Capital Gains Tax Issues With Respect to Various Intangibles Upon Deconsolidation

This article discusses, from a tax policy and legal perspective, the appropriate capital gains tax treatment of: goodwill, intellectual property rights, and trade receivables in relation to deconsolidation. The consolidation legislation does not appear to expressly deal adequately with the issues that relevantly present themselves in this regard, which is an unfortunate lacuna considering that the presence of such assets could be said to be not uncommon in subsidiaries that are being disposed of by a tax consolidated group. Where available, guidance from the Australian Taxation Office fills this legislative gap only in part, and in its application is itself potentially problematic.