In our last article on corporate groups, we looked at the subgroup exception as it applies to intra-group transfers. We showed, using both numerical and visual examples, why there should be an exception. In this article we shall see how the tax legislation ensures that this is indeed the case. As before, we shall be concentrating on the rules for capital assets – the rules for IP are similar.
As has been stated in previous articles, the degrouping rules are designed to prevent assets from being smuggled out of a group tax free under the protection of a corporate wrapper. This is achieved by imposing a tax liability when a company acquires an asset from a fellow group member and subsequently leaves the group within the next 6 years.
But for every rule, there is an exception.
In this article, we shall discuss the degrouping rules as they apply to intangible assets such as IP and goodwill (collectively referred to as IP). The tax treatment is similar to that applying to capital assets, but with important differences.
(This article can be downloaded in pdf format at Academia.edu.)
In Part One, we saw how the degrouping rules prevent capital assets from leaving a group tax free within a corporate wrapper. This article finishes off with a few miscellaneous, but important points concerning the operation of these rules.
(This article is Part Two of a two part mini-series on the Capital Gains Degrouping Rules. Both parts can be read in a single article in pdf format which can be downloaded at Academia.edu.)
This is the third article in our series on corporate tax groups where we explore the rules governing intra-group transactions, and how they are taxed. In this article we shall look at the rules relating to capital assets.
(This article is Part One of a two part mini-series on the Capital Gains Degrouping Rules. Both parts can be read in a single article in pdf format which can be downloaded at Academia.edu.)