Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 116 - Capital proceeds  

Special rules  

SECTION 116-120   Disposals of assets involving look-through earnout rights  

Consequences for capital proceeds

116-120(1)    
If *CGT event A1 happens because you *dispose of a *CGT asset, your *capital proceeds from the disposal:

(a) do not include the value of any *look-through earnout right relating to the CGT asset and the disposal; and

(b) are increased by any *financial benefit that you receive under such a look-through earnout right; and

(c) are reduced by any financial benefit that you provide under such a look-through earnout right.

Remaking choices affected by the look-through earnout right

116-120(2)    
Despite section 103-25 , you may remake any choice you made under this Part or Part 3-3 in relation to the *CGT event if:

(a) you provide or receive a *financial benefit under such a *look-through earnout right; and

(b) you remake the choice at or before the time you are required to lodge your *income tax return for the income year in which the financial benefit is provided or received.

Amending assessments affected by the look-through earnout right

116-120(3)    
The Commissioner may amend an assessment of a *tax-related liability if:

(a) an entity provides or receives a *financial benefit under such a *look-through earnout right; and

(b) the amount of the tax-related liability:

(i) depends on that entity ' s taxable income for the income year in which the *CGT event happens; or

(ii) is otherwise affected by that right ' s character as a look-through earnout right; and

(c) the Commissioner makes the amendment before the end of the 4-year period starting at the end of the income year in which the last possible financial benefit becomes or could become due under the look-through earnout right.

The tax-related liability need not be a liability of that entity.

Note:

Subparagraph (b)(ii) covers changes to the amount of that tax-related liability that happen directly or indirectly because of subsection (1) or (2).

116-120(4)    
If at a particular time a right is taken never to have been a *look-through earnout right because of subsection 118-565(2) , the Commissioner may amend an assessment of a *tax-related liability for up to 4 years after that time if:

(a) an entity provides or receives a *financial benefit under the right; and

(b) the amount of the tax-related liability:

(i) depends on that entity ' s taxable income for the income year in which the *CGT event happens; or

(ii) was otherwise affected by that right ' s character as a look-through earnout right before subsection 118-565(2) applied.

The tax-related liability need not be a liability of that entity.

Note:

Subsection 118-565(2) restricts look-through earnout rights to rights to financial benefits over a period not exceeding 5 years from the end of the income year in which the CGT event happens.

116-120(5)    
If, after providing or receiving a *financial benefit under a right referred to in subsection (3) or (4):

(a) you are dissatisfied with an assessment referred to in that subsection; and

(b) the Commissioner notifies you that the Commissioner has decided under that subsection not to amend your assessment;

you may object against the assessment, to the extent that it does not take account of that right ' s character (as a *look-through earnout right or not such a right), in the manner set out in Part IVC of the Taxation Administration Act 1953 .