Review of the Income Tax Treatment of certain forms of Deferred Consideration


The Board undertook a self-initiated post-implementation review of the capital gains tax (CGT) look-through provisions for eligible earnout arrangements contained in Subdivision 118-I of Part 3-1 of Chapter 3 the Income Tax Assessment Act 1997 (Act).

The Board’s self-initiated review also looked at the operation of the Act in respect of deferred consideration arrangements that fall outside the scope of the earnout rules.

The Board has made a number of recommendations to seek to increase certainty for taxpayers regarding the operation of the CGT look-through provisions.

Working Group

The Board established a Working Group to undertake the review. Board members comprising Mrs Ann-Maree Wolff (Chair), Mr Craig Yaxley and Dr Mark Pizzacalla were appointed to oversee this review.

The Working Group also included the members of the Board’s Advisory Panel, namely, Mr Hayden Scott (PwC), Mr Anthony Portas (Minter Ellison), Mr Andrew Noolan (Brown Wright Stein Lawyers), Mr Andrew Van Dinter (Ernst & Young) and Mr Cameron Rider (Greenwoods & Herbert Smith Freehills Pty Limited), as well as officials from the Department of the Treasury and the Australian Taxation Office (ATO).

Board Report

The Board completed its report in September 2018.

Government Response

On 12 December 2019 the Government announced the publication of the Review of the Income Tax Treatment of certain forms of Deferred Consideration report, noting it as a valuable contribution to public debate. The Government stated it will continue to consider the implications of the Board’s findings.

Further information

For further information about the Board’s work on the this topic, please contact the Board of Taxation Secretariat at or 02 6263 4366.