Consolidation pathway

There is a pathway of key steps in choosing, forming and operating as a consolidated group:

  • Choosing

Consolidation is optional. A group needs to determine its eligibility, analyse the costs and benefits of consolidating, and choose whether and when to consolidate. The choice to consolidate is irrevocable once it is made.

  • Forming a consolidated group

Consolidating a group involves planning and implementing new systems and calculating a consolidated income tax position for the group as a whole.

Among other things, the head company needs to:

  • determine asset values for joining subsidiaries
  • transfer losses and calculate a utilisation rate
  • transfer franking credits and foreign tax credits
  • deal with the other tax attributes of the joining subsidiaries.

  • Operating as a consolidated group

Operating as a consolidated group requires the head company to, among other things:

  • make a choice to form a consolidated group with effect from a certain date
  • notify the ATO of its choice to consolidate in the approved form within the prescribed time
  • calculate, report and pay the group’s PAYG instalments
  • determine, report and make any balancing adjustments to meet the group’s annual income tax liabilities
  • manage any ongoing income tax liabilities and supply income tax information to the ATO when required, and manage the entry and exit of subsidiary members, including notifying the ATO.
Last modified: 25 Feb 2016QC 48029