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.