- Description
- Specifications
Planning is very important when a business is acquired, especially for income tax purposes.
The first thing to be decided is the type of business entity to be utilised by the purchaser to acquire the business e.g:
- Individual
- Partnership
- Discretionary Trust
- Unit Trust
- Company
There are varying taxation implications, dependent on that decision.
This paper discusses the treatment of the purchase consideration and in particular the apportionment of the purchase consideration into its various components. Comment is also made on the treatment of debtors and employee entitlements for:
- annual leave
- sick leave
- long service leave etc
The responsibilities that shareholders of a company have relative to past events is also discussed, together with the treatment of carried forward losses in a company.
The paper also highlights the necessity for making enquiries as to whether a Unit Trust has ever resolved to be a Family Trust or whether a Unit Trust or a Company in which the purchaser may be interested in acquiring shares or units has ever issued an Interposed Entity Election. These items can attract penalty rates of tax and therefore the purchaser should be making enquiries.
The paper is presented under a number of headings including:
- Planning Is Important
- Business Structures
- Taxation Implications
- Purchase Apportionment
- Land
- Buildings
- Plant And Equipment
- Stock
- Debtors
- Goodwill
- Restrictive Covenant
- Employees Entitlements
- What To Purchase?
- “Corporate Skeletons”
- Companies - Carry Forward Of Losses
- Unit Trusts
- Interposed Entity
- Keep Detailed Records Of Business Acquisitions
- Professional Advice