These rules are designed to restrict losses arising on disposal of a subsidiary in certain circumstances. There are two legs to the rules: (1) those dealing with intra-group transfers of assets (TCGA 1992 s 176); and (2) those dealing with dividend stripping (TCGA 1992 s 177). We only need to consider these rules when we see a loss arising on the sale of a subsidiary from a capital gains group. The rules act so as to reduce that loss on a just and reasonable basis. This can include eliminating the loss completely but can never result in the loss becoming a gain. In the absence of special rules companies would be able to exploit the no gain/no loss transfer of assets within a group to realise capital losses on sale of subsidiaries. See example 1 for an illustration...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
These rules are designed to restrict losses arising on disposal of a subsidiary in certain circumstances. There are two legs to the rules: (1) those dealing with intra-group transfers of assets (TCGA 1992 s 176); and (2) those dealing with dividend stripping (TCGA 1992 s 177). We only need to consider these rules when we see a loss arising on the sale of a subsidiary from a capital gains group. The rules act so as to reduce that loss on a just and reasonable basis. This can include eliminating the loss completely but can never result in the loss becoming a gain. In the absence of special rules companies would be able to exploit the no gain/no loss transfer of assets within a group to realise capital losses on sale of subsidiaries. See example 1 for an illustration...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
