By taxconnect on
Tuesday, October 04, 2011
Changes to the tax consolidation treatment of rights to future income and associated residual cost setting rules announced today 25th November by Treasury. Below is an extract from Treasury of the changes.
The Government will introduce changes to income tax law affecting consolidated groups as part of its continued commitment to maintaining the integrity, equity and fairness of the tax system.
The changes relate to the way a consolidated group can deduct the costs allocated to some assets following a corporate acquisition.
The changes implement the recommendations of the Board of Taxation for future consolidations and seek to ensure that companies inside corporate groups don't receive tax benefits, which corporates outside consolidated groups are unable to receive.
Examples of “Rights to Future Income” assets (or RTFI assets) may include:
- work in progress
- contracts to supply goods or services
- construction contracts
- right to trailing commission
- right to deferred management fee
