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I aim to elucidate to the board the process by which a group structure pays corporate tax and justify my stance. The Australian Accounting Standards Board (AASB) provides guidelines for accounting for income taxes under AASB 112, "Income Taxes." This regulation mandates that the financial statements should reflect the income tax payable to tax authorities concerning the taxable profit or loss for the period, including any adjustments relating to previous periods (Income taxes - Australian Accounting Standards Board 2015).

In the context of a group structure, a consolidated financial statement is prepared (Deegan, C 2020). This statement aggregates the taxable profit or loss of all entities within the group, implying that each entity's tax is computed before the law's application. In this setup, a holding company owns subsidiary companies or entities (In 2022). Notably, about one-third of large Australian corporations do not pay income tax.

Framework: AASB 112 stipulates that companies must consider both current and deferred tax liabilities and assets when calculating the income tax payable. Deferred tax liabilities represent the total tax amount that an entity anticipates paying or recovering for taxable profit or loss in future periods, as opposed to current tax liabilities (Deegan, C. 2020).

Group structures can leverage any tax benefits offered by the country they operate in, such as exemptions, lower tax rates, and deductions, through tax planning strategies. By optimizing their group structure and operations, companies can reduce their overall tax liability (Fletcher 2022).

In conclusion, a group structure pays corporate tax by employing tax planning, calculating income tax payable or refundable concerning taxable profit or loss, and combining the financial results of all companies within the group through consolidated financial statements. The entire economic group structure should be considered when determining tax liabilities as it reduces the percentage of companies that owe no tax.

Therefore, I would recommend the board consolidate as a group to reap benefits like filing a single tax return for the group and consolidated PAYG instalments, which will lower the administrative and compliance costs of such tasks (Costs and Benefits 2016). However, we should also weigh the cost implications of consolidating as a group, such as high initial costs of software, legal fees, the cost of obtaining information, and the shared responsibilities of bearing the tax return as a group (Costs and Benefits 2016).