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Making the most of limited resources in tax due diligence - what to focus on in the purchase of a corporate entity paper


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.

Author profile

Grant Wardell-Johnson CTA
Photo of author, Grant WARDELL-JOHNSON Grant is the Lead Tax Partner of the Economics and Tax Centre at KPMG. Grant has a background in providing tax advice relating to international and domestic tax structuring, international cross-border acquisitions and initial public offerings. Grant now leads the thought leadership on tax policy and consultation on new law, including KPMG’s response to base erosion and profit shifting (BEPS) and the OECD Action Plan. He is Co-Chair of the National Tax Liaison Group, an Adviser to the Board of Taxation, a member of the KPMG Global BEPS Steering Group and the KPMG Responsible Tax Group. He is KPMG Global Partner Champion for Geopolitics & Tax. He is an Adjunct Professor in Taxation and Business Law at the UNSW and an Honorary Fellow of the University of Western Australia. - Current at 25 February 2021
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This was presented at Annual Corporate Tax Intensive .

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