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Deductible liabilities for consolidated groups


The Commonwealth Government has announced that it will accept recommendations made by the Board of Taxation in relation to the operation of the tax consolidation regime. In particular, the government has accepted a recommendation which proposes a new treatment for deductible liabilities for an entity that joins a tax consolidated group. The government proposes that the “amendments will apply to transactions that take place after 14 May 2013”. However, there is little detail in the government’s announcement about how the proposed amendments will apply to joining entities, which makes it difficult for tax consolidated groups to appropriately apply this announcement for new acquisitions.Yet the amendments will have implications for almost all joining calculations performed from 14 May 2013.

This article considers the proposed amendments in more detail, with examples to demonstrate how they may operate in some very basic cases.

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Alexis Kokkinos ATI
Photo of author, Alexis KOKKINOS Alexis Kokkinos, ATI, is a Partner of the Tax Consulting group of Pitcher Partners and has over 19 years experience in advising corporate clients. Alexis was a member of the Board of Taxation review on the tax consolidation measures and was also a member of the Treasury review of MEC groups. - Current at 16 December 2020
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