Private ruling: Sale of company shares - additional payment arrangement
Date of advice: 25 June 2021
Published: September 2021

Ruling: Q1: Will any of the proceeds, comprised of an initial consideration of cash and shares in the company and additional earnout payments dependent on the performance of the company after completion of the share purchase agreement, from the sale of 100% of the shares in an Australian resident company be treated as ordinary income under section 6-5 of the ITAA 1997? | A1: No. | Q2: Will all of the proceeds, comprised of an initial consideration of cash and shares in the company and additional earnout payments dependent on the performance of the company after completion of the share purchase agreement, from the sale of 100% of the shares in an Australian resident company be treated as statutory income under the capital gains tax provisions in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A2: Yes.




Subject: Sale of company shares - additional payment arrangement: The Commissioner was asked two questions relating to the tax consequences of the sale of shares in an Australian resident company.