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Unknown unknowns with unconsolidated clients


The consolidation provisions represent a combination of legal, accounting and economic concepts that are enacted in both prescriptive detail and broad principle. This presents difficulties for all taxpayers, but especially groups in the small-to-medium enterprise (SME) markets. Entry into consolidation is difficult for groups that utilise hybrid company/trust structures, or those that have an insufficiency of those attributes that enable entry into consolidation without detriment. These kinds of groups and entities dominate the SME sector. While a number of amendments have made the process of consolidating easier, this has caused detriment to the integrity of the consolidation framework. There have been informed recommendations for reforms that would better facilitate consolidation for the SME sector, but no action has been taken. This article considers the reasons consolidation can be difficult for an SME and what can be done under the existing law to mitigate the problems of consolidation for an SME group.

Author profiles

Michael Charles ATI
Michael is a Client Director at Pitcher Partner. He has advised multi-national, private and high wealth individuals, especially on tax consolidation and M&A in the SME sector. Michael frequently presents to professional and specialist bodies on a wide range of tax issues, is a member of the Tax Institute's Professional Development Committee (Victoria) and Victorian State Council and teaches in the Melbourne university Law School Masters’ program. - Current at 15 September 2021
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Lucy Goldwater ATI
Lucy Goldwater is a Client Director at Pitcher Partners with experience in advising on the income tax aspects of a broad range of corporate, international and trust taxation matters for both multi-nationals and SMEs across various sectors. Lucy has a particular focus on property, M&A and tax consolidation. - Current at 09 August 2021
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