Documents Regarding Earnout Arrangements And Remission Of General Interest Charge.

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The ATO guidance document explains the tax treatment of earnout arrangements—contractual provisions where business sellers receive contingent payments based on post-sale performance. The disclosure distinguishes between standard earnouts (buyer pays additional amounts on performance thresholds), reverse earnouts (seller repays if thresholds unmet), and hybrid arrangements. For arrangements predating 24 April 2015, the ATO applies Draft Taxation Ruling TR 2007/D10, treating earnout rights as separate capital gains tax assets. Legislation effective 25 February 2016 introduced "look-through" CGT treatment for arrangements from 24 April 2015 onward. Transitional relief applies to pre-2015 earnout arrangements where taxpayers reasonably and in good faith anticipated retrospective legislative amendments. The guidance addresses compliance expectations and interpretive consistency across different earnout structures and timing thresholds.