Change in Ownership – NBC Institute

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

Question

Exclusif Homes Ghana Ltd is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31 December each year. The company has obtained a government contract to build low-cost houses across the country. In order to raise additional capital to undertake this project, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with several potential investors, and there is the likelihood of having an investor and agreements signed on 31 January 2022.

The financial statements of Exclusif Homes Ghana Ltd revealed that the company made a loss of GH¢2,500,000 for the period ended 31 December 2021. Included in the expenses of the company are financial costs and bad debt amounting to GH¢100,000 and GH¢150,000 respectively.

The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.

Required:
Advise Exclusif Homes Ghana Ltd on the following:

The income tax implications for the company if an investor acquires 51% of the company’s shares and the tax planning opportunities available which could reduce the income tax exposure of the company if an investor acquires 51% of the company’s shares.
Measures the acquirer can adopt to mitigate the tax effects (if any) of the proposed transaction.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Change in Ownership, Financial cost, Share Acquisition, Tax Loss, Tax Planning
Level: Level 3

Topic: Mergers, amalgamation, and reorganization
Series: JULY 2023

AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization

Analyze the tax implications for Lawomba Ltd after acquiring 68% equity shares of Mbangba Ltd.

Question

The following has been extracted from the tax records of Mbangba Ltd relating to the 2018 year of assessment, which it intends to benefit in terms of tax outcome from the 2019 year of assessment.

Item	Amount (GH¢)
Tax loss recorded for the first time in 2018 Y/A	400,000
Financial Cost carried forward from derivatives- 2018	100,000
Bad Debts from Customers crystallized but not utilized in 2018	1,200,000

Lawomba Ltd in March 2019, acquired 68% equity shares of Mbangba Ltd and rebranded the name as Lawomba Ltd and conveyed the circumstance after the deal was clinched to the Ghana Revenue Authority to amend its records accordingly and recognize them as the legitimate persons in control of Mbangba Ltd.

The management of Lawomba Ltd has written to you making available the above disclosures for your tax opinion.

Required:

What is the tax implication of the above transactions in the records of Lawomba Ltd?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Reorganization, Change in Ownership, Tax Loss
Level: Level 3

Topic: Mergers, amalgamation, and reorganization
Series: NOV 2019

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

Question

The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.

Required:
Advise Exclusif Homes Ghana Ltd on the following:

The income tax implications for the company if an investor acquires 51% of the company’s shares and the tax planning opportunities available which could reduce the income tax exposure of the company if an investor acquires 51% of the company’s shares.
Measures the acquirer can adopt to mitigate the tax effects (if any) of the proposed transaction.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Change in Ownership, Financial cost, Share Acquisition, Tax Loss, Tax Planning
Level: Level 3

Topic: Mergers, amalgamation, and reorganization
Series: JULY 2023

AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization

Analyze the tax implications for Lawomba Ltd after acquiring 68% equity shares of Mbangba Ltd.

Question

The following has been extracted from the tax records of Mbangba Ltd relating to the 2018 year of assessment, which it intends to benefit in terms of tax outcome from the 2019 year of assessment.

Item	Amount (GH¢)
Tax loss recorded for the first time in 2018 Y/A	400,000
Financial Cost carried forward from derivatives- 2018	100,000
Bad Debts from Customers crystallized but not utilized in 2018	1,200,000

The management of Lawomba Ltd has written to you making available the above disclosures for your tax opinion.

Required:

What is the tax implication of the above transactions in the records of Lawomba Ltd?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Reorganization, Change in Ownership, Tax Loss
Level: Level 3

Topic: Mergers, amalgamation, and reorganization
Series: NOV 2019

Question Tag: Change in Ownership

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AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization

Analyze the tax implications for Lawomba Ltd after acquiring 68% equity shares of Mbangba Ltd.

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization

Analyze the tax implications for Lawomba Ltd after acquiring 68% equity shares of Mbangba Ltd.

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AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

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AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization

Analyze the tax implications for Lawomba Ltd after acquiring 68% equity shares of Mbangba Ltd.

You're reporting an error for "AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization"

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

You're reporting an error for "AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization"

AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization

Analyze the tax implications for Lawomba Ltd after acquiring 68% equity shares of Mbangba Ltd.

You're reporting an error for "AT – Nov 2019 – L3 – Q2c – Mergers, amalgamation, and reorganization"

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