woolworths demerger tax implicationswoolworths demerger tax implications

Depending upon the level of PPA undertaken in the past and disclosures around such intangibles in the block of assets, a taxpayer would need to explore whether reallocation of higher amounts to non-goodwill intangibles (such as trademarks, license, customer contracts, knowhow, distribution network, etc) is possible. Also, given that the amendment is effective from AY 2021-22 and onwards, the unabsorbed depreciation of past years should remain protected on this count as well. The consumer sector was the biggest drag on the market, led by a 11.2 per cent decline in Woolworths shares to $37.75. Provides updated tax consequences of participation in the 2012 Woolworths Limited restructure including correction of the value split amounts, updated examples and new information about the sale facility. Pendency means the period between the date of filing of application with prescribed authority and receipt of such order by the specified tax authorities. CBDT in a circular [71] has indicated that where NCLT has explicitly and adequately considered the tax implications while sanctioning the arrangement, then GAAR provisions will not apply to such arrangement. 42]. The company was formerly known as Woolworths Limited and changed its name to Woolworths Group Limited in December 2017. Owning Woolworths shares on 30November 2012 gave you a right to receive SCA Property Group stapled securities. Please try again. An argument can also be put forth that since depreciation on goodwill is not allowable on account of the amendment, it becomes imperative to carve out goodwill from other intangibles which as a matter of practice may have been clubbed in a common basket and termed as goodwill in the financial statements. It may be noted that the Delhi Tribunal in NIIT technologies [48] has taken a view that deduction for expenses incurred on demerger is not allowable to the resulting company but is allowed only to the demerged company. At least 75% of the shareholders of the transferor foreign company remain shareholders of the transferee foreign company; and, Depreciation claim on goodwill acquired on amalgamation, Availability of MAT credit of transferor company, Accumulated profits of amalgamated company for the purposes of dividend, Applicability of GAAR on a merger / demerger. This exemption applies only to distribution of shares and does not cover distribution of other securities or cash. The fact that there is no solution shown seems to mean that Reckon cannot handle this transaction. 4. As mentioned earlier, unless specifically exempted, gains arising on the transfer of capital assets are chargeable to income tax as capital gains. At the time (4 November), Woolworths was trading at $38.55. Simply the best portfolio management tool for DIY investors. The company that transfers such business operation is known as the "demerged" company, while the company to which the business is transferred is known as the "resulting . The proposed demerger is subject to shareholder approval. Neville still owns all of his 1,000 Woolworths shares. You wont get the funds for over a month and have no control over the price you will receive. Endeavour looks ready to fit this bill. Reddit and its partners use cookies and similar technologies to provide you with a better experience. PK ! See Cost base of new units. Woolworths' $10 billion demerger of its Endeavour drinks, pubs and pokies division will allow the company to focus more on tackling other social issues, CEO Brad Banducci says. Sixth proviso to Section 32(1) of the Act. The intention of this clause is to encourage transfers driven by strategic economic considerations and not to encourage transfer of individual assets of an undertaking under the guise of demerger. Section 2 (19AA) of the Income Tax Act,1961 defines demerger as a transfer of undertakings (one or more) to any resulting organisation pursuant to an arrangement scheme under Sections 391 to 394 of the Companies Act, 1956 in such a way that:. The entities involved in a demerger are companies and that the transfer is pursuant to a scheme of arrangement under Sections 230 to 232 of the Companies Act, 2013; The demerger involves transfer of one or more undertakings (demerged undertaking) by the transferor company (demerged company) to the transferee company (resulting company); All the property of the demerged undertaking, immediately before the demerger, becomes the property of the resulting company by virtue of the demerger; All the liabilities of the demerged undertaking, immediately before the demerger, become the liabilities of the resulting company by virtue of the demerger; The property and the liabilities of the undertaking are transferred at values appearing in its books of account immediately before the demerger. Vanilla has an undeserved reputation as being boring, but in reality, the flavor provides the backbone for many sweet treats. The Act provides that deduction of one-fifth of the expenditure incurred wholly and exclusively for the purpose of demerger is allowed to an assessee (being an Indian company) in each of the five successive years, beginning from the year in which the demerger takes place [47] . Will you need the Individual tax return instructions supplement? But with Woolworths continuing to win the sales wars, I am sticking with the number one player. To address this, amendmentshave been brought in vide Finance Act, 2022, that theassessment, reassessment or other proceedings made or initiated against the predecessorduring the pendency ofsuccession would be deemed to be made or initiated against the successor. This document contains information about the 2012 Woolworths Limited (Woolworths) restructure and creation of a new stapled security. No, the demerger is a forgone conclusion to be approved. Explanation 2B to Section 43(6) of the Act. // -->