• PAYG instalments for entities leaving a consolidated group

    A consolidated group is treated as a single entity for income tax purposes. After the head company has received its first consolidated instalment rate, it uses this rate to meet pay as you go (PAYG) instalment obligations for all members for that consolidated group.

    When a subsidiary member leaves the group

    If a head company is paying consolidated group PAYG instalments and a subsidiary member leaves the group, the subsidiary member begins paying its own PAYG instalments. This occurs whether or not the entity had a PAYG instalment obligation before joining the consolidated group.

    We will write to the member that is leaving the consolidated group to advise them of their instalment rate and obligations.

    However, if the subsidiary member immediately joins another consolidated group in which instalments are paid on a consolidated group basis, the head company of the new group will report the joining member's instalment income from the date of joining.

    Head company must notify us

    The head company must notify us within 28 days of a subsidiary member leaving (or entering) the group. As the head company, if you notify within 28 days, you will prevent processing delays and a failure to lodge on time penalty.

    What our letter includes

    After the head company notifies us, we write to the leaving entity. Our letter will include:

    • PAYG instalment rate – we give the leaving entity the instalment rate of its former head company and it must use the instalment rate × instalment income method of calculating PAYG instalments.
    • How often to pay – the leaving entity must use the same payment cycle as the previous head company. The first instalment is based on its instalment income from the date of effect (the date the entity leaves the group) to the end of the period.

    See also:

      Last modified: 22 Feb 2017QC 19588