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ARTICLE · 09 SEPTEMBER 2012

Australian tax update - 22 August 2012

Greenwoods & Freehills
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This update discusses a recent case and proposed developments in Australian tax law relevant to foreign investors.

AustraliaTax
Ken Spence
Ken Spence

In this update, we discuss the following developments in Australian tax relevant to foreign investors:

  • proposed changes to restrict tax relief for mergers & acquisitions;
  • Mitsui's loss in a tax dispute regarding an acquired petroleum project; and
  • proposed withholding tax concessions for foreign investments in Australian clean energy buildings.

Tightening tax relief for mergers and acquisitions

Australia's scrip-for-scrip rollover rules provide tax relief in respect of mergers and acquisitions that involve scrip consideration. The rules allow:

  • the target shareholders to disregard any capital gain they make on the sale of their target shares but require them to carry over their historic cost base to their new shares in the acquiring company; and

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