Miscellaneous 2004

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

Source: Australian Tax Forum Journal Article

Published Date: 1 Jan 2004

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.

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Miscellaneous 2004

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