The tax effect of capital contributions

Article Abstract:

The tax liability of company that receives voluntary capital contributions from some other firm is unclear in English company law. Such taxation implications are discussed, assuming that both recipient and contributor corporations are trading companies, and not share dealers. Examples from relevant British court decisions are also given. In general, for a capital contribution to be deductible from the contributing company's profits, it must be shown that the contribution was made with the primary intention of helping the trade of the contributor. If there are any other considerations, unfavorable tax consequences may result.

Usage, Commercial law, Corporation law, Gifts, Corporate finance, Endowments

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Asset finance: a real choice

Article Abstract:

Growing businesses can benefit from new finance opportunities based on asset values and project returns. The UK Finance Act 1984 made lease finance less attractive than hire purchase. The leasing business has dwindled and financing companies now offer more competitive rates. The circumstances in which asset or project-based financing can be used are discussed.

Assets (Accounting)

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