Pay as you go (PAYG) instalments for consolidated groups
A wholly owned group of resident companies, trusts or partnerships can choose to consolidate and be treated as a single entity for income tax purposes. The income, expenses and other income tax attributes of the group members are treated as belonging to the head company of the group.
After the head company lodges its first consolidated income tax return, we write to them to advise its 'consolidated instalment rate' and other pay as you go (PAYG) instalment details for the group.
The head company then begins paying PAYG instalments for the consolidated group as if it is one entity.
The letter from us includes
PAYG instalment rate – if the head company calculates the consolidated group's PAYG instalments using the instalment rate x instalment income method, it uses the consolidated instalment rate. This is a percentage figure that approximates the tax payable on the group's business and/or investment income. We calculate the instalment rate from the head company's latest consolidated income tax assessment.
Tax on business and investment income (notional tax) used to calculate instalment rate – this is the tax that would have been payable on the group's business and/or investment income, in the latest year the head company's consolidated income tax has been assessed.
How often to pay – consolidated PAYG instalments are paid quarterly or monthly, within 21 days of the end of the period.