Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016 (10 of 2016)

Schedule 1   CGT treatment of earnout rights

Part 5   Amendments relating to foreign resident capital gains withholding payments

Taxation Administration Act 1953

41   After section 14-200 in Schedule 1

Insert:

14-205 Effect of look-through earnout rights

Acquisitions of taxable Australian property from foreign residents

(1) You must pay to the Commissioner an amount if:

(a) you are required under section 14-200 to pay an amount to the Commissioner in relation to your *acquisition of a *CGT asset; and

(b) under a *look-through earnout right relating to the CGT asset and the acquisition, you provide a *financial benefit to one or more entities; and

(c) subsection 14-210(1) (about foreign residents) would apply to at least one of those entities at the time you provide the financial benefit if section 14-210 were modified as described in subsection (2) of this section; and

(d) an amount is not already required to be withheld from a *withholding payment relating to the financial benefit.

Note 1: To work out the amount payable, see subsection (4).

Note 2: You must pay the amount on account of income tax possibly payable by the entities on their increased capital proceeds from receiving the financial benefit.

Modifications of the relevant foreign residents test

(2) The modifications of section 14-210 are as follows:

When you must pay the amount

(3) You must pay the amount to the Commissioner on or before the day you provide the *financial benefit.

Note: There are penalties for failing to pay the amount (see Division 16).

(4) The amount to be paid to the Commissioner is:

(a) unless paragraph (b) applies - an amount equal to 10% of the *market value of the *financial benefit; or

(b) the varied amount applying under section 14-235.