Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016 (10 of 2016)
Schedule 1 CGT treatment of earnout rights
Part 2 Preserving small business concessions
Income Tax Assessment Act 1997
13 At the end of section 152-20
Effect of look-through earnout rights
(5) Despite subsections (1) to (4), in working out the net value of the CGT assets of an entity at the time just before the *CGT event (the valuing time ), you can make a choice under subsection (6) if:
(a) at the valuing time, one or more of the entity's *CGT assets were assets for which the entity later provided, or was later provided with, one or more *financial benefits under one or more *look-through earnout rights that were in existence at the valuing time; or
(b) at the valuing time, one or more of the entity's CGT assets were look-through earnout rights relating to CGT assets of:
(i) one or more of the other entities referred to in section 152-15; or
(ii) one or more entities not referred to in that section; or
(c) you are the entity, and:
(i) the CGT event referred to in section 152-15 happened because you *disposed of a CGT asset; and
(ii) your *capital proceeds from the disposal were affected by one or more financial benefits provided to, or by, you under one or more look-through earnout rights;
and no further financial benefits can be provided under any of those look-through earnout rights.
Note: For paragraph (c), capital proceeds can be affected by financial benefits provided under a look-through earnout right (see section 116-120).
(6) You can choose to treat the *market value of each of the *CGT assets first mentioned in the applicable paragraph of subsection (5) as if it were, at the valuing time, equal to:
(a) if paragraph (5)(a) applies - the first element of the CGT asset's *cost base at the valuing time; or
(b) if subparagraph (5)(b)(i) applies - nil; or
(c) if subparagraph (5)(b)(ii) applies - the total of the financial benefits provided under the *look-through earnout right after the valuing time; or
(d) if paragraph (5)(c) applies - those *capital proceeds.
Note: For paragraph (a), the first element of a CGT asset's cost base can be affected by financial benefits provided under a look-through earnout right (see section 112-36).
(7) In working out the net value of the CGT assets of an entity at the valuing time, if:
(a) you make a choice under subsection (6) about a *CGT asset of the entity that is a CGT asset covered by paragraph (5)(a) or (c); and
(b) a *look-through earnout right covered by that paragraph is also a CGT asset of the entity;
treat the *market value of that right as if it were nil at the valuing time.