(In)famous in Australia: Tax

Foreign investors as LPs and GPs in the Australian private equity industry remain anxious the Australian Tax Office’s recent reversal of years of precedent with two taxation determinations relating to investments in Australian assets by foreign investors. One issue surrounds whether the profits on the sale of shares in a company acquired in a leveraged buyout can be regarded as ordinary income, or whether they remain considered capital gains as they have always been considered in Australia. The second directive deals with the application of the general anti-avoidance provisions in Part IVA, related to the consideration of a company incorporated in a country that has a tax treaty with Australia, but operates a pooled investment vehicle located in a non-tax treaty country (e.g. the Cayman Islands).