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Relaxing the SBT: a Recommendation from the Canadian and American Experience

Published on 01 Jan 04 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

The purpose of this paper is to argue for the liberalisation of the same business test (SBT) as the basis for loss carryovers by consolidated groups. A review of the jurisprudence of Canada, the United States and Australia shows the difficulties encountered by the Courts in applying a 'business sameness' requirement. When such a requirement presents difficulties in the context of a single corporation, its application becomes exponentially more difficult to carry out in the context of a consolidated regime. The nature of Australian consolidation - in which the head entity is treated as a group and companies exiting a group are unable to take their losses with them - makes the requirement for tracing 'business sameness' virtually impossible to meet. Liberalisation of the SBT is recommended based on the Canadian and American experiences.

Author profiles:

Allister YOUNG
Allister is an Assistant Professor, Department of Accounting, Brock University, St. Catharines, Ontario, Canada.
Current at 5 January 2004
Click here to expand/collapse more articles by Allister YOUNG.
 
Maureen DONNELLY
Maureen is an Associate Professor, Department of Accounting, Brock University, St. Catharines, Ontario, Canada.
Current at 5 January 2004
Click here to expand/collapse more articles by Maureen DONNELLY.
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