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Australian Accounting Alert on tax consolidation

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04 Apr 2005

Deloitte (Australia) has published an Australian Accounting Alert covering a new Australian interpretation, (PDF 49k).

The effect of the interpretation is as follows:
  • each entity in the tax-consolidated group recognises its own deferred tax balances and income tax expense;
  • the head entity recognises the group's aggregate current tax liability and the benefit of any tax losses arising in the tax-consolidated group; and
  • where amounts payable under any tax-funding agreement that is in place do not mirror these requirements, the net difference is treated as an equity transaction.
The Deloitte Alert notes that this approach is "radically different" from that currently required by a previous interpretation. The AASB is expected to consider the interpretation for ratification at its meeting on 4-5 May 2005. Links to all past Alerts are Here.

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