Concept

Escrow Funds

Chopp v. R., 98 DTC 6014, [1998] 1 CTC 407 (FCA) / Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds did not violate a duty to cooperate with the vendor

"Prior to the closing of the purchase of the shares of an Australian company (the “Company”), the Australian purchaser (“Nuvei”) identified that a deemed dividend paid by the Company may have been subject to withholding tax at the non-treaty reduced rate of 30%, rather than the 15% rate generally applicable under the Australia-U.S. Treaty, given that the various US LLC and LLP recipients of the deemed dividend (the “investors”) had not established that their ultimate owners were residents of the US. It agreed with the Australian sellers (“Arrap”) that a portion of the purchase price would be placed into escrow for 18 months to cover off this potential liability, and that if there was no “determination” by the Australian Taxation Office (“ATO”) within the 18-month period that the additional withholding tax was payable, the escrowed funds would be released to Arrap."

Related Ideas

  • Escrow FundsDeyab v. Canada, 2020 FCA 222 · Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds did not violate a duty to cooperate with the vendor
  • ATO DeterminationDeyab v. Canada, 2020 FCA 222 · Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds did not violate a duty to cooperate with the vendor
  • Court FindingsChopp v. R., 98 DTC 6014, [1998] 1 CTC 407 (FCA) · Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds did not violate a duty to cooperate with the vendor
  • Implied ObligationDeyab v. Canada, 2020 FCA 222 · Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds did not violate a duty to cooperate with the vendor
Escrow Funds | Chopp v. R., 98 DTC 6014, [1998] 1 CTC 407 (FCA) | Bifalgorithm | Bifalgorithm