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Treatment of unabsorbed deduction under section 37O of Act of amalgamating company which ceases to exist

Income Tax (Amalgamation of Companies) Regulations 2011

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—(1) Subject to paragraphs (2) and (4), where —(a)an amalgamating company ceases to exist upon the amalgamation; and(b)the amalgamating company has any deduction allowed under section 37O of the Act that remains unabsorbed on the date of amalgamation by reason of an insufficiency of gains or profits chargeable for any year of assessment (referred to in this regulation as the year of assessment with the shortfall),then section 37O of the Act (other than subsection (21) of that section) shall apply as if the amalgamated company were the amalgamating company, for the purpose of allowing the unabsorbed deduction to be made against the income of the amalgamated company.(2) Paragraph (1) applies only if ––(a)the amalgamating company was carrying on a trade or business up to the last day immediately before the date of amalgamation;(b)the amalgamated company continues to carry on the same trade or business on the date of amalgamation as that of the amalgamating company; and (c)the Comptroller is satisfied that —(i)where the date of amalgamation is before the last day of the year of assessment with the shortfall, the shareholders of the amalgamating company on the day immediately before the date of amalgamation were substantially the same as the shareholders of the amalgamated company on the first day of the year of assessment in which the unabsorbed deduction is to be allowed to the amalgamated company under this regulation; or(ii)where the date of amalgamation is on or after the last day of the year of assessment with the shortfall, the shareholders of the amalgamating company on the last day of that year of assessment were substantially the same as the shareholders of the amalgamated company on the first day of the year of assessment in which the unabsorbed deduction is to be allowed to the amalgamated company under this regulation.(3) The Minister or such person as he may appoint may, where the shareholders of an amalgamating company are not substantially the same as the shareholders of the amalgamated company and he is satisfied that the change in the shareholders is not for the purpose of deriving any tax benefit or obtaining any tax advantage, exempt the amalgamated company from paragraph (2)(c).(4) Any deduction referred to in paragraph (1) shall only be made against the income of the amalgamated company from the same trade or business as that of the amalgamating company immediately before the amalgamation.

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