Consolidation - Tax basics for non-profit organisations

Note: This document forms part of our guide Tax basics for non-profit organisations.

Wholly-owned corporate groups may have the option of consolidating for income tax. Consolidation is optional but cannot be reversed. The consolidated group operates as a single entity for income tax purposes, lodging a single income tax return and paying a single set of pay as you go (PAYG) instalments.

When a group consolidates, it is a 'one in, all in' situation, in which all of the head company's eligible wholly-owned subsidiary members become part of the group.

The following entities (which receive special tax treatment compared with ordinary Australian-resident companies) cannot be a head company or subsidiary member of a consolidated group:

• exempt entities - that is, total ordinary and statutory income is exempt
• pooled development funds
• film licensed investment companies
• certain credit unions.

Other entities specifically excluded from being a subsidiary member of a consolidated group are:

• non-profit companies
• trusts that are complying and non-complying superannuation entities
• trusts that are non-complying approved deposit funds.

While a non-profit company can be the head company of a consolidated group, it cannot be a subsidiary member.

For more information about consolidation, refer to the Consolidation reference manual.