Published on 26 Oct 06
by NEW SOUTH WALES DIVISION, THE TAX INSTITUTE
Normally due diligence is carried out where a consolidated group is acquiring another consolidated group or a stand alone entity or group of entities - are you looking at the most significant matters or are the entities being acquired bringing unrecognised problems into the group? This paper covers topics including:
joint and several liability exposure arising from membership of previous consolidated groups - lack of visibility
risks from open assessment periods beyond four years
latent tax liabilities which could be triggered on acquisition, for example
CGT events L3, L5 and J1
crystalisation of unrealised gains
limitations on availability and utilisation of tax attributes
changes in relative market values of group companies
impact of gearing on available fraction calculations
capital injection and other adjustments
structural tax issues for the carry-forward entity arising from historical positions.
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
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