The valuation of cash holdings and its tax implications
Source: The Tax Specialist Journal Article
Published Date: 1 Aug 2012
The allocation of value between land and non-land assets has direct duty and capital gains tax (CGT) implications. What is required for duty purposes is the apportionment of the market value of the whole going concern entity between land and non-land assets to assess whether the relevant duty threshold has been exceeded.
For CGT purposes, the value apportionment between land and non-land assets is required for a principal asset test to assess Australian CGT payable by foreign residents. In this article, the authors discuss relevant valuation principles, and conclude that a value apportionment exercise conducted for duty and CGT purposes warrants more complex and lateral valuation thinking than does the normal total value assessment exercise undertaken for the purposes of the underlying commercial transaction. Unfortunately, the necessary shift in valuation thinking when the focus of valuation changes from total value assessment to value apportionment has received little attention in practice, and there are likely to be negative flow-on duty and CGT implications.
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Already a Subscriber? Login now
Details
- Published By: Hung Chu, Wayne Lonergan
- Published On:1 Aug 2012
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.
Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
Copyright Statement
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags
Share this page