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Dear Mr. Mike,
As I learned, the goodwill may arise from the consolidation process and is not subject to amortization but only impairment review . But I would like to know if the impairment indeed happens, can the impairment loss be deductible expenses for tax purposes for the group?
This above question is leading me to another question (not really related to F7): can a group be considered as a legal entity for tax purpose? or the tax authority only views the group as a collection of separate entities?
Tks you so much!
I believe, though it must depend upon local laws, that generally goodwill is not allowable as a deduction in calculating profits subject to taxation
If you have done F6 you will know that there is a topic called “group taxation”. When the consolidated profit before tax is calculated, this figure is NOT the basis of the taxation figure in the consolidated statement of profit or loss.
The tax figure in the consolidation is the accumulation of all the separate tax figures for the separate companies within the group. However, there is such an animal as “group relief” where companies within a group are able to surrender their own losses to other companies in the group that are profitable.
Yes, the taxman looks at companies individually, but the law allows companies to give and receive relief for tax purposes
Ok?
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