AVCAL response to ATO final determinations

1 December 2010

The Australian Private Equity & Venture Capital Association (AVCAL) welcomed the long-awaited publication of the Australian Tax Office final determinations TD 2010/20 income tax: treaty shopping – can Part IVA of the Income Tax Assessment Act 1936 apply to arrangements designed to alter the intended effect of Australia’s International Tax Agreements network? and TD2010/21 Income Tax: can the profit on the sale of shares in a company group acquired in a leveraged buyout be included in the assessable income of the vendor under subsection 6‑5(3) of the Income Tax Assessment Act 1997?

AVCAL’s CEO, Dr. Katherine Woodthorpe, said the association would study carefully the ATO Determinations and highlight where legislative responses are required to provide certainty in tax laws so that Australia can continue to attract foreign investment, particularly in private equity (PE) and infrastructure.

“The release today of the ATO’s final determinations clears the way for us to engage with the Federal Government to give foreign investors certainty on tax issues. Over $8bn in PE funds under management in Australia is sourced from foreign investors. The 2006 amendments to Australia’s tax laws were meant to bring Australia into line with other OECD countries by allowing capital gains earned by foreign investors to be taxed in the hands of those investors in their country of residence. The Government needs to ensure this intended outcome is realised,” said Dr. Woodthorpe.