ACCA Advanced Taxation (ATX) Practice Exam

What is the only relief available to companies?

1. Loss relief

2. Investment relief

3. Rollover relief

4. Tax credit

The correct answer is: Rollover relief

Rollover relief is the correct choice because it specifically pertains to companies when engaging in the disposal and acquisition of assets. This relief allows companies to defer the capital gains tax liability on gains that arise from the disposal of an asset as long as they reinvest the proceeds in qualifying replacement assets. This is particularly beneficial for companies looking to redeploy their capital into further investment, promoting the growth and continuity of their business operations. Other options can be available to both individuals and companies, but rollover relief is distinguished by its specific application to corporate entities in the context of asset disposals and reinvestments. In contrast, loss relief is typically more relevant to reducing taxable income using losses from previous years, investment relief usually applies to broader tax incentives rather than being solely for companies, and tax credits often serve different purposes such as incentivizing specific behaviors or investments rather than directly linked to asset disposals. Thus, rollover relief stands as the exclusive relief available specifically to companies, ensuring that capital can be efficiently managed and reinvested without immediate tax consequences.