Tax consolidation under Australian IFRSs

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08 Aug 2005

Deloitte (Australia) has published a discussion paper on (PDF 598k).

Australia's Urgent Issues Group issued Interpretation 1052 Tax Consolidation Accounting to address the accounting implications of the move by the Australian federal government to allow Australian groups to tax consolidate. Interpretation 1052 deals only with the separate financial statements of entities within a tax-consolidated group and many of the other issues surrounding the accounting for income tax in the tax consolidation environment remain unresolved. From a commercial perspective, there are three clear messages for Australian entities arising from Interpretation 1052:
  • 1. Tax funding arrangements need to be reviewed and if necessary rewritten to avoid superfluous accounting implications.
  • 2. The costs and benefits of any systems changes need to be considered.
  • 3. Care needs to be taken to ensure that the accounting methodology adopted does not result in unfavourable tax consequences.
The discussion paper explores these issues in addition to providing an in-depth analysis of the accounting mechanics of Interpretation 1052.

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