Two Good Reasons Why Consolidated Groups Should Enter Into a TFA:

1. FUNDING OF TAX PAYMENTS

Under the income tax law, the head company of the consolidated group has the obligation to pay the group tax. Where the group tax liability relates to the activities of subsidiaries there is a need for the head company to be funded by the relevant subsidiaries in respect of the tax liability.

Conversely, subsidiaries, may lose the benefit of tax assets and attributes used to reduce group tax liability. This might include deferred tax assets, tax losses, tax credits etc.

The TFA provides a mechanism for funding the head company in respect of group tax liabilities and for compensating subsidiaries for tax assets and attributes that they contribute to the group.

2. TAX ACCOUNTING IN SUBSIDIARIES

Accounting rules prevent a subsidiary from recognising tax assets, liabilities, expenses and revenues in their financial statements where the subsidiary is a member of a tax consolidated group.

However, where an agreement exists which creates obligations between the head company and its subsidiaries in respect of taxation, the subsidiaries may recognise income tax expense or revenue and tax related amounts receivable or payable.

Such recognition may be important for the financial statements of some subsidiaries.

Cornwall Stodart has developed a precedent TFA and easy to follow instructions for use by Groups or practitioners consulting to Groups. It is available through a single-use, multiple-use, or annual licence.

> The single-use licence, (AUD) $1,390 (GST inclusive), enables you to complete one TFA for one Group.
> The single-use licence update , (AUD) $420 (GST inclusive)

> The multiple-use (5) licence, (AUD) $1,850 (GST inclusive), enables you as a provider of tax, accounting, legal or other like services to use the TFA for up to 5 Consolidated Groups.
> The multiple-use (5) licence, (AUD) $560 (GST inclusive)

> The multiple-use (10) licence, (AUD) $2,780 (GST inclusive), enables you as a provider of tax, accounting, legal or other like services to use the TFA for up to 10 Consolidated Groups.
> The multiple-use (10) licence update, (AUD) $560 (GST inclusive)

> The annual licence, (AUD) $4,390 (GST inclusive), enables you as a provider of tax, accounting, legal or other like services to use the TFA without limit for your clients within a period of 12 months of payment.
> The annual licence update, (AUD) $1,320 (GST inclusive)

Please note that the Tax Funding Agreement will not be sent until we receive a credit card payment approval, or if payment is by other means, we are in receipt of $1,390 for a Single TFA or $1,850 for a Multiple (5) TFA, $2,780 for a Multiple (10) TFA and $4,390 for an Annual TFA. Please make cheques payable to "Cornwall Stodart".

Click here for the TFA order form (PDF)

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