outs has been released and presents a new way of testing earn-outs for tax purposes. Under the new regime, relevant earn-outs will not be treated as creating a new CGT asset, and payments under report-out and reverse earn-out arrangements will alter the CGT consequences of the underlying business sale. Amendments that preserve the small business CGT concessions where earnouts are used have also been proposed.

This is a significant change to the way in which earn-out arrangements had been treated and it will be important for all commercial advises to understand the impact of these new changes, which take effect from the date of release of the exposure draft legislation, 23 April 2015.

Changes to the treatment of earn-outs were originally announced on 12 May 2010 and significant consultation and development of draft legislation has occurred since that date, including when the Government reviewed the then announced unenacted measures in December 2013.

This event provided valuable insight into how the new rules will apply to business sales going forward.

All you need to know - Earnouts exposure draft

Author(s): Teresa Dyson

Details

  • Published On:18 May 2015
  • Took place at:Deloitte, Brisbane

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research critisism or review, as permitted under the copyright Act, no part may be rerpoduced by any process without written permission from The Tax Institute.

Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

This material is copyright. Apart from any fair dealing for the purpose of private study., research, critisism or review, as permitted under teh copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.

Unless expressly stated, opininons are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

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