The earnout workout
Source: Taxation In Australia Journal Article
Published Date: 1 Feb 2019
The income tax treatment of arrangements involving deferred consideration (earnouts) has been embarrassingly complex for tax practitioners and administrators alike. This continues to be the case, particularly for earnout arrangements that are not covered by the 2015 amendments to the capital gains tax rules. A recently released discussion paper from the ATO raises a number of consultation questions aimed at determining what future guidance is needed for those arrangements. The article analyses the current tax issues by way of a simple example and suggests that, first, greater clarity is needed to determine when earnout amounts are assessable or deductible. Second, the article suggests that the taxation of financial arrangement rules could be used to provide a more comprehensive solution to the treatment of earnouts.
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Details
- Published By: Enzo Coia CTA
- Published On:1 Feb 2019
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced 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.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
Copyright Statement
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags
Share this page