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Goodwill from consolidation and tax purpose

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Goodwill from consolidation and tax purpose

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • August 24, 2015 at 12:57 pm #268341
    Binh
    Member
    • Topics: 41
    • Replies: 78
    • ☆☆

    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!

    August 24, 2015 at 2:00 pm #268351
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    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?

    August 24, 2015 at 4:03 pm #268368
    Binh
    Member
    • Topics: 41
    • Replies: 78
    • ☆☆

    Tks you Mr. Mike. That is much clearer!

    August 24, 2015 at 5:07 pm #268374
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

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