Subsidiary member for entire income year
A company that is a subsidiary member of a consolidated group for the entire income year is not required to lodge an FAR if we have been notified of the group's formation by the time the FAR is due. For a consolidated group the obligation to lodge the FAR and pay any franking deficit tax (FDT) liabilities lies with the head company.
The FAR and payment of any FDT is due on the last day of the month following the company's normal income year. For example, a 30 June balancing company will have to lodge and pay by 31 July.
So if the head company does not notify us of the group's formation until the due date of the first consolidated income tax return (which it is entitled to do), subsidiary companies will have an obligation to lodge FARs and pay any FDT in the meantime.
However, if a company believes it will be a subsidiary member for the entire income year it may apply for deferral of time to lodge the FAR. If it subsequently transpires that the company was not a subsidiary member for the entire income year it will have to lodge an FAR and pay any FDT owing. GIC may be applied back to the due date.
If a company lodges an FAR and pays its FDT liability on the due date and subsequently notifies us that the company was a subsidiary member of a group for the entire income year, the company will need to contact us to amend the FAR to zero and request a refund of any FDT paid for the year.
Subsidiary member for part of the income year
If on the date of consolidation the subsidiary member's franking account is in deficit, it is required to lodge an FAR and pay any FDT owing by the last day of the month following its normal income year. For example, if a June balancing company joins a consolidated group on 1 December and has an FDT liability, the lodgment and payment due date will be 31 July.
After the part-year income tax return has been assessed any remaining FDT credit amounts will be available to the head company to be offset against current or future income tax liabilities of the head company.