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## Tax consolidation 

The Parent Entity and its wholly-owned Australian resident subsidiaries formed a tax-consolidated group under Australian taxation law with effect from 25 October 2006 and are therefore taxed as a single entity from that date. AGL Energy Limited is the head entity in the tax-consolidated group. 

The members of the tax-consolidated group have entered into a tax sharing and tax funding agreement. The tax funding agreement requires payments to/from the head entity equal to the current tax liability (asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity. The payments are recorded as intercompany receivables/payables. 

As a result of retrospective changes to the tax consolidation legislation enacted in June 2010, AGL has recognised a further tax benefit of $5.5 million (2010: $85.5 million) relating to tax deductions which are available for the tax value allocated to certain derivative assets in place at the time of the merger/demerger transaction with Alinta Limited in October 2006. AGL received tax refunds of $72.4 million during the 2011 financial year and expects to receive further tax refunds of $22.1 million. These amendments also resulted in a change to deferred tax liabilities of $3.5 million. 

