AASB 1020 'Income Taxes'

18 April 2002

Mr Keith Alfredson
Chairman
Australian Accounting Standards Board
PO Box 204 Collins Street West
MELBOURNE VIC 8007

Dear Keith

AASB 1020 'Income Taxes'

A number of Group of 100 members have expressed concern about the implementation of the revised AASB 1020 'Income Taxes' for reporting periods commencing 1 July 2002. While acknowledging that the Board provided entities with three years notice of the implementation date of the revised AASB 1020 the timing is unfortunate because it coincides with the implementation date for the consolidation.

The introduction of the tax consolidation regime is a major change in business taxation and will involve a significant amount of tax planning and resources to manage its implementation. The tax consolidation regime will have a significant bearing on tax issues and the tax value of assets and liabilities within groups with consequences for tax accounting. Delays in the finalisation of the legislation exacerbate the problems being experienced by companies.

I understand that the Board discussed a submission requesting deferral of AASB 1020 and decided that it would not do so. However, that was before the release of the draft regulation on tax consolidation.

The G100 believes that the AASB could help ease this burden on companies by deferring the application date of the revised AASB 1020 for one year to financial years beginning on or after 1 July 2003. Deferral of the operative date does not prevent companies, should they be in a position to do so, from 'early-adopting' the revised standard. Deferral would also enable companies to implement arrangements for tax consolidation without the complication of the changed approach to tax-effect accounting.

Yours sincerely

Tom Pockett
National President