A wholly owned group of resident companies, trusts or partnerships can choose to consolidate and be treated as a single entity for income tax purposes. The income, expenses and other income tax attributes of the group members are treated as belonging to the head company of the group.
After the head company lodges its first consolidated income tax return, we write to them to advise its 'consolidated instalment rate' and other pay as you go (PAYG) instalment details for the group.
The head company then begins paying PAYG instalments for the consolidated group as if it is one entity.
Date of effect - the head company pays PAYG instalments on a consolidated basis from the beginning of the instalment quarter in which it receives its consolidated instalment rate from us.
Assessment year used in calculations - this is the latest year for which the head company's consolidated income tax has been assessed. The consolidated group PAYG instalment details are calculated from this information.
PAYG instalment rate - if the head company calculates the consolidated group's PAYG instalments using the instalment rate x instalment income method, it uses the consolidated instalment rate. This is a percentage figure that approximates the tax payable on the group's business and investment income. We calculate the instalment rate from the head company's latest consolidated income tax assessment.
Tax on business and investment income (notional tax) used to calculate instalment rate - this is the tax that would have been payable on the group's business and investment income, in the latest year the head company's consolidated income tax has been assessed.
GDP adjusted notional tax or instalment amounts calculated by us - if the head company is eligible to pay instalment amounts on the basis of GDP adjusted notional tax, we calculate these amounts. GDP adjusted notional tax is similar to notional tax, except it takes into account likely growth in the group's business and investment income based on growth in Australia's gross domestic product (GDP).
How often to pay - consolidated PAYG instalments must be paid quarterly, within 21 days of the end of the quarter. So if the head company balances its accounts on 30 June, its consolidated instalments are due on 21 October, 21 January, 21 April and 21 July.
Last Modified: Tuesday, 12 March 2013