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Australian tax law may impede Deacons/Norton Rose merger

The impending merger of Australian firm Deacons and the multinational Norton Rose has hit a snag.

June 29, 2009 By Olivia Collings
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The impending merger of Australian firm Deacons and the multinational Norton Rose has hit a snag. 

The merger faces several impediments that could prevent the full financial integration of the two organisations. 

The main issue is a glitch with Australian tax law that could result in a major tax liability if Deacons became an incorporated legal practice in order to limit its liability, which it must as a prerequisite for all organisations that join Norton Rose. 

The merger is the first full financial merger of an Australian law firm with one of the global giants of the profession. 

Norton Rose chief executive, Peter Martyr, warned that unless that tax problem was overcome, it could impede other potential mergers between Australian and global law firms.

The taxation hitch was revealed last week during the preparations to create a new global organisation with 1800 fee earners, 29 offices and annual turnover of $864 million. 

However, Deacons has said that this would not occur until a way was found of overcoming the risk that Deacons would incur a major capital gains tax liability if it incorporated. “We are not sharing profits, initially, globally,” Deacons chief executive, Don Boyd, said. 

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