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Consolidation in Focus: Tax Sharing & Tax Contribution Agreements

Published on 26 Nov 2003 | Took place at AAR Seminar Room, Melbourne, VIC

Consolidation effects a fundamental shift in the liability of group members to meet the group's income tax liabilities. The head company of the group is primarily liable for the group's entire tax bill, and subsidiary entities exposed to potential joint and several liability if the head company defaults.

This presentation explores the issues raised by this new liability regime.

Individual sessions

Consolidation: Tax Sharing & Tax Contribution Agreements

Author(s):  Grant CATHRO,  Martin FRY This presentation addresses the following issues:
- whether the head company needs a funding arrangement - accounting issues and directors' duties
- whether the group needs a Tax Sharing Agreement (TSA) - benefits, directors' duties and relationship to ASIC cross guarantee
- issues in drafting Tax Sharing and Tax Funding Agreements - allocation methodology, liabilities covered, entities covered, dealing with losses and record keeping
- pitfalls in the TSA regime
- how you provide third parties with a level of comfort that the TSA will work.

Materials from this session: