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Presented By: Hassan Ijaz

Presented To: Sir Imran Khalid

Topic Group s of CompaniesRoll No# BSAF 12114

Semester 4th hhhh

Class BS(Accounting & Finance)

Subject Business Taxation jjjj

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Contents of Presentation

Associated companies & implications of being associatedCriteria for group relief group

Criteria for capital gains group

Factors affecting choice of group relief

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Implications of being associated

Only one annual investment allowance (maximum 25000 pavailable for the group.

There are four associated companies in the group

Corporation tax rate limits are as follows:

Upper limit:1500000/4=375000

Lower limit: 300000/4=75000

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Criteria for group relief group

If two companies are members of 75% group relief group whe

One company is a 75% Subsidiaries of the others both companies are 75% sua third company.

Example

The following information relates to the Tin ltd group:

Tin ltd75% 75% 75%

sub 1 sub 2 sub 3Answer to example

Tin ltd has a 75% direct holding in Sub 1,Sub 2, Sub 3 and therefore, all four companies are part of a group relief purposes.

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Criteria for capital gains group

If capital gains group criteria of parent company its 75% subsidiaries of first subs

Gains group

G ltd ,H ltd and I ltd are in gains group as there is 75% ownership at each levelparent ) owns more than 50%(75%75%=56.25%)in I ltd.

G ltd does not own more than 50% of J ltd (75%75%75%=42.19%) and therefform part of the gains group.

I ltd and J ltd cannot from a separate gains group as I ltd is part of the G ltd gaicannot therefore be itself a parent company and form a separate gains group.

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Factors affecting choice of group relief

The most important factor to be taken into account when considering group rerate of corporation tax payable by the claimant companies. Group relief should

surrendered as follows: Initially to companies subject to corporation tax at the marginal rate of 25%

Surrender should then be to those companies subject to the main rate of cor24%.

The amount surrendered should be sufficient to bring the claimant company

augmented profits down to the small profits rate limit.

Any remaining loss should be surrendered to those companies subject to corthe small profits rate of 20%.

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