CGT and Demerger Relief for Corporate Reconstructions
This important new law can assist practitioners access the CGT small business concessions for their clients in
situations where they might not currently be eligible. How this legislation works is a must for SME advisers and not
just large corporate groups. A simple restructure using demerger relief could make a big difference!
These case studies cover:
- rationale for demerger relief
- types of demergers allowed
- who can demerge
- implications for private groups
- CGT corporate and shareholder relief
- demerger dividend exemption
- anti-avoidance and section 45B
- obtaining rulings
- can Part IVA apply if demerger relief used to gain access to Div 152?
These case studies l consider recent developments and trends regarding the deductibility of:
- 'black-hole' and similar expenditure
- interest, including implications arising from Anovoy (interest on loan used to buy house for profit making purposes), Spassked (interest on loan to acquire shares in subsidiary company), Hart (split loan facilities), Firth (capital protected equity loan), Brown and Jones (cessation of a business)
- foreign exchange losses
- sale and leaseback, and hire-purchase, expenditure.
The General Value Shifting Regime is an enormously complex piece of legislation with important consequences for all
taxpayers. Failing to consider the provisions can result in your client inadvertently triggering capital gains, either
immediately or in the longer term. These case studies cover the following issues, with the use of practical examples:
- application of provisions - direct value shifting, indirect value shifting and exemptions (eg. reversal rule, threshold)
- consequences of application - crystallizing capital gains, adjustable values (cost bases), and denial of losses.