Gil Sperling

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What Is Tax Sharing Agreement

October 15, 2021 by gilsperling

Given the potentially significant difference in the payment schedule, care must be taken to ensure that all parties understand when members will be compensated for the use of their attributes. To date, most consolidated tax groups have decided to allocate their tax obligations on the basis of the notional autonomous taxable income of each group member or on the basis of each member`s retained earnings as a percentage of the group`s total retained earnings. Whether or not the allocation is accepted as appropriate on these bases ultimately depends on the facts and circumstances surrounding each group`s tax situation, as well as the ATO`s laws, regulations and guidelines for tax sharing agreements in general. If the group did not have a tax-sharing agreement, the parent company would not be required to transfer the $100 refund to Subsidiary 2.

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