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The Accounting Historians Journal Vol. 11, No. 2 Fall 1984 Robert W. Gibson DEAKIN UNIVERSITY EPISODES IN THE AUSTRALIAN TAX ACCOUNTING SAGA Abstract: Tax effect accounting was introduced into Australia a little over a decade ago. The treatment of the tax effect of losses carried forward and the trading stock valuation adjustment introduced further complications to this new aspect of corporate accounting and reporting. This paper presents an account of the resolution of these accounting issues. It covers the role of professional bodies, companies, and regulatory authorities and the conflicts which arose among them. The treatment of taxation in the published reports of companies listed on the Australian Stock Exchange (AASE)1 provides a fasci-nating saga, in the course of which a number of features of Aus-tralian accounting have been highlighted. These may be grouped conveniently under three headings. The first is the adoption of tax effect accounting; the second, the treatment in financial statements of the carryforward of tax losses; and the third, the short-lived trading stock2 valuation adjustment (TSVA). The circumstances in which tax effect accounting (the inter-period allocation of income taxes) was adopted demonstrate Ameri-can influence over Australian accountancy practice. They also demonstrate that it is possible for a reluctant profession suddenly to embrace tax effect accounting because it suits the immediate economic conditions. The treatment of the future tax benefit of tax losses confirms the American influence already referred to, because it was adopted largely through a failure to distinguish the differences in the tax laws of the two countries when the tax effect accounting standard was drawn up. This episode, more importantly demonstrated the power of the Commissioners for Corporate Affairs of the several States and the Commonwealth, to influence and/or determine accounting standards. The adoption of the TSVA is im-portant because it demonstrates the interaction between account-ing practice and politics, and the potential consequences of ac-countants failing to recognize this relationship and its application to what was a very political issue,