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Modifications of section 37O of Act when amalgamated company incurs contingent consideration for acquisition by amalgamating company

Income Tax (Amalgamation of Companies) Regulations 2011

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—(1) Subject to paragraph (2) and regulation 12F, where —(a)an amalgamating company made a qualifying acquisition of ordinary shares in another company;(b)the amalgamating company ceases to exist upon the amalgamation; and(c)the amalgamated company incurs capital expenditure in the form of contingent consideration in respect of that qualifying acquisition for which the amalgamating company would have been entitled to a deduction under section 37O of the Act if the amalgamation had not occurred and the amalgamating company had incurred the expenditure,then section 37O of the Act shall apply as if the amalgamated company were the amalgamating company, for the purpose of allowing the deduction referred to in sub‑paragraph (c) to the amalgamated company.(2) Paragraph (1) applies only if the Comptroller is satisfied that —(a)the shareholders of the amalgamated company on the date of amalgamation are substantially the same as the shareholders of the amalgamating company on the date of the qualifying acquisition of shares in the target company referred to in paragraph (1)(a), unless the Minister or such person as he may appoint has waived this requirement for the case in question and all conditions imposed by the Minister or the person have been satisfied;(b)the shareholders of the amalgamated company on the first day of the year of assessment in which the deduction is to be allowed to it are substantially the same as its shareholders on the date of amalgamation; and(c)on the date of amalgamation, the amalgamated company carries on the same trade or business as that carried on by the amalgamating company immediately before that date.

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