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Accounting for tax consolidation


Following the coming into force of the tax consolidation regime in 2002, the Australian Accounting Standards Board's Urgent Issues Group issued Interpretation 1052 — Tax Consolidation Accounting to provide authoritative guidance on acceptable accounting for income taxes in a tax-consolidated group. The purpose of this article is to explain the key features of Interpretation 1052 and to outline the steps taxconsolidated groups need to work through to recognise current and deferred tax balances. The article explains recognition of tax balances, the accounting process, alignment of accounting to tax consolidation core rules,
tax consolidation adjustments, and disclosure of necessary information. Examples illustrating the accounting for income tax within a tax-consolidated group are provided. The author cautions that the alignment of accounting to tax results in some interesting equity adjustments and should be avoided where possible.

Author profile

Davide Costanzo CTA
Photo of author, Davide COSTANZO Davide is a Manager in the Tax and Business Services Division of Moore Stephens Perth. With over 8 years of professional experience, Davide is predominantly involved in the area of tax consulting and tax compliance for more complex and larger client groups, including listed public companies. - Current at 01 December 2011
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