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10 Feb 2010

Non-resident investors and divestments of Australian assets: ATO seeks industry comment post-TPG

by Allan Blaikie, Jonathan Donald, Philip Kapp

Late last year the Australian Tax Office (ATO) pursued TPG for tax in respect of the A$1.5 billion gain derived by TPG from the disposal of its shares in Myer Holdings Pty Ltd, a move which we suggested at the time meant that future divestments of Australian assets by non-residents will come under close (and immediate) scrutiny, with serious implications for non-resident private equity fund investors.

On 16 December 2009, the ATO requested a response from industry to its draft tax determinations in relation to "Income tax: treaty shopping" and "Income tax: can a private equity entity make an income gain." The Australian Private Equity & Venture Capital Association Limited (AVCAL) responded with Response to Draft Tax Determination 2009/D17 and Response to Draft Tax Determination 2009/D18

Clayton Utz was pleased to assist AVCAL in developing its responses. We will continue to monitor the situation and keep you informed of future developments.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.