Income Tax Assessment Act 1997

If you *acquire a *CGT asset because an entity *disposes of the CGT asset to you, and that disposal causes *CGT event A1 (the first CGT event) to happen:

neither the *cost base nor the *reduced cost base of the CGT asset includes the value of any *look‑through earnout right relating to the CGT asset and the acquisition; and

include in the first element of the CGT asset’s cost base and reduced cost base any *financial benefit that you provide under such a look‑through earnout right; and

reduce the first element of the CGT asset’s cost base and reduced cost base by an amount equal to the amount of any financial benefit that you receive under such a look‑through earnout right.

Despite section 103‑25, you may remake any choice you made under this Part or Part 3‑3 for a later *CGT event involving the *CGT asset if:

after the later CGT event, you provide or receive a *financial benefit under such a *look‑through earnout right; and

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.

The Commissioner may amend an assessment of a *tax‑related liability if:

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

the amount of the tax‑related liability:

depends on that entity’s taxable income for an income year in which a *CGT event, involving the *CGT asset, happens after the first CGT event but before the financial benefit is provided or received; or

is otherwise affected by that right’s character as a look‑through earnout right; and

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.

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

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:

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

the amount of the tax‑related liability:

depends on that entity’s taxable income for an income year in which a *CGT event, involving the *CGT asset, happens after the first CGT event but before the financial benefit is provided or received; or

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

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 first CGT event happens.

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

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

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