A, noting increased use to bridge valuation gaps and that outcomes depend on TOFA, deal terms, metrics and payment timing, with ATO views still being tested. They outline the ATO’s shifting historical positions on whether earnout rights are separate CGT assets, buyer cost base treatment, and potential CGT event D1 exposure. TOFA is a key starting point for large taxpayers and can apply to contingent rights as financial arrangements, with timing and character mismatch implications; a business sale exception may exclude earnouts contingent on economic performance (not solely turnover/receipts), with uncertainty illustrated by the Merchant case. Outside TOFA, CGT applies and the look-through earnout rules may allow proceeds/cost base to reflect actual payments if strict conditions are met, including active asset and a hard five-year payment window.00:09 Welcome00:25 Why Earnouts Matter01:26 ATO Views Over Time05:44 TOFA as the starting point07:27 TOFA Mechanics and Timing09:27 Business Sale Exception Tests10:53 Structuring Contingencies13:26 In or Out of TOFA17:37 Outside TOFA and Look Through Earn out rights18:46 Look Through Requirements20:12 Five Year Rule Pitfalls23:39 Wrap Up and Key Takeaways