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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. 

On 29 June 2012, AGL Generation Proprietary Limited, a subsidiary of AGL Energy Limited (AGL), acquired the remaining 67.46% of the shares in, and loan notes issued by, Great Energy Alliance Corporation Pty Limited (GEAC) and 100% of the shares in Loy Yang Marketing Holdings Pty Limited (LYMH) which it did not already own. GEAC, LYMH and their subsidiaries are not eligible to be members of the existing AGL tax-consolidated group. On 23 July 2012, the LYMH entities joined a new tax-consolidated group which was formed by AGL Generation Holdco Pty Ltd, a subsidiary of AGL. On 27 July 2012, the GEAC entities joined the new tax-consolidated group. AGL Generation Holdco Pty Ltd is the head entity in the new tax-consolidated group. 

## Revenue authority matters 

During the year ended 30 June 2012, AGL received an unfavourable response from the Australian Taxation Office (ATO) to a request for a private binding ruling relating to the tax treatment of the supply of unbilled energy to AGL’s mass market customers. AGL’s current tax treatment is to pay income tax on energy when it is billed to customers. If the ATO view is correct, AGL would be required to pay income tax on energy when it is supplied to customers rather than when it is billed and AGL would be required to recognise the tax as a current tax liability rather than a deferred tax liability. AGL believes its current tax treatment is correct and has therefore lodged an objection to the private binding ruling. 

## Extension of Petroleum Resource Rent Tax to onshore projects 

Changes to the Petroleum Resource Rent Tax (PRRT) Assessment Act 1987 extend the operation of the PRRT to onshore oil and gas projects from 1 July 2012. As the PRRT falls within the scope of AASB 112 Income Taxes , AGL is required to account for any associated deferred tax assets or deferred tax liabilities as at 30 June 2012. AGL has recognised a deferred tax asset of $53.4 million representing the difference between the PRRT starting base amount and the carrying value of the production permits to which the PRRT will apply. 

